Legislature(2003 - 2004)

02/23/2004 01:40 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HOUSE BILL NO. 456                                                                                                           
        An    Act   making   supplemental   and   other                                                                         
        appropriations;    amending    and     repealing                                                                        
        appropriations; making appropriations to capitalize                                                                     
        funds; and providing for an effective date."                                                                            
 DEPARTMENT OF ADMINISTRATION                                                                                               
 Section 1(a) and (b)                                                                                                           
        OPA FY 04 projected caseload and case cost growth.                                                                      
        Statutory Des Prgm Rcpts                                                                                                
 Section 1(c) Public Defender                                                                                                   
        FY 04 projected caseload and case cost growth.                                                                          
                                                   $ 650.0                                                                      
 ERIC SWANSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                                                                   
 DEPARTMENT OF  ADMINISTRATION, explained three factors                                                                         
 contributing to  the need  for  the  Office of  Public                                                                         
 Advocacy(OPA) supplemental of $$1.1 million in Section 1(a)                                                                    
 and  (b).  Last   year  the  department  received  two                                                                         
 supplementals. The second, totaling about $357 thousand, was                                                                   
 not included in the base funding for the current year and as                                                                   
 a result, the department started out FY 04 short of funding                                                                    
 compared to what was needed in FY 03.  In prior years, the                                                                     
 department received interagency receipt funding for cases of                                                                   
 children in the state's foster care system for an extended                                                                     
 period of time. That funding, totaling $300 thousand for                                                                       
 OPA, is not  forthcoming this year, while the  caseload                                                                        
 continues at the same level.  Mr. Swanson noted that the                                                                       
 caseload is up this year at OPA, and felony cases, which are                                                                   
        typically the most expensive, have increased by 8% this                                                                 
        Co-Chair Harris noted that supplemental requests have been                                                              
        submitted for OPA and the Public Defenders' Office during 18                                                            
        or last  19 years.   Mr. Swanson acknowledged that the                                                                  
        information was correct and observed the difficulty of                                                                  
        projecting the need.                                                                                                    
        In response to a question by Co-Chair Harris, Mr. Swanson                                                               
        noted that the $300 thousand in SDPR receipts are the result                                                            
        of guardian fees charged for services. The Agency was not                                                               
        aggressive in collecting these fees in past years. The                                                                  
     amount includes backlog fees, which were collected.                                                                        
        In response to a  question by Representative Croft, Mr.                                                                 
        Swanson noted that they are requesting an additional $1.4                                                               
        million. The total FY 04 management plan is $13,289,000,                                                                
        which includes interagency receipts that are not funded. He                                                             
        felt that $13 million would be accurate.                                                                                
        Representative Croft asked the proposed FY 05 level. Mr.                                                                
        Swanson observed that it would be about the same as for FY                                                              
        04: $13 million. Representative Croft suggested that OPA has                                                            
        been purposely under-funded in past years. He maintained                                                                
        that there is no reason to think the workload is going down,                                                            
        and pointed out that the FY 05 level does not include the                                                               
        supplemental amount.                                                                                                    
        Representative Chenault felt that further savings could be                                                              
        realized and acknowledged that a supplemental may be needed.                                                            
        Co-Chair Harris observed that $3 million was added in the FY                                                            
        04 budget.                                                                                                              
        Mr. Swanson discussed Section 1(c), which is a $600 thousand                                                            
        request for the Public Defenders Agency. He observed that                                                               
        caseload is up and interagency receipts are down.                                                                       
        DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT                                                                      
     Section 2(a) Regulatory Commission of Alaska Audits                                                                        
                      & Investigations                                                                                          
            Additional funds for expert witness costs are required                                                              
            for  a) completion of Alaska Communications Systems                                                                 
            cases ($20.0), b) Enstar case participation ($15.0), c)                                                             
            assistance on  the  telecom  regulations proceeding                                                                 
            responsive to HB 111 ($20.0), d) participation in other                                                             
            cases ($60.0).  RCA Rcpts                                                                                           
        Section 2(b) Regulatory Commission of Alaska                                                                            
