Legislature(1995 - 1996)

06/04/1996 05:00 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SB 1005 - APPROP: MISCELLANEOUS                                              
            A draft  CSSB 1005  (Fin) (9-GS2073\O,  Utermohle,                 
            6/4/96) was adopted without Sec.  1.  Amendments 1                 
            through 9 were distributed for review.  Amendments                 
            1 and 2 were adopted as amended.  Amendments 3 and                 
            4 were not offered.  Amendment  5 failed on a vote                 
            of 2 to 5.  Amendments  6, 7, and 8 were  adopted.                 
            Amendment 9 was held per a request by  the sponsor                 
            (Senator  Zharoff).   Testimony  was presented  by                 
            Senator  Pearce,  Annalee  McConnell,   and  Nancy                 
            Slagle.    CSSB  1005 (Fin)  was  REPORTED  OUT of                 
            committee with a "do pass" recommendation.                         
  Co-chairman Frank directed attention to  CSSB 1005 (Fin) (9-                 
  GS2073\O,  Utermohle,  6/4/96) and  conducted  the following                 
  sectional analysis:                                                          
  Sec. 1.   Contains legislative findings and  intent for Long                 
  Range          Planning Commission work.                                     
  Sec. 2.   Contains  constitutional  budget  reserve language                 
  dealing        with both the sweep  and the budget balancing                 
                 mechanism.  It  suggests that  appropriations                 
                 be made under  sec. 17(c),  which requires  a                 
                 three-quarter vote.                                           
  Secs.  3  and 4.    Contain supplemental  appropriations for                 
  employee       contracts.                                                    
  Secs.  5  and  6.   Contain  appropriations  for  FY 97  for                 
  monetary terms           of collective bargaining contracts,                 
                           including   non-covered  employees.                 
                           Dollar amounts have been reduced in                 
                           Sec. 5(c)  by $1.5 million  for the                 
                           retirement  incentive plan  savings                 
                           and $975.0 for other  employer cost                 
                           savings  resulting  from  CSSB 1003                 
  Sec. 6.   Makes funding contingent upon passage of CSSB 1003                 
  Sec. 7.   Reduces the  amount of the appropriation  from the                 
  general        fund to  the debt  retirement  fund for  debt                 
                 retirement (both G.O.  and school debt),  due                 
                 to a  reduction in  the estimate required  to                 
                 fully  fund debt retirement  this year.  That                 
                 is a savings of $1.6 million from the earlier                 
  Sec. 8.   Contains an appropriation  to the disaster  relief                 
  fund for       the fire in MatSu.                                            
  Sec. 9.   Relates to  the  MatSu  fire.   Sec.  9  makes  an                 
  additional          appropriation  to  the  fire suppression                 
                      fund.    An  additional  amendment  will                 
                      later  be  offered   to  increase   this                 
                      appropriation and make  an appropriation                 
                      to   the   MatSu   Borough   for   costs                 
                      associated with that fire.                               
  Secs. 10 and 11.  Incorporate effective dates that failed in                 
  SB 412         and SB 136 (the operating and capital  budget                 
  Sec. 12.  States that Secs. 3 through  5 constitute explicit                 
            approval  of  the  monetary  terms  of  collective                 
            bargaining agreements.                                             
  Secs. 13 and 14.  Contain effective date clauses.                            
  Co-chairman Frank acknowledged additional amendments for the                 
  bill  and noted  that  the current  draft  does not  contain                 
  additional capital and  operating items.   The Governor  and                 
  other  legislative  members  have   requested  inclusion  of                 
  additional budget items.   The intent,  at this time, is  to                 
  "get this bill moved from  committee and into second reading                 
  so  that  we would  not  lose  any days  in  our legislative                 
  process."   Amendments  to include  additional  operating or                 
  capital items would be offered as floor amendments, over and                 
  above those of today.                                                        
  Senator  Donley  voiced  concern  regarding  the  fact  that                 
  minority  members were previously advised to hold amendments                 
  for floor action  and were  subsequently criticized for  not                 
  having offered them in committee.  Co-chairman Frank said he                 
  would have no  problem with amendments being  offered during                 
  the committee process.  He advised that he was not intending                 
  to  explain  why the  committee was  not  adding all  of the                 
  Governor's requests at  this juncture.   The committee  does                 
  not  want to  lose a  day.   If a  member wants  to make  an                 
  amendment, that opportunity is available.                                    
