Legislature(2017 - 2018)HOUSE FINANCE 519

04/14/2017 01:30 PM FINANCE

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Audio Topic
01:38:25 PM Start
01:40:13 PM Spring Revenue Forecast: Powerpoint
03:37:42 PM HB103
03:55:40 PM HB76
04:27:17 PM HB128
05:02:01 PM SB3
05:27:23 PM HB167
05:57:15 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+ Presentation: Spring Revenue Forecast by TELECONFERENCED
Commissioner Randall Hoffbeck, Dept. of Revenue
+ HB 76 MARICULTURE REVOLVING LOAN FUND TELECONFERENCED
Heard & Held
+ HB 128 SHELLFISH ENHANCE. PROJECTS; HATCHERIES TELECONFERENCED
Heard & Held
*+ HB 167 STATE AGENCY PERFORMANCE AUDITS TELECONFERENCED
Heard & Held
+ SB 3 SMALL VESSEL WASTEWATER EXEMPTION; 1% ART TELECONFERENCED
Moved HCS SB 3(TRA) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 103 OPTOMETRY & OPTOMETRISTS TELECONFERENCED
Moved CSHB 103(FIN) Out of Committee
HOUSE BILL NO. 167                                                                                                            
                                                                                                                                
     "An Act  relating to  performance reviews,  audits, and                                                                    
     termination   of  executive   and  legislative   branch                                                                    
     agencies,  the University  of  Alaska,  and the  Alaska                                                                    
     Court System."                                                                                                             
                                                                                                                                
5:27:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GABRIELLE  LEDOUX, SPONSOR,  explained  that                                                                    
the  bill  would  repeal  the  requirement  for  performance                                                                    
audits. She  reported that performance  audits had  not been                                                                    
funded for the  previous couple of years.  She thought their                                                                    
costs ran over $1 million.  The audits were typically 800 to                                                                    
1000 pages in length. She  doubted anyone had ever read any.                                                                    
Someone  had  requested  that  she  introduce  the  bill  to                                                                    
eliminate the requirement.                                                                                                      
                                                                                                                                
Representative Wilson did not agree  with the reason for the                                                                    
proposed elimination.  She wondered  if the  legislature was                                                                    
taking  the  wrong  approach  to  finding  efficiencies  and                                                                    
measuring  programs.  She wondered  if  there  was a  better                                                                    
approach to take rather than requiring performance audits.                                                                      
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT,  replied that  she believed there  was an                                                                    
expectation gap in terms of  the definition of a performance                                                                    
audit.  Performance audits  were  not in  place  to cut  the                                                                    
budget. She continued that a  very small piece of the audits                                                                    
had to do with the  budget. Departments were asked to submit                                                                    
10  percent  reductions  in  their  general  funds  and  the                                                                    
consultant  was asked  to  evaluate  whether the  reductions                                                                    
were  in  line  with  their findings  of  the  reviews.  She                                                                    
explained that a performance review  included looking at the                                                                    
agency's  mission  and  evaluating   how  it  conducted  its                                                                    
business. The performance reviews  were not intended to help                                                                    
solve the  state's budget crisis. The  inherent problem with                                                                    
the audit  reviews was that they  had not been read.  If the                                                                    
expectation was  the performance reviews were  going to help                                                                    
solve  the budget,  it  was not  valid.  If the  legislature                                                                    
chose to fund  audits in the future, many  changes should be                                                                    
made to make  them effective. She had been  asked to provide                                                                    
a summary  of suggested changes.  However, she did  not have                                                                    
the resources  to do so  at present. She suggested  it might                                                                    
be   possible  in   the  off-season.   She  added   that  if                                                                    
performance audits  were to continue  at the request  of the                                                                    
legislature,  some  tweaks would  need  to  be made  to  the                                                                    
process.                                                                                                                        
                                                                                                                                
