Legislature(1995 - 1996)

05/10/1996 10:15 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HOUSE BILL 1005                                                              
       "An Act making, amending, and repealing appropriations;                 
       making  appropriations  under  art.   IX,  sec.  17(c),                 
       Constitution  of   the  State   of  Alaska,  from   the                 
       constitutional budget  reserve fund; and  providing for                 
       an effective date."                                                     
  ALL FUNDS FISCAL SUMMARY                                                     
  Co-Chair Hanley spoke to the ALL FUNDS FISCAL SUMMARY passed                 
  during the  legislative session.  He stated that the numbers                 
  proposed in HB 1005 were based on that legislation.                          
  provided  a  summary of  general  fund differences.   During                 
  regular session,  four appropriation bills had  been passed,                 
  including  SB 84,  HB 412, HB  413 and  SB 136.   Mr. Greany                 
  provided Committee members a copy of  the FY 96/97 All Funds                 
  Fiscal  Summary  sheet.   [Copy  on file].    The attachment                 
  reflects  all  the appropriations  made  during  the regular                 
  legislative session.                                                         
  Mr.  Greany  noted  that  the  general  fund  was  recapped,                 
  indicating a general fund reduction from the FY96 authorized                 
  budget of $73.6  million dollars.   The difference  reflects                 
  the $1.2 billion  dollar deposit made to  the Permanent Fund                 
  under special transfers.                                                     
  HOUSE BILL 1005                                                              
       "An Act making, amending, and repealing appropriations;                 
       making  appropriations  under  art.  IX,  sec.   17(c),                 
       Constitution   of  the   State  of  Alaska,   from  the                 
       constitutional budget reserve  fund; and providing  for                 
       an effective date."                                                     
  BUDGET, OFFICE OF THE  GOVERNOR, briefed the Committee on  a                 
  meeting held in the Senate  Finance Committee which unfairly                 
  accused members from  the Office  of Management and  Budget.                 
  She noted that concerns from that meeting had been raised by                 
  individual  members  of  the  majority  and she  offered  to                 
  address them at this time.                                                   
  She  stated  that  the  long  range  intent   was  based  on                 
  information shared with  the majority.  The  draft resulting                 
  from the Long Range Planning Commission had been provided to                 
  Representative Hanley and Representative Phillips.  Co-Chair                 
  Hanley countered that  there had  been public testimony  and                 
  joint meetings on the Long Range Fiscal Planning issue.  Ms.                 
  McConnell  disagreed, advising  that "many"  members of  the                 
  public were not allowed to participate or speak.                             
  She  continued,  the  draft of  the  Governor's  version was                 
  shared   with   Representative  Hanley   and  Representative                 
  Phillips in mid April, 1996.  Co-Chair Hanley responded that                 
  there had  not  been a  final sign-off  of that  plan.   Ms.                 
  McConnell  reiterated for  the record  that the  information                 
  proposed was not a surprise to either body.                                  
  The current year budget as proposed by the Governor contains                 
  $18.4  million  dollars  of  reappropriation,  whereas,  the                 
  budget passed by the Legislature contained only $6.8 million                 
  dollars in reappropriation spending.   She stressed that the                 
  original request contained "good" and "valid" projects.                      
  Ms.  McConnell  spoke  to  examples  of the  reappropriation                 
  proposed by the  Administration such as the  Bethel seawall.                 
  She noted that the request had been proposed by the Governor                 
  and delivered to the Legislature  during the last couple  of                 
  weeks of the Legislative session.  The Children's Trust Fund                 
  also  had  not been  included  in the  final reappropriation                 
  passed through the Legislature.   Co-Chair Hanley asked when                 
  that request had been submitted.                                             
  MANAGEMENT  AND BUDGET,  OFFICE OF  THE GOVERNOR,  responded                 
  that   budget  amendment  had  been  submitted  to  Co-Chair                 
  Foster's office on April 18, 1996.                                           
  Representative Grussendorf  pointed  out that  the State  of                 
  Alaska has  known about the  Bethel seawall condition  for a                 
  long period of time.  Ms. McConnell interjected that federal                 
  funds have been spent and to date there remains a $5 million                 
  dollar  need.  She added that Senator Stevens has authorized                 
  continuation of  the project.   Co-Chair  Hanley asked  when                 
  Senator Stevens had acquired the  federal funding to provide                 
  such an authorization.  Ms.  McConnell informed members that                 
  those  funds  had  been  secured  several  years  ago.    In                 
  establishing fiscal  priorities, the  Governor's Office  was                 
  not sure  if they would be  able to fund the  Bethel seawall                 
  this session.  Co-Chair Hanley  stressed that priorities had                 
  changed from those proposed in December, 1995.                               
