Legislature(1993 - 1994)
03/08/1994 08:00 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 substitute. 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 legislature. (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 million. 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 uninhabitable. 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 existence. 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 binding. 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 away. 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. ADJOURNMENT Hearing no more business before the committee, CHAIRMAN VEZEY adjourned the meeting at 9:55 a.m.