5:31:53 PM                                                                                                                    
                                                                                                                                
Vice-Chair Gara  commented that  the largest  department had                                                                    
already been reviewed - the  Department of Health and Social                                                                    
Services. He  wondered if was correct.  Ms. Curtis confirmed                                                                    
that DHSS had been audited.                                                                                                     
                                                                                                                                
Vice-Chair  Gara imagined  that  the DHSS  audit would  have                                                                    
been the most expensive audit  process. He recalled that the                                                                    
department  made the  changes  that seemed  rational on  the                                                                    
audit report.  He could not  say there  was no value  to the                                                                    
reports.  However, the  goal  of the  original  bill was  to                                                                    
review  internal  practices in  the  hopes  of achieving  10                                                                    
percent  reductions wherever  possible. He  did not  see the                                                                    
need for future audit reports.                                                                                                  
                                                                                                                                
Representative  Wilson   thought  only  a  portion   of  the                                                                    
Department of  Health and Social Services  had been audited.                                                                    
She asked if she was accurate.                           Ms.                                                                    
Curtis  replied  that  the process  called  for  Legislative                                                                    
Audit to  help draft  a scope  of work.  The scope  was then                                                                    
provided   to  the   committee,   they   approved  it,   and                                                                    
contractors were  hired. The audit  had been focused  on the                                                                    
overall organization of the  department, long-term care, and                                                                    
another piece that she did not recall in the moment.                                                                            
                                                                                                                                
Representative  Wilson thought  that  the entire  department                                                                    
was going  to be audited  and noted her  disappointment. She                                                                    
stated that if there was  a possibility to tweak the program                                                                    
to  achieve the  original  intent of  the  legislation at  a                                                                    
lower price.                                                                                                                    
                                                                                                                                
5:35:07 PM                                                                                                                    
                                                                                                                                
Ms.  Curtis  responded  that  she   would  have  to  receive                                                                    
guidance from policy makers on  what they wanted to see from                                                                    
the bill. She  clarified they were not  audits, but reviews.                                                                    
The budget  request was so  high because the  University was                                                                    
included  in the  list of  departments to  be reviewed.  The                                                                    
cost was contingent on the size of the department.                                                                              
                                                                                                                                
Representative  Pruitt asked  when the  legislature's review                                                                    
had  been  scheduled.  Ms.  Curtis   answered  that  it  was                                                                    
scheduled  the year  it was  defunded. The  legislature, the                                                                    
Office of  the Governor,  and the  Alaska Court  System were                                                                    
scheduled in the same cycle.                                                                                                    
                                                                                                                                
Representative Pruitt  asked if  there was harm  to revising                                                                    
the  program.  He  referred  to  a  memorandum  in  members'                                                                    
packets. He  wondered if  there was  a problem  with leaving                                                                    
the law  on the  books. Ms. Curtis  responded that  the only                                                                    
problem  had to  do with  the uncertainty  of staffing.  She                                                                    
detailed it  was difficult to determine  whether staff would                                                                    
be  available.  It  had  taken  a lot  to  get  the  program                                                                    
running.  If it  was the  will of  policy makers,  she could                                                                    
provide feedback  on some  of the  obstacles in  getting the                                                                    
reports to lawmakers to make  a difference. She had feedback                                                                    
if individuals  were interested  in continuing  the program.                                                                    
If it were left on the  books, she would have to come before                                                                    
the legislature each year to request the funding.                                                                               
                                                                                                                                
