Legislature(2003 - 2004)
02/21/2003 09:07 AM Senate FIN
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* first hearing in first committee of referral
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SENATE BILL NO. 75
"An Act making supplemental and other appropriations; amending
appropriations; and providing for an effective date."
SENATE BILL NO. 76
"An Act making supplemental and other appropriations; amending
appropriations; making appropriations to capitalize funds; and
providing for an effective date."
CHERYL FRASCA, Director, Office of Management and Budget, Office of
the Governor, testified that the total FY 03 supplemental request
is $63.3 million, with $9.3 million of that included in the fast
track request. She stressed that the recently formed Murkowski
Administration "focused on the spending side of the fiscal gap", in
preparing the supplemental budget request. She explained the review
process in determining why the departmental requested funding was
needed. She shared that in some instances, it was learned that
supplemental requests submitted by departments were proposed only
because the Legislature did not appropriate funding the previous
legislative session. She furthered that some requests were not
actually supplements to the original appropriations, but rather to
fund unanticipated events and that other "options to cover the
costs" were identified. Therefore, she assured that the
supplemental budget request presented to the Legislature is
"scrubbed down".
Ms. Frasca divided the supplemental budget requests into "three
major groupings". The first she identified as $15 million for
caseload growth in formula programs. She informed that the actual
caseload growth expense is approximately $12 million and that this
amount was offset by other savings: fewer students than projected
in the K-12 foundation funding formula, and current year
requirements for school debt reimbursement.
Ms. Frasca next listed $31 million general funds and $31 million
federal funds for disasters and fire suppression as the group
comprising the largest amount of requested supplemental funds.
Ms. Frasca listed the third grouping of programs "habitually short
funded" in the regular operating budget and thus requiring
approximately $7 million in supplemental funds. She listed the
Office of Public Advocacy (OPA); the Public Defenders Agency (PDA);
foster care programs and subsidized adoptions.
Ms. Frasca added that approximately $11 million is requested for
other purposes.
Senator Bunde asked the Administration's desired timeline in
receiving funds requested in the fast track supplemental and those
requested in the regular supplemental legislation.
Ms. Frasca requested receipt of funds included in the fast track
legislation in March 2003, advising that funding for some programs
could be depleted by that date. She stated that the items included
in the regular supplemental request could be funded at the end of
the legislative session, as in past years.
Senator Hoffman directed attention to the $3.3 million supplemental
request for the OPA and commented that during the previous
legislative session, the Senate Minority was criticized for
proposing an increase of $2.3 million to the initial appropriation.
He therefore asserted that amendments offered to the FY 04
operating budget should receive serious consideration.
Senator Hoffman next addressed funding to offset the federal
government denial of the State's use of the Fair Share provision to
partially fund the Medicaid program, which is not included in
either supplemental budget request. He understood that legal issues
were involved, but stressed that the State is obligated to provide
services. He asked when these expenses would be paid.
Ms. Frasca detailed the identification of the relationship between
tribal hospitals and the State, and the intention to utilize $50
million federal funds for Medicaid expenses under the Fair Share
provision. She reported that the federal agency disallowed this
usage and the State has appealed this decision, although she
cautioned that the federal agency has history of not overruling
decisions made within that agency. If the appeal is lost, she
continued, the matter would be taken to court. She remarked that
the Murkowski Administration is meanwhile operating on the
assumption that the State is "within the regulation" and therefore
funding is not requested in this supplemental budget. She informed
that if the final ruling were against the State, the issue of
appropriating State funds would be addressed at that time. She
predicted funds might be procured from the Constitutional Budget
Reserve (CBR) fund.
SB 76
Section 7
Department of Natural Resources
Fire Suppression
Fixed costs and fire suppression costs incurred to date
$19,033,800 general funds
NICO BUS, Acting Administrative Services Manager, Division of
Support Services, Department of Natural Resources, provided a
booklet titled, "Wildland Fire Management, The Basics" [copy on
file.]
Mr. Bus reminded the Committee that the initial FY 03 appropriation
was $3 million for fire suppression. He recounted that historically
the annual general fund expenses have been approximately $14
million.
Mr. Bus reported that at the start of FY 03, fire activity and
subsequent expenses were higher than average due to "very
extraordinary" weather conditions, including minimal snow the prior
winter. He described the dry conditions in the spring, which
continued late into the summer. He stated that the larger fires,
those exceeding $1 million to suppress and defined by the
Department as "project fires", occurred in July and August.
Mr. Bus told of the classification of areas of the State into four
broad protection levels at the start of the fire season: critical
protection, full protection, modified protection and limited
protection. He said this dictates how the fire season is managed by
the Department of Natural Resources and federal agencies. He
applied critical protection status to those areas important for
life and property, full protection to areas of historical sites and
other property "important to protect", modified protection to areas
where a designation would be determined in the event of an actual
fire, and limited protection to areas of low value, in which fires
would be allowed to burn.
