Legislature(2009 - 2010)

03/10/2009 02:43 PM FIN


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02:43:30 PM Start
02:43:38 PM HB81 || HB83
06:12:09 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 81                                                                                                             
     "An Act making appropriations for the operating and                                                                        
     loan program expenses of state government, for certain                                                                     
     programs, and to capitalize funds; making supplemental                                                                     
     appropriations; and making appropriations under art.                                                                       
     IX, sec. 17(c), Constitution of the State of Alaska;                                                                       
     and providing for an effective date."                                                                                      
                                                                                                                                
HOUSE BILL NO. 83                                                                                                             
     "An Act making appropriations for the operating and                                                                        
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental health program; and providing for                                                                     
     an effective date."                                                                                                        
                                                                                                                                
2:43:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  introduced the agenda  to take up  the final                                                                   
amendments  to  the  operating  budget  on oil  and  gas  and                                                                   
litigation-related matters.  The  amendments originate from a                                                                   
request by the administration.   The Office of Management and                                                                   
Budget has been requested to clarify  what is being asked for                                                                   
by the  Governor.   The oil  and gas  and litigation  matters                                                                   
have involved  a multitude of appropriations  over the years.                                                                   
There has been  an effort to pull together  an aggregation of                                                                   
the  Governor's requests.   Many  of  the items  were in  the                                                                   
Governor's supplemental FY 2009  request; some were in the FY                                                                   
2010 budget request,  and some were significant  requests for                                                                   
funding for  continued litigation  work in the  Department of                                                                   
Law's regular  operating budget.   Co-Chair Hawker  mentioned                                                                   
that the Budget Subcommittee deferred  decisions to the House                                                                   
Finance Committee  to discuss, in the form  of amendments, at                                                                   
his request.                                                                                                                    
                                                                                                                                
2:46:49 PM                                                                                                                    
                                                                                                                                
Co-Chair   Hawker  explained   the  spreadsheet  before   the                                                                   
Committee  entitled, "Open Items  FY 2010  Oil & Gas  Related                                                                   
Items"  (copy on  file).   The  grid box  list identifies  by                                                                   
number each  of the requests before  the Committee.   This is                                                                   
backed up  by a more  detailed list  of the operating  budget                                                                   
amendments  (copies on  file).   Co-Chair  Hawker noted  that                                                                   
Karen Rehfeld  would be answering specific questions  for the                                                                   
Committee in  regards to  the list.   Some amendments  may be                                                                   
listed  as  withdrawn  or  not offered  with  the  intent  of                                                                   
"taking them back to the supplemental budget."                                                                                  
                                                                                                                                
2:49:03 PM                                                                                                                    
                                                                                                                                
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
OFFICE OF  THE GOVERNOR,  reminded the  Committee that  in FY                                                                   
2009  the  legislature  pulled  out  specific  appropriations                                                                   
related to oil  and gas and put them under the  Office of the                                                                   
Governor.  In  the FY 2010 budget, a section  specifically in                                                                   
the  operating  budget  for  gasline   related  appropriation                                                                   
requests  was brought  forward.   There was  also a  separate                                                                   
section  in  the capital  budget  for  those requests.    Ms.                                                                   
Rehfeld  said that  this  was important  because  in a  state                                                                   
where over  85 percent  of its revenue  derives from  oil and                                                                   
gas production,  and a third of  the economy is  dependent on                                                                   
oil and gas production, it is  very important for everyone to                                                                   
be engaged  in the oil and gas  business.  The state  has the                                                                   
responsibility  to manage  its  resources  and its  fiduciary                                                                   
interests, as  well as safeguard impacts on  the environment.                                                                   
At  the  request  of Co-Chair  Hawker,  the  departments  put                                                                   
together  a summary  of oil  and gas  appropriations from  FY                                                                   
2004 on, both operating and capital,  to give the Committee a                                                                   
full perspective for the FY 2010 budget.                                                                                        
                                                                                                                                
2:52:26 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  noted requests for  five departments  in Section                                                                   
16  related  to the  gasline:  Departments  of Fish  &  Game,                                                                   
Labor,  Law, Natural  Resources,  and Revenue.    One of  the                                                                   
requests  under the  Department  of Law  has been  withdrawn.                                                                   
The amended Section  16 totals $4,702,700.   Also included in                                                                   
the  supplemental   bill  are   three  items  requesting   an                                                                   
extension  of  a lapse  date  on an  existing  appropriation;                                                                   
Alaska  Oil  and Gas  Conservation  Commission  ($1,450,600),                                                                   
Department  of   Labor  ($100,000  in  general   funds),  and                                                                   
Department of Natural Resources ($2,965,800).                                                                                   
                                                                                                                                
Ms.  Rehfeld reported  that after  discussions with  Co-Chair                                                                   
Hawker  and  Legislative  Finance,   the  Governor  submitted                                                                   
budget amendments  for the FY  2010 budget.  The  purpose was                                                                   
to allow  the subcommittees  and House  Finance Committee  to                                                                   
discuss this information.  Also,  the Governor offered in the                                                                   
regular budget  amendments before  the Committee  on February                                                                   
18, 2009,  several items specific  to the Department  of Law,                                                                   
one  for BP  Corrosion ($3.5  million), and  one for  ongoing                                                                   
work on the  Trans Alaska Pipeline ($1.9 million).   There is                                                                   
a request  from the Department  of Law  for a little  over $5                                                                   
million  and a  new  request for  ongoing  work  on the  AIGA                                                                   
appropriation  approved  during   the  special  session  last                                                                   
summer.  The total amount requested is about $22.4 million.                                                                     
                                                                                                                                
2:54:58 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld introduced  staff  from various  departments  to                                                                   
answer questions.   She explained that the first  item on the                                                                   
spreadsheet  was an appropriation  for the  Alaska Oil  & Gas                                                                   
Conservation Commission  for a lapse extension  of $1,450,600                                                                   
for  reservoir   depletion  studies.     It  is   an  ongoing                                                                   
appropriation to continue work into the next fiscal year.                                                                       
                                                                                                                                
CATHY FOERSTER,  ENGINEERING COMMISSIONER,  ALASKA OIL  & GAS                                                                   
CONSERVATION   COMMISSION,  DEPARTMENT   OF   ADMINISTRATION,                                                                   
testifying via teleconference, introduced herself.                                                                              
                                                                                                                              
Co-Chair  Hawker thought  the money  from FY  2005 was  being                                                                   
used on  an ongoing  basis for  reservoir depletion  studies.                                                                   
He wondered what the original  $2.2 million in funds was used                                                                   
for, and what is intended with the remaining $1.4 million.                                                                      
                                                                                                                                
2:57:05 PM                                                                                                                    
                                                                                                                                
Ms. Foerster  replied that the  money was used to  complete a                                                                   
Prudhoe Bay  reservoir study and  to start the  Point Thomson                                                                   
study.    She  indicated  that  the  Prudhoe  Bay  study  was                                                                   
complete and a report had been  submitted to the legislature.                                                                   
The  Point Thomson  study  has  started and  stopped  several                                                                   
times due  to conflicts between  Exxon and the  Department of                                                                   
Natural Resources.  The anticipated  completion of that study                                                                   
is FY  2010.  Part  of the  money may be  used to  update the                                                                   
Prudhoe Bay study.                                                                                                              
                                                                                                                                
Co-Chair  Hawker  maintained  that  the  remaining  money  is                                                                   
adequate for  the project  and not in  excess.  Ms.  Forester                                                                   
anticipated  using all  of the  money and hoped  to have  the                                                                   
study completed by the end of FY 2010.                                                                                          
                                                                                                                                
2:58:41 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  reiterated that  the  money  request is  to                                                                   
extend a lapsing appropriation.   He indicated that Amendment                                                                   
O&G 1 would be  deferred from this discussion to  the FY 2009                                                                   
Supplemental Budget.                                                                                                            
                                                                                                                                
2:59:49 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  questioned if Co-Chair  Hawker had                                                                   
specified the FY 2004 date forward  in the request.  Co-Chair                                                                   
Hawker replied that  the Office of Management  and Budget had                                                                   
been  asked to  recap a  cumulative  history of  oil and  gas                                                                   
expenditures from FY 2004.                                                                                                      
                                                                                                                                
3:01:06 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  asked if  there  were any  lapsed                                                                   
funds in  oil and gas  prior to FY  2004 not being  discussed                                                                   
during  this meeting.   Ms. Rehfeld  did not  believe so  but                                                                   
offered  to report  the answer  to the Committee  at a  later                                                                   
date.                                                                                                                           
                                                                                                                                
Ms. Rehfeld referred  to Amendment O&G 2 on  the supplemental                                                                   
sheet  from  the  Department   of  Fish  and  Game  for  pre-                                                                   
application  work for  projects  specific  to Denali,  ANGDA,                                                                   
ESTAR, and TransCanada,  authorizing and funding  two habitat                                                                   
biologists.  It  is funded through RSA's from  the Department                                                                   
of Natural Resources.                                                                                                           
                                                                                                                                
Co-Chair Hawker asked  why people were needed in  state to do                                                                   
pre-application  work  and  why  funding  levels  were  being                                                                   
leveled  from  one  department   to  another.    Ms.  Rehfeld                                                                   
suggested  that   there  were   several  different   ways  to                                                                   
structure an  appropriation.  Co-Chair Hawker  requested more                                                                   
information from  the Department of Natural  Resources on why                                                                   
these positions were important.                                                                                                 
                                                                                                                                
LETA  SIMONS,   DIRECTOR,  DIVISION   OF  SUPPORT   SERVICES,                                                                   
DEPARTMENT OF NATURAL RESOURCES,  stated that the request was                                                                   
a  reimbursable  services  agreement  (RSA)  from  the  state                                                                   
pipeline coordinator's  office, which does  right-of-way work                                                                   
and bills industry for the work  by the Department of Natural                                                                   
Resources.   The Department  of Natural  Resources bills  the                                                                   
industry and  then the  RSA is written  to the Department  of                                                                   
Fish and Game, so industry is paying for these positions.                                                                       
                                                                                                                                