5:38:34 PM                                                                                                                    
                                                                                                                                
Representative    Pruitt    thought   the    reviews    were                                                                    
misunderstood.  He believed  there was  an understanding  by                                                                    
legislators and  the public that  the audits were  to assist                                                                    
in finding  efficiencies. He referenced suggestions  made by                                                                    
Mr. Alexander  and asked if  the items he  highlighted would                                                                    
assist  in  addressing  inefficiencies  in  government.  Ms.                                                                    
Curtis responded that  she did not believe  the problem with                                                                    
the  program was  how it  had been  structured. She  offered                                                                    
that  the current  statutes provided  direction for  looking                                                                    
for   efficiencies   within  departments   and   essentially                                                                    
providing  a  grade  to  an  agency  for  accomplishing  its                                                                    
mission. She believed it [the  review process] had been well                                                                    
set  up; however,  using  it as  a tool  to  cut the  budget                                                                    
appeared to be  the expectation. She indicated  that she was                                                                    
not in  agreement with some of  Mr. Alexander's suggestions.                                                                    
She reported that if the  expectation were to use the review                                                                    
process  to  help an  agency  cut  its budget,  some  tweaks                                                                    
should be made. She suggested  that the Office of Management                                                                    
and  Budget, because  they have  oversight of  the agencies,                                                                    
might be  a better source  for suggested reductions.  It was                                                                    
left  to the  departments to  recommend cuts;  however, some                                                                    
did  not  provide any  feedback.  She  mentioned some  other                                                                    
problems  with the  structure of  the  reports that  limited                                                                    
their effectiveness.  For instance, the reports  came out in                                                                    
December, a  time of the  year when the  Legislative Finance                                                                    
Division was busy  with reviewing the budget.  There was not                                                                    
much time  to get  the information  to legislators,  and the                                                                    
legislature lacked a working group  to vet the report. There                                                                    
was also  a lack of  feedback as to  what to include  in the                                                                    
reports or any kind of follow-up mechanism.                                                                                     
                                                                                                                                
Ms. Curtis indicated that she  struggled with how to get the                                                                    
legislature's attention.  She posed  the question as  to who                                                                    
was responsible  for implementing items. In  the Legislative                                                                    
Budget  and Audit  Annual  Report,  the Legislative  Finance                                                                    
Division was required  to report on the  savings. She shared                                                                    
that DHSS had  reported over $1 million in  savings from one                                                                    
of the recommendations in the  report. She opined that there                                                                    
had  been gems  in  the  report. She  noted  that there  was                                                                    
information in  the Department  of Corrections  report about                                                                    
booking fees,  parole fees  that were on  the books  but not                                                                    
being  collect. However,  there  was no  one  to gather  the                                                                    
information. She  claimed there were real  problems with the                                                                    
way things  were set up.  She speculated  that it was  not a                                                                    
good use  of funds to  generate a report if  the information                                                                    
was  not  used. She  had  a  neutral  position, but  it  was                                                                    
disappointing,   based  on   the  effort   that  went   into                                                                    
generating the reports, not to see the material utilized.                                                                       
                                                                                                                                
5:43:00 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg discussed  that in  the past  the                                                                    
legislature  had spent  significant  time defining  missions                                                                    
and measures for  the departments that he  believed had been                                                                    
forgotten.  The administration  was  required  to produce  a                                                                    
tool that  would help the  legislature in  determining where                                                                    
to make  reductions. He  reported people  did not  like that                                                                    
the  tool revealed  certain places  where additional  monies                                                                    
should  be spent.  He  cited  an example  of  a mission  and                                                                    
measure   in  the   Recorder's   Office.   He  thought   the                                                                    
legislature had not had a  vested interest in the report. He                                                                    
expressed  concerns  about  eliminating the  report  in  its                                                                    
entirety. He  was glad  Ms. Curtis pointed  out some  of the                                                                    
recommendations. He asked how  often the recommendations had                                                                    
been taken up by the departments.                                                                                               
                                                                                                                                
5:46:01 PM                                                                                                                    
                                                                                                                                
Ms. Curtis  did not know  of a  mechanism in place  to track                                                                    
implementation. She urged members  to look at the Department                                                                    
of  Education and  Early  Development's performance  review.                                                                    
She  characterized the  report  as a  phenomenal report  and                                                                    
encouraged all  members to review  it. She  highlighted that                                                                    
the  reports depended  on  a contractor,  an  expert in  the                                                                    
field,  being hired.  In managing  the reports,  contractors                                                                    
had  a vested  interest in  having additional  studies done.                                                                    
She suggested contractors  would always recommend conducting                                                                    
additional  studies. She  thought it  was one  obstacle. She                                                                    
added that  it was  important that the  relationship between                                                                    
the  department and  the  contractor remained  professional.                                                                    
She shared  that her staff  had attended every  meeting with                                                                    
the  contractor.  There  were  many lessons  that  had  been                                                                    
learned that she believed could be applied in the future.                                                                       
                                                                                                                                
