Legislature(2003 - 2004)
03/05/2003 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. 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."
This was the fifth hearing for these bills in the Senate Finance
Committee.
Co-chair Green announced that the Department of Military and
Veterans Affairs would continue their presentation begun, but not
concluded, at the March 3, 2003 meeting.
Department of Military and Veterans Affairs
SB 76
Section 11(a) and (b)
Department of Military and Veterans Affairs
Commissioner's Office
Structure change to move Commissioner's Office and Unallocated
Reduction components to National Guard BRU
JOHN CRAMER, Director, Division of Administrative Services,
Department of Military and Veterans Affairs stated that this
request would restructure the Department to provide the
Commissioner with "the latitude to work within the Department to
the extent" deemed necessary.
CRAIG CAMPBELL, Commissioner, Department of Military and Veterans
Affairs and Adjutant General, Alaska National Guard stated that
previous to his term as commissioner, the Commissioner's Office
operated within the National Guard Budget Review Unit (BRU);
however, he continued, the Legislature made the decision to remove
the Office of the Commissioner from the National Guard BRU and
establish a separate "and small" Commissioner's Office BRU. He
stated that re-establishing the Office of the Commissioner within
the National Guard BRU would provide the Commissioner with "more
latitude to manage the funds being entrusted" to him, specifically
to better coordinate Homeland Security measures and "better manage
the funding over the course of a year."
Senator Hoffman asked the importance of approving this request in
the supplemental request process rather than through a FY 04 budget
request.
Commissioner Campbell reiterated that approval of this request
would provide the opportunity to better manage current funding
allocations, specifically the funding necessary to sufficiently
develop and implement Homeland Security measures.
Senator Hoffman asked whether this request would transfer
additional Department funds to Homeland Security in FY 03.
Commissioner Campbell responded that approval of the request would
allow the Commissioner to utilize National Guard funds to develop
an overall operational plan to coordinate the National Guard's
existing Homeland Security responsibilities.
Co-chair Green asked whether the Department would continue this
restructuring alignment in FY 04.
Commissioner Campbell concurred that the FY 04 budget is being
developed in this manner.
SB 76
Section 11(c)
Military Youth Academy
Technical correction for Ch 130 SLA2002 (SB 345) fiscal note -
correct fund source amounts.
Co-Chair Green stated that this request regards a technical fund
source correction.
AT EASE 9:22 AM / 9:23 AM
Mr. Campbell noted that the backup material provides further
information regarding this request.
Co-Chair Green understood that this request is to correct an
inaccuracy that occurred during a conference committee meeting.
Mr. Campbell concurred and stated that the request would not
require additional funds.
Section 16(8)
Miscellaneous Claims and Stale-dated Warrants $580.88
$0.6 general funds
Mr. Cramer stated that this request entails two stale-dated items
totaling $580.88.
Department of Community and Economic Development
SB 76
Section 2(a)
Admin Services
Retroactive section to ratify the transfer of $51,000 from the
disaster relief fund back to the commercial fishing revolving
loan fund in response to recommendation 20 in the FY01
Statewide Single Audit prepared by Legislative Audit.
TOM LAWSON, Director, Division of Administrative Services,
Department of Community and Economic Development informed the
Committee that a 2001 Statewide fiscal audit [copy not provided]
conducted by the Division of Legislative Audit recommended that the
Department submit this request to authorization the return of the
unspent portion of monies to the Commercial Fish Fund from whence
it originated.
Co-Chair Green asked whether this request would be more appropriate
as a ratification.
Mr. Lawson voiced support for addressing the request as a
ratification rather than as a supplemental request.
Co-Chair Green announced that this request would be reclassified as
a ratification in the upcoming committee substitute.
SB 76
Section 2(b)
Capital
Section to change RPL 08-3-0104 for Rural Internet Access from
operating to capital
Mr. Lawson informed that this request would formalize the transfer
of a $7.5 million grant appropriation from the operating budget to
the capital budget to activate a Regulatory Commission of Alaska
(RCA) program authorized in FY 03.
Co-Chair Green clarified that this is a fund transfer.
Senator Taylor asked for further information about the RCA program.