  Co-chairman Halford MOVED  for adoption  of CSSB 1005  (Fin)                 
  (9-GS2073\O,  Utermohle,  6/4/96)   as  a  mark-up  vehicle.                 
  Senator Rieger OBJECTED.   He then voiced  concern regarding                 
  Sec. 1.   He suggested  that Sec. 2  through the end  of the                 
  bill be adopted and  Sec. 1 be considered piece by piece, or                 
  another means  of  dividing  the question  be  found.    The                 
  Senator objected to language which indicates intent to adopt                 
  the long-range financial plan at a  future date.  He further                 
  objected  to  specific  provisions  within intent  language,                 
  saying  that they  do not  match his  view of what  the long                 
  range plan should encompass.                                                 
  Co-chairman Halford withdrew his motion for adoption of CSSB
  1005  (Fin) and instead MOVED for adoption exclusive of Sec.                 
  1  and  any title  provisions that  might  apply to  Sec. 1.                 
  Senator  Zharoff questioned  objection to  Sec. 1  language.                 
  Co-chairman Frank cited lack of  time for argument over  the                 
  23 subsections within  Sec. 1 since  findings and intent  do                 
  not  substantively impact  the legislation.   Senator Rieger                 
  reiterated that  language does  not reflect  his intent  and                 
  suggested  that it  is inappropriate  to  incorporate intent                 
  saying that the legislature "is going to do, next year, what                 
  we  could have done  this year."   Senator Zharoff indicated                 
  that language speaks to a fiscal  plan and suggested that it                 
  attempts to move the state toward a budget reduction process                 
  over a  period of time.  At present,  there appears to be no                 
  plan other than to cut the budget.  Proposed intent language                 
  offers  recommendations.                                                     
  Co-chairman Frank called  for further debate on  the motion.                 
  None was forthcoming.  He then  called for objections to the                 
  motion.  Senator Zharoff OBJECTED.  Co-chairman Frank called                 
  for a  show of hands.  The motion carried  on a vote of 6 to                 
  1, and CSSB  1005 (Fin)  was ADOPTED with  the exception  of                 
  Sec. 1.                                                                      
  Co-chairman Frank next referenced  proposed amendments.  Co-                 
  chairman Halford spoke to need  for a technical amendment to                 
  AMENDMENT NO.  1.   He  asked that  "and 1997"  be added  to                 
  appropriation language  for fire suppression funding so that                 
  the third line of the amendment reads:                                       
       ending June 30, 1996 and  1997, from the following                      
       fund sources:                                                           
  Co-chairman Halford MOVED for adoption of AMENDMENT NO. 1 AS                 
  AMENDED.  No  objection having been raised,  AMENDMENT NO. 1                 
  was  ADOPTED AS AMENDED.                                                     
  Co-chairman Frank  referenced AMENDMENT NO.  2 and explained                 
  that  it  would  allow the  public  utilities  commission to                 
  utilize FY 96  moneys in  FY 97, with  the stipulation  that                 
  assessments for FY 97 be reflective of costs attributable to                 
  the  particular   industry,  whether   that  be   telephone,                 
  electric,  etc.   The  funding is  needed  to deal  with the                 
  Federal Telecommunications Act of 1996.  Co-chairman Halford                 
  MOVED for adoption and requested unanimous consent.  Senator                 
  Rieger OBJECTED for the purpose of a question.  He said that                 
  a reading of  the first  four lines indicates  a balance  is                 
  being  carried forward.  The  following language reads as if                 
  the balance is assessed against utilities in FY 97.  Senator                 
  Sharp voiced his understanding that it is necessary to apply                 
  the assessment to the FY 97 regulatory charge for  telephone                 
  utilities  because  left over  moneys  are normally  used to                 
  reduce  regulatory  charges  against  all  utilities,  on  a                 
  prorata share, in  the following year.   The amendment  says                 
  that the $200.0 to be used exclusively for telephones should                 
  be assessed against telephone utilities in addition to their                 
  regular assessment next year.                                                
  Senator Rieger asked if the "balance on June 30," referenced                 
  in amendment  language, refers  to  a balance  that will  be                 
  assessed against the utilities.  Co-chairman Frank explained                 
  that it  refers to  the unexpended  balance in  the existing                 
  budget.  That amount will be carried forward.  Normally, any                 
  amount carried forward from one fiscal  year to the next, in                 
  APUC, is  used to  offset future assessments.   The  unspent                 
  $200.0  would  normally have  reduced  everyone's assessment                 
  (gas, electric, and telephone utilities).   However, in this                 
  case,  the  APUC  is asking  that  the  $200.0  be spent  on                 
  telephone  utilities  alone.     That  has  the   effect  of                 
  disproportionately  increasing  1997  assessments for  other                 
  utilities.    Language within  the  amendment says  that the                 
  $200.0 should be  assessed against telephones  so as not  to                 
  have  an impact on the 1997  assessment for other utilities.                 
