Legislature(1993 - 1994)

03/08/1994 08:00 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 345 - PRESERVATION OF PUBLIC FACILITIES                                   
  CHAIRMAN VEZEY opened HB 345 for discussion under bills                      
  previously heard.                                                            
  Number 443                                                                   
  JEANNETTE JAMES, PRIME SPONSOR OF HB 345, addressed the                      
  bill.  She commented since the last hearing of HB 345, the                   
  State Association of Facilities Management held a meeting to                 
  discuss HB 345 and decided they would propose a committee                    
  Number 451                                                                   
  CHAIRMAN VEZEY asked if the committee had received a revised                 
  fiscal note.                                                                 
  Number 452                                                                   
  REPRESENTATIVE JAMES replied another fiscal note was                         
  received from the University of Alaska Fairbanks (UAF).  She                 
  suspected, in looking at the two fiscal notes, that the                      
  reduction of the operating budget meant the university was                   
  not asking for operation dollars.  The difference between                    
  the capital request starting in 1995 from $16 million in the                 
  Department of Transportation fiscal note, to the $11 million                 
  in the UAF fiscal note, is to just include that portion that                 
  would relate to UAF.                                                         
  REPRESENTATIVE JAMES stated the purpose of HB 345 is to put                  
  emphasis on the maintenance of the state's public                            
  facilities.  She said the sooner these facilities are taken                  
  care of, the better off the state will be.  She would like                   
  to set in statute, a formula for funding maintenance of                      
  public facilities based on a life cost basis.  This formula                  
  would be used for allocating revenues that would be required                 
  for each agency.  Each agency, including the Governor, would                 
  have to present their number in the budget process.  She                     
  would like the legislature to be required to fund these                      
  amounts, before they could authorize the construction of new                 
  facilities.  She pointed out the state has continued to fund                 
  new facilities, without any consideration for buildings the                  
  state already has.                                                           
  REPRESENTATIVE JAMES outlined the fiscal note as the $61                     
  million, indicated in the total operating cost, would be the                 
  amount required in the current year's budget if the                          
  legislature were to formula fund the percentage of                           
  maintenance required for all existing facilities.  Of the                    
  $61 million, about $35-36 million is included in the                         
  operating budget that has been presented by the Governor.                    
  She noted the great short fall in the operating budget,                      
  compared to what the budget has requested.  The capital line                 
  is the amount that would take over a period of 15 years to                   
  catch up on the deferred maintenance the state has fallen                    
  behind on.                                                                   
  CHAIRMAN VEZEY asked if the legislature were to authorize                    
  $75 million in bonding, how would it impact the proposed                     
  fiscal note.                                                                 
  Number 498                                                                   
  REPRESENTATIVE JAMES suggested the $75 million would not                     
  address the deficit between the $35 million currently in the                 
  budget and the $61 million that would be required just to                    
  keep up.  Until the state fully funds maintenance, the state                 
  will continue to fall behind.                                                
  Number 509                                                                   
  CHAIRMAN VEZEY questioned what $31 million REPRESENTATIVE                    
  JAMES was referring to in the budget.                                        
  Number 510                                                                   
  REPRESENTATIVE JAMES responded $31 million is spread out                     
  through the agencies' budgets.                                               
  Number 511                                                                   
  CHAIRMAN VEZEY stated when he brought up the $75 million in                  
  bonding, he was only referring to the university.                            
  Number 512                                                                   
  REPRESENTATIVE JAMES was not aware of the University's                       
  operating budget for 1994.  She suspected it did not address                 
  deferred maintenance and it only addresses the past deferred                 
  maintenance by the $75 million.  She noted the University                    
  would continue to pick up more deferred maintenance because                  
  it was not in the budget.                                                    
  Number 516                                                                   
  CHAIRMAN VEZEY clarified the $75 million would cut in half                   
  the accrued deferred maintenance, and it would not impact                    
  the proposed fiscal note at all.                                             
  Number 517                                                                   
  REPRESENTATIVE JAMES affirmed CHAIRMAN VEZEY.  She was                       
  disappointed there was not more public input and response to                 
  HB 345.  She wanted to make the public aware of the                          
  seriousness of the problem.                                                  
  CHAIRMAN VEZEY asked what she had meant by public.                           
  Number 525                                                                   
  REPRESENTATIVE JAMES answered anyone other than the                          
  (REPRESENTATIVE KOTT returned to the meeting at 9:34 a.m.)                   
  REPRESENTATIVE JAMES felt if HB 345 was an important issue                   
  people would not have to be invited, and if the desire                       
  existed they would be present.                                               
  Number 536                                                                   
  CHAIRMAN VEZEY did not accept her reasoning because he                       
  believed those involved in maintenance were acutely aware of                 
  the problem.  He thought the administrators of the state's                   
  public facilities probably feel like "it's the sword                         
  Democoles hanging over their head."  He stated the majority                  
  of the average public is probably not aware that all of the                  
  state's public facilities are broken or deteriorating.                       
