Legislature(2001 - 2002)
02/08/2001 09:02 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 73
"An Act making supplemental appropriations and making and
amending other appropriations; and providing for an effective
date."
SENATE BILL NO. 74
"An Act making supplemental and other appropriations; and
providing for an effective date."
ANNALEE MCCONNELL, Director, Office of Management and Budget,
Office of the Governor acknowledged the shortened time for the
presentation. She said the requested items would be addressed in
the same order they appear in SB 74, with the exception of Section
9.
Section 9 (a)
Department of Revenue
Tax Division budget review unit (BRU)
Expert analysis for a major North Slope oil and gas property
tax assessment challenge.
$1,276,000 general funds
DAN DICKINSON, Director, Tax Division, Department of Revenue,
testified via teleconference from Anchorage that the division hoped
that these funds would not be needed for this matter. However, he
noted that if there were a challenge to the oil and gas property
tax assessment of the Prudoe Bay production facility, it would be
necessary to hire an expert to analyze the assessment. He noted
that the state imposes a 20-mill tax on oil and gas property and
that this facility is the largest in the state. He shared the
previous year's collection on this property as $5.6 million. He put
that into perspective as more than any other city in the state
generates. He detailed the process whereby the assessment is
determined each year.
Senator Leman understood the request, but noted that the stated
purpose was to address "the challenge in the fiscal years ending in
2001 and 2002." He wanted to know how much of the money is for the
upcoming fiscal year and if that portion could be included in the
FY 02 budget as opposed to including this item in the fast track
supplemental.
Mr. Dickinson replied that the value needed to be assessed as of
June 30, 2001. He added the department hoped to do much of the work
during that time period, hoping the ultimate assessment would be in
place in time for the 2002 negotiations.
Section 1
Department of Administration
Pioneer Homes BRU
Nurses' salaries increased through statewide reclassifications
to address critical staff shortages by bringing compensation
more in line with other employers.
$195,000 general funds
JAMES KOHN, Director, Division of Alaska Longevity Programs,
Department of Administration, spoke of the difficulty in recruiting
and retaining qualified nursing staff due to the lower pay the
department offers. He stated that there are currently 15 vacancies
in the statewide Pioneer Home system. He stressed that immediate
action was necessary. He told of existing personnel working very
long hours to compensate for the shortfall.
SHARON BARTON, Director, Division of Personnel, Department of
Administration, reiterated the nursing shortage situation and
detailed the union negotiations and the increasing demands for
higher compensation. She stated that other employers are offering
greater compensation packages to attract trained nurses. As a
reaction to this, she noted the department has instituted a two-
step salary increase that will begin March 1, 2001. She explained
that this is a result of negotiated contract agreements that
include a 10.7 percent increase, with 5.7 percent paid at the
signing of the contract, another 2.5 percent to be paid in May 2001
and the final 2.5 percent paid the following May.
Ms. Barton stressed that accreditation of the Pioneer Homes are at
risk because of the lack of ability to recruit and retain nurses.
She added that the exiting Pioneer Home staff is working double
shifts and that many employees are "reaching their limit." This,
she said, is because of the shortage of on-call nursing staff to
provide relief. She noted that this situation is present at the
Alaska Psychiatric Institute as well.
Co-Chair Donley clarified that the department implemented this pay
increase before having a funding source. He understood that the
department is faced with challenges, but questioned why the
contract was signed before there was legislative review.
Ms. Barton responded that not only the Department of Administration
is affected by this dilemma, but the Department of Health and
Social Services and the Department of Corrections also. She
asserted that if the legislature failed to fund this item, the
department would take other drastic actions in order to meet the
funding requirement, but warned that the consequences would be
unfavorable. She emphasized the need for health care in these 24-
hour institutions.
Senator Austerman asked if there are other salary increases
contained in this supplemental appropriation request. If so, he
wanted to know the total cost.
Ms. McConnell replied that the other affected departments were able
to shift funding internally, but that the Pioneers Homes do not
have that flexibility. She advised that all of the affected
departments would be submitting budget amendments for FY 02 to fund
the pay increases.
Senator Austerman requested information listing the total number of
state employees who are registered nurses, and are receiving the
salary increases.