  Ms.  McConnell  pointed  out  that  reappropriation   are  a                 
  "normal" part  of each  year's budget  process.   Discussion                 
  followed regarding the  base school  funding and the  Bethel                 
  Representative Mulder spoke to the  Bethel seawall, advising                 
  that the Legislature had not been presented with the request                 
  until the end  of the legislative  session.  He thought  the                 
  issue  differed "dramatically"  from the  base school  need.                 
  Ms. McConnell  interjected that the  Bethel seawall  funding                 
  request  had been  presented  by the  Governor  as a  budget                 
  amendment in mid April, 1996.                                                
  In  response   to  Representative  Parnell,   Ms.  McConnell                 
  explained that $250  thousand dollars  of the power  project                 
  fund had been  reappropriated in  the budget  passed by  the                 
  Legislature.  The  requested amount  would be the  remainder                 
  needed.  Ms. Slagle suggested that the $900 thousand dollars                 
  identified  for   the  two  reappropriation  came   from  an                 
  administrative oversight.   The funding  source has not  yet                 
  Co-Chair Hanley asked if an amendment had been submitted for                 
  the Longevity bonus.  Ms. McConnell advised that information                 
  had been determined  from the last  checks sent off for  the                 
  longevity checks.  When those checks were run, it provided a                 
  new estimate for the necessary amount  of money needed.  Ms.                 
  Slagle  pointed  out that  at the  end  of March,  1996, the                 
  Department of Administration (DOA) presented information for                 
  an additional supplemental request of  $1.6 million dollars.                 
  Representative Therriault questioned the amount remaining in                 
  the Fairbanks  Youth facility  appropriation.    Ms.  Slagle                 
  stated that balance was $43 thousand dollars.                                
  Ms. McConnell pointed out that the items included in HB 1005                 
  are items which  had been discussed  during the last  couple                 
  days  of  the Legislative  session.   The  Administration is                 
  willing to negotiate all those items.                                        
  Representative  Therriault  identified that  the Legislature                 
  had  placed  $6 million  dollars  into the  Children's Trust                 
  Fund; the Governor  now requests an additional  $2.5 million                 
  dollars.  Ms.  McConnell stressed  that the items  contained                 
  within the  context  of the  legislation  would be  open  to                 
  negotiation.   Representative Therriault  responded that  he                 
  would not support an additional $2.5 million dollar addition                 
  to that fund.                                                                
  Representative Navarre  reminded Committee members  that the                 
  majority  members  had made  amendments  to the  budget much                 
  later  than  those  proposed  by  the  Administration.    He                 
  recommended  that  the  Committee   focus  on  whether  each                 
  proposed  project was  worth  consideration rather  than the                 
  timing submitted.                                                            
  Inn  response to  Representative Kelly's  question regarding                 
  the Children's  Trust Fund  intent, Ms. McConnell  explained                 
  that decisions made for that spending authority are  made by                 
  the  Board  members  of  that  fund.   Representative  Kelly                 
  demanded that a plan be submitted.                                           
  Co-Chair Hanley summarized  that the reason for  the Special                 
  Session  resulted  from a  difference  of  opinion regarding                 
  fiscal  spending.    He asked  if  the  Administration would                 
  consider  placing the $2.5  million dollar  Children's Trust                 
  Fund request into the general fund in order that the savings                 
  not be spent.   Ms. McConnell stated that the Administration                 
  was willing to consider all options.                                         
  Representative  Navarre  pointed out  that  all departmental                 
  budgets  have  received  significant  cuts.    He  requested                 
  further information on the impact  of not funding the Bethel                 
  (Tape Change HFCSS 96 - 1, Side 2).                                          
  Ms. McConnell  disclosed that  work was  in progress  on the                 
  Bethel seawall.   As long as there  is a state-match to  the                 
  federal dollars, the work will continue.                                     
  Co-Chair  Hanley  briefed  the  Committee  that it  was  his                 
  intention   that   today's   meeting    provide   a   better                 
  understanding of HB 1005, although, it was not his intent to                 
  pass the bill from Committee.                                                
  Representative Kohring noted  that he was a  strong advocate                 
  of cutting the budget,  not adding more money into  it.  Ms.                 
