Legislature(1997 - 1998)
02/25/1998 03:21 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 400 - DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT Number 0800 CHAIRMAN ROKEBERG announced the committee's next item of business was HB 400, "An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Commerce and Rural Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; relating to the Department of Commerce and Rural Development; adjusting the membership of certain multi-member bodies to reflect the transfer of duties among departments and the elimination of departments; and providing for an effective date." Chairman Rokeberg indicated the committee was continuing with testimony from the February 23 hearing. Number 0815 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic Development (DCED), came forward to testify. He indicated much of his testimony would be a summation of several weeks of testimony on HB 409, a similar piece of legislation which went through lengthy hearings approximately two years previously. Number 0853 MR. BUSH stated it is the DCED's and the Administration's position that the fundamental missions of the DCED and the Department of Community and Regional Affairs (DCRA) are not similar. He said DCED focuses on economic development for the private sector. DCRA focuses on local and municipal development, on government projects and programs. Mr. Bush noted there was not a lot of similarity between international trade and statewide tourism promotion, and local sewer and water projects. He said, as he had stated in his testimony two years ago, he has looked closely at allegations of duplication of services between DCRA and DCED and has not been able to find any, noting he would welcome the opportunity to address anyone else's perceived duplications at any time. Mr. Bush stated at the present time DCED is an effective advocate for economic development in this state because DCED has economic development as its sole focus. He stated it is important to retain that focus, commenting that HB 400 would dilute that. Number 0907 MR. BUSH indicated his principle concern with HB 400 is that it is a massive reorganization of government functions and agencies with very little benefit. He stated, "We should be talking instead about restructuring and eliminating programs, and not simply moving people around." He indicated simply moving people around is counterproductive because it only creates short-term expenses, high employee anxiety and morale problems, and wasted administrative time and effort. Mr. Bush said they would welcome a reasonable discussion on the merits of programs or particular agencies in his department, and he is sure the same can be said for DCRA, but they see no particular value in this piece of legislation because it doesn't deal with the crucial issues of what programs are valuable and how valuable they are. Mr. Bush quoted Representative Mackie regarding HB 409 in 1996, "Why take the action if it will not eliminate services or save money?" Mr. Bush noted Commissioner Irwin of the DCRA had used the "if it isn't broken, why fix it?" analogy in the previous hearing on HB 400, and Mr. Bush said he thinks that is true of the programs of both DCRA and DCED, noting it is certainly true for the programs in his department. He said the programs are working efficiently and effectively and if there is a perception of a problem relating to a particular program in DCED, again, he said he would welcome any kind of discussion regarding that particular program with this body or any other body in the legislature. Mr. Bush noted that the performance-based budgeting process this body was undertaking, and which the DCED supports, is designed to do just that, to elicit and better define agency and program missions, goals and objectives; and to set up ways for the administration and the legislature to assess success or failure of those programs. He said the process then leaves it to the agencies to implement the defined objectives, and this particular bill, in its micro-management and organization focus, flies directly in the face of that performance-based budgeting process. Number 1018 MR. BUSH said he thought HB 400 was poorly thought out in some ways, and didn't take the lengthy testimony heard two years ago on HB 409 into consideration. In 1996 they heard extensive testimony that day care assistance and the Head Start Program needed to be in the same department for coordination purposes, noting sponsor may be correcting this, but as the current version of HB 400 is written, those particular programs end up in different departments. He stated testimony was heard in 1996 stating that the child care facility revolving loan program should remain with other state loan programs. He noted a good deal of energy and effort has gone into combining state loan programs under one division, the Division of Investments in DCED, for administrative savings and purposes. Mr. Bush said to split that particular loan program and put in the Department of Health and Social Services (H&SS) did not make sense, as they had testified two years ago, noting no one had disagreed with them. Mr. Bush commented that if it were done, he thought he could safely say the result would be an interagency