Ms. McConnell stated that information would be provided along with
an overview of the number of currently vacant positions in all the
departments.
Senator Austerman asked if the two-percent salary increase has
helped reduce the vacancies.
Ms. Barton responded that because the increase does not go into
effect until March 1, 2001, it is too soon to see any benefits. She
noted that this would make the state more competitive in the
marketplace.
Ms. McConnell referred to the backup documentation supporting the
request that gives comparable compensation packages of other
employers.
Senator Hoffman referenced this documentation, which shows a
comparison of the salaries of nurses with a career working for the
state versus those working in the private sector. He wondered how,
even with the increase, the state could begin to compete.
Ms. Barton admitted it would be difficult. She suggested that the
department hoped to attract nurses more recently certified and with
less experience and thus more leverage for higher compensation
packages.
Senator Hoffman stressed that these employees are providing a key
service to Alaska and that they would be lost to other employers if
they were not competitively compensated.
Senator Ward asked the cost differential between nurses employed by
the Department of Corrections and those the department hired on a
contractual basis.
Ms. Barton was unfamiliar with the Department of Corrections
situation but was able to predict that if the Department of Health
and Social Services was forced to use contracted nurses, the total
cost would be a minimum of 25 percent higher than the current cost.
Senator Ward suggested the Department of Administration and the
Department of Health and Social Services consider following the
Department of Corrections' practices in utilizing contracted
nursing services.
Senator Olson asked how many total nurses are employed at the
Pioneer Homes and also inquired about the next accreditation
review.
Ms. Barton was unsure when the next accreditation cycle would
occur. She noted that the vacancy rate for these positions changes
daily and that the most recent figure she had was 37 vacancies. She
qualified that this amount only reflects permanent, part-time and
full-time positions and does not include the difficulties involved
with keeping substitute on-call positions filled. She stated that
the Pioneer Homes have approximately 72 positions with
approximately 15 of those vacant.
Ms. Barton added that the Department of Health and Social Services
holds approximately 249 positions with 20 vacant, and the
Department of Corrections has 68 positions with 12 vacancies. She
noted again that these positions are permanent positions.
Ms. McConnell qualified that these figures account for facilities
across the state, and that certain locations may experience greater
difficulties than others.
Co-Chair Donley requested the average vacancy rate for the last few
years.
Section 2
Alaska Court System
Trial Courts BRU
Federal granted award for implementation of the Anchorage Drug
Court pilot program.
$150,000 federal funds
CHRIS CHRISTENSEN, Staff Counsel, Office of the Administrative
Director, Alaska Court System, told of the two-year federal grant.
He noted that this request is for authorization from the
legislature to allow the expenditure of the funds during the
current fiscal year.
Co-Chair Donley asked if any additional state money would be
required to garner the federal funds.
Mr. Christensen answered there would not and shared that it is the
court system's policy to operate pilot projects using federal
funds, requesting state funds only after the projects have proven
successful.
Section 3
Department of Fish and Game
Sport Fish BRU
Increase of federal authority for stock assessment and
fisheries management projects to provide baseline data and
help mitigate risks to sport fish opportunities resulting from
the federal management process.
$898,700 federal funds
KELLY HEPLER, Director, Division of Sport Fish, Department of Fish
and Game, spoke to the request for receipt authority, assuring that
no general funds were requested. He noted this program has broad
public support and that is the reason the request is being made. He
spoke to the importance of retaining a department presence in the
federally run subsistence office.
Co-Chair Donley asked if this would impact the Dingle-Johnson or
the Pittman-Robinson federal funding programs for sport fishing and
sport hunting activities.
Mr. Hepler stated it would not.
Section 4 (a)
Office of the Governor
Elections BRU
Costs incurred to comply with the Republican Party's request
for the closed statewide primary election held in August 2000.
$252,000
JANET KOWALSKI, Director, Division of Elections, Office of the
Lieutenant Governor, shared the Supreme Court ruling that governs
primary elections was handed down after the previous legislature
had adjourned. She stated that Lieutenant Governor, Fran Ulmer and
herself had met with members of that legislature and
representatives of the state's political parties and that a
concusses was reached in the form of emergency regulations.