Representative   Austerman  asked   if  the  state   pipeline                                                                   
coordinator's office  is funded  through general funds.   Ms.                                                                   
Simons  responded that  it is  primarily  funded by  industry                                                                   
through statutory designated program receipts.                                                                                  
                                                                                                                                
3:04:52 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker asked  what work  these  positions would  be                                                                   
doing.                                                                                                                          
                                                                                                                                
MARTY RUTHERFORD, DEPUTY COMMISSIONER,  DEPARTMENT OF NATURAL                                                                   
RESOURCES,  via teleconference,  reported that the  requested                                                                   
positions would work in the field  helping the companies make                                                                   
determinations  on the permitting  process and ensuring  that                                                                   
permits reflect the appropriate  stipulations and protect the                                                                   
environment.                                                                                                                    
                                                                                                                                
Representative  Austerman expressed concern  for a  more open                                                                   
disclosure of the budget process.   He questioned the way the                                                                   
request was funded.   He indicated his frustration  about not                                                                   
completely knowing  where the money was going  versus putting                                                                   
the money into the general funds.                                                                                               
                                                                                                                                
3:07:55 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 2.                                                                                 
                                                                                                                                
     DEPARTMENT:         Fish and Game                                                                                          
     APPROPRIATION:      Habitat                                                                                                
     ALLOCATION:         Habitat                                                                                                
                                                                                                                                
     ADD: $180,000 Inter-agency Receipts (1007)                                                                                 
                                                                                                                              
     EXPLANATION:   The  amendment   will  fund  two  Habitat                                                                   
     Biologists  who will  perform  pre-application work  for                                                                   
     Denali, ANGDA, ENSTAR and  TransCanada including initial                                                                   
     planning, design review, field inspections, and pre-                                                                       
     construction permitting.  Funding is through RSA's from                                                                    
     Natural Resources.                                                                                                         
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
3:08:41 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld offered  that Amendment O&G 3 had  been requested                                                                   
in the  FY 2009 Supplemental Budget  as a lapse  extension of                                                                   
an  appropriation from  FY 2008.    It was  for developing  a                                                                   
comprehensive   training  program   to  provide  a   prepared                                                                   
workforce for the gas line.                                                                                                     
                                                                                                                                
Co-Chair Hawker  asked if  the appropriation carries  forward                                                                   
$100,000  in general  funds,  with  $325,000  expected to  be                                                                   
available for lapse.                                                                                                            
                                                                                                                                
Ms. Rehfeld answered that the  estimate carried into the next                                                                   
fiscal year would be the $100,000 requested.                                                                                    
                                                                                                                                
Co-Chair  Hawker  thought that  was  only  a portion  of  the                                                                   
anticipated lapse.                                                                                                              
                                                                                                                                
3:09:51 PM                                                                                                                    
                                                                                                                                
GUY BELL, ASSISTANT COMMISSIONER,  DIVISION OF ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF LABOR  AND  WORKFORCE  DEVELOPMENT,                                                                   
agreed that  the anticipated  lapse would  be $325,000.   The                                                                   
requested  amount of  $100,000  would be  for continuing  the                                                                   
training  program  development,  and the  remaining  $225,000                                                                   
would lapse to the general fund.                                                                                                
                                                                                                                                
Co-Chair Hawker deferred Amendment  O&G 3 to the Supplemental                                                                   
Budget.                                                                                                                         
                                                                                                                                
3:10:57 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  commented that Amendment  O&G 4 for  $145,000 in                                                                   
Section  16, subpart  2a, is  for continuing  efforts on  the                                                                   
comprehensive training  program to provide a  prepared Alaska                                                                   
workforce for the Alaska Gas Pipeline.                                                                                          
                                                                                                                                
Mr. Bell  explained the two components  to the request.   The                                                                   
first is  the development, completion,  and maintenance  of a                                                                   
web-based catalog  of training  programs in the  state, which                                                                   
will  be completed  in  September 2009  for  $50,000.   After                                                                   
2010, costs  should go  down to  a lesser maintenance  level.                                                                   
The   second   component   is   for   the   development   and                                                                   
dissemination  of  regional workforce  data.    At this  time                                                                   
there is  one full-time staff  person to provide the  data at                                                                   
the statewide, regional, and local levels.                                                                                      
                                                                                                                                
Co-Chair Hawker commented that  the legislature has looked at                                                                   
this item and determined that  it may not be the same project                                                                   
as in  Amendment O&G  3, but  it is  related to training  and                                                                   
workforce  development in the  state.   Because there  was an                                                                   
extra $225,000 lapse authority  in FY 2009, the intent of the                                                                   
Committee is to  have the requested $145,000 be  put into the                                                                   
Supplemental  Budget to  further utilize  the FY 2009  money.                                                                   
Co-Chair Hawker  asked if  this would cause  a problem.   Mr.                                                                   
Bell replied that it would not.                                                                                                 
                                                                                                                                
Co-Chair Hawker deferred Amendment  O&G 4 to the Supplemental                                                                   
Budget.                                                                                                                         
                                                                                                                                
3:14:27 PM                                                                                                                    
                                                                                                                                
Mr. Bell explained  that Amendment O&G 5 is  for the business                                                                   
services component  in the Department of Labor  in the amount                                                                   
of   $585,000   to  continue   the   training   program   for                                                                   
apprenticeship  development  through  the  regional  training                                                                   
centers,  private employers,  and the  University of  Alaska.                                                                   
Mr.  Bell  felt  the Department  had  achieved  a  tremendous                                                                   
momentum  thanks to legislative  investment.   This year  the                                                                   
full balance  is expected  to be  used on training  programs,                                                                   
although very  little has been  spent to date.   The training                                                                   
will be occurring in late March  through June 2009.  Mr. Bell                                                                   
felt confident  that the  goals set for  FY 2009 and  FY 2010                                                                   
would be met.                                                                                                                   
                                                                                                                                
Co-Chair Hawker  observed that when the money  was originally                                                                   
appropriated, the development  of the apprentice programs was                                                                   
meant to  proceed in a regionally  diverse and  trade diverse                                                                   
manner.  He  asked if there had been success  in diversifying                                                                   
around the state.                                                                                                               
                                                                                                                                
3:16:47 PM                                                                                                                    
                                                                                                                                
Mr. Bell agreed  that a diverse portfolio of  occupations had                                                                   
been    developed    including,    non-destructive    tester,                                                                   
electricians, core drillers, truck  mechanics, surveyors, and                                                                   
welders.  He  also revealed that many relationships  had been                                                                   
developed throughout  the state,  particularly in  the mining                                                                   
industry.                                                                                                                       
                                                                                                                                
Representative  Gara agreed that  thousands of jobs  would be                                                                   
needed when  there is  a pipeline  and the  goal would  be to                                                                   
have them  filled by  Alaskans.  He  wondered how  to balance                                                                   
"under training" and training people too early.                                                                                 
                                                                                                                                
3:18:54 PM                                                                                                                    
                                                                                                                                
Mr. Bell  agreed it was a  good question.  The  present focus                                                                   
of training programs is on industry  job needs for today, and                                                                   
later on  it will  be for future  jobs, such  as the  for the                                                                   
pipeline.    The goal  is  to  have  a job  for  each  person                                                                   
trained.   At a later date,  as the pipeline  approaches, the                                                                   
state will  need to  accelerate training  for those  jobs, as                                                                   
well as  backfilling jobs  for those leaving  to work  on the                                                                   
pipeline.  These are challenges that need to be addressed.                                                                      
                                                                                                                                
Representative Gara  commented that he was not  worried about                                                                   
over training,  but was more concerned about  under training.                                                                   
He wondered if he should be concerned.                                                                                          
                                                                                                                                
3:20:22 PM                                                                                                                    
                                                                                                                                
Mr. Bell indicated that many steps  have been taken to expand                                                                   
training opportunities such as  the legislative investment in                                                                   
the  Alaska Vocational  Technical Center,  the University  of                                                                   
Alaska, and  the pipeline training  center in Fairbanks.   He                                                                   
cautioned  that  it  was  important not  to  over  train  new                                                                   
workers before they are needed.                                                                                                 
                                                                                                                                
Vice-Chair  Thomas asked  for  a report  regarding where  the                                                                   
individuals for training come  from and where they work after                                                                   
being trained.                                                                                                                  
                                                                                                                                
Mr. Bell replied  that he would get the  detailed information                                                                   
for  the  Committee.   A  comprehensive  training  report  is                                                                   
published annually  by the Research  and Analysis  Section of                                                                   
Labor  and  Workforce   Development.    It   looks  at  every                                                                   
publically-funded training  program by course,  the number of                                                                   
trainees,  the  pre  and  post training  wages,  as  well  as                                                                   
unemployment claims.                                                                                                            
                                                                                                                                
3:22:23 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  expressed concern about training  too many                                                                   
workers;  he wondered  what the  Department was  going to  do                                                                   
about  supplying   support  service   individuals,   such  as                                                                   
doctors, dentists, teachers, and retirement counselors.                                                                         
                                                                                                                                
Mr.  Bell discussed  a  focus to  increase  resident hire  by                                                                   
offering more trained Alaskans.   He reported that about $1.7                                                                   
billion leaves  the state  in non-resident  hires.   He noted                                                                   
that  the  Division  was  working  closely  with  the  Alaska                                                                   
Workforce Investment  Board and  the University of  Alaska on                                                                   
developing  a  long-term  health  care plan.    The  teaching                                                                   
profession has not yet been addressed.                                                                                          
                                                                                                                                
3:24:00 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas agreed  with local  resident hire,  and he                                                                   
expressed interest in a debt retirement  program for students                                                                   
coming home to find work.                                                                                                       
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 5:                                                                                 
                                                                                                                                
    DEPARTMENT:         Labor and Workforce Development                                                                       
     APPROPRIATION:      Workforce Development                                                                                
     ALLOCATION:         Business Services                                                                                    
                                                                                                                                
     ADD:      $505,000 General Funds (1004) Inc OTI                                                                          
                                                                                                                                
     EXPLANATION:   Provide training and  related instruction                                                                 
     to at least 70 apprentices  at Regional Training Centers                                                                   
     for AGIA-related occupations.                                                                                              
                                                                                                                                
     Fund cooperative  training agreements with  business and                                                                   
     industry for  registered apprentices and  structured on-                                                                   
     the-job training for approximately 125 workers.                                                                            
                                                                                                                                
