Legislature(1995 - 1996)

01/31/1995 08:05 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HSTA - 01/31/95                                                               
 Number 622                                                                    
 HB 81 - PRESERVATION OF PUBLIC FACILITIES                                   
 CHAIR JAMES announced that she would roll HB 81 over to the next              
 meeting.  She also said that on February 17, 1995, is an annual               
 meeting regarding public facilities management, which she will be             
 CHAIR JAMES read the Sponsor Statement, updated 1-9-95, for the               
 The State of Alaska has 2.3 billion dollars invested in 1,717                
 public buildings.  There is currently a gigantic deferred                     
 maintenance backlog (Deferred Maintenance list, prepared by                   
 the Alaska State Facilities Administrators.  February 1993,                   
 attached as exhibit #10) for these public buildings, this is                  
 a public disgrace, our buildings are falling down around us                   
 No new construction should be undertaken until we have                       
 repaired and maintained our current facilities to an                          
 acceptable condition.  It is senseless to keep building new                   
 facilities while our current buildings deteriorate from a                     
 maintenance need to a replacement need.                                       
 This bill requires:                                                          
 1.  All deferred maintenance is to be performed over a 15                    
 year period on all public buildings for a total                               
 appropriation as extrapolated from the fiscal note of                         
 $251,400,000.00 ($113,985,800.00 in the first 6 years) in                     
 capital replacement costs, the sum of the dollars needed                      
 is astonishing.  The fiscal note for FY 95 building                           
 operation is $61,102,700.00 and continues annually                            
 forever, adjusted for inflation at an annual rate of 3.5                      
 percent.  The operating budget has been underfunded for                       
 a long time and is the reason the deferred maintenance                        
 2.  All new buildings built after #1 is complete will need to                
 be funded by a formula program to guarantee that the new                      
 buildings will be properly maintained.                                        
 The continuing problem of assuring the money appropriated for                
 maintenance goes to the maintenance is one that we must                       
 examine and incorporate into this bill through the amendment                  
 Public facilities have been underfunded for many years, it is                
 sheer folly to expect our buildings to fix themselves, and to                 
 continue to ignore this crushing need is totally                              
 The Department of Transportation and Public Facilities is the                
 agency I will charge with this task of repairing and replacing                
 our public facilities including University of Alaska                          
 CHAIR JAMES said that in the analysis of the bill, all deferred               
 maintenance on state buildings would take place over a 15 year                
 period.  All new buildings would be constructed after all deferred            
 maintenance is completed.  New construction will be funded by a               
 formula program to guarantee that they will be properly maintained.           
 TAPE 95-6, SIDE A                                                             
 CHAIR JAMES said there are horror stories about maintenance                   
 problems.  The state needs operating expenses to avoid these                  
 capital expenses.                                                             
 Number 016                                                                    
 REPRESENTATIVE WILLIS concurred.  He served on Military and                   
 Veterans Affairs budget subcommittee last year and found that they            
 let maintenance slip.  A preventative maintenance program could               
 take care of problems in the first instance and cost considerably             
 less than the repairs.                                                        
 Number 050                                                                    
 REPRESENTATIVE ROBINSON spoke in favor of the bill, saying she                
 thought it was a good direction for the legislature to move toward.           
 She asked how the priorities would be set out and if it would be              
 similar to the school districts are doing now.                                
 Number 108                                                                    
 CHAIR JAMES said there would be an analysis by those people who are           
 supposed to evaluate what is the most needed.  The maintenance                
 would be brought current over a fifteen year period.  Meanwhile, we           
 would be taking a life-cost basis and in the operating budget we              
 would be funding what that is, so we could do the keeping up while            
 catching up.                                                                  
 REPRESENTATIVE ROBINSON asked if they would repeal the way they are           
 handling maintenance and programs for the school districts now.               
 CHAIR JAMES answered that there is a dispute as to whether or not             
 the school districts are doing fine the way they are.  They are               
 doing fine with new buildings, but there is an extensive amount of            
 deferred maintenance at this point too.                                       
 REPRESENTATIVE ROBINSON brought up a Juneau school as a follow-up             
 to that.  The high school is in need of a new roof.  Last year,               
 they are number 7 on the priority list, and this year they are back           
 down to 47.  She was curious about how this would work, because at            
 the school district level it seems they are in this spinning wheel.           
 One day they are at four and next year at seven.  When thinking               
 about public facilities, which are grantees through the Division of           
 Family Youth Services and through the Department of Public Safety,            
 she wondered if they had considered including these into the                  
 CHAIR JAMES answered, "yes," and then recalled the Fairbanks                  
 Resource Center, which is a grantee of the state.  They are                   
 pleading with the state for money to build their own building to              
 avoid paying the outrageous rent they are paying; then the State              
 could use their operating funds for the purpose that they are                 
 intended.  However, Chair James pointed out that it does not work             
 that way.  It costs nearly as much to own a building as it does to            
 rent one.  This is a myth that many people hold to, but normally,             
 the cost of maintenance is included in the rent they pay.  There              
 are advantages to owning a building, but it does not necessary save           
 Number 132                                                                    
 REPRESENTATIVE OGAN said that CHAIR JAMES' statement was somewhat             
 accurate, but he would have to debate with her some on it.  When              
 moving into a new building, maintenance would be less.  When you              
 rent a building the amortization costs are factored in as well as             
 maintenance.  In short term, they would have more money, but in               
 long term, it might cost more.                                                
 CHAIR JAMES said that there is a life cost basis for determining              
 how much should be used for maintenance each year.  If money is put           
 aside on a life cost basis we would have the money when needed for            
 Number 158                                                                    
 REPRESENTATIVE PORTER wondered what can be done to maintain an                
 account for maintenance.  The legislature changes every two years             
 and the philosophy of funding also changes.                                   
 Number 175                                                                    
 CHAIR JAMES asserted that the legislature cannot be forced to                 
 appropriate funds for anything.  It is up to the legislature to do            
 that, and every two years they are free to budget what they want.             
 However, the public is greatly distressed with the deferred                   
 maintenance on our public facilities.  If there was a provision in            
 the statutes to allow for a formula driven amount  to apply to                
 maintenance, the general public would not allow the legislature to            
 turn away from the issue.                                                     
 REPRESENTATIVE ROBINSON inserted that the legislature would need a            
 proposal to consider.                                                         
 Number 200                                                                    
 JOHN STEINMANN, Architect, Division of Finance, Department of                 
 Education (DOE), testified in favor of this bill.  The Department             
 of Education is an advocate of maintenance, and there are presently           
 163 Rural Education Administrative Areas (REAA) and 360 city                  
 borough sites.                                                                
 CHAIR JAMES asked about a life-cost amount calculated in the amount           
 to do maintenance and repairs.                                                
 MR. STEINMANN said the DOE advocates a plan to work on a long term            
 life cycle basis.                                                             
 Number 247                                                                    
 REPRESENTATIVE GREEN mentioned there was money in the budget for              
 maintenance, but it was appropriated to do other things.  He was              
 concerned that this situation might happen again.                             
 MR. STEINMANN wasn't prepared to answer that.                                 
 CHAIR JAMES rolled the bill over to the next meeting on Thursday,             
 February 2, 1995.                                                             

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