  McConnell   offered   to   provide  additional   information                 
  regarding  the  magnitude  of the  cuts  recommended  to the                 
  budget through legislative action.                                           
  In response  to Representative  Parnell's inquiry  regarding                 
  the foundation formula, Ms. McConnell  stated that the Board                 
  of Education is currently investigating  how to make changes                 
  to  the foundation  formula.    Proposals  considered  would                 
  include pupil transportation.                                                
  Co-Chair Hanley indicated that Section #2 was language which                 
  identified  short federal  funding and  that Capital  Budget                 
  Receipts  (CBR)  would be  used  as necessary.    Ms. Slagle                 
  pointed  out  that Section  #2  contained two  portions; the                 
  first addressing the  "pay back"  and the second  clarifying                 
  how to  make up the shortage.  She agreed that both sections                 
  would require a 3/4 legislative vote.                                        
  Representative  Martin  spoke  to  Section  #3  which  would                 
  provide for the May, 1996,  Alaska Marine Highway contracts.                 
  He asked  if it had  been programmed for  FY97.  Ms.  Slagle                 
  stated that it  was a "one time" payment of $950 dollars per                 
  employee.  Section  #3 and #4 were requested as  part of the                 
  FY97 monetary terms request, a one time bonus.                               
  Ms. Slagle continued,  Sections #5 and #6  were supplemental                 
  requests  for  the University  contracts  and the  Community                 
  College Federation of Teachers contracts.                                    
  Section  #7  also  had been  contained  in  the supplemental                 
  request; $720 thousand dollars needed for the consent decree                 
  for the Copper River Highway.  Representative Brown asked if                 
  those funds were  required immediately.  Ms.  Slagle advised                 
  that there  were certain  things within  the consent  decree                 
  that needed  to take place within  the next 90  to 120 days.                 
  Ms. McConnell added,  the Governor had recommended  that the                 
  issue be addressed as soon as possible.  The amount of money                 
  will not change unless, of  course, delinquent penalties are                 
  Co-Chair Hanley pointed  out that  Section #8 would  provide                 
  $250 thousand dollars for the  Alaska Marine Highway System.                 
  Ms.  Slagle added that  the request was  made in conjunction                 
  with Section  #35 in an  attempt to  add money  back.   This                 
  would  be  a restoration  of  a  reduction to  a  budget cut                 
  already made.                                                                
  Ms.  Slagle  continued,  Section  #9a  addresses   extending                 
  Medicaid  services in the amount of $1.5 million dollars for                 
  programs  which provide  alternatives  to  nursing home  and                 
  institutionalization of the elderly.  Representative  Martin                 
  asked how much money was left in that lapse fund.                            
  SERVICES, responded that  there was $3.2 million  dollars in                 
  the Medicaid lapsing funds.  Five million dollars in federal                 
  money exists which would be garnered by recycling the funds.                 
  The extension of  the lapsed dates would be  oriented toward                 
  providing  basic  services  for the  elderly  and  very poor                 
  and/or gearing the Department of  Health and Social Services                 
  (DHSS)  for  being  more  cost  effective  in  managing  the                 
  Representative  Brown  commented  on  the  amount  of  money                 
  lapsing in the Medicaid fund.  She asked why services to the                 
  elderly  and the  basic  poor were  not being  provided with                 
  those  funds.   Ms.  Perdue explained  that  there was  a 5%                 
  growth rate in  the FY97 base.   There is no room  to expand                 
  the services  in that  base.   Co-Chair Hanley  added, those                 
  requests had not been submitted by the  Administration.  Ms.                 
  McConnell countered that the Medicaid program is very large.                 
  A small change in the percentage of growth will have a large                 
  impact on what may be available.                                             
  Co-Chair Hanley asked  the repercussions  if the funds  were                 
  not  spent.   Ms. Perdue  explained  that those  funds would                 
  lapse back  to the general  fund.  She added  that the State                 
  was  fortunate  to have  the  Mental Health  Trust Authority                 
  (MHTA) come forth with their own money.                                      
  Ms. Slagle  continued, Section #10 through #16 all relate to                 
  the  FY97  labor  contracts.   The  amount  needed  for  the                 
  bargaining units for FY97 would be  $7.3 million dollars and                 
  $3.6 million  dollars for  the non-covered  employees.   Co-                 
  Chair Hanley summarized the expense to the State:                            
            $7.3      -    Covered employees;                                  
            $3.6      -    Non-covered employees;                              
            $10.9     -    FY97                                                
            $2        -    Supplementals in previous years                     
            $12.9     -    Total                                               
  Ms. McConnell added that the proposed contracts would be the                 
  most  cost effective  package of contracts  ever negotiated.                 
  Co-Chair Hanley objected;  including the covered costs,  the                 
  contracts would amount  to $30 million dollars  of increased                 
  spending over the next three years to the State.                             