     Current  status:   $322.0  of  FY09  funding   has  been                                                                   
     obligated to date and other  grant agreements are in the                                                                   
     negotiation  process.    Most training  is  expected  to                                                                   
     occur March through June.                                                                                                  
                                                                                                                                
     An anticipated lapse of $80,000  of the original request                                                                   
     is to be addressed in the supplemental bill.                                                                               
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Co-Chair  Hawker  pointed  out   that  the  request  was  for                                                                   
$585,000, but he offered the amendment  to the FY 2010 budget                                                                   
for $505,000.  The remaining $80,000  would be picked up from                                                                   
lapse funds coming forward from FY 2009.                                                                                        
                                                                                                                                
Co-Chair  Stoltze  WITHDREW  his OBJECTION.  There  being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
3:26:21 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld moved  on to Amendment O&G 6 which  is also under                                                                   
the  Department  of  Labor  and  Workforce  Development.  The                                                                   
request  was for $130,000  under  Section 16  in the FY  2010                                                                   
budget.                                                                                                                         
                                                                                                                                
Mr.  Bell  explained  that  the   funding  would  be  for  an                                                                   
educational  specialist  position  in  the  Alaska  Workforce                                                                   
Investment  Board.   Funding was  received in  FY 2009  and a                                                                   
lengthy recruitment proceeded.   The job has been offered and                                                                   
accepted by the  current head of the Northwest  Alaska Career                                                                   
and  Technical  Center in  Nome.    He is  under  contractual                                                                   
obligation to  the Barrow School District through  June 2009,                                                                   
after which  time he will be  working at his new  position in                                                                   
Anchorage.                                                                                                                      
                                                                                                                                
Co-Chair Hawker  noted that the money appropriated  this year                                                                   
would have an $85,000 lapse component  in the current budget,                                                                   
so the amended amount would be $45,000 in general funds.                                                                        
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 6:                                                                                 
                                                                                                                                
    DEPARTMENT:         Labor and Workforce Development                                                                       
     APPROPRIATION:      Workforce Development                                                                                
     ALLOCATION:         Workforce Investment Board                                                                           
                                                                                                                                
     ADD:      $45,000 General Funds (1004)                                                                                   
                                                                                                                                
     EXPLANATION:   The current head of the  Northwest Alaska                                                                 
     Career and  Technical Center  has been selected  to this                                                                   
     Education  Specialist Position,  which will oversee  the                                                                   
     education components  of the gasline  strategic training                                                                   
     plan,  including better  training  program and  industry                                                                   
    coordination, curriculum sharing, and articulation.                                                                         
                                                                                                                                
     $85,000 of original request to be addressed in the                                                                         
     supplemental bill.                                                                                                         
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
3:29:25 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld turned  to the Department of Law  - Amendment O&G                                                                   
7.                                                                                                                              
                                                                                                                                
CRAIG TILLERY,  DEPUTY ATTORNEY  GENERAL, DEPARTMENT  OF LAW,                                                                   
reported that he  had indicated to the legislature  last year                                                                   
the  possibility   of  litigation   with  British   Petroleum                                                                   
Exploration  Alaska due  to the  oil spill  in 2006 from  the                                                                   
North Slope  oil transit lines  and the subsequent  shut-down                                                                   
of  those lines  due  to extensive  corrosion.   Mr.  Tillery                                                                   
noted  that the  State of  Alaska  has been  involved in  the                                                                   
investigation and has asked for  $25 million over a number of                                                                   
years.  The  legislature appropriated $4.7 million,  but as a                                                                   
result of  delays, gathering and  analysis of  documents, and                                                                   
analysis  of  the  legal  case,  the  investigation  has  not                                                                   
proceeded  as quickly  as anticipated.    The Department  has                                                                   
expended $2.8  million, leaving  $1.9 million  at the  end of                                                                   
the fiscal  year.   For next  year, the  Department will  use                                                                   
$1.9 million and, in addition,  is asking for $3.5 million in                                                                   
new monies.                                                                                                                     
                                                                                                                                
Co-Chair  Hawker questioned  if the $1.9  million was  really                                                                   
obligated or if it was being extended as a lapse fund.                                                                          
                                                                                                                                
3:33:39 PM                                                                                                                    
                                                                                                                                
Mr. Tillery  clarified that the  money is not  obligated yet,                                                                   
but  will  be  obligated  by  the  end  of  the  year.    The                                                                   
Department  took  what  would  have been  a  larger  FY  2010                                                                   
request  and  reduced  it  to account  for  the  money  being                                                                   
available in FY 2010.                                                                                                           
                                                                                                                                
Co-Chair Hawker asked Ms. Rehfeld  how she arrived at a lapse                                                                   
request in the original supplemental budget.                                                                                    
                                                                                                                                
Ms. Rehfeld replied that there  are several different ways to                                                                   
structure  appropriations.   The initial  review and  request                                                                   
was  for an  extension  of the  lapse  state  because it  was                                                                   
unknown if the  Department of Law would be able  to have that                                                                   
money  obligated by  the  end of  the year  or  how it  would                                                                   
transpire.  When  the Department of Law indicated  they would                                                                   
be able to have the funds obligated  and adjust the money for                                                                   
FY 2010, it was brought before  the Committee in that manner.                                                                   
                                                                                                                                
3:34:47 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker questioned what  sort of financial commitment                                                                   
the  legislature  should be  prepared  to make  and  inquired                                                                   
about the time frame.  He wondered  what the chances were for                                                                   
a favorable outcome.                                                                                                            
                                                                                                                                
Mr. Tillery originally  estimated the amount to  be about $25                                                                   
million over  five years, but  he observed it was  an inexact                                                                   
science.   The original  assumption was  that more  documents                                                                   
would be available.   As litigation proceeds,  more documents                                                                   
may appear.  He judged there was  no need to back off the $25                                                                   
million  estimate or  the 5-year  date.  He  agreed that  the                                                                   
expectation of  a likely recovery  is hard to  determine, but                                                                   
British Petroleum  Alaska Extension has already  admitted its                                                                   
negligence in federal court.                                                                                                    
                                                                                                                                
3:36:00 PM                                                                                                                    
                                                                                                                                
Representative Austerman  asked for clarification  that in FY                                                                   
2010  the  expected spending  would  be  $5.4 million.    Mr.                                                                   
Tillery agreed that was correct.   Co-Chair Hawker reiterated                                                                   
that as  the $1.9 million is  obligated, there will  not be a                                                                   
lapse extension  for that  money, and  $3.5 million  is being                                                                   
asked for in new funds.                                                                                                         
Representative Gara asked how  much work is being done by in-                                                                   
house counsel.  Mr. Tillery replied  that most of the work is                                                                   
being prepared by  outside counsel.  The money  is also being                                                                   
used  for   other  experts   and  for  document   management.                                                                   
Representative  Gara stressed  that  outside counsel  billing                                                                   
rates  are very  high,  in excess  of $200  an  hour, and  he                                                                   
believed  that the attorney  general's  office should  have a                                                                   
standing litigation  staff for research and  briefing work so                                                                   
the state could save outside counsel costs.                                                                                     
                                                                                                                                
3:38:12 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked if there  was room for  a staffing                                                                   
request at this  point.  Mr. Tillery remarked that  he did an                                                                   
analysis of the case presented  last year to the legislature.                                                                   
If it had  been done with  less outside counsel and  more in-                                                                   
house  staff,  25 percent  could  have  been saved  over  the                                                                   
course of the litigation.  Representative  Gara asked for the                                                                   
hourly rates for  outside counsel.  Mr. Tillery  replied that                                                                   
the rates  are $375  per hour  for partner-level counsel  and                                                                   
$250 for associates.                                                                                                            
                                                                                                                                
Representative  Austerman asked if  this was the  second year                                                                   
of litigation of the 5-year projection.   Mr. Tillery replied                                                                   
that FY  2009 is the  first fiscal  year, but the  litigation                                                                   
has not begun yet as no formal complaint has been filed.                                                                        
                                                                                                                                
3:40:59 PM                                                                                                                    
                                                                                                                                
Representative   Kelly   countered    Representative   Gara's                                                                   
suggestion of  hiring more in-house  staff.  He did  not want                                                                   
more in-house legal staff hired,  but preferred using outside                                                                   
legal staff.                                                                                                                    
                                                                                                                                
Co-Chair Hawker  signified that  the state made  a commitment                                                                   
to pursue  this course in  the prior legislative  session and                                                                   
the legislature needed to make  a strong stand that the state                                                                   
was prepared to go all the way.                                                                                                 
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 7:                                                                                 
                                                                                                                                
                                                                                                                                
     DEPARTMENT:         Law                                                                                                    
     APPROPRIATION:      BP Corrosion                                                                                           
     ALLOCATION:         BP Corrosion                                                                                           
                                                                                                                                
     ADD:                $3,500,000 Inc OTI                                                                                     
                                                                                                                                
     FUNDING SOURCE:General Funds - 1004                                                                                        
                                                                                                                                
     EXPLANATION:                                                                                                               
     The Department of Law (DOL) requests an appropriation                                                                      
     for FY10 in the amount of $3.5 million to continue the                                                                     
     pursuit of  claims for penalties  and lost  revenues for                                                                   
     the  2006 Prudhoe  Bay  pipeline spills  and  production                                                                   
     shutdowns.   DOL believes  that it  is unlikely  that an                                                                   
     agreement  can  be reached  to  resolve  the claims  and                                                                   
     anticipates  the need to  file a  court case later  this                                                                   
     year  or risk certain  claims being  time barred;  hence                                                                   
     this   request  for   an  appropriation   to  fund   the                                                                   
     anticipated litigation in FY10.                                                                                            
                                                                                                                                
     Due  to delays  in obtaining  documents and  information                                                                   
     from  British Petroleum Exploration  Alaska (BPXA),  the                                                                   
     investigation was  only recently completed.   Based upon                                                                   
     information gathered  to date, DOL anticipates  making a                                                                   
     recommendation to  seek recovery of the  state's revenue                                                                   
     losses,  as well  as civil penalties  and damages  under                                                                   
     the state's environmental statutes.                                                                                        
                                                                                                                                