agreement moving the program back because that is what is currently being done with several other loan programs in the state. Mr. Bush noted the DCED currently operates several loan programs for other departments. Mr. Bush stated another principal concern with HB 400 the discussion of the so-called finance division. Mr. Bush indicated he thinks there is a misconception by the bill sponsor if he thinks placing independent agencies like the Alaska Industrial Development and Export Authority (AIDEA), Alaska Science and Technology Foundation (ASTF), the Aerospace Development Corporation (AADC), and the Tourism Marketing Council (ATMC) into a division will suddenly bring those agencies under the management and control of that division director. He stated those particular entities are run by boards of directors that are independent of state control and government. Mr. Bush noted they are not currently under the control of the Commissioner of the DCED. He indicated representatives of the DCED sit as members on those boards and have an influence, but other people appointed from the public and private sectors also sit on those boards. Mr. Bush said those boards run as independent agencies; it has been the will of the legislature for a long time that that's the way these agencies operate. Those agencies are truly independent, and without a change to their management structure or an elimination of their current management structure, they will never really fall into a division under the control of the division director. Mr. Bush stated that if they want to make those agencies particular programs under a division, the legislature is certainly free to do that, but HB 400 bill does not currently do so. Number 1169 MR. BUSH indicated there may be another misconception about HB 400. He noted the sponsor said HB 400 would create only four divisions. Mr. Bush stated several other divisions currently exist in state statute and HB 400, as drafted, does not eliminate those divisions. As examples he gave the Division of Insurance; Division of Banking, Securities and Corporations; and Division of Tourism. He indicated several other divisions in state government exist even though they are not in statute; Mr. Bush said nothing in HB 400 would prohibit divisions from continuing to exist. He commented he could probably safely say, for example, that the Division of Occupational Licensing would probably remain as separate division under any management structure because it does not really fit under the same division as other divisions in the DCED. He indicated occupational licensing would not be run as a separate program in a division which also included international trade because it is not a program in the same sense that international trade is. Mr. Bush stated committee members in 1996 recognized many of the problems this bill has, and he wanted to point out some comments made in 1996 by committee members from the House Standing Committee on Community and Regional Affairs. Mr. Bush said Representative Austerman noted the concept of a "one-stop shop" for rural communities at DCRA was very valuable. Representative Austerman also noted that the Head Start Program and child care were interrelated and should remain together. Representative Nicholia stated it was important for child care to remain with an economic or rural development department, not H&SS, and Mr. Bush noted she said so, based upon testimony the committee heard at the time, because she did not want child care to be viewed as a welfare program. Mr. Bush noted Representative Kott had stated he hoped the particular piece of legislation at that time would not be viewed as a rural versus urban issue, but that in fact it is. Representative Nicholia pointed out that DCRA bridged the gap between Juneau and rural Alaska, and that people in rural Alaska have learned, over the years, how to deal with government through DCRA. Mr. Bush said consolidation and elimination would "upset the apple cart," noting he was using Representative Nicholia's words, and it would take years for the people to relearn the system. Representative Austerman had commented that a merger of DCRA and DCED would cause "heartburn" in rural Alaska and he hoped that the bill would not be seen again; Mr. Bush noted that was a quote. Representative Kott stated that he was not convinced that the consolidation was in the people's best interest, and that the disruption to lives and programs was more than intended. Mr. Bush commented that Representative Ivan had concluded the lengthy tedious hearings on HB 409 by stating that he and Co-Chairman Austerman, with the concurrence of all majority members of the committee, believed that HB 409 was not in the best interest of the state. Number 1338 MR. BUSH indicated he had just received the sponsor's analysis of cost savings associated with HB 400. He said he had a few comments about the forthcoming fiscal note so the committee had an understanding of how the note was put together. He said it was a massive undertaking, commenting that the fiscal note two years ago took a month. He indicated DCED was able to use that fiscal note as a starting point, and he stated the department hopes to have the fiscal note on the current version of HB 400 ready