Legislature(1997 - 1998)

02/25/1998 03:21 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                 
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               
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                       
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                     
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.                                                                 

Document Name Date/Time Subjects