  Senator  Rieger suggested it would have been clearer to say,                 
  at line 5, that  "an equal amount shall be  assessed against                 
  the telephones."    Senator Sharp  voiced his  understanding                 
  that  the  $200.0 needed  to "get  up  to speed"  on federal                 
  regulations was not  included in  the total amount  approved                 
  for FY 97.  "This would be an add-to for telephones only."                   
  Senator Rieger next  asked for  an explanation  of what  the                 
  intent  would  do.    He  specifically asked  if  "universal                 
  service" means the  same access now available.   Co-chairman                 
  Frank asked if representatives from the Office of Management                 
  and Budget were  prepared to  speak to the  issue.   ANNALEE                 
  McCONNELL,  Director,  Office   of  Management  and  Budget,                 
  responded,  "Not   specifically  on   the  intent   language                 
  presented here, but, obviously,  we did believe that it  was                 
  important  for  the  state  to   have  control  of  our  own                 
  responsibilities under the Federal  Telecommunications Act."                 
  The  Governor thus  included  a request  for  funding.   The                 
  administration  does  not  wish  to   end  up  with  federal                 
  preemption.  Senator Donley referenced lengthy deliberations                 
  in past years  regarding universal  service and voiced  need                 
  for  an explanation.   Ms. McConnell advised  that she could                 
  not speak specifically  to that issue.   She reiterated  the                 
  administration's belief that it is important that APUC "take                 
  this up" per the recommended lapsing funds.                                  
  Senator  Rieger  voiced  concern that  language  within  the                 
  amendment  "seems to be  almost a code  for something that's                 
  going  on."    SENATE  PRESIDENT  DRUE  PEARCE  came  before                 
  committee.  She explained that earlier in the session, after                 
  passage of the  federal telecommunications act, a  number of                 
  phone utilities  in Alaska  (both local  and long  distance)                 
  expressed interest  in legislation to follow federal law.  A                 
  briefing  for  legislators  was conducted  by  John  Katz of                 
  Alaska's   Washington,  D.C.,  office  and  one  of  Senator                 
  Stevens' staff members to advise of federal action.  Senator                 
  Stevens was on  the federal  conference committee.   Concern                 
  was  raised  by  APUC-regulated,  local  phone companies  in                 
  smaller communities.   It was the recommendation  of the Lt.                 
  Governor and Mr. Katz (following  review of the federal  act                 
  and  in  agreement with  APUC)  that it  was  not necessary,                 
  during  the  present  session,  to  attempt  to  make  state                 
  statutes comparable to  the new  federal act.   It is  still                 
  unknown what new rules might impact  the industry in Alaska.                 
  Another federal joint board process will be put  forward via                 
  the federal communications commission.   There is no Alaskan                 
  on  the joint board, yet it  will be dealing with how Alaska                 
  will be treated under the new act.                                           
  END:      SFC-96, FSS #4, Side 2                                             
  BEGIN:    SFC-96, FSS #5, Side 1                                             
  Senator Pearce voiced need for state ability to react should                 
  new rules be forthcoming in the near future.  It is expected                 
  that the  first new  rule will issue  "sometime this  Fall."                 