by the next week. There would be a single note for all departments instead of the multiple notes done two years ago, because savings in one department are costs in another. Mr. Bush stated it seemed more beneficial for the committee to have the complete picture of what this proposal involved. He said they had several assumptions: a commissioner and a commissioner's secretary would be eliminated, and an administrative services director would be downgraded to a staff member. Mr. Bush said other members of the commissioner's office under the proposed fiscal note would not be eliminated, however. They felt there would not be a reduction in work in the short run, at least, because a significant amount of work would be added by moving people around and dealing with the administrative process of a move. Furthermore, Mr. Bush noted this proposal would add significant responsibilities to the remaining commissioner. Mr. Bush said the DCED'S commissioner currently sits on approximately 25 boards, commissions and task forces, and he thinks ten of those exist in statute. HB 400 alone added six more commissions and boards by statute to this commissioner's responsibilities. Mr. Bush indicated the representatives of DCRA could inform the committee how many other entities its commissioner sits on that would have to be taken on by the new commissioner. He said the result would be a combination of 19 current agencies and divisions in one department. In DCED's view, administering a department of that size would take two deputy commissioners not one, at least in the short run. Mr. Bush noted the cost savings in the sponsor's proposal showed the elimination of the special assistants existing in both departments. Mr. Bush commented he couldn't even imagine how he would operate his current department without a special assistant, noting having a larger department with no special assistants struck him as unrealistic. Number 1496 MR. BUSH stated those types of things would not be included in the department's fiscal note. He indicated personnel moves would be minimized, with one caveat: entire programs would be kept together. He indicated they wanted to avoid a situation where, for example, a division in Juneau has three or four different offices under one division director, noting that was not realistic. So, he said, everybody in one division would be co-located under the proposed fiscal note. He stated two years ago the Department of Administration determined that a full-time space planner on a short-term basis would be necessary in both Juneau and Anchorage to help implement the necessary moves, noting there is no reason he can see why that won't happen again, and that will probably appear in the fiscal note. Mr. Bush said they've talked at length about the problem of the move. Two years ago it was decided that temporary space would be necessary, indicating it would be to house dislocated personnel in order to effect the move. He said the estimate two years ago was $25,000 a year, and he is assuming that will also be in the fiscal note again. Mr. Bush stated that the computer compatibility issues are probably the most disconcerting part of the proposal from an administrative standpoint, and part of the most difficult thing for them to do from the perspective of a fiscal note. They don't really know what will happen regarding computer compatibility if these two departments are combined, but Mr. Bush assured the committee it would not be cheap. He said the estimate two years ago was $250,000 just to make the computers themselves compatible and money was also included for data processing personnel to make the two systems work when they were combined. Number 1632 MR. BUSH stated, finally, they expect unforeseen expenses will probably come before the legislature at some point, but these will not be included in the fiscal note. For example, DCRA's building, as he understands it, is not currently ADA (Americans with Disabilities Act) compatible. "You cannot move people, you can't work on that building, you can't do things to that building without making it ADA compatible," he said, and it becomes a difficult problem if the building is going to continue to be used, unless it is used in the set-up it currently has. Number 1670 REPRESENTATIVE RYAN asked which building Mr. Bush was referring to. Number 1679 MR. BUSH clarified it was the DCRA building in Juneau just below the court building, across the street and down the hill from the Capitol. He stated, in conclusion, they believed this proposal would not result in any significant reduction in the state's fiscal gap and would cost the state money in the short run. He said HB 400 is in direct opposition to the testimony of all departments, the Governor, and the people of Alaska who spoke out and testified in 1996. They also feel that the delivery of service and the organization of government and the reorganization of government is a function that should remain with the executive branch, and they are somewhat concerned that they were not consulted on this particular issue until very recently. Finally, Mr. Bush said, the sponsor's statement says cross-department coordination is difficult. He stated, "I do not believe -- I have (indisc.) seen any evidence of