  CHAIRMAN VEZEY stated he felt the fiscal notes were                          
  presented in an improper manner.  The University fiscal note                 
  estimates $11 million escalating at about 3-4 percent a                      
  year.  He stated those capital improvements to existing                      
  facilities represent depreciation and they will accrue,                      
  whether the legislature funds them or not.                                   
  Number 551                                                                   
  REPRESENTATIVE JAMES stated CHAIRMAN VEZEY was correct.                      
  Number 552                                                                   
  CHAIRMAN VEZEY looked at the DOT fiscal note and noted it                    
  included the cost of operation for the facilities.  He                       
  believed they had good reason because their operating                        
  budgets had been manipulated to go to other than building                    
  maintenance, utilities, etc.                                                 
  Number 557                                                                   
  REPRESENTATIVE JAMES responded if the requirement for                        
  maintenance and repair was funded on an ongoing basis, the                   
  operating cost would be found in the operating budget, not                   
  in the capital budget.  If component replacement and renewal                 
  were considered, they might be a capital expenditure.  She                   
  understood general maintenance of public facilities is an                    
  operating expense.  She noted only the $35 million is                        
  included in the $61 million because most of the rest of the                  
  money in the operating and maintenance is for lights and                     
  other utilities that have nothing to do with keeping the                     
  building "up to speed."                                                      
  Number 569                                                                   
  CHAIRMAN VEZEY stated DOT's fiscal note is $61 million just                  
  for operation, plus a capital improvement portion of $16-17                  
  REPRESENTATIVE JAMES clarified the $16 million is to catch                   
  up the deferred maintenance that has not been done in                        
  previous years.                                                              
  Number 574                                                                   
  CHAIRMAN VEZEY stated the $61 million includes scheduled                     
  maintenance.  He had believed the $61 million included                       
  operation of the building, including utilities.                              
  Number 576                                                                   
  REPRESENTATIVE JAMES stated the $61 million did also include                 
  operation of the buildings and utilities.  She noted                         
  throughout the agency budgets $35 million has been                           
  distributed of the $61 million.  She clarified this depicts                  
  that there is a deficit in the 1994 budget, which is going                   
  to contribute to the capital needs in the future.                            
  Number 584                                                                   
  CHAIRMAN VEZEY felt the committee may have not thoroughly                    
  reviewed their packets on HB 345 yet.                                        
  Number 587                                                                   
  REPRESENTATIVE KOTT agreed.                                                  
  Number 589                                                                   
  REPRESENTATIVE G. DAVIS stated the fiscal note was the                       
  obvious factor which was detracting from the attractiveness                  
  of HB 345. However, he felt a mechanism did need to be found                 
  to deal with the deferred maintenance.  He agreed with                       
  REPRESENTATIVE JAMES that if HB 345 would have had more                      
  public notice, every agency would have been present to                       
  indicate the need for the bill.  He thought HB 345 was                       
  similar to the Executive Order from the 1993 session, which                  
  dealt with transferring all facilities to DOT so they could                  
  run a program similar to that in HB 345.  In reference to                    
  his example, he felt the issue of deferred maintenance was                   
  becoming more up front and open, but solutions are not being                 
  adequately discussed.                                                        
  Number 615                                                                   
  CHAIRMAN VEZEY felt HB 345 would be more attractive if a                     
  zero fiscal note could be structured.  He stated if the                      
  maintenance was not paid for, the existing buildings would                   
  depreciate at a predictable rate and would soon be                           
  Number 627                                                                   
  REPRESENTATIVE JAMES agreed with CHAIRMAN VEZEY.  She                        
  mentioned maintenance persons would be doing other things                    
  besides just maintenance in several agencies.  Therefore,                    
  the state is really paying for labor which could be amassed                  
  into a definite labor position.  This labor position could                   
  get maintenance done for the same dollars the state is                       
  already spending.  She gave the example of maintenance                       
  people making coffee.                                                        
  REPRESENTATIVE JAMES felt money could be saved in the long                   
  run and the issue of deferred maintenance needs to be                        
  addressed.  She would support putting maintenance in a                       
  special area where it, and the employees, would be properly                  
  utilized so the cost would be less.  She believed a positive                 
  fiscal note could even be offered, if HB 345 could be                        
  revised in some way.                                                         
  Number 646                                                                   
  CHAIRMAN VEZEY believed the legislature would not have a                     
  problem approving a formula for the maintenance of it's                      
  facilities; however, it would have a problem creating                        
  another program.  He did not believe the legislature would                   
  ever deny itself the right to build new facilities until                     
  maintenance was brought up to a certain level, noting one                    
  legislature cannot bind another.  He felt terms would have                   
  to be defined because utilities may or may not be included,                  
  and major maintenance items would need a cost limit.  He                     
  noted some administrators deliberately let maintenance                       
  deteriorate to the extent that it exceeds $25,000, so they                   
  can the have work done under capital improvements, as                        
  opposed to under their maintenance budget.                                   