     In March and  August of 2006, crude oil  leaked from Oil                                                                   
     Transit Lines  (OTLs) operated  by BPXA at  Prudhoe Bay.                                                                   
     In its  Plea Agreement with  the United States  executed                                                                   
     in  October  2007,  BPXA  acknowledged  that  it  "acted                                                                   
     negligently by  failing to adequately inspect  and clean                                                                   
     the  OTLs."   The company  is "required  to operate  the                                                                   
     OTLs as  a reasonable operator."   BPXA "did  not expend                                                                   
     sufficient  resources to address  the complex  issues of                                                                   
     corrosion in the OTLs."   "BPXA failed to clean the OTLs                                                                   
     with  a piece  of  equipment  called a  maintenance  (or                                                                   
     cleaning)  pig  and  inspect   the  pipe  for  corrosion                                                                   
     activity with a smart pig."   These admissions are borne                                                                   
     out by our investigation.                                                                                                  
                                                                                                                                
     BPXA's  documents   substantiate  that   these  failings                                                                   
     resulted in shutdowns and  reduced production of tens of                                                                   
     millions of barrels  of crude oil in 2006-08.   The loss                                                                   
     of  revenue in  royalties  and taxes  to  the state  for                                                                   
     those years potentially amounts  to hundreds of millions                                                                   
     of dollars.                                                                                                                
                                                                                                                                
     This is  a complex  matter with many  documents.   It is                                                                   
     anticipated  that the  FY10  litigation activities  will                                                                   
     cost an  additional $3.5  million for costs  of counsel,                                                                   
     document  management,  experts,  and  litigation  costs.                                                                   
     DOL anticipates the litigation  will last at least three                                                                   
     to four years and that appropriations  will be needed in                                                                   
     future years.                                                                                                              
                                                                                                                                
     This issue is independent of gasline appropriations.                                                                       
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
3:42:30 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  introduced  the Department  of Law's request  in                                                                   
Amendment O&G  8 for ongoing  work, not specifically  related                                                                   
to the gasline  appropriations, but the continuation  of work                                                                   
funded outside of the base for the past year.                                                                                   
                                                                                                                                
TINA KOBAYASHI, CHIEF ASSISTANT  ATTORNEY GENERAL, SUPERVISOR                                                                   
OF  THE  OIL,  GAS  &  MINING  SECTION,  DEPARTMENT  OF  LAW,                                                                   
explained   that   this   request   represents   the   state,                                                                   
particularly  the Department  of Natural  Resources, and  the                                                                   
Department of Revenue, on cases  and litigation involving the                                                                   
state's  proprietary  interests in  oil  and  gas and  mining                                                                   
resources.  The  Department of Law also represents  the state                                                                   
on royalty  disputes,  lease and unit  issues, including  the                                                                   
Point  Thomson  litigation,  tariff   matters,  property  tax                                                                   
cases,  production  tax  cases,   and  corporate  income  tax                                                                   
litigation  involving oil  and gas companies.   This  request                                                                   
reflects the ongoing  litigation that began earlier  and will                                                                   
continue.                                                                                                                       
                                                                                                                                
Co-Chair  Hawker  asked  for   Ms.  Kobayashi's  comments  on                                                                   
opposing  points of  view concerning  having larger  in-house                                                                   
staff   versus   hiring   outside   counsel   for   regularly                                                                   
reoccurring cases.   He questioned the amount  of the request                                                                   
as it related to a possible need to expand staff.                                                                               
                                                                                                                                
Ms.  Kobayashi  replied  that  the hourly  billing  rate  for                                                                   
outside counsel is significantly  higher than the cost of in-                                                                   
house counsel.  She indicated  that for specialty counsel the                                                                   
fees can  range from  $200 to  more than $600  an hour.   She                                                                   
remarked that part of the problem  is that some of work is so                                                                   
specialized  that  high  rates   for  outside  expertise  are                                                                   
necessary.   If it  were possible  to train  and retain  that                                                                   
sort of in-house expertise it  would be more efficient.  Part                                                                   
of the problem  is that when people are trained  in-house and                                                                   
gather  additional expertise,  they often  move on to  higher                                                                   
paying positions in  the private sector.  She  added that the                                                                   
Department of Law develops a relationship  with outside firms                                                                   
that aid the state.                                                                                                             
                                                                                                                                
3:48:04 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  concurred that she was talking  about unique                                                                   
positions  that  are  occasionally   used,  albeit  recurring                                                                   
requests.  He believed it was  necessary to increase the base                                                                   
level  of attorneys  who  have the  desire  to be  competent;                                                                   
qualified  attorneys  for  the   state  of  Alaska  in  these                                                                   
disciplines.                                                                                                                    
                                                                                                                                
Ms. Kobayashi  agreed that if  more qualified  attorneys were                                                                   
available, more in-house work could be done.                                                                                    
                                                                                                                                
3:49:27 PM                                                                                                                    
                                                                                                                                
Representative Gara  believed the state spends  more money on                                                                   
attorneys than  needed.   Some of the  staff at the  attorney                                                                   
general's  office  is  underpaid,   yet  the  state  ends  up                                                                   
spending more  money in the  long run.   He suggested  that a                                                                   
lot of the  legal research and  brief work could be  done in-                                                                   
house while hiring outside legal  staff for some of the trial                                                                   
work.    He   also  believed  private  outside   staff  could                                                                   
supervise the Alaskan in-house staff doing much of the day-                                                                     
to-day work.  He  remarked that often there are  those who do                                                                   
not  like  to  hire  staff  as  it  does  not  look  fiscally                                                                   
conservative,  but he  concluded  that it  would be  fiscally                                                                   
conservative in the long run.                                                                                                   
                                                                                                                                
Co-Chair Hawker  believed the  conversation was relevant  and                                                                   
should be talked about at a later date.                                                                                         
                                                                                                                                
3:51:29 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 8:                                                                                 
                                                                                                                                
          DEPARTMENT:          Law                                                                                              
          APPROPRIATION:       Civil Division                                                                                   
          ALLOCATION:          Oil, Gas and Mining                                                                              
                                                                                                                                
          ADD:                 $5,109,200 Inc OTI                                                                               
                                                                                                                                
          FUNDING SOURCE:General Funds - 1004                                                                                   
                                                                                                                                
          EXPLANATION:                                                                                                          
          The  Department  of   Law's  Oil,  Gas  and  Mining                                                                   
          section  continues  to play  a  major  role in  the                                                                   
          State's  top   priority  project  related   to  the                                                                   
          construction   of  a  gas  pipeline   and  bringing                                                                   
          natural   gas  to   market.     In  addition,   the                                                                   
          Department  of  Law has  a  number  of other  major                                                                   
          projects  underway that  will  continue to  require                                                                   
          outside  counsel  and  experts beyond  the  funding                                                                   
          included  in the base  operating budget.   The most                                                                   
          noteworthy  are  Pt.  Thomson  litigation,  ongoing                                                                   
          proceedings  before the  Federal Energy  Regulatory                                                                   
          Commission  (FERC) on TransAlaska  Pipeline Service                                                                   
          (TAPS)  tariffs  issues;  and two  major  corporate                                                                   
          income tax matters.                                                                                                   
                                                                                                                                
          This    issue    is    independent    of    gasline                                                                   
          appropriations.                                                                                                       
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
3:51:58 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld referred to Amendment O&G 9.                                                                                        
                                                                                                                                
Ms. Kobayashi  remarked that when originally  arriving at the                                                                   
anticipated budget  for litigation,  it was thought  that the                                                                   
TAPS Strategic  Reconfiguration  would be  spread out  over a                                                                   
number  of fiscal  years, but  TAPS  carriers are  requesting                                                                   
that  the discovery  and  litigation schedule  be  compressed                                                                   
into a  smaller fiscal year.   Therefore, the  requested $1.9                                                                   
million will be needed in the next fiscal year.                                                                                 
                                                                                                                                
Co-Chair Hawker inquired if this  was the first year that the                                                                   
money has  been requested.   Ms.  Kobayashi remarked  that it                                                                   
had been generally  included in the $5.1 million,  but is now                                                                   
an addition  as it was believed  the cost would arise  in the                                                                   
next fiscal  year.  The  Department must react  to litigation                                                                   
as new  situations appear.  It  was not anticipated  that the                                                                   
compressed schedule would be requested.                                                                                         
                                                                                                                                
3:54:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker requested some  background on the litigation.                                                                   
He  wondered what  put  this  situation on  the  Department's                                                                   
radar screen.  Ms. Kobayashi replied  that the Department had                                                                   
been in discussion with the carriers  and was aware that they                                                                   
were  undertaking  reconfiguration of  TAPS.    In 2005,  the                                                                   
Department protested,  for the  first time, the  inclusion of                                                                   
some of  the costs in the  tariff.  The Department  protested                                                                   
that there had  been cost overruns and that  the carriers had                                                                   
been imprudent  in their  planning and  expenditures  for the                                                                   
reconfiguration project.  They  had additional costs in 2006,                                                                   
2007, and  2008, and  anticipated additional  costs in  2009.                                                                   
Each  year the  Department  has  protested the  inclusion  of                                                                   
those  cost overruns.   Due  to other  TAPS litigation,  this                                                                   
controversy  was  stayed  by the  Federal  Energy  Regulatory                                                                   
Commission  (FERC) and  the Regulatory  Commission of  Alaska                                                                   
(RCA).    The  Department  is  currently  in  front  of  FERC                                                                   
discussing scheduling.                                                                                                          
                                                                                                                                
3:56:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked what the  consequence would be  of not                                                                   
funding this $1.9 million request.                                                                                              
                                                                                                                                
Ms. Kobayashi replied  that the Department would  have a hard                                                                   
time with this  litigation.  She remarked that  in such cases                                                                   
it takes  a lot of  discovery, document handling,  assistance                                                                   
from outside  counsel, and the  use of expert witnesses.   If                                                                   
this item is not funded, it would  be hard to put forward the                                                                   
case.                                                                                                                           
                                                                                                                                
3:57:29 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  recollected that $5 million  would be spent                                                                   
on this  case.  Ms. Kobayashi  agreed that that  amount would                                                                   
take the case all the way through the court of appeals.                                                                         
                                                                                                                                