cross - of cross department coordination between Commerce and Community [and] Regional Affairs." He said he works very closely with DCRA on a fairly regular basis, noting Mr. Cotten, Deputy Commissioner, DCRA, could confirm that. Mr. Bush stated coordination has never been a problem under the Knowles administration, noting he can't speak for prior times. He apologized to the committee if he sounded a bit "testy" about the bill, explaining he and several members of his staff spent the better part of a month two years ago testifying, preparing testimony, doing fiscal notes, working with the sponsor back then, working with the committee back then and working with several other legislators. He said they attended many hearings, they prepared and delivered testimony on several occasions, and at the end of that process, the entire committee, every Republican and Democrat on that committee, determined that the merger was a bad idea. Mr. Bush said he just simply doesn't look forward to going through that long and tedious process again, stating "It was, quite simply, a bad idea back then, it's still a bad idea and I believe that both you and the administration and myself have more important things that we should be doing than ... looking at this particular piece of legislation again. So with that, I urge the committee to move on to some other business, and hope that this bill stays here." Number 1849 REPRESENTATIVE COWDERY stated he took it that Mr. Bush was not for HB 400. He asked Mr. Bush how long he has been in state government. Number 1861 MR. BUSH indicated that he had been in state government since 1982, with a 2 1/2 year gap in the middle of that time. Number 1869 REPRESENTATIVE COWDERY asked how long DCED has been in existence. MR. BUSH said it was his understanding that the Department of Commerce and the Department of Economic Development had been merged in the mid-1970s, in approximately 1976. CHAIRMAN ROKEBERG added, "(Indisc.) there's always been a Department of Commerce and there always will be." Number 1915 REPRESENTATIVE COWDERY asked how many departments in government were there 10, 15 or 20 years ago. Number 1920 MR. BUSH responded he has been with state government since 1982 and did not think there have been any new departments since then, but he noted a lot happened in the few years before 1982, when there was a lot of money. Number 1938 REPRESENTATIVE COWDERY indicated Mr. Bush had referred to morale problems, noting it was Representative Cowdery's understanding that approximately a dozen people have left DCED in about the past 18 months. Representative Cowdery indicated some of those people had conveyed to him that they left because of morale problems and asked Mr. Bush if that was the truth. Number 1968 MR. BUSH responded that was probably true, and indicated that may be true of any department, some employees like different management styles. He thinks, in a department of approximately 390 people, losing a dozen a year is not too bad. REPRESENTATIVE COWDERY commented, "Especially in trade and development ...? You have a large overturn in that?" Number 2000 MR. BUSH replied they've had what he considers a significant turnover in the Division of Trade and Development, but from a morale stand point, he could only think of two people he would say left for morale reasons, left because they were unhappy with the department. He said the others moved on to bigger jobs, noting the head of their trade office moved to San Francisco, California. Number 2030 REPRESENTATIVE COWDERY referred to Mr. Bush's previous mention of AIDEA, noting it was independent agency and they all understood the vote Representative Cowdery asked if it really mattered which department AIDEA was under, commenting that it could be under the Department of Administration, for example. Number 2056 MR. BUSH said that was a reasonable debate, noting he thought AIDEA was only put in DCED because it does a commercial-oriented business. Mr. Bush said an even more extreme example would be the Alaska Railroad Corporation (ARR), because it isn't under normal budget processes. He said DCED has virtually no connection with ARR besides the fact that it shows up in DCED's phone book. Number 2081 REPRESENTATIVE COWDERY commented that he did not think HB 400, as he read it, had any intention of doing away with the Division of Banking, Securities and Corporations; or the Division of Insurance, or any those others. He asked Mr. Bush if he thought this would do away with that. Number 2096 MR. BUSH responded that was the way the sponsor had described it to him: there would be only four divisions under his proposal, and all of the existing divisions would be moved into one of those four, so that they would become subgroups - sections or programs within those divisions. REPRESENTATIVE COWDERY noted they would still exist. MR. BUSH replied that they would exist as programs, not divisions. REPRESENTATIVE COWDERY commented, "A different title (indisc.)