Legislature(1997 - 1998)
05/03/1997 01:20 PM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 107 APPROPS:CAPITAL/REAPPROP/FUNDS/OPERATING
COCHAIR SHARP announced there was a proposed CS before
the committee for consideration. TOM WILLIAMS
presented a summary of the changes in the CS.
Additional information on various capital projects were
provided by ANNALEE MCCONNELL, TOM BRIGHAM, NICO BUS,
KEVIN BROOKS, JANET CLARK, DIANE WORLEY, KURT PARKAN
and JOHN BITNEY.
SENATE BILL NO. 107
"An Act making and amending capital and other appropriations
and to capitalize funds; and providing for an effective
date."
COCHAIR SHARP brought attention to a proposed Finance CS and
a side-by-side comparison that had been provided for
members. He noted the total submitted by the governor was
$184.6 million compared to the CS which contained
expenditures totaling $153.1 million, a difference of $41.5
million. He stated that a guiding force in putting this
budget together was the long range planning goal. He
invited his staff, Tom Williams, to summarize the changes in
the draft CS after a brief recess.
Recess 1:28 P.M.
Reconvene 1:55 P.M.
TOM WILLIAMS, Staff to Cochair Sharp, Senate Finance
Committee, explained that the first thirty-two sections of
the draft CS dealt with reappropriation requests. There was
a handout provided to the committee that grouped and
summarized them. In response to a question from SENATOR
ADAMS, MR. WILLIAMS explained that some items that had been
deleted for a variety of reasons.
Starting with Section 33, there were a variety of
reappropriations requested by the administration that were
either in the original bill or subsequent amendments to
submitted bills. MR. WILLIAMS noted that Section 35(d) was
a duplication of Section 27(a) and needed to be removed.
Section 39, the Alaska Clean Water Fund, had a provision in
the original bill regarding AIDEA funds that was deleted in
the CS. Section 41 had a corresponding appropriation in the
back section under DNR that needed to be deleted. Section
42 had to do with Matching Grant programs. Section 43 was
language that gave authority for additional expenditure by
the Legislative Budget and Audit committee that mirrors
language in HB 75. Section 44 was in the original bill.
Section 45 was new and dealt with repeal of prior capital
appropriations, except fund capitalization. It basically
gave a five year roll so that by June 30, 1998, everything
that had been appropriated prior to July 1, 1993 that had
not been amended would be repealed. It was basically a
housekeeping function that would allow departments to come
back with ongoing projects to request additional time for
completion and thereafter have a continual rollover. It
would be a mechanism for determining the status of projects
every five years. Sections 46-48 related to lapse
provisions, retroactivity and effective dates.
Section 49 began the bulk of the capital budget, beginning
with the Department of Administration. There were no major
structural changes other than funding decisions and a title
change relating to the Division of Motor Vehicles to conform
with law. Other than items not funded or funding source
changes, the Department of Commerce and Economic Development
had no significant structural changes. The same held true
for the Department of Education.
There was a structural change under the Department of
Environmental Conservation (DEC) related to Village Safe
Water. He referred to the side-by-side comparison and
pointed out that none of the projects had been eliminated,
with the exception of the operation and maintenance capacity
development line for $500 thousand. They changed the
general fund to general fund match and spread the federal
receipts out to the specific projects to show the one-to-one
correlation and to provide a clear idea of the cost of the
entire project.
The following page numbers refer to the side-by-side
comparison previously mentioned, a copy of which is on file.
On page 8 and 9 there were funding source changes in the
Alaska Drinking Water Loan program. Page 10 and 11, under
the Department of Fish and Game, showed funding source
changes related to the operating and capital budgets and
returned the structure to the way it was in FY97.
Two significant items under the Department of Health and
Social Services that were not in the governor's request were
the Domiciliary Care Facilities renovation and construction
in Anchorage and Fairbanks.
MR. WILLIAMS pointed out the last three items under the
Department of Military and Veterans Affairs (DMVA), those
being the operation of the state emergency coordination
center and the FEMA grants for FY97 and FY98. They were
amendment requests that may relate more to the operating
budget in nature and were not included.