     Due to major developments in Cook Inlet and the Trans                                                                      
     Alaska Pipeline System, the Regulatory Commission of                                                                       
     Alaska's  effort   in   regulating  pipelines  has                                                                         
     significantly increased.  To provide the  necessary                                                                        
     expertise two  new positions, a  range 21  Research                                                                        
     Analyst IV and a range 19 Utility Financial Analyst are                                                                    
     requested. Funds for additional office space, furniture                                                                    
     and equipment are also requested.                                                                                          
     RCA Rcpts                                     $114.6                                                                       
 TOM LAWSON, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF                                                                   
 COMMUNITY and ECONOMIC DEVELOPMENT, discussed Section 2(a),                                                                    
 which seeks $115 thousand in Regulatory Commission of Alaska                                                                   
 receipts to cover increased costs in the expert witnesses                                                                      
 Co-Chair Harris noted that Sections 2(a) and 2(b) would both                                                                   
 use Regulatory Commission of Alaska receipts and asked if                                                                      
 the Commission is involved in the natural gas  pipeline                                                                        
 MARK JOHNSON, CHAIR, REGULATORY COMMISSION of ALASKA, VIA                                                                      
 TELECONFERENCE, ANCHORAGE, testified via teleconference. He                                                                    
 observed that the Regulatory Commission of Alaska is an                                                                        
 independent agency and that it would be inappropriate for                                                                      
 them to be engaged in negotiations.                                                                                            
 Section 2(c) Capital                                                                                                           
     Repeal of funds to Saxman for Public Safety Bldg sec.                                                                      
     87, ch. 1, SSSLA 2002, pg. 138, ln. 9. Actual grant                                                                        
     amount is $1,074,341.                                                                                                      
 Mr. Lawson explained that the Public Safety building in                                                                        
 Saxman would not be built. There funds would be repealed.                                                                      
 Section 2(d) Power Cost Equalization                                                                                           
     PCE Endowment fund appropriation to PCE fund to replace                                                                    
     the general funds requested in FY 05 budget.  This is                                                                      
     the balance of  the statutory 7% limit of  the PCE                                                                         
     Endowment monthly average market value available for                                                                       
     appropriation in FY 04. An FY 05 budget amendment will                                                                     
     also be submitted.                                                                                                         
      PCE Endowment Fund                       $4,581.0                                                                         
 Mr. Lawson explained that the request would appropriate PCE                                                                    
 Endowment Funds to the PCE fund. This would deal with an FY                                                                    
 05 shortfall.  The FY 05 governor's operating budget would                                                                     
 remove a $3.7 million general fund appropriation. In FY 04                                                                     
 budget, authorized PCE up to $12.6 million, the draw was                                                                       
 only $7.9 of the $12.6 million. The balance was transferred                                                                    
 into the Fund. The rest of the amount needed to reach $15.7                                                                    
 million came from one-time NPR-A grants. There is about $4.6                                                                   
        million left in FY 04 to be transferred from the endowment                                                              
        into PCE Fund. Through the supplemental the funds would be                                                              
        available in FY 05, which would provide full funding.                                                                   
        In response to a question by Co-Chair Harris, Mr. Swanson                                                               
        clarified that the $7 million form the NPR-A grant is being                                                             
        used in the PCE Fund for the current year.                                                                              
        Representative Croft summarized that the remaining funds                                                                
        from FY 04  being transferred to FY 05 would result in                                                                  
        available $3.7 million in general funds, which could be used                                                            
        Mr. Lawson observed that no general funds are needed for FY                                                             
        DEPARTMENT OF CORRECTIONS                                                                                           
        Section 3(a) Inmate Health Care                                                                                         
            The cost of drug and scientific supplies continue to                                                                
            rise annually and contractual costs have increased due                                                              
            to eight catastrophic cases, each costing in excess of                                                              
            $100.0.                                     $1,100.0                                                                
        Section 3(b) Out of State Contracts                                                                                     
            Due  to   increases in  population  and  subsequent                                                                 
            management of placement of prisoners, the out of state                                                              
            contracts and related travel costs are increasing from                                                              
            the budgeted 650 prisoners to in excess of 775 by the                                                               
            end of FY 04.         $920.0                                                                                        
        JERRY BURNETT, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT                                                            
        OF  CORRECTIONS three  items  including a   $63  dollar                                                                 
        ratification for a miscoded invoice. He discussed Section                                                               