  Representative  Therriault agreed  that the  contracts would                 
  not  provide  a  savings  for  the  State.    Ms.  McConnell                 
  clarified that  it would  be a  savings from  what had  been                 
  previously negotiated, providing lower contract amounts.                     
  Co-Chair Hanley  asked if there  had been a  comparison made                 
  when negotiating the  contracts for base level  funding.  He                 
  suggested that on an average, for a similar job class, State                 
  employees  are paid  an  8% higher  salary than  the private                 
  sector is paid.   Ms. McConnell replied that there  exists a                 
  range of differences and that many  jobs pay much less.  Co-                 
  Chair  Hanley   interjected,  that  the  pay  scale  listing                 
  information  differences  had  been  taken  from   a  report                 
  provided by the Department of Administration indicating that                 
  in some job classes, State employees are paid 8% more, which                 
  does not include benefits.   Ms. McConnell stressed that the                 
  pay differential had  been taken  into consideration in  the                 
  Co-Chair Foster referenced Section #19.  He asked the effect                 
  of   appropriating  those   funds  to   the  Department   of                 
  Transportation and Public Facilities (DOTPF) for the  Bethel                 
  seawall construction.  Ms. Slagle explained if the money was                 
  not  used  for that  purpose,  it  would lapse  back  to the                 
  general fund.  Representative Martin noted that to date, $36                 
  million  dollars  has  been  spent  on the  Bethel  seawall.                 
  Representative  Therriault thought  that  since those  funds                 
  resulted from "electrician"  money, they should be  used for                 
  electrician  needs  throughout the  State,  and not  for the                 
  seawall concern.                                                             
  Ms.   Slagle   continued,   Section   #20   represents   the                 
  reappropriation requested amount of  $1 million dollars  for                 
  the   site  preparation  of   the  Johnson  Youth  Treatment                 
  Facility.  It  would combine  with the  request provided  in                 
  Section  #37.   Ms.  McConnell  added, a  critical situation                 
  existing in Southeast  Alaska is currently having  an impact                 
  on kids and  families in  Southeast Alaska and  also on  the                 
  facilities  in   Fairbanks,  Bethel  and   Anchorage.    The                 
  Administration believes that Aid  to Families with Dependent                 
  Children (AFDC) lapse money would  be an appropriate use for                 
  those lapsed funds.                                                          
  Co-Chair Hanley advised that this was an original Governor's                 
  budget  request  which was  not  funded by  the Legislature.                 
  Representative Mulder agreed  that a need exists  within the                 
  State,  although  he did  not feel  that  it was  limited to                 
  Southeast.   Commissioner Perdue elaborated that the Johnson                 
  Center has been designed and has been ready for the past six                 
  years.  It  is currently  under a contempt  order issued  by                 
  Judge  Weeks.    Funding  the  request  would  be  the  most                 
  expedient  way  to address  the  over-crowding issue  in the                 
  State.  She emphasized that this is a "number one priority".                 
  Representative  Mulder  replied  that the  entire  State  is                 
  "bursting at the seams".                                                     
  (Tape Change HFC 96 - 2, Side 1).                                            
  Commissioner Perdue spoke  to Section #21 which  would repay                 
  the State for health services provided in the schools by the                 
  federal  government.    The  money  would allow  the  school                 
  districts to apply  for community based grants to  work with                 
  families at risk.                                                            
  Ms. Slagle stated  that Section  #22 would reappropriate  an                 
  anticipated balance for  the Longevity  Bonus grants to  the                 
  Department  of Administration  for  the continuation  of the                 
  personnel  automation  and  for developing  changes  to  the                 
  State's  personnel management system.  Co-Chair Hanley noted                 
  that the  Legislature over-appropriated the  Longevity Bonus                 
  by an amount of $300 thousand  dollars.  Ms. McConnell added                 
  that  Senator  Frank  had  proposed  a  possibility  of  the                 
  automation computer system. She agreed  that the project had                 
  not been submitted to the Legislature as a request.                          
  Ms. Slagle  continued, Section  #23 would  address the  need                 
  within the Department  of Corrections for the  conversion of                 
  Harborview to a correctional facility.                                       
  DEPARTMENT OF  CORRECTIONS, stated that  the facility  would                 
  handle medium level offenders.  The premise would be to pull                 
  offenders from prisons across the State  and place them in a                 
  therapeutic situation at Harborview.                                         
  Representative Mulder questioned the cost per day.  Mr. Cole                 
  replied the cost per day would be $177 dollars with  a total                 
  cost of $3.2 million dollars per year.   This year, the U.S.                 