." Number 2136 MR. BUSH stated, in clarification, his only point was that there's apparently an inconsistency between the sponsor's statement and intent, in the way the bill is drafted, because they exist in statute as divisions. Number 2157 REPRESENTATIVE COWDERY indicated he was asking Mr. Bush for some of the DCED's results in economic development over approximately the past 18 months. He stated, "I know everybody claims that FedEx [Federal Express Corporation] moved in because of them, but I claim that too ...." Number 2196 MR. BUSH replied he thought there were several things going on. For example, he referred to a power superconductor proposal down in Ketchikan he said the legislature is currently looking at, and he noted was generated by DCED through a direct contact between a member of the Division of Trade and Development and the private sector. Mr. Bush noted two appearances in the past two years on QVC [television home shopping channel by QVC, Incorporated] which were very successful for several merchants in Alaska. He said those appearance, which he confessed he had not seen, were generated from contacts made by his department directly to or with the television companies. Mr. Bush said he was caught a bit off guard here because he does not do the trade and development side. He noted Commissioner-designee Sedwick would be in front of the committee next week, indicating she would provide many more examples, addressing "where we've been and where we're going." REPRESENTATIVE COWDERY excused himself for the House Special Committee on International Trade and Tourism hearing on HB 432. TAPE 98-19, SIDE A Number 0001 REPRESENTATIVE RYAN stated the testimony had been very interesting [FROM TAPE LOG NOTES]. He continued, "... (Indisc.) perhaps instead of putting departments together -- I know there's a duplication if you move two departments together, you have duplication of administration; you don't need two administrations so there's a definite savings there." Representative Ryan stated the number of boards and commissions the new commissioner would be required to sit on could be reduced by amendment. Representative Ryan said they do have a huge department in state government which seems to "bumble and struggle along," commenting that he was speaking of the Department of Transportation and Public Facilities (DOT/PF), stating, "I mean they're, they're outrageous, but they manage to - to get along." Representative Ryan said some of the things Mr. Bush described seemed to be poor management choices on the part of a lot of administrations. Representative Ryan said Mr. Bush mentioned computer compatibility. Representative Ryan noted he has seen that coming through over and over again in budgets, using the description, "Why we all can't play from the same sheet of music?" He referred to the point Mr. Bush mentioned about coordinating with the governor. Representative Ryan stated he remembered from his reading of the state constitution that all power comes from the people and it's invested in their representatives, the legislature, and there is a governor and there is a court. He noted only a supreme court is mentioned in the state constitution and the legislature may establish other courts from time to time as it sees fit. He said, as far departments' administration, it's up to the legislature to decide what they give the governor to operate. Representative Ryan said then, necessarily, if the legislature chooses to do away with and/or consolidate, et cetera, he thinks that would be within the legislature's constitutional purview, and he stated, "It might be nice to contact the governor from time to time and say, 'What do you think?' if you have a governor who's willing to talk to you. I haven't found that forthcoming from the third floor. It seems to be a confrontational attitude of, 'This is what I want, and I'm not about to discuss it with you,' so under those circumstances we [the legislature] take the initiative." Representative Ryan noted Mr. Bush mentioned some key points that, with perhaps a little change in language might make this bill work a little smoother, commenting that was his "two cents." Number 0213 CHAIRMAN ROKEBERG stated for the information of all present he would be adjourning this meeting no later than 5:15 p.m. because of other commitments and other hearings. Chairman Rokeberg invited Mr. Bush back to future hearings on HB 400, noting the bill would be taken up Friday, February 27. Number 0244 MR. BUSH noted he would not be able to attend on Friday, but would available the following week. Number 0274 CHAIRMAN ROKEBERG noted the presence of Lamar Cotten, Deputy Commissioner, DCRA and Dwight Perkins, Special Assistant, Department of Labor (DOL), asking them to limit their comments to 7 1/2 minutes. Number 0274 LAMAR COTTEN, Deputy Commissioner, Department of Community and Regional Affairs, came forward to testify. He stated Commissioner Irwin of DCRA had testified at the previous hearing, but Mr. Cotten noted he wanted to briefly comment on a couple of points brought up by the sponsor in his presentation. Before beginning, Mr. Cotten said he wanted to reiterate Mr. Bush's comment; that is, DCRA also, unequivocally, does not support HB 400. Mr. Cotten stated it is not the type of bill DCRA would like to see go forward, however, they would not suggest they have a monopoly on all of the good ideas on how to run government. He said DCRA is certainly open to ideas, but the department is not sure that this approach is the right approach, both