        3(a), which is  would fund  $1.1 million for  drug and                                                                  
        scientific supplies. He noted that costs are running higher                                                             
        than projected.                                                                                                         
        Representative Stoltze asked for a summary of impacts from                                                              
        the early medical parole statute.  Mr. Burnett noted that                                                               
        there was  an  estimation of  three  cases a  year  of                                                                  
        discretionary parole. There has been one person paroled in                                                              
        the current year. The savings to department are significant.                                                            
        Representative Hawker asked if the $1.1 million is the                                                                  
        identical amount transferred through the budget process.                                                                
    Mr. Burnett said the amount is totally coincidental.                                                                        
        Representative Hawker discussed out-of-state contracts. Mr.                                                             
        Burnett noted that the Arizona numbers increased in fall at                                                             
        a  rate higher  than anticipated and  the  transfer of                                                                  
        additional inmates to AZ resulted in higher costs. The                                                                  
 department budgeted on 650 inmates; there are 702 there                                                                        
 today, but they don't expect to go beyond 706.                                                                                 
 In response to a question by Representative Hawker, Mr.                                                                        
 Burnett observed that 21 employees were reconciled and were                                                                    
 placed into the budget. Twelve of these were in health care.                                                                   
 Co-Chair Harris asked how many inmates incarcerated out of                                                                     
 state. Mr. Burnett observed that there are 702 inmates in                                                                      
 Arizona; there are approximately 21 other placements out-of-                                                                   
 Co-Chair Harris asked status of contract for out of state                                                                      
 bids.  Mr.  Burnett noted that an  RFP was put  out in                                                                         
 December. The proposals are being evaluated. There are                                                                         
 enough beds to deal with state's needs. He couldn't speak to                                                                   
 the price.                                                                                                                     
 Co-Chair Harris expressed concern that the legislature have                                                                    
 an idea of the cost for out-of-state beds.                                                                                     
 DEPARTMENT OF EDUCATION                                                                                                    
 KAREN REHFELD, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION                                                                    
 AND  EARLY  DEVELOPMENT, provided  information on  the                                                                         
 department's requests.                                                                                                         
 Section 16(a)     School Debt Reimbursement                                                                                    
        FY 04 entitlement adjustment based on actual, down                                                                      
        from $37,424.1 to $32,052.0.                                                                                            
        FY 04 Cigarette Tax revenue increased adjustment                                                                        
        from $28,600.0 to $30,572.2                                                                                             
 Mr. Jeans explained that there was a reduced need, and                                                                         
 school debt retirement fund revenue would be replaced with                                                                     
 increased tobacco tax receipts.                                                                                                
 EDDIE JEANS, MANAGER, SCHOOL FINANCE and FACILITIES SECTION,                                                                   
 DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, explained                                                                       
 that some municipalities did not sell bonds, which were                                                                        
 anticipated. There was also an increase in tobacco tax                                                                         
 Mr. Jeans clarified that he was speaking of the School Debt                                                                    
 Reimbursement Program. The program is reconciled each year.                                                                    
 Representative Croft observed that the funds are lapsed                                                                        
 general funds. Mr. Jeans agreed, but pointed out that the                                                                      
 actual appropriation is out of the Fund and is identified as                                                                   
 other funds.                                                                                                                   
        Co-Chair Harris asked if schools are funded at 100% Mr.                                                                 
        Jeans explained that the request is at 100 percent of the                                                               
        projected entitlement, which is $79 million. Mr. Jeans noted                                                            
        that the  majority of  school  debt is  at  70  percent                                                                 
        Section 4(a) Foundation                                                                                                 
            FY 04 foundation program entitlement adjustment based                                                               
          on actual student count.        (3,654.0)                                                                             
        Section 4(b) Pupil Transportation                                                                                       
            Pupil transportation program adjustment based on actual                                                             
            student count.                   (788.4)                                                                            
        Ms. Rehfeld discussed Sections 4(a) and 4(b). She noted that                                                            
        these are formula driven programs.                                                                                      
        Mr.  Jeans explained that  the  major decrease to  the                                                                  
        foundation program is due to fewer students. The request is                                                             
        $3.6 million less than what was actually appropriated in FY                                                             