Mr. Lawson replied that this program would provide for grants and
partnerships between internet carriers and public entities to
provide high speed Internet service to rural areas of the State.
Senator Hoffman asked the projected timeframe of the program.
Mr. Lawson responded that the program is proceeding slower than
anticipated; however, he stated, the federal grant application
process would be finalized this spring.
Co-Chair Green asked what occurs once the federal grant is
finalized.
Mr. Lawson explained that once the State/federal grant application
is finalized, the next step would be to distribute the grant
applications to eligible entities. He estimated that the
applications would be distributed in the spring; however, he
asserted that the program would not be completed by June 30, 2003.
Co-Chair Green stated therefore that the program funding would
continue into FY 04.
Mr. Lawson concurred.
SB 76
Section 2(C)
Insurance
Authority to receive and expend fees paid by licensees for
background checks. The Division of Insurance will then enter
into a contract (RSA) with Department of Public Safety who
performs the background checks.
$200.0 Receipt Supported Services
Mr. Lawson stated that this request results from a change in the
methodology of collecting fees for insurance industry applications
and background checks. He stated that the Department of Public
Safety requested this change because of the increase in background
checks being conducted as a result of the terrorist attacks on the
United States on September 11, 2001. He explained that, previously,
insurance applicants were required to submit two payments for
services: one to the Department of Public Safety for the background
check and one to the Department of Community and Economic
Development for the license; this change, he continued allows
applicants to remit a single payment for the entire fee to the
Department of Community and Economic Development. Therefore, he
concluded, the Department of Community and Economic Development
must receive authorization to transfer the $200,000 collected for
the Department of Public Safety's background checks.
Co-Chair Green announced that there would be a "correcting entry"
in the final committee substitute that would reduce the Department
of Public Safety budget by $100,000 to reflect the portion of the
fee the Department must pay to a third party for administering
background checks.
Senator Olson voiced concern that, as a result of the September 11,
2001 terrorist attacks and "other obstacles" presented to the
insurance industry, insurance companies might be deterred from
providing insurance coverage in Alaska. He asked whether the
Department has heard any such indications from the industry.
Mr. Lawson clarified that this request is not generated by an
increase in insurance fees, but rather reflects a change in the fee
process.
Co-Chair Green commented that were there any opposition to this
change, it has not been "publicly" voiced. She informed that State
regulations specify that anyone seeking to sell insurance in Alaska
must submit to a background check.
Senator Taylor asked for confirmation that every insurance agent in
the State is required to undergo a background check.
Co-Chair Green confirmed and stated that background checks have
been a requirement for many years.
Senator Taylor asserted that, while he accepts that attorneys are
required to undergo background checks, he is "incredulous" that
this requirement applies to the insurance industry.
Senator Bunde voiced that writing one check, rather than two, is
"slightly more user friendly" for the industry.
SB 76
Section 2(d)
International Trade
Authority to receive and expend registration receipts from the
Korea USA economic conference. The 2002 conference was held in
Korea; 2003 will be in Anchorage. Subsequent years'
conferences will be held in other western states.
$115.0 Statutory Designated Program Receipts
Mr. Lawson asked that this request be withdrawn from consideration
because the 2003 conference has been postponed.
SB 76
Section 2(e) and (f)
Alaska Science and Technology Foundation
Income is insufficient to fund appropriation due to stock
market declines. Fund source switch from income to endowment
and a reduction of $6,418.6 in the appropriation, leaving
authorization of $4.1m.
($6,418.6) Sci/Tech Endowment
Mr. Lawson informed the Committee that the Alaska Science and
Technology Foundation (ASTF) endowment revenues have declined due
to financial market conditions. He stated that, as a result, this
request seeks to reduce the authorization funding level and change
the funding source. He continued that this is an interim step as
the program is currently under review.
Senator Taylor verified that existing program obligations and
operating expenses amount to $4.1 million.
Mr. Lawson concurred.
Senator Taylor concluded that authorization of this request would
allow the program to operate through June 30, 2003.
Mr. Lawson agreed.
SB 76
Ratifications
Section 17(a)(1)(A)
AR 56381-02 (Delta Junction Economic Recovery)
$562.95 general funds
SB 76
Ratifications
Section 17(a)(1)(B)
AR 56385-02 (Rural Utility Mgt.)