for government and more importantly, the clients that DCRA serves. Mr. Cotten stated the issue of government efficiency was addressed as a problem in the February 23 hearing. Mr. Cotten noted efficiency was in question because of allegation of duplication of services by the two departments, and the bill sponsor had laid out a series of points where overlapping missions and activities had occurred. Mr. Cotten indicated he would like to briefly go through those points to show the difference between the perception of the sponsor and the reality of what actually happens in the two departments. He stated the first point addressed by the sponsor is rural economic development and rural small business development. Mr. Cotten noted he is not aware of very much DCED does in that area because DCED deals directly with private industry. He noted DCRA does not deal primarily with the private sector, DCRA deals with the small community governments and nonprofits, and what they consider "communitive" development - helping small communities build the infrastructure that will hopefully someday eventually attract the private capital. Number 0416 CHAIRMAN ROKEBERG asked why was it called "rural economic development" if that was the case, noting that had confused him for a number of years. Number 0429 MR. COTTEN said he wasn't sure if he had ever called it that, and DCRA prefers to use "community development." He said, "I guess the distinction I'm trying to make ... is that community development is really working those basic -- whether it's energy to build a generator, whether it's to assist somebody with a grant to - to build a road or help build waterfront projects ..." CHAIRMAN ROKEBERG interjected, "Aren't most of your grant monies from the Department of Agriculture for rural economic development?" Number 0460 MR. COTTEN responded that they were not, noting in the past they had primarily been from the federal government for Housing and Urban Development (HUD). He indicated that then until last year funding had come through rural development assistance which was primarily general fund, and, for one year, through AIDEA. CHAIRMAN ROKEBERG asked, "So there's no more 'ag' money from the feds then?" Number 0481 MR. COTTEN replied there was a small grant program of about $100,000 or $150,000, stating, "That has always been a very small portion of the -- our rural ..." CHAIRMAN ROKEBERG noted that was for "rural council" or whatever they called it. Number 0493 MR. COTTEN replied actually, it came through their department and has been used for planning grants. He said it has rarely been used for economic development other than the planning feasibility stage. Mr. Cotten continued, noting an overlap on fisheries had been brought up. He said he was assuming the reference was to the Community Development Quota Program (CDQ). Mr. Cotten said it is a program which is being coordinated between the Alaska Department of Fish and Game (ADF&G), DCED and DCRA. It is a program involving fishing groups in rural Alaska working and becoming partners with the private sector. Mr. Cotten stated, "In our minds it's a good example of how there's not overlap, but the expertise and the backgrounds of staff in those three departments are a good example of how they coordinate to work with those groups. So, it is not as if we have duplicate services in the three departments that work with CDQ, but we meet as a team. And I thinks it's not only with CDQ, but you'll see with many programs that the state works with is that, rightfully so, no agency has a monopoly, if you will, on what succinct (ph) or particular services that a project or an economic activity really needs. So I think there's a real clear distinction between coordination and overlap. Rural tourism ..." Number 0576 CHAIRMAN ROKEBERG referred back to the CDQ program, noting three different departments were involved. He asked, "Do we get any kind of a share from the funds that are provided by the private sector to the state of Alaska for administration of (indisc.) program?" Number 0585 MR. COTTEN responded, "The state contributes the money to do the oversight, directly. There is, however, ..." Number 0593 CHAIRMAN ROKEBERG interjected, "Wait a minute, so the money's being generated by the private sector to the rural communities that qualified under federal statutes for this, and we administer it but we don't get any money for it. We have to pay for it ourselves, is that right?" Number 0606 MR. COTTEN replied, "I was going to say 'however.' However, there was a change in federal law through the Magnuson-Stevens ... Act [Magnuson-Stevens Fishery Conservation and Management Act] that, in fact, did tax the fishing industry, and part of that money is to be conveyed ... back to the state of Alaska to administer this program, and that tax is on the fishing industry itself that has benefitted from this program." CHAIRMAN ROKEBERG commented, "That's good, because if we have to have three sacks of bureaucrats to do one program, then we need all the money we can get from the feds. Go on, I don't want to interrupt you anymore." Number 0635 MR. COTTEN laughed and noted he was not sure he agreed with that conclusion. He continued with his comment on rural tourism, noting DCRA