        04. The Pupil Transportation Grant Program was switched from                                                            
        reimburse to grants and is based on enrollement.                                                                        
        TAPE HFC 04 - 27, Side B                                                                                              
        DEPARTMENT OF FISH & GAME                                                                                           
        Section 6 Capital                                                                                                       
                Language change to FY 02 appropriation relating to                                                              
                use of the proceeds from sale of vessels to also                                                                
                include repair and maintenance of vessels   0.0                                                                 
        KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                                                            
        DEPARTMENT OF FISH AND GAME, discussed section 6. He noted                                                              
        that the language change would allow the department to use                                                              
        the proceeds from the sale of an older research vessel for a                                                            
        OFFICE OF THE GOVERNOR                                                                                              
        Section 16(e) Fund Transfer                                                                                             
                Have received additional federal grant                                                                          
                funds for deposit into the Election Fund.  $100.0                                                               
        Section 7 Elections                                                                                                     
                Additional Election Funds for improving                                                                         
                accessiblity to voting locations.                                                                               
                 Election Fund                 $100.0                                                                           
 LAURA GLAISER, DIRECTOR, DIVISION OF ELECTIONS, OFFICE OF                                                                      
 THE LIEUTENANT GOVERNOR, reviewed Section 16(e), which would                                                                   
 place $100.0 in federal receipts for accessibility in the                                                                      
 Election Fund. Section 7 provides the authorization                                                                            
 Representative Stoltze asked if they would try to encourage                                                                    
 more parking availability.  Ms. Glaiser stated that she                                                                        
 would check on the issue.                                                                                                      
 DEPARTMENT OF HEALTH & SOCIAL SERVICES                                                                                     
 Section 8(a) Pioneer Homes                                                                                                     
     Transfer within H&SS to cover projected funding                                                                            
     shortfall  as   part  of   net-zero  general  fund                                                                         
     supplemental.                                 $711.9                                                                       
 JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                                                                   
 DEPARTMENT OF HEALTH & SOCIAL SERVICES, spoke to Sections                                                                      
 8(a) through 8(r). She observed that the department is                                                                         
 proposing a delete/add supplemental based on an anticipated                                                                    
 $29 million shortfall.   The shortfall would  primarily                                                                        
 pertain to  the  Medicare program,  pioneer homes  and                                                                         
 catastrophic and chronic illness assistance. The department                                                                    
 would internally transfer the majority of the amount. The                                                                      
 request is to transfer between appropriations. Part of the                                                                     
 shortfall is caused by a $20 million gap in fair share                                                                         
 receipts. The intent is to take care of the gap so don't                                                                       
 have ratification in the future. There  is a  one time                                                                         
 opportunity to generate $14 million, which is outlined in                                                                      
 backup. The Commissioner has provided a memo, stressing                                                                        
 belt-tightening measures and not a  desire to  come to                                                                         
 legislature for general fund increase.                                                                                         
 Co-Chair Harris asked if the department had implemented an                                                                     
 Options List on Medicaid Services.  Ms. Clarke stated that                                                                     
 the department is looking at an options list for the FY 06                                                                     
 Co-Chair Harris observed that the Fair Share program has                                                                       
 been under litigation and questioned if the department is                                                                      
 supposed to  implement the  Options List  if there  is                                                                         
 insufficient funds.  Ms.  Clarke  explained  that  the                                                                         
 requirement to use the Options List was repealed last year.                                                                    
 Representative Hawker explained that the statuted pertaining                                                                   
 to the Options List was repealed in SB 105.  He discussed SB
 105, which allows the department to look at all services                                                                       
 Ms. Clarks clarified that the department's policy is to look                                                                   
 at  other  measures  before  eliminating services,  or                                                                         
        eligibility groups. The department has  looked at cost                                                                  
        containment and ways to reduce the program.                                                                             
        Representative Hawker stated that he shared the concerns                                                                
        regarding the program costs. The department was able to                                                                 
        secure unanticipated federal money, which supplanted $14                                                                
        million of  general funds in  the previous budget. The                                                                  
        Legislative Budget and Audit Committee asked the department                                                             
        not to account for the $14 million. He stressed the need to                                                             