Mr. Bus related that over the past several years, there has been
pressure on the Department to categorize as much land as possible
for limited protection without jeopardizing the protection of life
and property. He spoke to the Department goal and legislative
directive relating to the size of fires and their classification,
noting that in FY 02, the goal was exceeded. He remarked that
confining fires to areas of less than ten acres reduces the cost of
fire suppression.
Mr. Bus described the conditions during the past summer, including
one day in which 7,000 lightning strikes occurred. He coupled this
with fuel conditions in explaining the difficulty of fire fighters
to contain fires. He reported that once the initial $3 million FY
03 appropriation was exhausted the Department issued an emergency
disaster declaration on July 19, 2002. The additional expenses
incurred after that date he estimated at $7.5 million. He continued
that weather conditions in late July and early August created other
"flare ups of fire activity", although this is normally the end of
the fire season. As a result, he said, another emergency disaster
declaration was issued on August 19, with $11 million expended. He
disclosed these expenditures comprise the $19 million supplemental
budget request.
Mr. Bus was uncertain whether this amount would fund fire
suppression activities through the end of the fiscal year on June
30, 2003. He explained that if fire occurrences are minimal the
expenses could be absorbed; however, any large project fires would
require another emergency disaster declaration and additional
funding.
Co-Chair Green requested the average costs for fire suppression
during the months of May and June in the past five to ten years.
Mr. Bus stated he would provide this information to the Committee.
He predicted the cost for the upcoming spring would be higher than
average, given the low snow pack.
Senator Hoffman asked the relationship between the State of Alaska
and the federal government in fighting fires located on federally
owned lands. He also wanted to know if fire activity on federal
land was over-budgeted for FY 03.
Mr. Bus replied that the State is divided into two fire protection
zones, with the federal Bureau of Land Management (BLM) responsible
for fire suppression activities in all lands in the northern
portion of the state plus most of Southeastern Alaska and a portion
of Southcentral Alaska. Fire suppression in central and western
portions, and a small portion of Southeastern Alaska is the
responsibility of the state Division of Forestry, Department of
Natural Resources. [Map indicating these areas is located on page 8
of the aforementioned handout.] He commented that the majority of
the population resides in the areas under State control.
Mr. Bus then explained that regardless of the landowner, the State
and federal governments are responsible for fighting the fires
located within their fire protection boundaries. He furthered that
once a fire is extinguished and the cost is calculated, land
ownership is determined and that party is liable for the expenses.
He exampled a fire located on federally owned land within the fire
protection boundary of the Division of Forestry. He stated that at
the conclusion of the fire season, the State charges the federal
government for reimbursement, and conversely the State reimburses
the federal government for expenses incurred fighting fires on
state-owned land located in the BLM fire protection zone. He
detailed the timeframe in reconciling the charges, with the final
settlement completed in March of the following year.
Co-Chair Green commented that this is an on-going process.
Senator Bunde asked if the State charges private landowners for
fire suppression efforts on their property.
Mr. Bus responded that if the State conducts fire suppression on
Native-owned land, the BLM reimburses the State for the expenses.
He continued that if the fire began on privately owned land, the
Department considers the cause of the fire and if negligence is
found, the State attempts to recoup the costs from the landowner.
He admitted that actual collection of these expenses is "not very
good."
Senator Bunde commented that the population in the State continues
to grow and is redistributed. He asked if a procedure exists to
reclassify the priority of fire suppression in areas as population
concentrations changes. He also asked whether the lands classified
for limited protection should be increased to reduce fire
suppression costs.
Mr. Bus relayed that the Murkowski Administration is "eager" to
review the classifications and amend contractual relationships to
attain the most economical system. He qualified that agreements
must be reached between the landowners. He exampled that a portion
of State-owned land could be classified for limited protection yet
is adjacent to land under different ownership that has a higher
classification.
It was established that representatives of the Division of Forestry
would provide further details at a later time.
Co-Chair Green asked if the classifications are internal decisions
made within the Division of Forestry, or whether statutory
guidelines apply.
Mr. Bus told of annual landowner meetings whereby discussions are
held to determine classifications. Conversely, he stated that if a
fire occurred in an area under State jurisdiction and the
Department did not respond adequately, the State could be held
liable for damages.
Senator Bunde asked if a cabin were constructed in a non-protection
area and the land was not reclassified, could the State be held
liable in the event of fire damage.
Mr. Bus replied that property owners could attempt to obtain
restitution and the State would be required to defend against the
litigation.
Senator Bunde recommended that the Legislature should be involved
in making the classification determinations.
Mr. Bus referenced the aforementioned handout in commenting that
the inter-agency agreement on classification of land partially
determines how the Department responds to fire situation. He
stressed that although the total cost of fire suppression is the
responsibility of landowner, if no action is taken on State-owned
land and the fire spreads to land under other ownership with a
higher protection value, the State becomes liable for the damage
done on that land. He relayed such an instance of the previous
summer in which the State was required to pay $1.2 million.
Co-Chair Wilken spoke of a situation along the Chena Hot Springs
Road the prior year and he thanked the Division for its efforts. He
opined that this situation "had all the components of being a
disaster," but noted the disaster was averted.
