Legislature(1999 - 2000)
01/26/1999 09:03 AM Senate FIN
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* first hearing in first committee of referral
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SENATE BILL NO. 32
"An Act making and amending capital appropriations and
reappropriations and capitalizing funds; and providing
for an effective date."
Co-chair Torgerson introduced SB 31 and SB 32 saying these
were the capital budget bills, including mental health.
He informed the committee that separate subcommittees would
be appointed and meetings would be held for individual
departments. He then appointed Senator Donley, chair;
Senators Wilken, Torgerson and Adams to examine the capital
budget and asked their report be completed by 4 April 1999.
All Finance committee members and other legislative members
were welcome to attend the subcommittee meetings.
Senator Adams said the subcommittee would act as a working
party and then recommendations would be brought before the
full committee. Senator Torgerson concurred.
ANNALEE MCCONNELL, Director, Office of Management and Budget
was invited to join the committee. She said she looked
forward to working with the committee. Ms. McConnell said
the general fund portion of the budget had been reduced
about $4 million. Several adjustments on projects had been
made. Last year there was a $200 million portion of the
capital budget funded with bonds. She said the total
dollars would be less than last year, but would still cover
many essential projects. She referred specifically to
Village Safe Water noting there were more funds available.
$6.6 million of State funds would be reduced in capturing
Federal funds. They were not able to fund projects such as
deferred maintenance, school construction and maintenance in
the current budget.
In referring to the budget that was provided in December it
was noted there were reductions in the debt service. She
explained there was an excellent cash flow from AHFC that
allowed for the reductions. This was due to a change made
in their proposal for use of the AIDEA dividend. Monies
were also used for other specific projects such as the corps
of engineeers and community projects. However, many
communities were fearful of capital matching grants in that
there would not be enough funding available. In the context
of the current fiscal year she felt they were in a position
of having stability for next year. She referred to
increased funds through the motor fuel tax for road
construction. She advised the committee that prisons had
not been taken into consideration but hoped this could be
focused on shortly. Also school construction and
maintenance.
Senator Wilken posed a question about AIDEA and the
approximate $18 million they were going to make available.
Ms. McConnell responded and said the proposals had been made
for rural matching grants, transportation and corps of
engineer program. (A handout from the Office of Management
and Budget was copied and passed out to committee members.)
Co-chair Torgerson asked Ms. McConnell for clarification of
the Denali Commission. Would this go through the
Legislature? Ms. McConnell said she was not up to date on
this commission. However, she said the projects would be
done directly through the Federal government rather than the
State. Senator Torgerson said there should be some
coordination in order to prevent double funding.
DAN EASTON, Director, Department of Environmental
Conservation was invited to join the committee. He
explained that monies captured from Federal grants were put
back into the Alaska economy. They provide low interest
loans to communities and he explained this process for the
committee. They do it each year and it is a simple process.
Applications are sent to the communities across the State.
If there are any problems on behalf of the communities they
are happy to help them out. Upon receipt of the
applications they are ranked as followed: Will the project
fix a public health problem? Has the community secured
other funding for the project? Is the community able to
operate the system?
Senator Donley asked if the criteria were adopted in the
regulations and asked a copy be provided the committee.
Senator Phillips asked who paid for sewer and water? Mr.
Easton responded that it was paid for by the communities.
Senator Phillips asked if the communities taxed themselves?
Mr. Easton responded yes.
Senator Leman asked about roving operators who assisted the
communities. Mr. Easton explained how these individuals
helped the communities in filling out their applications for
grants.
Senator Phillips asked about grants and low interest loans.
Mr. Easton said last fiscal year the amount in grants was
approximately $76.7 million, about $23 million was in loans
and the balance was grants. In further response to Senator
Phillips, Mr. Easton said he did not have the figures at
hand specifically for the grants but would provide the
committee with a breakdown including both loans and grants.
Senator P. Kelly asked about certain recommendations for
water quality and asked if this was checked with the
Division of Public Health? Was this treated as a public
health issue or environmental issue? Mr. Easton said this
was an environmental health issue. He defined environmental
health as requested by Senator P. Kelly. Public Health
would investigate water quality and sanitary and unsanitary
conditions.
Senator P. Kelly asked what would happen in case of a
dispute between public health and environmental health? Mr.
Easton responded. Senator Kelly said this should be
investigated as there had been some problems with who was
making the health decisions with respect to grants being
given to projects.
Senator Parnell said the subcommittee could look into this
matter and then report back to a full Senate Finance
Committee.
Co-chair Torgerson asked this fiscal year amount in grants
and loans. Mr. Easton referred to the total capital budget
summary.
Mr. Easton said there were seven appropriations made. They
were funded by Federal funds and State matching grants. He
said the funding from the US Department of Agriculture goes
directly to the communities and is then matched with State
funds at the community level.