was not involved in rural tourism. He said on a rare occasion a community might qualify for a planning grant, but there is a Division of Tourism in DCED; DCRA does not involve itself in tourism. Mr. Cotten noted infrastructure scoping, planning and funding had been brought up and he indicated he assumed this related back to comments made by Mr. Krieber, Legislative Administrative Assistant to Representative Kohring, at the February 23 hearing about a scoping process for the communities of Southeast Alaska affected by the timber industry-related mill closures. Mr. Cotten said that is, again, a coordination of different agencies and "hopefully everybody's at the table." Mr. Cotten noted that, for a small community like Wrangell or Ketchikan, all the services these communities would receive were not going to come out of one agency. They might need some help from the Department of Health and Social Services (H&SS), help from DOT/PF to speed up a project to get work in a community, help from DCED because of tourism. Mr. Cotten noted he thinks it's a good example of coordination, but that there is no overlap there. Addressing another point of perceived overlap, Mr. Cotten referred to energy development - electrical utility assistance. He noted the energy authority was disbanded in 1993 and the portion of that agency which dealt with bulk fuel, small generators, and alternative energy went to DCRA's Division of Energy. He said the note for the "four dam pool" went to AIDEA which has bonding authority, and he indicated that is AIDEA's only energy-related activity. Mr. Cotten commented that AIDEA has not made any loans to anybody since 1993 on energy; so, he said, when it comes to energy, particularly in rural Alaska, DCRA is really the only agency dealing with that issue. Number 0733 MR. COTTEN noted Representative Kohring had mentioned rural sanitation projects and funding. Mr. Cotten stated DCRA deals, again, as part of a package with small communities, assisting their staff with utility operation and maintenance and he's not aware of any capacity in which DCED has to deal with that topic. Mr. Cotten addressed assistance to economically distressed regions, stating that, again, this is what they called "community response partnership," indicating it is a multi-agency coordination process coming into a community. He noted many times DCRA has been the "point" agency so that the needs of the community can be funneled through "one voice." Mr. Cotten stated he wanted to make one or two extra comments. He referred to a DCED report mentioned by the sponsor completed in 1994, he thought, which looked at "overlapping" of the two agencies. Mr. Cotten stated that report had been done by the last administration, by the commissioner, who had hired one of his former employees to look at the issue. Mr. Cotten said he meant no disrespect to the former commissioner or the report's author, but Mr. Cotten said he thought the report was really a reflection of the problems those two departments had then "(indisc.) having to sign memorandums of understanding as to who was doing what." He stated that was an issue and a problem from the past administration and did not exist anymore. Mr. Cotten said it was not an issue in front of DCRA as a department, or as a department dealing with DCED. Number 0819 MR. COTTEN noted, as a final point, "The sponsor spoke about a one- stop process for communities to come in and work, and he used the example of - of having AIDEA, if I remember right, and ASTF and PCE under one division." Mr. Cotten said, from his experience as a former city and borough manager, and therefore as a client of a process like that, it simply did not make any sense. He said, "PCE, municipal systems and revenue sharing, are - are straight grants. [For] Municipal systems and revenue sharing, we have one person in our department do all that. It isn't something you come in and negotiate with. PCE is a formula-based process. It is not something you come in to negotiate like you would on a loan or a grant. AIDEA, by the way, rarely ever loans money to communities. They are primarily a lender of - of funds to the private sector. So, I think even though on the surface putting titles together under one division looks good, but I can tell you, as an ex-client of this department, and - and Commerce's department to a very minor extent, it doesn't work that work that way. So, in summary, we don't claim to have monopoly on all the good ideas ... but I can say, having worked in local government for over the last 20 years, along with some state service, that I thinks there's a compelling argument to keep a department that focuses primarily on dealing with communities, whether they be large ones or small ones. And that, to me, is a succinct, different mission than Commerce that really does deal with economic development, and directly, as a client, the private sector." REPRESENTATIVE RYAN noted he had to leave as he was late for another meeting. Number 0930 CHAIRMAN ROKEBERG asked Mr. Cotten if he could condense some of his comments into the form of a written outline, noting the portion of his testimony when he was comparing a couple of different functions as it related to the sponsor's statement. Chairman Rokeberg