        address and  identify long-term  growth containment in                                                                  
        Ms. Clarke observed that the department is committed to a                                                               
        number of cost containment measures that haven't yet been                                                               
        achieved. She pointed out that  the department's backup                                                                 
        accounts for the $14 million.                                                                                           
        Section 18(a)(3)                                                                                                        
        18(a)(3) AR22520-02,                                                                                                    
            Medicaid Services, General Funds:                                                                                   
            $22,069,794.69; Total Funds: $22,069,794.69                                                                         
        Ms.  Clarke  noted  that  this  section  would  provide                                                                 
        ratification for FY 02. This was the first year that the                                                                
        Fair Share program was implemented.                                                                                     
        Co-Chair Harris asked if the department was coming back for                                                             
        authorization for money already spent and questioned what                                                               
        would happen if the authorization was not approved. Ms.                                                                 
        Clarke stated that the department would have go to the                                                                  
        director of Office of Management and Budget.                                                                            
        Representative Croft questioned the current status of the                                                               
        Fair Share litigation. Ms. Clarke noted that it is in the                                                               
        first appeal stage. One proposal in FY 05 is almost $8                                                                  
        million in general fund in an effort to close the gap.  The                                                             
        intent is not to incur any forward debt.                                                                                
        Representative Joule asked if there are more pending audits.                                                            
        Ms. Clarke acknowledged that the federal government has been                                                            
        more aggressive in its interpretation.                                                                                  
        Representative Joule asked the state would have to pay back                                                             
        previous payments.  Ms. Clarke agreed that the state could                                                              
        be asked to pay amounts that were disallowed. It is an issue                                                            
        that many states are concerned about.                                                                                   
        Representative Croft asked why it would not make sense to                                                               
        continue to use as much as possible while maintaining a                                                                 
        reserve balance.                                                                                                        
       DEPARTMENT OF LAW                                                                                                    
Section 9 Civil Division, Deputy Attorney General                                                                               
        Judgments and Claims as of February 5, 2004 -                                                                           
        $2,825,490.66                            $2,825.5                                                                       
KATHRYN  DAUGHHETEE,  DIRECTOR, ADMINISTRATIVE  SERVICES                                                                        
DIVISION, DEPARTMENT OF LAW reviewed Section 9. There are 14                                                                    
items. She noted that one item would be withdrawn for $15                                                                       
thousand. She noted that the largest settlement was just                                                                        
under $176 thousand for the destruction of a home due to the                                                                    
state's involvement in the over compaction of an embankment,                                                                    
which collapsed. Further discussion occurred on specific                                                                        
In response to a question by Representative Stoltze, Ms.                                                                        
Daughhetee discussed the  marijuana initiative.     She                                                                         
explained that the dispute was the result of regulations                                                                        
that   require  certain   record  keeping,  which   the                                                                         
Administration did not believe the sponsors had met.                                                                            
Section 10 Civil Division & Criminal Division                                                                                   
        Technical change to sec. 60, ch. 82,                                                                                    
        SLA 03 which appropriated $175.0 to                                                                                     
        Department of Law, Civil Division for                                                                                   
          outside counsel costs.  The appropriation                                                                             
        should have been to the Criminal Division.    0.0                                                                       
Ms. Daughhetee explained that Section 10 is ratification for                                                                    
$375 thousand, which was incorrectly appropriated to the                                                                        
Civil Division. The money should have gone to the Criminal                                                                      
DEPARTMENT OF MILITARY & VETERANS AFFAIRS                                                                                   
 Section 11(a) Homeland Security and                                                                                            
               Emergency Services                                                                                               
        Transfer of federal authorization from                                                                                  
        Army Guard to Homeland Security for                                                                                     
        increased FEMA grants                      $767.0                                                                       
 Section 11(b) Army Guard Facilities Maintenance                                                                                
        Transfer of federal authorization from                                                                                  
        Army Guard to Homeland Security for                                                                                     
        increased FEMA grants                     (767.0)                                                                       