Co-Chair Stoltze asked if another  half million to $1 million                                                                   
might be  needed after  the hearing  process.  Ms.  Kobayashi                                                                   
agreed that  was correct.   Co-Chair Stoltze inquired  if the                                                                   
stakes were hundreds  of millions of dollars.   Ms. Kobayashi                                                                   
agreed.                                                                                                                         
                                                                                                                                
Co-Chair Hawker  asked for clarification  if the  hundreds of                                                                   
millions  of  dollars  were in  consequence  to  the  state's                                                                   
treasury or  just the  change in the  values of the  tariffs.                                                                   
Ms.  Kobayashi  replied  that  the hundreds  of  millions  of                                                                   
dollars was  the impact  on the  possible future royalty  and                                                                   
production tax.                                                                                                                 
                                                                                                                                
3:59:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 9:                                                                                 
                                                                                                                                
     DEPARTMENT:         Law                                                                                                    
     APPROPRIATION:      Civil Division                                                                                         
     ALLOCATION:         Oil, Gas and Mining                                                                                    
                                                                                                                                
     ADD:                $1,900,000 Inc OTI                                                                                     
                                                                                                                                
     FUNDING SOURCE:General Funds - 1004                                                                                        
                                                                                                                                
     EXPLANATION:  The   Department  of  Law   is  requesting                                                                   
     $1,900.0  to cover preparation  and other related  costs                                                                   
     associated  with  the  TAPS  Strategic  Reconfiguration.                                                                   
     The State  is protesting imprudent capital  expenditures                                                                   
     on the  TAPS Strategic Reconfiguration project  that are                                                                   
     included in rates from 2005 forward.                                                                                       
                                                                                                                                
     This issue is independent of gasline appropriations.                                                                       
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
3:59:35 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld moved  on to Amendment O&G 10.   This request was                                                                   
for the Department of Natural  Resources as a lapse extension                                                                   
in the FY 2009 Supplemental Bill  for ongoing work related to                                                                   
gasline development.                                                                                                            
                                                                                                                                
Ms. Simons remarked  that the original appropriation  was for                                                                   
$3.9 million, beginning in FY  2005.  It was used in FY 2005,                                                                   
FY 2006,  FY 2007, and FY  2008 to do preliminary  work under                                                                   
the previous  administration.   With the  change in  strategy                                                                   
and the  new AIGA license  approval, the Department  is ready                                                                   
to move forward again with spending  on this appropriation to                                                                   
do the same kind of work involving right-of-way permitting.                                                                     
                                                                                                                                
Co-Chair  Hawker believed  it commenced  in FY  2004, not  FY                                                                   
2005.  He  emphasized that it  had been out there for  a long                                                                   
time and  wondered if the money  would be used quickly  or if                                                                   
it was being stashed in the budget.                                                                                             
                                                                                                                                
4:02:01 PM                                                                                                                    
                                                                                                                                
MARTY RUTHERFORD, DEPUTY COMMISSIONER,  DEPARTMENT OF NATURAL                                                                   
RESOURCES,  agreed with  Co-Chair Hawker  that this  case has                                                                   
been on the books  for along time.  The work  done in FY 2005                                                                   
and  FY 2006  was associated  with TransCanada's  application                                                                   
associated with  the Stranded  Gas Development Act,  for some                                                                   
right-of-way  work on  the Glennallen  to Palmer route,  work                                                                   
for right-of-way applications  for both an oil pipeline and a                                                                   
gas  pipeline  from  Point  Thomson to  Prudhoe  Bay,  and  a                                                                   
highway project  for Dalton Highway  east to the  Anwar area.                                                                   
Legal work  was also  associated with  some of these  issues.                                                                   
Then there was  a long time where nothing much  occurred, but                                                                   
now there is a great deal of activity for a potential right-                                                                    
of-way from the North Slope south  to Delta and into the Cook                                                                   
Inlet.   Under  consideration are  various project  right-of-                                                                   
ways,  pinch  points,  material supplies  for  the  pipeline,                                                                   
access roads, and facility locations.   Ms. Rutherford agreed                                                                   
that the  money had been  on the books  a long time,  but she                                                                   
believed  more would  be spent  in  the near  future to  good                                                                   
state purpose.                                                                                                                  
                                                                                                                                
Co-Chair   Hawker  acknowledged   that  there   has  been   a                                                                   
rethinking  of many  of the  projects.   He  wondered if  the                                                                   
money  would  be  prejudiced  toward  any  one  project  over                                                                   
another.   Ms. Rutherford  replied  that it  would not.   She                                                                   
noted that  it was  important to see  a project move  forward                                                                   
for the  benefit of the  state of Alaska  to take gas  to the                                                                   
market and see gas available for Alaskan needs.                                                                                 
                                                                                                                                
Co-Chair  Hawker wanted  confirmation that  a project  not be                                                                   
told that  the legislature  did not  provide enough  money to                                                                   
follow  up  on  permits.   Ms.  Rutherford  assured  Co-Chair                                                                   
Hawker that this would not happen.   The only advantages that                                                                   
the  AIGA  licenses  have are  specific  to  the  inducements                                                                   
provided  as  part  of  the  legislation.    Co-Chair  Hawker                                                                   
impressed  that   it  was  important   that  the   money  for                                                                   
permitting and application processing  be available as needed                                                                   
for any project.                                                                                                                
                                                                                                                                
4:06:52 PM                                                                                                                    
                                                                                                                                
Representative Kelly inquired  how much of the money would be                                                                   
spent  in FY  2010.   Co-Chair  Hawker  interjected that  the                                                                   
number  was  for  a  $2.9  million   lapse  extension.    Ms.                                                                   
Rutherford replied  that she was  uncertain since  the bottom                                                                   
line is  directly related to the  speed at which some  of the                                                                   
applicants  are  moving their  projects  forward  and to  the                                                                   
degree  in  which  material  sites  can  be  found  and  have                                                                   
contractors analyze  them.  Only $1 million of  $3.9 has been                                                                   
spent so far,  but she believed spending would  accelerate in                                                                   
the future.                                                                                                                     
                                                                                                                                
Representative Kelly  referred to Amendments O&G  10, 11, 12,                                                                   
13, and the millions involved,  and wanted a good estimate on                                                                   
what  would be  spent in  the coming  year.   He related  the                                                                   
importance of  the Committee's  understanding how  much money                                                                   
would be spent in FY 2010.                                                                                                      
                                                                                                                                
4:10:16 PM                                                                                                                    
                                                                                                                                
Ms. Simons declared  that a lot being done is  staging and it                                                                   
is difficult  to know  from one  month to  the next  how much                                                                   
will be  spent, but the  Department knows when  projects come                                                                   
up short at  the wrong time of  the year because they  can be                                                                   
delayed  significantly.   Representative  Kelly stressed  the                                                                   
need to reduce  the budget since  in FY 2009 and FY  2010 the                                                                   
state will be $2.6  billion short.  It is necessary  to be as                                                                   
precise as possible when giving out funds.                                                                                      
                                                                                                                                
Co-Chair  Hawker  reminded  the   Committee  that  this  item                                                                   
request  did not  show up  in the FY  2010 budget,  but  as a                                                                   
lapse  extension  request  that  showed  up in  the  FY  2009                                                                   
supplemental budget.   He noted  that as the Committee  moves                                                                   
the amendments, the intent is  that they will be incorporated                                                                   
into the numbers section for the coming year.                                                                                   
                                                                                                                                
Co-Chair Hawker deferred Amendment  O&G 10 to be incorporated                                                                   
into the FY 2009 supplemental budget.                                                                                           
                                                                                                                                
4:13:39 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker remarked  that items numbers O&G  11, 12, and                                                                   
13 are state coordinator gas pipeline  issues.  Amendment O&G                                                                   
11 is  a request  from the  Department for  base funding  for                                                                   
three  positions.   Amendment O&G  12 is a  request for  $3.2                                                                   
million for  a state coordinator  for gas pipeline  work, and                                                                   
originally was  a lapse extension  request.  There  are three                                                                   
components:    $391,000,  $3.2   million  originally  in  the                                                                   
capital budget, and a $2.7 million lapse extension.                                                                             
                                                                                                                                
Co-Chair  Hawker  requested  an   explanation  of  the  State                                                                   
Coordinator -  Gas Pipeline positions.   He pointed  out that                                                                   
the request  is for  over $6  million.   He wondered  how the                                                                   
money would be spent.                                                                                                           
                                                                                                                                
4:15:45 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  suggested  that each department  respond  to the                                                                   
question.                                                                                                                       
                                                                                                                                
Ms. Simons  explained that there  are three positions  in the                                                                   
State  Coordinator -  Gas  Pipeline office  being  requested.                                                                   
The  requests for  $3.2  million in  general  funds and  $2.7                                                                   
million lapse  extension are directly related.   The $391,700                                                                   
was a FY 2009 one-time request  for three positions for AGIA,                                                                   
which is being requested again.   The State Coordinator - Gas                                                                   
Pipeline  was hired  in  January  and is  ready  to fill  the                                                                   
positions.                                                                                                                      
                                                                                                                                
Co-Chair Hawker asked if the position  was held by Mr. Myers.                                                                   
Ms. Simons said that was correct.   Co-Chair Hawker asked how                                                                   
much of  the FY 2009 request  was left.  Ms.  Simons reported                                                                   
that all  monies left in personal  services will lapse.   Co-                                                                   
Chair Hawker  asked how  much that was.   Ms. Simons  replied                                                                   
that she would  have to check.  Co-Chair Hawker  asked if the                                                                   
amount being  lapsed was included  in the $2.7 million.   Ms.                                                                   
Simons offered to find out.                                                                                                     
                                                                                                                                