Ms. Kowalski warned that the funds requested were already expended
using operating budget funds and that if this request was not
granted, the division would be forced to close.
Senator Leman asked if there was a less expensive way that the
changes could have been implemented.
Ms. Kowalski agreed that with more time, the cost could have been
lower. She detailed the expenditures involving computer
reprogramming, printing additional ballots, voter notification and
retraining workers.
Senator Leman asked if the division was integrating what was
learned in the event this situation occurred again.
Ms. Kowalski responded that there are currently no regulations
governing primary elections except those, which were adopted the
previous summer. She stated that without legislative intervention,
these regulations would dictate future procedures in the next
primary election.
Senator Hoffman asked if other states hold closed primary elections
and if those states charge the political party for the subsequent
costs.
Ms. Kowalski replied that other states had been surveyed and only
South Carolina charges the political parties for the cost of closed
primary elections. She noted that California, Washington and Alaska
were the only states affected by the Supreme Court ruling and each
was considering the best way to address the matter.
Senator Hoffman suggested that charging the political party holding
the closed primary was one way to recoup the cost to the state.
Senator Ward asked that if the primary election system were to
change from the previous election, whether additional costs would
be incurred.
Ms. Kowalski affirmed.
Section 4 (b)
Office of the Governor
Governmental Coordination BRU
Reduce backlog due to large increase in oil and gas permit
coordination workload compared to last year.
$14,300 general funds
PATRICK GALVIN, Director, Division of Governmental Coordination,
Office of the Governor, told the Committee that the division
implements the Alaska Coastal Management Program. He explained the
requested funds would be used to hire an additional Project Review
Coordinator to review oil and gas projects. He spoke of the
increased number of oil and gas projects subject to consistency
review in the last four months. As a result, he stated, the
division has been faced with either falling behind in those project
reviews, which could potentially jeopardize the development, or
shifting other staff away from different projects, thus delaying
those projects. He shared that representatives of the oil and gas
industry have indicated that the current level of applications
would remain the same or increase.
Co-Chair Donley asked how many employees are in the division.
Mr. Galvin answered there are 27 employees, of which ten are
project review coordinators.
Co-Chair Donley thought it unusual to have that size of office and
to request an additional position just for the four months
remaining in the fiscal year.
Mr. Galvin responded that the intent is to add the position
permanently and that a request to do so is included in the
governor's FY 02 proposed budget. He emphasized the need to fund
the position soon because the division is "facing an immediate
crunch." He noted that while the division has been able to absorb
the workload during the last four months, other projects have
fallen behind.
Ms. McConnell noted that typically this type of request would be
made during the regular budget period but because the backlog is so
significant, this supplemental request was submitted. She added
that the intent is to avoid causing problems to the private sector
because of the delays.
Senator Ward asked what other duties the division was falling
behind in as a result of shifting personnel to the oil and gas
projects.
Mr. Galvin explained that the division performs a consistency
review for any project that requires either state permits from more
than one state agency or a federal permit. This, he stated includes
timber sales, dredging projects, etc.
Senator Ward asked if there is any way to measure the additional
costs to the state as a result of the increased amount of oil and
gas projects.
Mr. Galvin offered to provide a breakdown of the time involved to
do a project review.
Senator Ward wanted this information to also include time that was
not spent on other projects because of the staff redirection.
Senator Austerman asked if a fee is charged for these consistency
reviews.
Mr. Galvin replied there is none.
Senator Leman wanted to know how the division expected to hire a
competent person in this position, while only offering the salary
of a Range 18A. He questioned the hiring of an entry-level person
to perform complicated consistency reviews. He relayed the
complaints of other agencies and their difficulties in competing
with private industry.
Mr. Galvin responded that this is the standard pay range of all the
project review coordinators. He hoped that an existing employee
would apply for this position, thus bringing their experience to
the job and in turn, broadening their knowledge and exposure to the
oil and gas process.
Senator Austerman asked if, similar to the pay raise action taken
by Pioneer Homes, if the position has already been filled.
Mr. Galvin assured that no one has been hired and that the budget
request was calculated based on a hire date of May 1, 2001.