 JOHN CRAMER, DIRECTOR OF ADMINISTRATIVE SERVICES, DEPARTMENT                                                                   
 OF MILITARY & VETERANS AFFAIRS explained that federal funds                                                                    
 were being shifted.                                                                                                            
       DEPARTMENT OF NATURAL RESOURCES                                                                                      
        Section 12(a) Capital                                                                                                   
                FESCO Settlement for Contaminated Site                                                                          
                Cleanup                             $118,638.12                                                                 
                          Statutory Des Prgm Rcpts        $118.6                                                                
        NICO BUS,  ACTING DIRECTOR, DIVISION  OF ADMINISTRATIVE                                                                 
        SERVICES, DEPARTMENT OF NATURAL RESOURCES, discussed item                                                               
        12(a), which is for cleanup on the North Slope lease. The                                                               
        lease holder  inherited the  problem as  a  preexisting                                                                 
        condition and does not want to be liable.                                                                               
        Section 12(b)     Capital                                                                                               
                BLM 2009 Accelerated Land Transfer -                                                                            
                Year 1 of a 5-year project to                                                                                   
             significantly increase the rate of                                                                                 
                federal land transfers to individual                                                                            
                Native Allottees, the ANCSA Corporations,                                                                       
                and the state.                             $1,268.0                                                             
        Mr. Bus observed that Section 12(b) would accelerate the                                                                
        land transfer.                                                                                                          
        Section 12(c) Capital                                                                                                   
                Denali Park Visitor Destination Access -                                                                        
                U.S. Park Service grant for planning                                                                            
                and design of new visitor facilities         $600.0                                                             
        Mr. Bus explained that Section 12(c) is part of the grant                                                               
        for the National Park Service for planning and design of                                                                
        Co-Chair Harris observed that no state money is required for                                                            
        planning, but questioned if state money is required for                                                                 
        Gary  Morse, Director  of  State Parks,  testified via                                                                  
        teleconference. He clarified that full funding would come                                                               
        from the federal government through the Parks Service and                                                               
        the Federal Highway Administration.                                                                                     
        Co-Chair Harris asked who would provide maintenance.  Mr.                                                               
        Morse observed that they are under discussions with the                                                                 
        MatSu Borough and the Parks Service. The Parks Service is to                                                            
        receive funding for the operation of the facility, which the                                                            
        state interprets to included road maintenance.                                                                          
 Sections 12(d) - (e) Capital                                                                                                   
        Afognak Coastal Wetlands grant for purchase of                                                                          
        waterfall parcel within the Perenosa Bay area of                                                                        
        Afognak Island                                                                                                          
        Statutory Des Prgm Rcpts       $2,650.0                                                                                 
 Mr. Bus discussed Section 12(d). The Governor vetoed an                                                                        
 expanded version. The request is  the modified version                                                                         
 requested by the Governor.                                                                                                     
 Representative Croft observed that the project had been                                                                        
 vetoed and questioned the difference. Mr. Bus observed that                                                                    
 the Exxon Valdez Trustee funds were removed.                                                                                   
 GARY MORRISON, DIRECTOR, DIVISION OF STATE PARKS, explained                                                                    
 that there is no Exxon Valdez Oil Spill Settlement funding                                                                     
 in the current request. The previous proposal had different                                                                    
 phases with substantial EVOS funds. He explained that $12                                                                      
 million was pared down to a number of phases.                                                                                  
 Mr. Bus observed that the Governor, who vetoed the previous                                                                    
 legislation, supports the request.                                                                                             
 In response to a question by Representative Hawker, Mr.                                                                        
 Morrison explained that phase one is non-controversial. The                                                                    
 request funds a stand-alone project that would not lead into                                                                   
 further controversy.                                                                                                           
 Section 12(f) Office of Alaska Coastal Zone Mgt.                                                                               
        Increased Department of Law costs for Coastal Zone                                                                      
        regulations                      $95.0                                                                                  
 Mr. Bus explained that Section 12(f) would implement HB 91/                                                                    
 TAPE HFC 04 - 28, Side A                                                                                                     
 Section 18 (b)                                                                                                                 
 Mr. Bus observed that the request is a ratification for fire                                                                   