4:18:51 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked how the  $3.2 million would  be spent.                                                                   
Ms. Simons  explained that it  was the leftover  funding from                                                                   
FY 2009  for AGIA implementation.   She reported  that during                                                                   
special   session  the   Department   of  Natural   Resources                                                                   
requested $15  million for  AIGA implementation,  spread over                                                                   
five years.   The  first year request  was for $5.5  million,                                                                   
the second  year request was for  $3.2 million, and  the rest                                                                   
was spread out for remaining years.   The $5.5 million amount                                                                   
was a  one-time operating increment  which will lapse  at the                                                                   
end of June  30.  A portion  of that money has  been expended                                                                   
and  the Department  would  like the  rest  available for  FY                                                                   
2010, along  with the $3.2 million.   The money will  be used                                                                   
for managing the TransCanada license:  for a project monitor,                                                                   
for evaluating royalty inducement  regulations, for proposals                                                                   
for economic modeling, and for a commercial advisor.                                                                            
                                                                                                                                
4:21:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker thought  it seemed odd that  of $5.5 million,                                                                   
only  $190,000 was  spent.   Ms.  Simons  explained that  the                                                                   
Department received the appropriation  in August and it takes                                                                   
time to write contracts  and spend the money.   Also, not all                                                                   
positions have been  filled yet.  The Department  feels as if                                                                   
it is moving quickly on this matter.                                                                                            
                                                                                                                                
Co-Chair Hawker  noted that  the coordinator  was hired.   He                                                                   
wondered if the other two positions  were filled.  Ms. Simons                                                                   
described   the  three   positions:   two  natural   resource                                                                   
specialists and a  pipeline engineer.  There  were also three                                                                   
positions in the  Governor's office - the  State Coordinator,                                                                   
Gas Pipeline  and Inter-Governmental  Coordinator.   Co-Chair                                                                   
Hawker asked if  they were filled at the moment.   Ms. Simons                                                                   
said they  were not filled at  the moment, but were  close to                                                                   
being filled.  Co-Chair Hawker requested job descriptions.                                                                      
                                                                                                                                
4:24:06 PM                                                                                                                    
                                                                                                                                
Ms.  Rutherford clarified  the  tasks expected  of each  job.                                                                   
The  natural   resource  specialist   will  be  focusing   on                                                                   
regulations,  permitting,  coordination,  and  legal  issues.                                                                   
The  pipeline engineer  will be  working to  ensure that  the                                                                   
proposed project  is developed  and constructed  according to                                                                   
federal and state  standards.  The fourth position  is a land                                                                   
manager.   Dr. Mark Myers  is the fifth  position and  is the                                                                   
state coordinator.   She commented  that the positions  would                                                                   
be highly challenged to handle the pending work load.                                                                           
                                                                                                                                
Co-Chair Hawker  summarized that when looking  at the request                                                                   
for general funds, and not considering  the statutory program                                                                   
receipts, the Department was asking  for carry-over authority                                                                   
of  $2.7  million,  as  well  as  for  $3.2  million  in  new                                                                   
authority.   He asked how much  of that total  the Department                                                                   
anticipates  spending in  the  coming year.   Ms.  Rutherford                                                                   
explained  that  contracts  with  monitoring  oversight  will                                                                   
progress as  the AGIA project  progresses.  The same  is true                                                                   
for the  economic modeling  and commercial advisor,  although                                                                   
they may  not go beyond two  years.  The royalty  regulations                                                                   
should be  wrapped up by December  of next year.  They  are a                                                                   
significant factor in the open  season.  There will be a need                                                                   
for outside expertise.                                                                                                          
                                                                                                                                
Ms. Rutherford  expected all of  the $200,000 would  be used;                                                                   
however, $300,000  of the $2.7 may not be used.   Conformance                                                                   
with  the license  provision,  royalty  inducements, and  the                                                                   
contractors' duties  will continue and  will use the  bulk of                                                                   
the  request.    She  pointed  out  that  the  Department  is                                                                   
required to  use the state  procurement process now  that the                                                                   
license has been  issued.  She maintained that it  has been a                                                                   
slow start due to understaffing.                                                                                                
                                                                                                                                
4:27:58 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker asked  if $2.7  million was  on top of  $3.2                                                                   
million.   He summarized what he  thought he had heard.   Ms.                                                                   
Rutherford clarified  that the  $15 million spread  had never                                                                   
really  been combined.   She clarified  that  the $3.2  was a                                                                   
combination of  factors.  Within  the $5.5 million  this year                                                                   
and $3.2  next year  was $300,000  for this  fiscal year  and                                                                   
$200,000   for  FY   2010  for   support   to  the   pipeline                                                                   
coordinator's office.                                                                                                           
                                                                                                                                
Co-Chair  Hawker surmised  that  there was  a  great deal  of                                                                   
confusion  about  the  appropriations.    He  reiterated  his                                                                   
understanding of  the requests and observed  that information                                                                   
was lacking.   He  voiced concern  about off-budget  agencies                                                                   
and the loss of accountability.                                                                                                 
                                                                                                                                
4:31:24 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  emphasized that  it is not  the intention  of an                                                                   
agency to be off-budget.   She suggested a number  of ways of                                                                   
dealing with  the appropriations,  such as putting  the funds                                                                   
in a multi-year  operating appropriation that  appears before                                                                   
the subcommittee on  an annual basis or in  a capital project                                                                   
request.   She  voiced appreciation  for  the discussion  and                                                                   
recognized the need for more clarification.                                                                                     
                                                                                                                                
Ms.  Rutherford added  that  the $15  million  is almost  all                                                                   
contractual service money and  is viewed as a capital project                                                                   
where the  monies can be extended  because they are  used for                                                                   
outside contracts.   The $391,700 amount is  for an operating                                                                   
item;  staffing   and  travel  for  commodities   contractual                                                                   
services.                                                                                                                       
                                                                                                                                
4:33:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  pointed out that the pipeline  coordinator's                                                                   
office is an ongoing position  and he suggested putting it in                                                                   
the  operating  budget  which comes  before  the  legislature                                                                   
every year.                                                                                                                     
                                                                                                                                
Ms.  Rutherford clarified  that  the $391,700  is  associated                                                                   
with  the AGIA  inducement position.   There  is currently  a                                                                   
discussion   about  whether   or  not   the  Denali   Project                                                                   
coordinator could  also coordinate the AGIA effort.   It is a                                                                   
requirement  to have  an AIGA  coordinator  for the  project.                                                                   
Once the license  responsibility is done, that  function goes                                                                   
away, and there may or may not be a project at that time.                                                                       
                                                                                                                                
4:36:40 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  commented  that the  larger  numbers  cause                                                                   
concern.                                                                                                                        
                                                                                                                                
Representative  Austerman  commented   that  he  agrees  with                                                                   
getting a  handle on the request.   He suggested  lapsing the                                                                   
$2.7  million and  giving the  Department  the $3.2  million.                                                                   
Then the Department  can make a more informed  request in the                                                                   
supplemental budget.                                                                                                            
                                                                                                                                
Co-Chair Hawker wished to go forward  with the decision after                                                                   
taking an at-ease.                                                                                                              
                                                                                                                                
Representative  Gara agreed that  it is  hard to predict  how                                                                   
much money will be used for AIGA.   He was concerned that the                                                                   
supplemental  budget  may  not   pass  any  faster  than  the                                                                   
operating budget.                                                                                                               
                                                                                                                                
4:39:08 PM                                                                                                                    
                                                                                                                                
Representative Kelly  thought the discussion was  helpful due                                                                   
to  the   multiple  years   and  multiple   projects.     The                                                                   
availability  of the  "top players"  has  been scarce  during                                                                   
this process and would have proved helpful.                                                                                     
                                                                                                                                
4:40:40 PM     AT EASE                                                                                                        
                                                                                                                                
5:07:48 PM     RECONVENED                                                                                                     
                                                                                                                                
Co-Chair Hawker reviewed the components  of Amendments O&G 11                                                                   
and 12.                                                                                                                         
                                                                                                                                
Co-Chair   Hawker  commented   that  the  state   coordinator                                                                   
position is an  operating budget item.  He  stated his intent                                                                   
to incorporate the amendments into the FY 2010 budget.                                                                          
                                                                                                                                
5:11:11 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 11:                                                                                
                                                                                                                                
     DEPARTMENT:         Natural Resources                                                                                      
     APPROPRIATION:      Resource Development                                                                                   
     ALLOCATION:         State Coordinator - Gas Pipeline                                                                       
                                                                                                                                
     ADD: $3,591,700 General Fund (1004) Inc OTI                                                                                
                                                                                                                                
     EXPLANATION:  This amendment  includes funding for three                                                                   
     positions   that  will  assist   with  the   review  and                                                                   
     coordination  of  all  state  and  federal  permits  and                                                                   
     processes,  to   ensure  that  all  state   and  federal                                                                   
     environmental  requirements  have  been  completed,  and                                                                   
     assist with  title work  for natural gas  transportation                                                                   
     projects in Alaska, including AGIA implementation.                                                                         
                                                                                                                                
     A $3.2 million FY 2010 capital  project request for this                                                                   
     purpose  will be  deleted  from the  capital budget.  An                                                                   
     anticipated  lapsing balance  of $2.7  million GF  of an                                                                   
     operating  appropriation   for  this  purpose   will  be                                                                   
     addressed as a supplemental request.                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Co-Chair Hawker  MOVED to  AMEND Amendment  O&G 11  to change                                                                   
$3,591,700 million  in general  funds, a one-time  increment,                                                                   
to $3.2  million.   This is  money that  was formerly  in the                                                                   
capital budget.   The amount of  $391,700 will be shown  as a                                                                   
regular  increment  as it  was  originally submitted  to  the                                                                   
legislature in the Section 16 breakdown.                                                                                        
                                                                                                                                
Representative Austerman  asked for clarification,  which Co-                                                                   
Chair Hawker provided.                                                                                                          
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION.                                                                                        
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Representative  Kelly  asked  that  technical  amendments  be                                                                   
included in the  budget.  Co-Chair Hawker assured  that would                                                                   
happen.                                                                                                                         
                                                                                                                                
5:14:23 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  remarked that  Amendment  O&G  12 would  be                                                                   
deferred to the supplemental budget.                                                                                            
                                                                                                                                
Ms. Rehfeld  discussed Amendment  O&G 13  - $2.5 million  for                                                                   
Statutory  Program  Receipts for  the  Pipeline  Coordinator.                                                                   
This  is  multi-agency  work  related  to  AIGA,  the  Denali                                                                   
Project, ANGDA, and ENSTAR right-of-way.                                                                                        
                                                                                                                                