Under the Department of Natural Resources, there were no
structural changes, only funding decisions. He noted that a
variety of items went to zero because they were dealt with
in the supplemental request. The Exxon Valdez Oil Spill
Trustee Council - Overlook Park parcel was included in the
front section and should be deleted from the departmental
section. The Circumpolar Agriculture Conference was
included under DNR.
There were no structural changes to the Department of Public
Safety. The Department of Revenue contained changes (page
15) under Grants to Named Recipients for appropriation to
senior citizen housing development programs. Significant
changes appeared under DOTPF on page 16 as a result of
discussions with the department. There were a number of
areas where the general fund match was zero and the senate
column included an amount. The reason was that they
endeavored under the Statewide Transportation Improvement
Program (STIP) to spread the match to get a better overall
correlation. He also noted the remaining match was
retitled "State Match for Previously Authorized Federal Aid
Highway Projects." There was no structural change to the
airport improvement programs, although funding decisions had
been made.
On page 25 there was an addition under University of Alaska
titled Low Rank Coal-Water Fuel/Coal-Water Fuel Fired Diesel
Project. It was a project that had been discussed for
several years.
The Alaska Court System contained funding decisions but no
structural changes. The Legislature portion was an added
component that was not in the governor's budget. It was the
first time in several years that the legislature had
requested a capital appropriation. A number of projects
were identified on page 25. There was also a request for
the Ombudsman.
The Municipal Capital Matching Grants reflected some title
changes from the original budget, but none had been reduced,
although requests continue to be received and adjustments
may be made up until the budget is passed. The same applied
to the Unincorporated Community Matching Grants.
MR. WILLIAMS said the Mental Health Program components
appeared in HB 76, so the totals in the comparison did not
agree with the actual draft CS. He also pointed out that
there had been a reappropriation of $1.5 million of DOTPF
match money divided between the transportation and aviation
programs which needed to be added back in. It had been left
out while a technical question was being resolved as to
whether it was an appropriate way to make the reallocation.
In conclusion, MR. WILLIAMS noted that there had been a
number of projects that had been submitted by the
administration under a May 2 memo that had not been included
in the draft CS. Copies of the memo were in members' files.
SENATOR ADAMS questioned the reason for a $17 million
reduction in federal funds, noting totals on page 37. MR.
WILLIAMS responded that he believed the federal funds were
captured in most instances with the exception of the DOTPF
mediation program.
COCHAIR SHARP asked to hear from OMB regarding requests in
their May 2 memo. He inquired about the first request for
DOTPF.
ANNALEE MCCONNELL, Director, OMB, addressed the committee.
She responded that the memo back-up explained they would be
spending the money only if they got the agreement with the
union necessary to operate the Malaspina ferry as a day
boat. She provided additional information.
TOM BRIGHAM, Director, Division of Statewide Planning,
DOTPF, in response to a question from COCHAIR SHARP,
explained that there was no specific project that would come
out of their requests if the Malaspina request went in.
COCHAIR PEARCE had concern about the department's priorities
and expressed surprise at this particular request. She
referred to the Ocean Dock road that had been programmed for
design in FY96 and for construction in FY98 but then a
right-of-way issue came up and the department chose to push
the construction to FY99. She believed if there was room to
add something new in FY98, she preferred to move the
construction back instead of adding a new project. SENATOR
TORGERSON expressed his concern that there had not been a
plan from the Marine Highway System as to how they would
handle the impacts of the Kennicott Ferry coming on board
other than hiring an addition 200 employees. He also
mentioned the impact of a new vessel from Craig that would
take money from the system.
MR. BRIGHAM responded to both concerns. He noted that
engineers had indicated the right-of-way and construction
could not be completed in one year because of the complexity
of the issue. If there were any way to advance that phase,
they would, but they did not have a solution as yet. There
was additional discussion on this matter as well as the
request to maintain the Malaspina ferry as a day boat.
End SFC-97 # 137, Side 1, Begin Side 2
COCHAIR PEARCE reiterated her concerns about delays with the
Ocean Dock Road construction and the problems it created for
the community. MS. MCCONNELL assured her that they were not
less supportive of that project and explained that the
Malaspina issue was a response to concerns about ferry
service in Southeast. After looking at the numbers, it was
believed it could operate as a day boat without requiring
any general fund subsidy. There was further discussion
among members about economic analysis and feasibility of the
Malaspina as a day boat, as well as it's net worth after
$2.5 million in upgrades. MS. MCCONNELL assured the
committee an analysis would be provided when available from
the department.