 DEPARTMENT OF PUBLIC SAFETY                                                                                                
 Section 13(a) ABC Board                                                                                                        
        Enabling language to allow the department to pay a                                                                      
        prior year bill using the FY 04 appropriation                                                                           
 DAN SPENCER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                                                                    
 DEPARTMENT OF PUBLIC SAFETY, observed that FY 04 funding                                                                       
 would be used to pay a  claim from the Anchorage Police                                                                        
        Department contract with the Alcohol Beverage Control Board                                                             
        that was underestimated. The request would allow the entire                                                             
        claim to be paid.                                                                                                       
        Section 13(b) Capital                                                                                                   
                Denali Commission grant to the Council on Domestic                                                              
                Violence and Sexual Assault for domestic violence                                                               
                and  sexual  assault shelter  facility  funding                                                                 
        Mr. Spencer observed that the request would authorize pass                                                              
        through funding from the Denali  Commission for shelter                                                                 
        repair. The Denali Commission has asked the Council on                                                                  
        Domestic Violence and Sexual Assault to have all of the                                                                 
        funding allocated by July 1, 2004.                                                                                      
       DEPARTMENT OF REVENUE                                                                                                
        Section 14(a) Municipal Bond Bank                                                                                       
                Increased    management    fees     due     to                                                                  
                increased activity.                                                                                             
                Muni Bond Bank Rcpts                        $150.0                                                              
        SUSAN TAYLOR, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                                                            
        DEPARTMENT OF REVENUE, explained that the request is the                                                                
        result of increased activity of the Municipal Bond Bank and                                                             
        would authorize additional management fees of $150 thousand.                                                            
        In response to a question by Representative Hawker, Ms.                                                                 
        Taylor observed that the statutory limit is $500 million and                                                            
        they are up to $300 million.                                                                                            
        Co-Chair Harris questioned information on requirements by                                                               
        the Bond Bank to go to Seattle for closings. Ms. Taylor                                                                 
        noted that some closings had occurred in Juneau and did not                                                             
        know of a requirement to go to Seattle.                                                                                 
        Section 14(b) Alaska Permanent Fund Corp.                                                                               
                Language clarifying that the appropriation made by                                                              
                sec. 67(2), ch. 82, SLA 2003 was for inflation                                                                  
                proofing  Perm Fund Rcpts                     0.0                                                               
        Section 14(c) Alaska Permanent Fund Corp.                                                                               
                Balance  needed   to    inflation  proof   the                                                                  
                fund in FY 04.                                                                                                  
                Perm Fund Earnings Reserve          $177,000.0                                                                  
        BOB BARTHOLOMEW, CHIEF OPERATING OFFICER, ALASKA PERMANENT                                                              
        FUND CORPORATION, DEPARTMENT OF REVENUE, discussed Sections                                                             
        14 (b) and (c). He explained that the transfer was intended                                                             
 to be a prepayment of inflation proofing of the Permanent                                                                      
 Fund for FY 04. The Alaska Permanent Fund Corporation needs                                                                    
 legal clarification for the appropriation. The appropriation                                                                   
 needed to fully inflation proof the fund is given in Section                                                                   
 14 (c). The actual amount would not be available until June                                                                    
 1, 2004.                                                                                                                       
 In  response to  a  question by  Co-Chair  Harris, Mr.                                                                         
 Bartholomew noted that the Corporation expects a 2.6 percent                                                                   
 inflation rate for FY05 and a transfer of just over $600                                                                       
 Section 17(a) Capital                                                                                                          
        Proceeds from the 2003 sale of the MV Barlett will                                                                      
        be  spent on the new Prince William Sound marine                                                                        
        highway maintenance facility in Cordova.  This and                                                                      
        the $900,000 authorization requested in the FY 05                                                                       
          capital budget will complete the project.                                                                             
        Marine Highway System Fund      $389.5                                                                                  
 NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE                                                                             
 SERVICES,  DEPARTMENT  OF  TRANSPORTATION  AND  PUBLIC                                                                         
 FACILITIES, explained that the funds would accommodate a                                                                       
 fast ferry in Cordova. Title 23 federal funds must go back                                                                     
 to another Title 23 project.                                                                                                   
 Representative Croft questioned the sale amount of the                                                                         