Co-Chair   Seaton   reported    that   the   House   Finance                                                                    
Subcommittee for  the Legislature's  budget met  on February                                                                    
23rd  and  decided  to  ask the  House  Rules  Committee  to                                                                    
introduce  a  bill that  would  eliminate  the provision  of                                                                    
reviewing all  of the  departments in  a 10-year  cycle. The                                                                    
cost  included $1  million and  3  full-time positions.  The                                                                    
legislature  did  not  fund  the  amount.  He  thought  that                                                                    
routine performance  reviews were  not being used  enough to                                                                    
justify the  expense. He would  rather that  the legislature                                                                    
request a  specific audit for  a department when  needed. He                                                                    
believed  the  committee  should   move  the  bill  and  get                                                                    
something off  the books  that required  full-time positions                                                                    
to be hired.                                                                                                                    
                                                                                                                                
5:49:53 PM                                                                                                                    
                                                                                                                                
Representative   Wilson   disagreed.    She   believed   the                                                                    
legislature  was partially  at  fault.  She thought  finance                                                                    
should have had a subcommittee  review the reports. She also                                                                    
recommended reviewing  a lesser  number of  departments each                                                                    
year. She had  read the reviews and  believed they contained                                                                    
good information.   She found  that some of  the departments                                                                    
had done  better than  other ones.  If the  legislature were                                                                    
more involved,  agencies would  be more  cooperative knowing                                                                    
they   would  be   held  accountable.   She  believed   that                                                                    
accountability was  a missing link.  She thought  that based                                                                    
on  the times,  the legislature  should be  taking a  deeper                                                                    
look beyond  a 90-day or  120-day session. She spoke  to the                                                                    
importance  of  finding  efficiencies. She  thought  follow-                                                                    
through  was  important  to  put   into  place  without  any                                                                    
additional  costs.  Members  of  the  legislature  could  be                                                                    
appointed to review the reports.  She believed the situation                                                                    
was a  disservice to Legislative  Budget and Audit.  She did                                                                    
not support  rushing the bill  through when she  thought the                                                                    
review process could be saved.                                                                                                  
                                                                                                                                
Co-Chair Seaton  surmised that Representative  Wilson wanted                                                                    
to fund the reviews and to fund the three positions.                                                                            
                                                                                                                                
Representative  Wilson believed  the  legislature could  not                                                                    
afford three  positions. She thought that  spending money on                                                                    
the University  to conduct  the review  did not  make sense.                                                                    
She suggested that  maybe the issue could  be addressed over                                                                    
the interim and that the state could pay for one review.                                                                        
                                                                                                                                
5:53:00 PM                                                                                                                    
                                                                                                                                
Representative   Guttenberg  was   concerned  that   if  the                                                                    
required  audits were  eliminated in  statute, institutional                                                                    
memory  could  potentially  be lost.  In  reference  to  the                                                                    
university, he  thought one of  its problems was  in looking                                                                    
at its self.                                                                                                                    
                                                                                                                                
Co-Chair Foster  asked committee  members if they  wanted to                                                                    
take  action on  the bill.  He would  provide more  time for                                                                    
members  to think  about  the bill.  He  indicated that  the                                                                    
deadline for  amendments was on  Tuesday, April 17,  2017 at                                                                    
5:00 p.m.                                                                                                                       
                                                                                                                                
Co-Chair Foster OPENED Public Testimony on HB 167.                                                                              
                                                                                                                                