COCHAIR SHARP noted the next item was the Soldotna DOTPF
Maintenance Station site clean-up and there had been some
question about differences in figures between $1.3 million
and $250 thousand. SENATOR TORGERSON offered explanation.
MS. MCCONNELL added that DOTPF and DEC worked together and
agreed that an appropriation of $250 thousand was their best
estimate of what would be needed. COCHAIR PEARCE commented
that, by request, she was working on an amendment that would
use Alyeska and Valdez settlement money for projects in the
affected areas, including the Kenai River site and
questioned the value of making an appropriation for a
project that couldn't begin until the site was cleaned up.
MS. MCCONNELL addressed three requests for DMVA in the memo,
noting they were grants that just came in and didn't need to
be included as capital items. She wanted to assure they
were in the budget process, noting the operating budget
would be fine.
NICO BUS, Chief, Financial Services, Division of Support
Services, DNR, added that the grants had been awarded
between late March and early April.
There was general discussion between members and Ms.
McConnell about Capital Matching Grant projects. MS.
MCCONNELL noted that OMB continued to receive requests and
the memo was up to date based on what had been received.
COCHAIR SHARP noted that the next item in the memo, the
Mental Health Trust Authority (MHTA) request for a data
management system project under the Department of
Administration, had been rolled into the bill under Section
30. There was additional general discussion about where
some DEC projects appeared in the CS.
COCHAIR SHARP brought up a hatchery project under DFG next.
KEVIN BROOKS, Director, Division of Administrative Services,
DFG, provided information about changing language regarding
an appropriation to Beaver Falls Hatchery. The site had not
worked out for a number of reasons and the recipient, the
Southern Southeast Regional Aquaculture Association, had
requested a site change to Burnett Inlet to enable the
project to proceed.
There was general discussion next about fencing around
landfills to keep bears out, after which the discussion
turned back to the hatchery project. SENATOR DONLEY
requested additional information from the department.
MS. MCCONNELL brought up some final projects that were late
requests from communities, including the Noorvik Elementary
School.
COCHAIR SHARP pointed out there had been requests to have
representatives from DHSS present and asked SENATOR DONLEY
to speak to that. SENATOR DONLEY commented that juvenile
detention was a very serious problem and he wanted to give
the department an opportunity to elaborate on why something
should be done.
JANET CLARK, Director, Division of Administrative Services,
DHSS, brought attention to information that had been
provided by the department regarding the crisis of
overcrowding in youth facilities such as Johnson,
McLaughlin, Fairbanks and Bethel. (A copy of the
information is on file.) She pointed out that over the last
ten years, no new youth facility beds had been built and the
facilities had been operating over capacity, creating
constant tense situations. She referenced a master plan for
youth facilities that had recommended two additional
facilities that had not yet been built and outlined needs
for the next ten years. She expressed concern that they
still haven't dealt with the needs of the last ten years.
DIANE WORLEY, Director, Division of Family and Youth
Services, DHSS, spoke of the latest master plan (copies of
which were provided) and described the process of making
projections and identifying needs. MS. CLARKE noted there
was a comprehensive list in the handout she provided that
showed a total of 103 beds were needed at a cost of
approximately $35 million. There was also a short list of
immediate needs that were required. SENATOR DONLEY added
that his impression from police was that it was a most
serious situation in that the facilities were not accepting
many juveniles that should be institutionalized because of
overcrowding. MS. WORLEY confirmed and added that they were
trying to find a balance with community based services as
well to keep kids in their own communities. MS. CLARKE
later added that an additional issue was that kids from
Southeast were being placed in Fairbanks, McLaughlin and
Bethel, which in turn kept the numbers high for those areas.
In response to a question from COCHAIR SHARP, she stated
that no infrastructure would be needed for Johnson because
they could renovate.
End SFC-97 # 137, Side 2
Begin SFC-97 # 138, Side 1
MS. MCCONNELL continued with a discussion of the cost per
bed, noting it was not disproportionate for a new unit at
either Johnson or McLaughlin. MS. CLARKE added that there
were both the detention and support buildings at Johnson.
The infrastructure was already there, so it was just a
matter of adding a new treatment cottage. There was
additional discussion about the per bed and square footage
cost and MS. CLARKE indicated she would make additional
comparison information available to the committee.