Co-Chair Hawker  asked for  delineation between the  Pipeline                                                                   
Coordinator  in Amendment  O&G 13 and  the State  Coordinator                                                                   
Gas-Pipeline discussed  in the previous two  amendments.  Ms.                                                                   
Simons described the State Coordinator-Gas  Pipeline as a new                                                                   
component  formed to  deal with  AGIA and  the gas  pipeline.                                                                   
The State  Pipeline Coordinator's  Office  (SPCO) is  part of                                                                   
the joint pipeline  office which exists to  coordinate right-                                                                   
of-way permitting and oversight  of common carrier pipelines,                                                                   
the biggest of which is TAPS.                                                                                                   
                                                                                                                                
Co-Chair Hawker  asked Ms. Simons  to explain  what Statutory                                                                   
Designated Program  Receipts (SDPR)  are and how  they differ                                                                   
from  a general  fund appropriation.    Ms. Simons  indicated                                                                   
that  a  SDPR  is a  request  for  authorization  to  receive                                                                   
funding from  a third party  outside of state  government, so                                                                   
anyone  making an application  for a  right-of-way would  pay                                                                   
for  the  work  to  be  done.    This  gives  the  Department                                                                   
authority to collect that money.                                                                                                
                                                                                                                                
Co-Chair Hawker asked if it was  an adequate amount of money.                                                                   
Ms. Simons declared it would be sufficient.                                                                                     
                                                                                                                                
5:18:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G 13:                                                                                
                                                                                                                                
     DEPARTMENT:         Natural Resources                                                                                      
     APPROPRIATION:      Resource Development                                                                                   
     ALLOCATION:         Pipeline Coordinator                                                                                   
                                                                                                                                
     ADD: $2,500,000  Statutory  Designated Program  Receipts                                                                   
     (1108)                                                                                                                     
                                                                                                                                
     EXPLANATION:   To  fund work  required for  multi-agency                                                                   
     coordination  and  review  of AGIA,  Denali,  ANGDA  and                                                                   
     ENSTAR  right-of-way  pre-application  work.   Under  AS                                                                   
     38.35,  the   pre-applicant,  applicant  or   lessee  is                                                                   
     required  to  reimburse  the State  for  these  efforts.                                                                   
     Authorization is needed to  receive funds to do work for                                                                   
     applicants.                                                                                                                
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
5:19:12 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  described Amendment  O&G 14  as a Department  of                                                                   
Revenue  request.   It was  one  of the  original Section  16                                                                   
items.                                                                                                                          
                                                                                                                                
Co-Chair Hawker asked why the  amendment is a unique request.                                                                   
                                                                                                                                
PAT  GALVIN,   COMMISSIONER,   DEPARTMENT  OF  REVENUE,   via                                                                   
teleconference, replied  that Amendment O&G 14  was needed to                                                                   
do analysis of  the state's fiscal system as  the open season                                                                   
approaches.  This  analysis would be above and  beyond normal                                                                   
operations                                                                                                                      
                                                                                                                                
Co-Chair  Hawker inquired  if the money  would be  prejudiced                                                                   
toward any  AIGA implementation  or if it  could be  used for                                                                   
another project line.                                                                                                           
                                                                                                                                
Commissioner Galvin  explained that the actual  language says                                                                   
it is to  be used for gas  commercialization, so it  does not                                                                   
have  to  be limited  to  the  AIGA  project.   It  could  be                                                                   
transferable.                                                                                                                   
                                                                                                                                
5:22:24 PM                                                                                                                    
                                                                                                                                
Representative Gara pointed out  that $2.5 million is a round                                                                   
number and wondered how accurate  it was.  He wondered if the                                                                   
same amount  of work  could be done  for less.   Commissioner                                                                   
Galvin explained  that the  amount for  FY 2010 was  $771,000                                                                   
and there is a good chance it may not all be spent.                                                                             
                                                                                                                                
Co-Chair Hawker  recalled that the  amount of money  spent on                                                                   
such projects since 2004 was $183  million.  He was concerned                                                                   
whether the state was getting value for the money.                                                                              
                                                                                                                                
Representative  Fairclough  asked  how  the funds  for  a  $3                                                                   
million  capital  appropriation   were  used.    Commissioner                                                                   
Galvin   thought  they   might  be  part   of  a   multi-year                                                                   
justification.   For the current fiscal year,  the Department                                                                   
contracted  with Gaffney  Cline & Associates  to analyze  the                                                                   
state's fiscal  system as  it relates  to the interaction  of                                                                   
oil and gas.  The Department has  also continued to fund work                                                                   
that Goldman Sachs has been doing  in analyzing the financing                                                                   
of the project  and the various roles that  state and federal                                                                   
government should  play.  A lot  of the funds are  being used                                                                   
for contractual work on the AIGA  application and evaluation.                                                                   
                                                                                                                                
5:26:26 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  added  that  the  $3  million  was  a  2007                                                                   
multiple-year  operating  appropriation,   of  which,  as  of                                                                   
January  15, $650,000  was unencumbered.   He  asked if  that                                                                   
balance would be utilized in FY 2009.                                                                                           
                                                                                                                                
Commissioner  Galvin  replied  that  he  did  not  know,  but                                                                   
offered  to  find out.    He  thought  there was  only  about                                                                   
$200,000 left.  Co-Chair Hawker  assumed that the money would                                                                   
be spent.                                                                                                                       
                                                                                                                                
Co-Chair  Hawker concluded  that he had  discomfort with  the                                                                   
number, but no basis to challenge it.                                                                                           
                                                                                                                                
Representative Joule asked when  the work would be completed.                                                                   
Commissioner  Galvin  thought   it  would  be  done  by  next                                                                   
legislative session.  If not,  the Department would request a                                                                   
supplemental.                                                                                                                   
                                                                                                                                
5:29:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment O&G #14:                                                                               
                                                                                                                                
     DEPARTMENT:         Revenue                                                                                              
     APPROPRIATION:      Administration and Support                                                                           
     ALLOCATION:         Natural Gas Commercialization                                                                        
                                                                                                                                
     ADD:      $771,000 General Funds (1004) Inc OTI                                                                          
                                                                                                                                
     EXPLANATION:    This funding  is  needed  to respond  in                                                                 
     FY2010  to issues  associated with  the holding  of open                                                                   
     seasons  in the  fall of  FY2010 by the  major gas  line                                                                   
     projects.   The  administration  has  stated  that  when                                                                   
     economic  information   becomes  available,   they  will                                                                   
     analyze  the economics underpinning  proposed  major gas                                                                   
     line  projects prior to  an open  season and assess  the                                                                   
     need  for changes  in the  state's  fiscal system.   The                                                                   
     work  will be  on  a tight  time  frame  as any  changes                                                                   
     ideally should  be in place prior to or  during the open                                                                   
     season and  will require the assistance  of contractors.                                                                   
     The need for economic evaluations  is critical in moving                                                                   
     gas line projects along as  quickly as possible. DOR has                                                                   
     the ability  to contract with the  appropriate financial                                                                   
     institutions   to  facilitate   the  evaluations.   This                                                                   
     funding   has  typically   been   managed  through   the                                                                   
     Commissioner's Office appropriation.                                                                                       
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
5:29:54 PM                                                                                                                    
                                                                                                                                
Representative   Austerman  questioned   if  OMB  could   put                                                                   
together a  yearly report for  all money received and  how it                                                                   
was used.   This could be  discussed in subcommittees  in the                                                                   
future,  instead of at  this kind  of meeting  at the  end of                                                                   
session.   Co-Chair Hawker suggested  that a capstone  report                                                                   
would be great.                                                                                                                 
                                                                                                                                
Representative Austerman thought  such a report would provide                                                                   
a  better  understanding  of the  entire  budget.    Co-Chair                                                                   
Hawker  suggested that  it would  show how  the $183  million                                                                   
already allocated was spent.                                                                                                    
                                                                                                                                
5:31:59 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld offered  that a process is needed  for discussing                                                                   
cross-departmental items.   Co-Chair Hawker pointed  out that                                                                   
this discussion  has been helpful  and very productive.   Ms.                                                                   
Rehfeld appreciated the work of the Committee.                                                                                  
                                                                                                                                
5:34:52 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED to ADOPT Amendment 33:                                                                                
                                                                                                                                
          DEPARTMENT:          Health and Social Services                                                                     
          APPROPRIATION:       Behavioral Health                                                                              
          ALLOCATION:          Behavioral Health Grants                                                                       
                                                                                                                                
          ADD:           $210,000 General Fund/Mental Health                                                                  
          (1037)                                                                                                                
                                                                                                                                
          ADD INTENT:    It    is   the   interest   of   the                                                                 
          legislature  that at least $210,000 be  expended to                                                                   
          service  individuals  on waiting  lists for  Heroin                                                                   
          addiction  treatment  at  facilities  that  have  a                                                                   
          waiting  list. The  funding  is to  be utilized  in                                                                   
          addition to any other behavioral health grants                                                                        
          that  a  heroin addiction  treatment  facility  may                                                                   
          qualify  for,  and  it  shall not  prevent  such  a                                                                   
          facility   from  qualifying   for  any   additional                                                                   
          behavioral health grant funds.                                                                                        
                                                                                                                                
          EXPLANATION:   The  funding is  intended to  expand                                                                   
          the  capacity of  Heroin  treatment facilities  for                                                                   
          individuals  that  are  on  a  waiting  list.  This                                                                   
          supplemental  funding is to  be targeted  to Heroin                                                                   
          addiction treatment  facilities that have a waiting                                                                   
          list   and  not  prevent   those  facilities   from                                                                   
          qualifying   for  other  behavioral   health  grant                                                                   
          funds.                                                                                                                
                                                                                                                                
Co-Chair Hawker OBJECTED.                                                                                                       
                                                                                                                                
Representative  Gara pointed  out that  there are two  heroin                                                                   
addiction treatment  centers in  the state, in  Anchorage and                                                                   
in Fairbanks.  The treatment uses  is a drug called methadone                                                                   
which has a good effectiveness  rate.  The centers are funded                                                                   
by behavioral  health grants.  Both centers  have substantial                                                                   
waiting lists,  and the behavioral health grants,  as funded,                                                                   
are not  adequate as they  are distributed among  the various                                                                   
state treatment centers for alcoholism and substance abuse.                                                                     
                                                                                                                                