  The  specific  interest  of  locals,  that led  to  proposed                 
  language asking that  the APUC review the  new rules "before                 
  they take action," stems from the fact  that local telephone                 
  companies are regulated  by APUC.   That means that if  they                 
  want  to  change  their telephone  rates,  they  have  to go                 
  through  an APUC  rate case.   It  requires filings,  public                 
  hearings,  etc., and the  APUC has a  set amount  of time in                 
  which it is required to respond.  Rate-making cases can take                 
  from six  months to  much longer.   Concern  by small  phone                 
  companies is that,  with the new telecommunications  act and                 
  with announced intention by some  long distance carriers and                 
  ATU  to get into  local phone service  throughout the state,                 
  larger unregulated telephone  companies will make  offers to                 
  consumers to which local utilities will be unable to respond                 
  because  of  need  to  proceed   through  APUC.    Telephone                 
  companies in smaller communities would have  to file an APUC                 
  rate case to "ever be able to get to any sort of competitive                 
  prices."   By the  time they progressed  through the process                 
  and got  to a competitive price (if  they were able to match                 
  the  price), the time for  action would be  long gone.  That                 
  was the concern  brought forward  by local phone  companies.                 
  It  is that  concern  that  led  to intent  language  within                 
  Amendment No. 2.                                                             
  Senator Pearce next  referenced interest  on behalf of  some                 
  long distance companies for the  legislature to declare that                 
  competitive  local  phone service  was  in the  state's best                 
  interest.  Those bills  have not passed.  However,  there is                 
  still concern  that the APUC  might move forward,  and local                 
  phone companies would not be able to respond.                                
  Senator Rieger advised that the foregoing testimony explains                 
  the last four lines of the amendment.  It does not, however,                 
  speak  to  universal service,  how it  is defined,  and what                 
  "same  access"  means.   He  voiced  concern  that universal                 
  service  would raise  questions  of cross-subsidization  and                 
  expressed need to know what is  being talked about before he                 
  could support the language.   In the past, Alaskan consumers                 
  have  enjoyed  "some  preferential  treatment"  compared  to                 
  benefits available in the  "Lower Forty-eight," particularly                 
  in terms  of full cost  allocations.  He  questioned whether                 
  the subject language  might involve  "removing some  support                 
  for telephone service  up here."   Senator  Pearce said  she                 
  could  not speak  to  the universal  service question.   She                 
  acknowledged  a subsidy  and further  acknowledged questions                 
  about  how those subsidies would  be distributed if there is                 
  local competition.   The APUC  will eventually have  to make                 
  that  decision.   She  said  she  did not  know  whether the                 
  legislature would choose to  be a part of that.  The subsidy                 
  question, and definition  of universal  service in terms  of                 
  the subsidy, will start with  rule-makings under new federal                 
  law.  Only  after those decisions  are made will the  matter                 
  come  to APUC for further  action at the  state level.  Both                 
  Senator Rieger and Senator Pearce acknowledged that they did                 
  not know the impact of the language.                                         
  Senator  Donley  voiced  support  for  the  portion  of  the                 
  amendment relating to authorization of program receipts.  He                 
  then asked  why it was linked to subsequent intent regarding                 
  universal   service   and  APUC   action   on  the   federal                 
  communications act.   Senator Pearce  reiterated concern  by                 
  telephone companies  in small  communities about what  might                 
  happen should APUC  move forward before the joint  board has                 
  an opportunity to do its work.   Senator Donley concurred in                 
  Senator  Rieger's concern  regarding  universal service  and                 
  access language.                                                             
  Senator Donley next  asked if  utilization of the  remaining                 
  $200.0 means that telephone utilities would repay the $200.0                 
  in  FY 97, and it would be  rebated back to other utilities.                 