$0.83 general funds
Mr. Lawson stated that this request involves federal grant program
expenses originating in 1987.
Department of Education and Early Development
SB 76
Section 5(a)
Schools for the Handicapped
Out of State Placement educational cost increase due to
increased number of clients and increased length of stay.
$366.8 general funds
EDDY JEANS, Manager, School Finance and Facilities Section,
Division of Education Support Services, Department of Education and
Early Development informed the Committee that this request is
generated by the additional cost of placing handicapped children in
out-of-State educational programs.
Co-Chair Green asked whether the program includes psychiatric and
disability treatment.
Mr. Jeans replied that these two categories are included in the
program.
Mr. Jeans stated that the Division of Family and Youth Services
(DFYS) administers this program that provides treatment for
children who are wards of the State. He explained that because the
State does not have the ability to teach these students, they are
provided treatment in out-of-State facilities. He continued that
the increased cost results from an increase in the number of
students in the program and an increase in the total number of days
at the facility.
Co-Chair Green asked whether these children qualify for Medicaid
coverage.
Mr. Jeans replied that, while Medicaid would provide for medical
expenses, these expenses result from educational needs.
Co-Chair Green asked whether the Department could identify the
reason for the increase in the number of youth being served in the
program.
Mr. Jeans stated that the reason is unknown.
Co-Chair Green suggested that the ability of private physicians to
enroll youth in the program through the auspice of the Denali
KidCare program might be a cause. She stated that this issue would
be addressed. She asked for verification that the increase in the
program is the result of an increase in the number of students and
their length of stay in the program.
Mr. Jeans concurred.
SB 76
Section 5(b)
Foundation
General fund reduction due to preliminary actuals for
foundation program that reconciles initial October student
count to the electronic data.
($6,728.8) general funds
Mr. Jeans stated that this surplus of funds in the School
Foundation Formula Fund account is the result of a lower than
expected final count of students in the public school system.
Co-Chair Green asked whether these funds would lapse at the end of
the fiscal year if they remained in the supplemental budget.
Mr. Jeans stated they would.
SB 76
Section 15(b) and (c)
Debt
Reduce debt retirement fund appropriation for school debt
reimbursement by amount of FY2002 cigarette tax carry forward
and increased tax collections.
($2,593.9) Debt RF
Increase School Fund appropriation for school debt
reimbursement by amount of FY2002 cigarette tax carry forward
and increased collections.
$2,593.9 School Fund
School construction reimbursement estimate has decreased from
56,378.4 to 52,536.0, a reduction of 3,842.4 needed to
capitalize the debt retirement fund. That amount plus the
2,593.9 debt retirement fund reduction above is the amount the
debt retirement fund is overcapitalized in FY03.
($10,278.7) Total Funds
($6,436.3) general funds
($3,842.4) Debt RF
Mr. Jeans stated that this request reflects a reduction in the debt
retirement fund as the result of a funding allocation overage as
well as the receipt of cigarette tax revenue allocated to the
Department in excess of projections.
Co-Chair Green clarified that these items offset each other.
Mr. Jeans clarified that the first entry reflects the overall
reduction in the debt retirement program and that the second entry
specifies the reduction in general funds needed to support the debt
retirement fund as the result of the transfer of excess cigarette
tax revenue received by the Department.
AT EASE 9:45 AM / 9:46 AM
SB 76
Section 16(3)
Admin Services
Miscellaneous Claims and Stale-dated Warrants $5,107.28
$5.1 general funds
Mr. Jeans stated that this request is the result of a late copier
billing.
Senator Hoffman asked whether the action specified in Section 15
(b) and (c) would increase the funding required in FY 04.
Mr. Jeans stated that this request would not impact FY 04 needs as
it adjusts the FY 03 authorizations based on current year
entitlements.
Senator Taylor asked the total savings amount resulting from the
reduction of debt reimbursement expenses and the lowered school
student enrollment figures.
Mr. Jeans responded that the actual reduction in the debt
reimbursement program is $3.8 million, and that a fund source
change of "up to another $5 million" further reduces the amount of
general funds required for the debt reimbursement program. He
continued that there is a savings of $6.7 million in the school
foundation funding program allocation.