  Number 667                                                                   
  REPRESENTATIVE JAMES pointed out page 6, line 25, after it                   
  states "a legislature shall", Section 9(7), "appropriate                     
  funds for the full cost of annual maintenance and repair and                 
  periodic renewal and replacement of existing public                          
  facilities of a branch of state government...before funding                  
  construction of new public facilities or substantial                         
  addition to existing public facilities."  She asked if this                  
  should be reworded to not be so strong.                                      
  REPRESENTATIVE JAMES would not want to bind other                            
  legislatures, but she wants them to have to notice its                       
  CHAIRMAN VEZEY commented the legislature would not pass                      
  bills that attempted to bind other legislatures.                             
  REPRESENTATIVE JAMES felt changing the language to where                     
  they would have to first identify before they go forward in                  
  new construction might be effective and not necessarily                      
  Number 688                                                                   
  REPRESENTATIVE G. DAVIS commented deferred maintenance will                  
  continue to be a problem and the legislature should continue                 
  to talk about it as is it now.  He also felt agencies should                 
  be involved to let them know there are things they can do to                 
  keep the problem on the forefront.  New facilities will face                 
  the same fate as existing facilities in the future if they                   
  are not taken care of.  He stated even before an agency                      
  offers a new section or service which will cost more money,                  
  they should have to look at where they could spend that                      
  money in deferred maintenance.                                               
  TAPE 94-25, SIDE A                                                           
  Number 015                                                                   
  (REPRESENTATIVE OLBERG left the meeting at 9:46 a.m.)                        
  CHAIRMAN VEZEY stated he was not prepared at the time to                     
  prepare a committee substitute which would address the                       
  short-comings he has found in HB 345.                                        
  Number 026                                                                   
  REPRESENTATIVE JAMES referred to the comments by CHAIRMAN                    
  VEZEY about the fiscal note and the attempt by HB 345 to                     
  bind other legislatures, and asked if he would be more                       
  comfortable with moving HB 345 out of committee if these two                 
  concerns were amended.                                                       
  CHAIRMAN VEZEY did not have a problem moving the HB 345 out                  
  of committee; however, he wanted HB 345 to be more                           
  attractive to the legislature so it would not be buried in                   
  the Finance Committee.  He felt a zero fiscal note could be                  
  made if HB 345 was made into an advisory report.  HB 345 may                 
  fit into HB 347, which will be heard March 10, 1994, because                 
  it deals with state long-term planning.                                      
  Number 055                                                                   
  REPRESENTATIVE JAMES said she would support any plans for                    
  the future because historically, the state has not done it.                  
  She took CHAIRMAN VEZEY's suggestion that HB 345 be made                     
  into an advisory, as opposed to a formula program.  She felt                 
  the public needed to be informed that the formula would                      
  actually work.  She noted when money is authorized for                       
  construction of new buildings, fiscal notes are attached                     
  which shows the cost of maintenance for that building in the                 
  future.  She offered to make the changes to HB 345 and bring                 
  it back before the committee as a sponsor substitute, so the                 
  bill would not get stalled in committee.                                     
  Number 099                                                                   
  CHAIRMAN VEZEY thought a zero fiscal note could even be                      
  attached to the sponsor substitute if worded correctly.  The                 
  bill may have to carry some cost to perhaps prepare a report                 
  on an annual basis.                                                          
  Number 114                                                                   
  REPRESENTATIVE JAMES appreciated hearing HB 345 before the                   
  committee because the issue is important and, even if it                     
  becomes an interim project, she will not let the problem go                  
  Number 119                                                                   
  CHAIRMAN VEZEY believed the legislature does not see                         
  information to the extent of regarding deteriorating public                  
  facilities.  Life cycle costing has now become an important                  
  issue.  HB 345 could be revised and made attractive enough                   
  to gain the support of the legislature.                                      
  Number 136                                                                   
  REPRESENTATIVE JAMES asked, if a sponsor substitute was                      
  drafted, would the committee consider rehearing HB 345 and                   
  moving it out of committee.                                                  
  CHAIRMAN VEZEY replied the committee would consider                          
  rehearing HB 345 if they received a zero fiscal note.  HB
  345 was held in committee for reconsideration.                               
  Hearing no more business before the committee, CHAIRMAN                      
  VEZEY adjourned the meeting at 9:55 a.m.                                     

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