Co-Chair Foster CLOSED Public Testimony on HB 167.                                                                              
                                                                                                                                
HB  167  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Foster  reviewed the agenda  for the  following day                                                                    
and recessed the  meeting to a call of the  chair [Note: the                                                                    
meeting never reconvened].                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB0076 CS Sectional Analysis 03.15.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Sponsor Statement 01.26.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - Alaska Fisheries Development Foundation Letter 03.01.2017.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - Alaska Shellfish Growers Letter 03.03.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - APICDA 03.06.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - City and Borough of Wrangell Letter 03.01.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - Ketchikan Gateway Borough Letter 03.02.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - Mariculture Task Force Letter 03.03.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - OceansAlaska Letter 03.06.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - Shelly Wright Letter 03.02.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document - Southeast Conference Resolution 03.02.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document-Alaska Municipal League 01.26.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document-City and Borough of Wrangell 01.26.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB0076 Supporting Document-Ketchikan Gateway Borough 01.26.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB76 and HB128 Supporting Document-APICDA 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 76
HB 128
HB128 Amend Document-M.Adkison 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Opposing Document-N. Hilstrand 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Sectional Analysis 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Sponsor Statement 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-AFDF 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-AK Mariculture Task Force 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-Alutiiq Pride Shellfish Hatchery 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-ASGA 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-B Yuknis 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-City & Borough of Wrangell 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-JEDC 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-Ketchikan Gateway Borough 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-SE conference 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128 Supporting Document-SWAMC 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HB128-Supporting Document-SARDFA 4.4.17.pdf HFIN 4/14/2017 1:30:00 PM
HB 128
HCS SB3 - Explanation of Changes.PDF HFIN 4/14/2017 1:30:00 PM
SB 3
HCS SB3 - Sectional Analysis.PDF HFIN 4/14/2017 1:30:00 PM
SB 3
HCS SB3 - Sponsor Statement.PDF HFIN 4/14/2017 1:30:00 PM
SB 3
SB 3 - Letter of Support - AK Chamber.pdf HFIN 4/14/2017 1:30:00 PM
SB 3
SB 3 - new cruise line in Alaska.PDF HFIN 4/14/2017 1:30:00 PM
SB 3
SB3 - FINAL Small Ship 2016 Sampling Report 1-3-17.pdf HFIN 4/14/2017 1:30:00 PM
SB 3
SB3 - Environmental Compliance Info Sheet.pdf HFIN 4/14/2017 1:30:00 PM
SB 3
SB3 - vessel vs. muni discharge.pdf HFIN 4/14/2017 1:30:00 PM
SB 3
SB3 - Letter of Support - Alaskan Dream Cruises.pdf HFIN 4/14/2017 1:30:00 PM
SB 3
SB3 - Small Vessel Discharge Bill FAQs 1.3.2017.pdf HFIN 4/14/2017 1:30:00 PM
SB 3
HB167 Additional Document - Statutory Recommendations to Rules.pdf HFIN 4/14/2017 1:30:00 PM
HB 167
HB167 Suggested Improvements to the Performance Review Program.pdf HFIN 4/14/2017 1:30:00 PM
HB 167
HB167 Sponsor Statement.pdf HFIN 4/14/2017 1:30:00 PM
HB 167
Spring Revenue Forecast DOR 2017 RSB - 4.14.17.pdf HFIN 4/14/2017 1:30:00 PM
HFIN DOR Spring Revenue Forecast
DOR Spring 2017 Revenue Forecast Presentation - FINAL.PDF HFIN 4/14/2017 1:30:00 PM
HFIN DOR Spring Revenue Forecast PP
HB 103 - Amendments.pdf HFIN 4/14/2017 1:30:00 PM
HB 103
HB103_Support_041417.pdf HFIN 4/14/2017 1:30:00 PM
HB 103
SB3 Support UFA to Hse Finance 030117.pdf HFIN 4/14/2017 1:30:00 PM
SB 3