Representative  Gara related  that the  funds target  waiting                                                                   
lists.  Federal  law requires that pregnant  women be treated                                                                   
first.   Some  who  are desperate  for  treatment cannot  get                                                                   
treatment,  which can  lead  to felonies  by  both users  and                                                                   
dealers.    By  not  eradicating  waiting  lists,  more  drug                                                                   
dealing occurs on the streets.   For $210,000 people who want                                                                   
to kick their heroin addiction  can be treated, the amount of                                                                   
crime  can  be reduced,  and  law  enforcement costs  can  be                                                                   
saved.   He maintained  that funding  this request  is smart,                                                                   
humane, and would save money.   He shared a story of a client                                                                   
on the  waiting list.   He discussed  behavioral grants  that                                                                   
were not fully funded.                                                                                                          
                                                                                                                                
5:41:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker voiced concern  about setting a precedent for                                                                   
"cherry picking" in the human  services area at short notice.                                                                   
He agreed  that the  request had merit;  however, it  was not                                                                   
circulated to the  Committee during the budget  cycle.  There                                                                   
is $70 million  designated to the behavioral  health category                                                                   
already.    He  cautioned  against  circumventing  the  grant                                                                   
request  process and  he  questioned what  law  enforcement's                                                                   
experience with the clinics has been.                                                                                           
                                                                                                                                
Co-Chair  Hawker  stated  that  he  was  sympathetic  to  the                                                                   
legislature's  and the  Governor's commitment  not to  expand                                                                   
programs.  He  wanted assurance from the  administration that                                                                   
an amendment such as this one  would survive a veto and would                                                                   
be received positively by the other body.                                                                                       
                                                                                                                                
5:46:23 PM                                                                                                                    
                                                                                                                                
Representative  Crawford reported that  he was familiar  with                                                                   
the center  for drug problems  in Anchorage, as his  wife was                                                                   
the program  nurse.   He was  familiar with  many people  who                                                                   
work there.   He believed support  for the center was  in the                                                                   
Governor's  original  request,  but  had been  reduced.    He                                                                   
recalled that,  at times, the  waiting list had  been reduced                                                                   
to almost  zero.   He pointed out  that the request  provides                                                                   
just  a  portion of  the  match;  addicts  also pay  for  the                                                                   
program according  to a sliding scale.  There  are also other                                                                   
grants  awarded  to the  center.    He maintained  that  this                                                                   
request would  help save  lives and money,  in the  long run.                                                                   
He  emphasized  that  he  was  very  much  in  favor  of  the                                                                   
amendment.                                                                                                                      
                                                                                                                                
5:49:51 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  stated   that  he  cannot  support                                                                   
Amendment 33  or Amendment 34,  regarding the Center  for the                                                                   
Blind.  He maintained that there  are many programs not being                                                                   
funded to the  full extent needed; however,  this meeting was                                                                   
not the right place or time to  bring the requests before the                                                                   
Committee.   He appreciated Representative  Gara's intention,                                                                   
but preferred to work within the existing budget process.                                                                       
                                                                                                                                
Representative  Joule thought  the amendment presupposes  how                                                                   
the  Department would  spend the  $1  million.   He spoke  in                                                                   
opposition  to the  amendment,  saying he  would rather  hear                                                                   
from the  Department how the  money allocated would  be used.                                                                   
He  spoke  of personal  experience  on  boards  of  treatment                                                                   
centers.                                                                                                                        
                                                                                                                                
5:52:35 PM                                                                                                                    
                                                                                                                                
Representative  Kelly commented  that the  government is  not                                                                   
the only  place to turn to  for this sort of  financial help.                                                                   
He  suggested  the  program  try and  get  money  from  local                                                                   
churches and other community organizations.                                                                                     
                                                                                                                                
Co-Chair  Stoltze  shared  that  he has  had  to  make  tough                                                                   
choices  and show  restraint  for  issues regarding  his  own                                                                   
district.   Co-Chair Hawker  agreed that  he would  also have                                                                   
liked to request more money for  specific items such as state                                                                   
troopers, but the process did not allow it.                                                                                     
                                                                                                                                
5:55:17 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas interjected  that he wanted to go on record                                                                   
as not encouraging  drug dealing.  He voiced  support for the                                                                   
committee chair.                                                                                                                
                                                                                                                                
Representative Gara  suggested it would be important  to know                                                                   
what law  enforcement and health  and human services  have to                                                                   
say  about the  quality  of care  provided  at the  treatment                                                                   
centers.  He offered to research their views.                                                                                   
Representative  Gara reported  that he  was attempting  to be                                                                   
efficient by proposing the smaller  amount, due to less money                                                                   
being available for the treatment  centers.  He thought there                                                                   
would be support by the other body.                                                                                             
                                                                                                                                
Representative  Gara thought  that asking  for funds  for the                                                                   
two centers,  rather than just  for the one in  his district,                                                                   
may  have  negatively  affected   the  chances  of  receiving                                                                   
funding.   He  suggested that  the amendments  might be  more                                                                   
appropriate for a one-time funding in the capital budget.                                                                       
                                                                                                                                
Representative Gara WITHDREW Amendment 33.                                                                                      
                                                                                                                                
5:59:47 PM                                                                                                                    
                                                                                                                                
Representative Fairclough announced  that the PFD application                                                                   
deadline is  on March  31.  Part  of the fund  is going  to a                                                                   
Pick,  Click,  and  Give campaign,  thanks  to  the  Rasmuson                                                                   
Foundation,  United Way,  and Vice-Chair  Thomas.  There  are                                                                   
programs that  are not receiving  funding that  could benefit                                                                   
by this program.                                                                                                                
                                                                                                                                
6:01:29 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED to ADOPT Amendment 34:                                                                                
                                                                                                                                
     DEPARTMENT:    Department of Labor and Workforce                                                                           
                    Development                                                                                                 
     APPROPRIATION: Division of Vocational Rehabilitation                                                                       
     ALLOCATION:    Independent Living                                                                                          
                                                                                                                                
     ADD:           $70.0 General Funds (1004)                                                                                  
                                                                                                                                
     EXPLANATION:                                                                                                               
     Outreach to Visually-Impaired in Rural Communities                                                                         
                                                                                                                                
     This increment would allow  The Center for the Blind and                                                                   
     Visually  Impaired to  reach out  to provide life  skill                                                                   
     and  services to  visually  impaired  Alaskans in  those                                                                   
     small  communities,   where  no  or  few   services  are                                                                   
     offered.  The Increment was  recommended by the Division                                                                   
     and no forwarded to the Legislature by the Governor.                                                                       
                                                                                                                                
Co-Chair Hawker OBJECTED.                                                                                                       
                                                                                                                                
Representative  Gara explained the  increment for  The Center                                                                   
for  the Blind  and Visually  Impaired,  which would  provide                                                                   
training  for the  visually impaired  outside urban  centers.                                                                   
The request was  requested by the Division,  but not accepted                                                                   
by the Governor.                                                                                                                
                                                                                                                                
6:03:07 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  acknowledged  the numerous legitimate  needs                                                                   
in the  communities  of Alaska.   He reiterated  the need  to                                                                   
follow the budget  process.  The proper process  is important                                                                   
so as  not to  put committee members,  especially those  from                                                                   
rural communities, in an uncomfortable position.                                                                                
                                                                                                                                
6:04:44 PM                                                                                                                    
                                                                                                                                
Representative Gara  wanted to raise  the issue, but  not put                                                                   
anyone on the record or call for  a vote.  He believed it was                                                                   
important  to  keep  learning   new  things  as  the  session                                                                   
progresses.     He  announced   that  most  of   the  service                                                                   
organizations  do not  have professional  lobbyists to  guide                                                                   
them through the legislative process.                                                                                           
                                                                                                                                
Representative Gara WITHDREW Amendment 34.                                                                                      
                                                                                                                                
6:06:40 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas withdrew  Amendment 5A  from the  previous                                                                   
day's  discussion.   It involved  having  the Alaska  tourism                                                                   
industry  take  a position  that  may negatively  affect  the                                                                   
communities he represents.                                                                                                      
                                                                                                                                
Representative Kelly reported  on a letter he received, which                                                                   
indicated that  people are listening  to these meetings.   He                                                                   
appreciated Vice-Chair Thomas's flexibility.                                                                                    
                                                                                                                                
6:09:39 PM                                                                                                                    
                                                                                                                                
Representative Austerman  reported that he was  a participant                                                                   
in sending  a letter to  the tourism industry  concerning the                                                                   
halibut issue,  requesting that  they look at  the biological                                                                   
issues as  well as the  economic issues.   There has  been no                                                                   
response from the industry.  Vice-Chair  Thomas thought there                                                                   
was a response now.                                                                                                             
                                                                                                                                
Co-Chair Stoltze spoke in support  of Amendment 5B and of the                                                                   
good things the tourism industry is doing.                                                                                      
                                                                                                                                
6:12:09 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  thanked everyone  for their contribution  to                                                                   
the discussion.   He believed that the amendment  process was                                                                   
clear and the bill could move  out of Committee at this time.                                                                   
                                                                                                                                
Co-Chair Stoltze  MOVED to report CSHB 81 (FIN),  as amended,                                                                   
out of  Committee with  individual recommendations,  and that                                                                   
authorization  be given to  the Legislative Finance  Division                                                                   
and  to  Legislative  Legal Services  Division  to  make  any                                                                   
necessary  technical  and/or conforming  amendments.    There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
CSHB  81  was  REPORTED  out of  Committee  with  a  do  pass                                                                   
recommendation.                                                                                                                 
                                                                                                                                
Co-Chair Stoltze  MOVED to report CSHB 83 (FIN),  as amended,                                                                   
out of  Committee with  individual recommendations,  and that                                                                   
authorization  be  given  to   Legislative  Finance  and  the                                                                   
Legislative Legal  Services to  make any necessary  technical                                                                   
and/or conforming  amendments.  There being  NO OBJECTION, it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
CSHB  83  was  REPORTED  out of  Committee  with  a  do  pass                                                                   
recommendation.                                                                                                                 
                                                                                                                                

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