Co-Chair Wilken next told of an instance in the fall of 2002
whereby a fire burned to the property line of a private landowner.
Co-Chair Wilken stated this landowner requested assistance from the
Department, but that request was denied. He asked the witness'
assessment of the situation.
Mr. Bus was unaware of the details of the situation.
Co-Chair Wilken asked how the State is compensated for the State-
employed firefighters sent to other states to assist in fire
suppression.
Mr. Bus replied that these expenses are reimbursed 100 percent. He
pointed out that the fire season in Alaska is generally May through
July and after it has been determined that the Alaska fire season
is concluded, equipment could be "released" for use in other
states. He informed that these expenses are reimbursed as well, and
therefore, some of the Department's fixed costs are reimbursed. He
listed an average of $8 million federal reimbursement funds
garnered, approximately $5 million of which is for out-of-state
fire suppression activities. He noted that village crews are
employed in this manner and this contributes to village economies.
Co-Chair Wilken and Mr. Bus further discussed the accounting of the
reimbursements into the State general fund and the logistics of
loaning equipment.
Senator Olson questioned the loan of certain aircraft to other
states, noting that other aircraft is less expensive to operate.
Mr. Bus replied that the federal government prefers this aircraft
and utilizes them almost immediately upon release by the
Department. He noted that as a result, the federal government pays
the majority of the fixed costs of these aircraft.
Mr. Bus told of other federally owned aircraft utilized by the
State that has since been returned at the request of the federal
government.
Co-Chair Wilken asked what is done with the State-leased fire
suppression aircraft during the winter.
Mr. Bus replied that the aircrafts undergo maintenance and are
parked.
Senator Taylor asked about efforts to salvage timber in areas of
fire activity. He surmised that between two and three million acres
of land is burned annually.
Mr. Bus answered that no commercial market exists for burned timber
from Interior Alaska. He understood that local residents obtain a
conditional use permit to utilize some of this timber for personal
use.
Senator Olson pointed out the request of $48,000 for fire weather
forecasting. He asked the reason for this item.
Mr. Bus replied that weather is a significant factor in fire
activity and forecasts are utilized in determining suppression
activity. He exampled the decision to "attack less aggressively" a
fire when rain is forecasted.
Senator Olson wanted to know why the federal weather bureau
forecasts are not utilized, as this service is free of charge.
Mr. Bus indicated he would research the matter.
Senator Olson next referenced the airport use fees of $111,000 in
FY 02 compared to $33,000 in FY 03.
Mr. Bus told of erosion at the McGrath airport and the emergency
temporary repairs that were required during FY 02. He informed that
the federal government issued an emergency declaration and rebuilt
the airfield. However, he said the State was responsible for the
cost of the emergency repairs.
Senator Olson understood the process of reimbursement from
different agencies, and asked the reimbursement process in the
event an aircraft crash starts a fire. He wanted to know if the
State collects from the pilot's insurance carrier.
Mr. Bus replied that the possibility of collecting from private
insurance companies is under consideration. He was unsure the
number of fires caused by downed aircraft.
Co-Chair Green commented that a number of pilots fly without
insurance coverage.
Senator Olson relayed an incident of a helicopter crash near
Galena, which started a tundra fire. He understood that the
insurance company was billed for the cost of fire suppression and
as a result, the company ceased issuing new policies in Alaska.
Mr. Bus stated he would provide further information on the matter.
Senator Bunde suggested an initially appropriating $6 million for
fire suppression to cover the fixed costs, rather than $3 million
with an expectation for a supplemental appropriation.
Mr. Bus agreed to this approach. He noted the average annual fire
suppression expense is $14 million and that projecting the actual
budget requirement would be difficult. He stated this has been an
issue for the previous ten years. However, he asserted that an
appropriation sufficient to cover fixed costs would be appreciated.
Senator Bunde spoke of "unfortunate accidents" the previous summer
involving air tankers. He surmised this would impact the number and
types of air tankers available for the upcoming year. He asked the
Department's plan given this situation.
Mr. Bus affirmed that aircrafts are scarce. He told of the process
undertaken to obtain additional aircraft for the upcoming fire
season.
Senator Taylor asked to what extent Native corporations participate
in the expense of fire suppression activities on Native-owned land.
Mr. Bus responded that the federal BIA reimburses the entire amount
of fire suppression expenses to the State.
Co-Chair Green noted the discussion on fire suppression would
continue. She indicated intent to change the process of funding
this item and others to minimize the amount of supplemental
appropriations necessary.
SFC 03 # 6, Side B 09:54 AM
Co-Chair Green continued that this would be applied to other
departments as well.
Senator Taylor compared the State's philosophy of fighting fires to
those practiced in British Columbia and Alberta, Canada. He
informed that in these provinces, fires are suppressed immediately
and not allowed to spread from one area to another. He suggested
the system practiced in Alaska is "set to fail". He surmised that
if the fire located near McGrath had been contained immediately,
the expense would have been between $2 and $3 million lower.
Co-Chair Green stated the Department would respond to these
comments as the first order of business in the next meeting.
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