said that might be helpful for the committee. MR. COTTEN answered in the affirmative. CHAIRMAN ROKEBERG noted the time was 5:10 p.m. He asked Dwight Perkins, DOL, if he could delay his statement until the next hearing which was scheduled for Friday, February 27. Number 0958 DWIGHT PERKINS, Special Assistant, Department of Labor, stated it was up to the Chairman, commenting that his statement was less than five minutes. Number 0963 CHAIRMAN ROKEBERG said he preferred to wait until the next hearing. Chairman Rokeberg asked the bill sponsor if he wished to comment, noting Representative Kohring had been present at all times during the testimony. Number 0984 REPRESENTATIVE KOHRING came forward to testify, indicating he was there with his staff member, Mr. Krieber. Representative Kohring stated he was frankly not surprised to hear the previous testimony, particularly of Mr. Bush. He commented he thought Mr. Bush was worried about losing his job, using the analogy of a rabbit backed into a corner. Representative Kohring noted that they were speaking about streamlining the bureaucracy of state government, not eliminating programs. He circulated a hand-out to the committee members which gave an outline of what they were trying to accomplish with HB 400. He reiterated that they were trying to streamline the structure of the organization by creating four different divisions, setting the programs up under a new management structure without eliminating any. The former DCRA would become a rural affairs division, the former DCED would become a statewide development division, and they would take, as mentioned previously, all the financial-related entities and programs out there, consolidating them under one financial resources division, and the fourth division would be the division of administration. Representative Kohring stated he would like to provide more details at the subsequent hearing, but he said they do still maintain that both entities are economic development-related, and he referred to the second page on the handout, indicating the overlapping functions occurring in both DCED and DCRA. He said, "You can see there's about nine or ten of them there." On the third page, he said, they show what the cost savings would be, noting this reflects the elimination of the DCRA commissioner's office. Again, as he mentioned at the February 23 hearing, the identities of the new commissioner and other upper management personnel in this new entity would be at the discretion of the governor's office. Representative Kohring stated the committee could see that the bottom-line savings would be $1, 054,000, if one of the two commissioners' offices was eliminated. He said that had been a "nut-shell" recap of his presentation at the previous hearing, noting he would certainly like to have, and looked forward to, the opportunity to refute some of the claims made earlier in this hearing. In closing, he stated this was a good faith effort to achieve not just simply greater efficiency in government, but also to try and retain economic development-related programs by spending less money. He indicated if they were going to continue with their five-year budget plan to reduce spending, one course of action would be this "merger bill" which would save $1 million a year while protecting programs, or they could stay with the existing structure and simply start "lopping off programs." Representative Kohring said they are essentially faced with a choice in that regard. He thinks they owe it to themselves, and the people in Alaska who want to see them enhance the economy with programs of this nature, to look at streamlining the bureaucracy so they can protect some of these programs. Number 1170 CHAIRMAN ROKEBERG asked if Representative Kohring and his staff had reviewed the minutes on HB 409 mentioned in this meeting's testimony. REPRESENTATIVE KOHRING responded Mr. Krieber had reviewed those, but he personally had not. CHAIRMAN ROKEBERG suggested that Mr. Krieber could possibly highlight some of the statements referred to for Representative Kohring because the committee would be also be reviewing some of those minutes. Chairman Rokeberg stated the committee had received a letter from the Alaska Municipal League in opposition to HB 400, and a copy would be provided to the sponsor. He noted the letter points out the concern that there is a constitutional mandate for a local (indisc.) agency in Article X, Section 14, and the sponsor might want to be prepared to respond to that [Article X, Section 14 of the Constitution of the State of Alaska reads: "Local government agency. An agency shall be established by law in the executive branch of the state government to advise and assist local governments. It shall review their activities, collect and publish local government information, and perform other duties prescribed by law."]. Chairman Rokeberg indicated HB 400 would be held over, stating the committee would take HB 400 up on February 27 at approximately 4:00 p.m. after the hearing on HB 458. The Chairman noted the committee would be hearing Mr. Perkins's testimony; he believed Jim Nordlund, H&SS, would be testifying, and DCED and DCRA staff were invited to provide further testimony and/or be available for questions.