Senator Parnell asked to return to the criteria issues and
asked Mr. Easton to explain. Mr. Easton said they had not
found a need to regulate these. Senator Parnell asked how
general public health was accounted for. Mr. Easton
suggested Mr. Capito be called before the committee to
answer this specific question.
GREG CAPITO, Section Chief, Village Safe Water Program,
Division of Facility Construction & Operation, Department of
Environmental Conservation was invited to join the
committee. He cited an example of a hepatitis outbreak and
said they did a study finding a tainted water problem. He
explained the school wanted a better and safer water system.
After having brought this before the Legislature they now
have a safe water system. This was a financially solvent
program on line. Senator Parnell said this did not
particularly address the criteria issue as requested. Mr.
Capito further explained a public health risk. For instance
a potential risk for unprotected water.
Senator Parnell referred to a greater health risk in a
larger community and there should be better criteria to
address these situations. Mr. Capito responded.
Tape: SFC - 99 #7, switched from Side A to Side B 3:51 PM
Mr. Capito continued. There are other factors that emphasis
was put on. They have been audited multiple times by LB&A.
However they have not received criticism from the
communities.
Senator Green asked who participated in the programs. Mr.
Capito explained that unincorporated areas, second class
cities and first class cities all participate in these
programs and services.
Senator P. Kelly felt there should be some regulation
issues. Under the environmental section he asked if the EPA
standards would be different from the epidemiologists
standards? He suggested perhaps the epidemiologist should
make the final call regarding the health issues.
Senator Donley asked how a decision would be made between
two communities with the same needs one larger than the
other? Mr. Easton said it would depend on the magnitude of
the disease. Population is not figured on his criteria
system handout. Mr. Capito further explained that if two
communities had same disease problems and both were
documented by epidemiologists that would not be the only
deciding factor as to funding the project. There would be
other criteria involved.
Senator Donley asked for an explanation. Mr. Capito said
probably both would be funded. Senator Donley asked if the
Department of Law had been asked for an opinion regarding
these matters? Mr. Capito said there had been many opinions
from the Department of Law and would make them available for
the committee.
Mr. Easton continued his overview of appropriations. He
noted a project for $800,000 last year that was not included
this year, therefore there were only 7 projects.
He explained the Clean Water Loan Fund and Drinking Water
Loan Fund. Approximately $9,649.5 would be available for
loans under the Clean Water Loan Fund and approximately
$8,956.6 would be available under the Drinking Water Loan
Fund.
The next appropriation was for Village Safe Water Project
administration. Approximately $12 million more federal
funds could be still captured. There was an increase in $10
from USDRA. However it did not come through the capital
budget for appropriation. Senator Torgerson asked who
determined the criteria for disbursement of that money. Mr.
Easton said the department did.
Senator Leman asked about the change from FY 1999 to FY 2000
in the approximate amount of $600,000 for administration.
Mr. Easton said this was to cover additional staff. He said
they were under-funded for administrative purposes because
they had left over appropriation monies that could still be
used. He said the same option was not available to them
this year. They need these funds to be able to continue at
the same level as last year. He explained the increase in
workload was at approximately 36%. A 12% increase in staff
was needed to cope with this work load increase.
Senator Leman said this should be looked at under the
subcommittee level.
Senator Wilken referred to US Rural Development and asked
this be clarified. Mr. Easton responded. He explained the
department spreadsheet. He said there was no total but each
project was listed. They discussed the table, pages 2 and 3
under the capital budget hand out.
Senator Phillips asked the employee situation at the
department be explained. Mr. Easton said the department was
fully privatized. The rate of default on loans is zero.
Senator P. Kelly asked if they were overmatched on the
funds? Mr. Easton said no.
Mr. Easton continued explaining the municipal water/sewer
match. It would be $2 million less on State matching funds.
He identified operating budget items for the committee.
(see operating budget items of the handout) He said they
lumped their funds into one.
Senator Torgerson asked if there was a federal cap on the
funds. Mr. Easton said there was a cap on the EPA funds.
Their cap was $2 million. There was also a cap on USDRA.
However as explained, those funds go directly to the
communities.
Mr. Easton concluded his overview. He explained that the
village safe water and municipal matching grant books were
in detail to his presentation.
MIKE BURNS, Section Chief, Municipal Grants and Loans,
Department of Environmental Conservation was invited to join
the committee. He explained what was published in the
municipal matching grant book. Figures were received from
the communities and the Department of Labor.
Senator Donley referred to Kenai Peninsula Fisherman vs.
State, 628 P2d 897 (1981) court case.
Senator Adams asked that all new CS be submitted to the
committee at least 24 hours prior to the meeting so that
there is time for review. Senator Torgerson concurred.
However, on this specific occasion he felt this CS was self-
explanatory. Senator Donley also concurred with Senator
Adams.
ADJOURNED
Senator Torgerson adjourned the meeting at 3:51 PM.
SFC-99 (8) 01/26/99
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