COCHAIR PEARCE inquired what addition requirements would be
needed along with the treatment beds, such as professional
personnel. MS. CLARKE responded that the Johnson Center had
a teacher provided by the school district. In addition,
there would be a unit leader, twelve youth counselors, a
half-time nurse, a half-time maintenance person and some
contractual psychiatric and other services as needed. In
response to a question from COCHAIR PEARCE, MS. WORLEY
elaborated about the differences between a treatment center
and detention and additional services that would be provided
in the smaller facilities. MS. CLARKE responded to another
question about the cost of the Johnson facility by pointing
out that it was comparable to the McLaughlin unit built in
the early nineties, although providing utilities and site
work had driven the cost up some.
COCHAIR SHARP asked MR. WILLIAMS back to the table to
provide additional information in response to SENATOR ADAMS'
earlier question regarding the $17 million reduction in
federal funds shown on page 37 of the side-by-side
comparison. MR. WILLIAMS pointed out two specific areas
that reflected the largest decreases. One was under DOTPF
on page 22: Statewide Surface Transportation Preconstruction
which showed a $10 million reduction. The reason was that
the department indicated there was already about $30 million
in FY97 authorization that they hadn't gotten to yet, so
they were comfortable in reducing the $20 million by half.
There was no loss of federal receipts, only federal excess
authority. Another large reduction occurred in the
Department of Revenue on page 14: the Oil Overcharge
Restitution Building Educational Projects. The governor had
proposed to spend $2.5 million of Stripper well funds,
basically cleaning out the account. Instead, the Senate
proposed to spend $600 thousand of that total for grants to
the Alaska Craftsman Home Program and the Energy Rated Homes
Program. That also did not reflect a loss of funds, as they
remain for future year appropriations.
COCHAIR SHARP asked the representative from DOTPF to the
table for questions from COCHAIR PEARCE about the
International Airport projects.
KURT PARKAN, Deputy Commissioner, DOTPF, approached the
table and stated his name and position for the record.
COCHAIR PEARCE first referred to an April 22 letter to the
commissioner which inquired about the impact of the projects
on landing fees at the two airports. She had been informed
that the total cost increase would be about six cents per
thousand pounds, but she wanted clarification about the long
term impact over the next twenty years. She had also been
told that the department did not prepare spreadsheets. She
did not see how they could run the International Airport
Revenue Fund without doing spreadsheets nor how airlines
would go along with an operating agreement without some feel
for what their fees would be in ten to fifteen years.
COCHAIR PEARCE also brought up an issue in which for two
years the airline carriers disapproved of projects and the
department proceeded to include them in their capital budget
request. Her final request had to do with a summary of
appropriations and expenditures for the last ten years out
of the System Development Fund.
MR. PARKAN first addressed the airline carriers' veto of two
Fairbanks projects. He explained the projects and added
that Fairbanks had a harder time getting projects approved
because of the disproportionate number of carriers compared
to Anchorage. They felt the projects were still important
enough to proceed on the runway extension and terminal
improvements. COCHAIR PEARCE questioned the reasoning
behind the runway extension. There was additional detailed
discussion between her and MR. PARKAN on this topic as well
as the terminal improvement plans.
Regarding landing fees, MR. PARKAN stated that they were
based on the activity at the airport and it was a complex
formula. It was difficult to anticipate what a project
impact would be on the landing fees because of increases and
decreases of activity. The fees were based more on
activities than projects.
MR. PARKAN next addressed projects under the System
Development Fund. There was about $3 million in the fund
which would generally be used for advanced project design,
annual improvements and terminal rehabilitation. The
discussion continued at length. MR. PARKAN noted that by
having design projects on the books, it allowed for
favorable competition with other projects for discretionary
FAA funding. COCHAIR SHARP commented on statements made by
the technical committee regarding unspent funding available,
noting that additional funding was being requested for
annual improvements. MR. PARKAN informed the members that
the technical committee was a subcommittee of the Airline
Affairs Committee. It was designated to look at projects,
whereas the Executive Committee made the final project
decisions.