Section 6
Department of Law
Government Affairs BRU
Continuing costs for prosecution of claims against Bank of
America and other affiliated banks, and for litigation related
to the allocation of public safety resources
$240,000 general funds
BARBARA RITCHIE, Deputy Attorney General, Civil Division, Office of
the Attorney General, Department of Law, explained this item is to
cover costs in two different cases. The first, she stated is the
"Bank of America" case and detailed the anticipated litigation
based on the State of California's finding that this bank, along
with affiliates, failed to return or default to the state,
unclaimed property that would have been passed along to
bondholders. As a result, she said the department decided to look
into the matter in Alaska and determined the same was happening in
this state. She told of the action taken, including a three-day
mediation hearing, which did not result in a settlement of the
claim. She explained that the statute of limitation on this matter
expires in March 2001 and that the department plans to file suit
against the bank before that deadline.
Ms. Ritchie emphasized the amount at stake equals tens of millions
of dollars and that municipalities are also participating in the
case and would help cover some of the legal costs. She explained
some of the expenditures include legal expertise involved in the
California dispute. She noted that $100,000 of the $240,000
requested would be applied to this case and would help cover filing
costs of the suit, making the required disclosures and for other
costs related to the incitation of the litigation. She stressed
that this case is complex and that some of the analysis dates back
several years.
Ms. Ritchie then addressed the remaining $140,000, would be used to
cover costs in a separate suit brought against the state by the
Alaska Intertribal Council challenging the issue of equity of
public safety funding throughout the state. She shared that while a
request for a preliminary injunction was denied, the release was
the state's expenditure of $8 million in federal funds. She said
the case is in the discovery phase and that the trial is set to
begin in October 2001, with motions for summary judgments due
August 1. She noted that attorneys were already disposing experts
and that rebuttal dispositions would follow. She stated the funding
request is for expert costs associated with the department's
analysis, a historical review of public safety funding in Alaska
and to also cover the costs of reassigned staff that are not
currently paid with general funds, but instead with designated
interagency receipts.
Ms. Ritchie responded to a query by Senator Hoffman stressing that
with litigation it is difficult to predict when costs will be
incurred. She elaborated that sometimes, additional experts are
required or another round of dispositions are necessary. This she
explained was the reason the department requested that any unused
funds not lapse at the end of the fiscal year, and instead be
available during the legislative interim.
Senator Olson asked about the possibility that the litigation would
end with summary judgment and the expenses therefore not incurred.
Ms. Ritchie answered that it was difficult for her to predict,
although it is the department's goal to identify the specific
issues that are amenable to resolution short of trial. She
qualified that this would probably not be all of the aspects of the
case, noting the necessity to establish that there are no material
facts in dispute and that the matter is won based upon law. She
stressed that this is a high standard and that preparation for
every case should proceed as if it would go to trial.
Senator Leman requested further detail of the mediation session
with the Bank of America.
Ms. Ritchie stated that many parties were involved. She stated that
after three days, an agreement was not reached, but that there was
clarified focus on the specific areas of dispute. She added that
the mediator is a retired judge who had also presided over
mediations in the California case and is continuing his assessment
of the proceedings. Ms. Ritchie did not anticipate that this case
would settle before trial.
Section 7
Department of Military and Veterans Affairs
Office of the Commissioner BRU
Grant to Special Olympics to help cover lodging and other
costs of the World Games being held in Anchorage in March.
$500,000
BEN STEVENS, representing the Special Olympics World Games,
testified via testified via teleconference from Anchorage in favor
of the request, which would be used for food and housing of the
athletes. He noted other support given to the event by the federal
government, the military and other parties.
Senator Leman asked how much the state had already contributed to
the games.
Mr. Stevens replied that none were supplied to date, but noted a $4
million guarantee Alaska Industrial Development and Export
Authority (AIDEA) was passed in 1998 to be granted if necessary.
Senator Leman asked if any in-kind service has been provided by the
state.
Mr. Stevens replied that the state troopers have volunteered their
own time as well as members of the Alaska National Guard.
Senator Leman asked for accounting of the costs of those in-kind
services.
Mr. Stevens spoke to the total amount of cash needed for the games
calculated at costing $9 per day per athlete, with approximately
2,950 participants.
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