 Bartlett. Ms. Slagle observed that the state received $389.5                                                                   
 Ms. Slagle explained that the maintenance facility in                                                                          
 Cordova is $1.5 million. The capital portion was allocated                                                                     
 in FY04.  The design is  almost complete and  would be                                                                         
 advertised in the beginning of March 2004. The rest of the                                                                     
 funding is federal receipts in the FY 04 budget.                                                                               
 Representative Hawker questioned why the request was in the                                                                    
 FY 04 supplemental. Ms. Slagle noted that the intent is to                                                                     
 begin the project in  the spring. Representative Hawker                                                                        
 questioned why Cordova was  chosen as  the  maintenance                                                                        
 facility as opposed to a community connected to the road.                                                                      
 Ms. Slagle did not know, but observed that believe the ferry                                                                   
 would not travel beyond Cordova.                                                                                               
 Co-Chair Harris explained that Cordova would need a new                                                                        
 system to accommodate the fast  ferry. The ferry would                                                                         
 terminate in Cordova on a daily basis. The department felt                                                                     
 that Cordova needed the economic assistance.                                                                                   
 Section 17(b) NR Leasing and Property Management                                                                               
                Funds needed due to legal  challenges to recent                                                                 
                changes in airport leasing rates in AS 17.                                                                      
                Receipt Supported Services        $50.0                                                                         
        Ms. Slagle discussed section 17(b) and explained that the                                                               
        request deals with legal issues stemming from implementation                                                            
        of regulations relating to rural airport land leasing.                                                                  
        Section 17(c) CR Hwys & Aviation                                                                                        
                Snow hauling in Anchorage. Funds budgeted in FY 04                                                              
                have been exhausted due to the heavy snowfall so                                                                
                far this winter. Additional costs of removing snow                                                              
                from Anchorage sidewalks are  included in this                                                                  
                request.                                   $200.0                                                               
        Ms. Slagle observed that the request would fund snow removal                                                            
        in Anchorage, which received 76 inches of snow as opposed to                                                            
        an average of 42.                                                                                                       
        Section 17(d) SE Hwys & Aviation                                                                                        
                Funds needed due to legal  challenges to recent                                                                 
                changes in airport leasing rates in AS 17.                                                                      
                Receipt Supported Services        $50.0                                                                         
        Ms. Slagle observed that the request would fund $50 in                                                                  
        receipt support services pertaining to the best interest                                                                
        findings in the  airport leasing issue  at the  Yakatat                                                                 
        Section 17(e) Marine Vessel Operations                                                                                  
                Masters, Mates and Pilots union has ratified its                                                                
                contract as of January 1, 2004.  In  the FY 04                                                                  
                budget, the Legislature appropriated $60.5 to cover                                                             
                a full year's monetary term cost, but six months of                                                             
                the appropriation is not needed.                                                                                
                Marine Highway System Fund       (30.2)                                                                         
        Ms. Slagle observed that Section 17(e) would reduce the                                                                 
        amount of  Marine Highway authorization to reflect the                                                                  
        ratification of the Masters, Mates and Pilots, which was                                                                
        ratified in January. This is an extension; negotiations are                                                             
        still on-going.                                                                                                         
        Sections 16(b) - (d) Debt                                                                                               
                Extend lapse to  June  30, 2005  for  Lake and                                                                  
                Peninsula Borough Chignik dock and Aleutians East                                                               
                Borough False Pass harbor in sec. 32(o), ch. 83,                                                                
                SLA 03, pg 71, lines 24, 25. Also reduce amounts                                                                
                from 130,000 and 310,000 respectively to 118,553                                                                
        and     68,176    (reduction    of     253,271).                                                                        
 Ms. Slagle noted that a lapse date is being extended and the                                                                   
 appropriation would be reduced to the actual amount needed.                                                                    
 Legislation passed, which required the state to reimburse                                                                      
 debt service for harbor projects in certain communities. The                                                                   
 law requires that the communities be reimbursed in the                                                                         
 fiscal year following their debt service payments. Debt                                                                        
 service will be made later in the year, which would allow                                                                      
 the department to make the reimbursement in FY 05.                                                                             

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