End SFC-97 # 138, Side 1, Begin Side 2
COCHAIR SHARP pointed out that in some instances the
signatory airlines have turned projects down by the two-
thirds required vote. He had seen copies of letters sent by
the airport manager to some of the users after a project
failed, that threatened them to change their mind or they
would be sorry. He had also seen letters in response from
major airlines that expressed indignation with the tactics
used to force a change on a vote. He wanted to clarify that
some of the reductions in the capital projects were not
random decisions.
COCHAIR PEARCE inquired if there was any penalty for
airlines that pull out after they took part in approving a
project that everyone else had to pay for. MR. PARKAN
replied that there was a clause in the operating agreement
that holds them to continue payment after they leave. He
offered to provide a copy of the agreement.
MR. PARKAN next spoke of the terminal rehabilitation project
that dealt with life and health code safety issues, followed
by a brief discussion of phase two of the wetlands
development project, which concluded the projects he was
addressing. COCHAIR PEARCE and SENATOR TORGERSON questioned
him about requirements and restrictions concerning
development of the wetlands and there was continued
discussion on this topic.
SENATOR ADAMS asked if the department could implement
everything as presented under the existing budget structure.
MR. BRIGHAM addressed the question as it related to highway
projects and the STIP. He explained that the way the
program was appropriated and allocated presented a
difficulty with respect to a greater administrative burden
with decreasing numbers of administrators. They would be
fairly hamstrung in their attempts to fund emergency work.
He explained that work done within the first 180 days was
done at 100 percent federal funding. Beyond that, the
regular match would apply, and it was unclear how they would
fund emergency work beyond the 180 days. MR. PARKAN added
that the matches were based on estimated costs of the
projects and would require additional staff to keep track.
SENATOR TORGERSON stated for clarification that this budget
did not prepare DOTPF to handle emergencies. MR. BRIGHAM
responded that the way the match is appropriated by program
and allocated by project, left them without a match to deal
specifically with emergency projects or repairs. SENATOR
TORGERSON brought up the Seward flood, noting the city had
to guarantee all the contractors' work on that because the
state wouldn't. COCHAIR SHARP noted that with regard to
emergencies, the budget had emergency federal projects for
$5 million and federal contingency funds for an additional
$5 million, and asked if the concern was with the general
fund match for the $10 million. MR. BRIGHAM confirmed that
was correct. COCHAIR SHARP then pointed out that there was
an allocation of previously authorized federal highway
projects with a GF match of $7.9 million that wasn't
allocated by project and inquired if those funds would be
available to match emergencies. MR. BRIGHAM responded that
if they worked on the wording in that particular line it
could take care of it.
SENATOR PHILLIPS asked about relocation of airports in Eek,
Marshall and Noorvik for $10.7 million. MR. PARKAN
explained that they were situated in areas that couldn't be
expanded. There was additional general discussion on this
topic. COCHAIR SHARP asked if it was the federal government
that dictated the location of the projects. MR. PARKAN
explained that planners and designers make the decision
based on conditions at the particular airports in addition
to federal requirements and specifications.
COCHAIR SHARP asked if there was any additional discussion
on the draft CS. SENATOR ADAMS inquired about cutbacks in
weatherization and supplemental housing. COCHAIR SHARP
replied that there would be no loss of federal funds by the
reduction. SENATOR ADAMS asked to hear from AHFC
representatives.
SENATOR PHILLIPS asked a few questions of DOTPF regarding
tourist oriented signage at the airports to which MR.
BRIGHAM responded.
JOHN BITNEY, Legislative Liaison, AHFC, DOR, in response to
a question from SENATOR ADAMS, explained that the
weatherization project was not a match situation. Regarding
supplemental housing, they estimate how much money would be
available to match on a five-to-one basis. They learned
last week that $40 million was available from HUD, so they
would need a minimum of $7.9 million to fully utilize the
federal dollars available on a match basis.
COCHAIR SHARP inquired if there were any additional
questions or comments regarding the draft CS. SENATOR ADAMS
inquired about the guidelines for amendments to the capital
budget. He indicated programs that he had interest in and
elaborated on his concerns. COCHAIR SHARP explained the
original guidelines they had and his intention to keep a lid
on the budget at $155.5 million, noting the CS was at
$153.1. He provided a deadline for submittal of proposed
amendments.
There was additional general discussion among members about
various projects, reappropriations, a spending plan and
fiscal notes.
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