  Congress  appropriated  money  for  alcohol  and drug  abuse                 
  programming funds for all the states.  Representative Mulder                 
  disclosed  that  the  cost  was  too  expensive.    Mr. Cole                 
  explained that  the direct cost of intervention will be more                 
  expensive  than  the basic  care  costs  of a  prisoner;  an                 
  enriched program will often allow early release.  The intent                 
  of intervention would be to  end re-offense.  Representative                 
  Mulder requested supporting documentation.                                   
  Ms.  Slagle  continued,  Section  #24  would  provide   $750                 
  thousand dollars  of interest from the  criminal restitution                 
  funds from the  Exxon settlement  to be used  for a  visitor                 
  interpretive facility.    The  interest  money  accumulates.                 
  There has been other projects completed with these funds and                 
  the   projects   must   be   associated   with  the   spill.                 
  Representative  Therriault suggested  that a  better use  of                 
  those funds would be  to offset general funds wasted  on the                 
  Whittier Road.                                                               
  Ms. Slagle  added,  Section #25  would provide  funds to  be                 
  appropriated to  the Department  of Natural Resources  (DNR)                 
  for the  State  land status  geographic information  system.                 
  Ms. McConnell added that the proposal  had not been the full                 
  amount requested in  the Governor's  original request.   She                 
  added, it was a  high priority for the Department  and would                 
  enable them to utilize it for economic development.                          
  Section  #26  would  identify   $400  thousand  dollars   of                 
  anticipated  carry-forward for the  Governor's Office  to be                 
  included  in  the base  for  executive operations  for FY97.                 
  That amount had been  reduced in Conference Committee.   Co-                 
  Chair Hanley pointed out that money had been rolled forward.                 
  Ms.  Slagle  continued,  Section #27  represents  the Alaska                 
  Public  Utilities  Commission   (APUC)  designated   program                 
  receipts account  for regulatory  cost charges  in order  to                 
  meet its duties under the  Federal Telecommunications Act of                 
  1996.   That  balance is $400  thousand dollars;  the lapsed                 
  need would be $200 hundred thousand dollars.                                 
  Section #28 deals with  HB 412 which was adopted  without an                 
  effective date.  The request would provide an effective date                 
  of  July 1, 1996,  in order to  provide effective operations                 
  for the State of Alaska.                                                     
  Section #29 would  address the  disparity problems with  the                 
  foundation formula.   It would provide  a temporary fix  for                 
  FY96; although,  would not  address FY97 problems.  Co-Chair                 
  Hanley asked if the Governor would add SB  244 to the agenda                 
  for the Special Session.  He thought that bill could address                 
  concerns  regarding the  disparity problem.    Ms. McConnell                 
  replied that the Governor has indicated that he will discuss                 
  with Legislative  Leadership expanding the call  for Special                 
  Session.   He felt that there were a number of issues "left"                 
  in limbo.  The  Governor's intent is to address  the primary                 
  matters first.   She suggested that  passage of SB 244  will                 
  not fix the budget at this time.  The Governor has expressed                 
  his willingness and interest with the Legislature to address                 
  concerns on  the table.   Heated  discussion followed  among                 
  Committee  members  and  the  Administration  regarding  the                 
  concerns of leverage used by  both bodies during the Special                 
  Session to get "interests" accomplished.                                     
  Representative  Therriault  questioned  the  impact  in  not                 
  appropriating the  amount of  funding requested  in SB  244.                 
  Co-Chair Hanley replied that $35  million dollars in federal                 
  funds were  at risk.   Representative  Therriault identified                 
  that  as  a high  risk gamble.    Ms. McConnell  stated that                 
  passage of Section  #29 provision  would guarantee that  the                 
  money not be lost.                                                           
  Representative Parnell  asked if  the Governor supported  HB
  1005.   Ms. McConnell replied that the Governor will discuss                 
  all concerns  as soon  as the  budget issues  are addressed.                 
  Representative Parnell inquired if  additional requests were                 
  anticipated for special funding  during the Special Session.                 
  Ms.  McConnell  stated that  there  could be  some technical                 
  Representative Grussendorf noted that he did not support all                 
  items included in HB 1005.  He suggested that there was room                 
  to negotiate.   Representative Brown asked what  other items                 
  are currently under discussion.   Ms. McConnell replied that                 
  the Administration has  concerns with the  Municipal Revenue                 
  Sharing bill (SB  20) and  other items and  requests in  the                 
  limbo file.   Co-Chair Hanley concluded that  the Leadership                 
  has interest in the disparity bill.                                          
  HB 1005 was HELD in Committee for further consideration.                     

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