Senator Taylor specified, therefore, that the general fund could
receive a credit of approximately $12 million.
Mr. Jeans agreed.
Co-chair Green restated that the FY 04 budget for the debt
reimbursement program would be independent from this request.
Mr. Jeans verified that the Department's FY 04 debt reimbursement
program budget is viewed "as separate transaction." He continued
that this request applies to the FY 03 budget appropriation and the
FY 03 Department resources.
Department of Natural Resources
SB 76
Section 12(a)
Recorder's Office
Increased costs to process heavy volume of mortgage refinance
activity and increased postage and supplies costs.
$149.1 Receipt Supported Services
NICO BUS, Administrative Services Manager, Division of Support
Services, Department of Natural Resources stated that this request
would provide for increased workload and operating costs in the
Recorder's Office due to an increase in mortgage refinancing cases.
He stated that, historically, the average number of mortgages
recorded each year is 400,000; however, he noted, the number this
year has exceeded 1,000,000. He referred to a handout titled
"Recorder's Office increase in Document Size (Image Count)" [copy
on file] that depicts the increase. He stated that the Department
hired non-permanent staff to address the backlog.
SB 76
Section 12(b)
Parks Management
Increased fees for City of Kodiak park maintenance contract
$4.0 Statutory Designated Program Receipts
Mr. Bus informed that this request would address the increased cost
of maintaining a State Park.
SB 76
Section 12(c)
Capital
National Coastal Wetlands Conservation grant pass thru to
Juneau for purchase of wetlands near Herbert River.
$553.0 federal funds
Mr. Bus stated that these funds are a pass-through federal
Department of the Interior grant to the City and Borough of Juneau
(CBJ) to purchase a parcel of land.
SFC 03 # 15, Side B 09:53 AM
Mr. Bus stated that the Department oversees the transaction, and he
noted that the CBJ Mayor urges the Committee to support this
request.
Co-Chair Green asked why the Division of Legislative Budget and
Audit (LB&A) initially disapproved this request.
Mr. Bus noted that the initial LB&A response requested the CBJ to
approve an ordinance endorsing this land transaction. He noted that
the ordinance would be finalized at an upcoming CBJ Assembly
meeting.
Mr. Bus responded to a question posed by Senator Bunde by
specifying that this one-time pass through grant transaction would
not result in any administration revenue to the Department.
SB 76
Ratifications
Section 17(b) and (c)
Fire Suppression
FY2002 Fire Suppression costs
AR37313-02 Fire General Fund and AR37311-02 Fire Federal
Receipts
$13,340,900.00 general funds
$ 3,000,000.00 federal funds
Mr. Bus stated that this ratification request provides for May and
June 2002 fire suppression expenses.
Department of Environmental Conservation
SB 75
NEW Section
Air Quality
Feb 26 Amd: Legal services for Red Dog Mines air permit
dispute
$100.0 general funds
MARY SIROKY, Legislative Liaison, Department of Environmental
Conservation explained that in 1998 the Department issued air
quality permits for an existing and a new diesel generator at the
Red Dog Mine. She informed that these permits were subsequently
objected to and blocked by the federal Environmental Agency (EPA).
She furthered that this request results from legal proceedings
whereby the Department challenged that EPA determination. She
stated that a favorable ruling is expected in the near future.
Co-Chair Green clarified, therefore, that this request is for legal
fees.
Senator B. Stevens asked whether the Department would be entitled
to legal fee reimbursement if the State prevailed.
Ms. Siroky responded that the State would not be entitled to legal
fees.
Senator Bunde asked how much money the State might receive if it
wins the lawsuit.
Ms. Siroky responded that rather than receive monetary
compensation, the State would be granted the authority to issue the
permits.
SB 76
Misc. claims
Section 16(4)
Admin Services
Miscellaneous Claims and Stale-dated Warrants $568.03
$0.6 general funds
Ms. Siroky stated that this is a miscellaneous claim request.
AT EASE: 10:03 AM / 10:03 AM
Co-Chair Green stated that this concludes the department
presentations for the supplemental bills.
Co-chair Green ordered the bills HELD in Committee.
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