  Co-chairman  Frank responded  negatively.    He advised,  "I                 
  think  that they  would get  a  little extra  assessment for                 
  their share  of .  . .  the $200.0."   He  then recited  his                 
  understanding of the operation of the approximate $4 million                 
  budget.  In  developing next year's budget,  the legislature                 
  assumed a $200.0  carryforward.   Assessments would thus  be                 
  for $3.8 million, divided  per the normal proration.   Under                 
  the proposed language, assessments would  be $4 million with                 
  the extra $200.0 being fully  assessed against the telephone                 
  industry.  Assessments for other utilities would not change.                 
  Ms.  McConnell advised  that  when  the  administration  was                 
  considering inclusion of the amendment, discussions were had                 
  with APUC regarding  the mechanics "for  how they had to  do                 
  this."  The  language the administration developed  does not                 
  specifically  tie it  to telephone  utilities.   It was  the                 
  administration's understanding that  was "the way  that they                 
  needed  to deal  with  it."   She  offered to  check on  the                 
  question and bring it to  committee attention for subsequent                 
  correction, if there is a problem.  Ms. McConnell referenced                 
  earlier  discussion indicating  that,  given the  regulatory                 
  process,  "they  would  need to  do  it  in  a more  generic                 
  fashion."  Co-chairman Frank directed that Ms. McConnell ask                 
  if "they can live with our language."                                        
  Senator Donley asked if the administration had a position on                 
  universal  service  and  access  language.    Ms.  McConnell                 
  advised she was  not an expert  on the  issue and could  not                 
  speak to it.                                                                 
  Co-chairman Halford  suggested that since  universal service                 
  language  is  not   understood,  it  be  removed   from  the                 
  amendment.  He then cited the following text for removal:                    
       in  addressing  the  issue   of  what  constitutes                      
       'universal service'  under  the  Act,  the  Alaska                      
       Public   Utilities   Commission    should   define                      
       'universal service' so that                                             
  and suggested that remaining  language maintains the intent.                 
  Co-chairman  Frank  concurred  that  removal  represents  an                 
  improvement  in  the  wording.    Co-chairman  Halford  then                 
  formally MOVED to  delete the  above-noted language so  that                 
  the remaining portion of the sentence reads:                                 
       It is the intent of  the Legislature that Alaskans                      
       will  have  the  same access  to  the  benefits of                      
       modern telecommunications . . . .                                       
  No objection having been raised,  the amendment to AMENDMENT                 
  NO. 2 was ADOPTED.                                                           
  Senator Zharoff reiterated  earlier concern regarding  "same                 
  access," suggesting  that perhaps  it should  read "same  or                 
  improved."  Co-chairman  Frank asked if access  language was                 
  necessary  to  the  amendment.    Senator Pearce  said  that                 
  instructing APUC not to move forward until rule-making takes                 
  place   would  comfort   numerous  small,   rural  utilities                 
  statewide.  Co-chairman Frank  suggested that the  amendment                 
  be further limited by removal of access language so that the                 
  last sentence reads:                                                         
       It is the intent of the legislature that  the APUC                      
       should carefully review steps taken by the Federal                      
       Communications  Commission  to implement  the 1996                      
       Federal Telecommunications Act prior to taking any                      
       significant action which  would affect the current                      
       telecommunications marketplace in Alaska.                               
  Co-chairman Halford  MOVED to  delete the  following access-                 
  related wording:                                                             
       Alaskans will have the same access to the benefits                      
       of  modern  telecommunications  services   as  the                      
       residents of the lower 48 states and that                               
  No objection having  been raised, the amendment  was ADOPTED                 
  and the latter language was deleted.                                         
  Senator  Rieger  voiced need  to  insert the  word  "any" in                 
  remaining  language between the  words "review" and "steps."                 
  He explained that  without the insertion, language  could be                 
  construed to direct APUC "to not take any telecommunications                 
  actions  on  anything  until   the  federal  commission  has                 
  completed  its  work."   He  suggested that  the legislature                 
  would not want  to freeze activities entirely.   Co-chairman                 
  Frank called  for objections  to the  addition.   None  were                 
  forthcoming, and the  third amendment  to the amendment  was                 
  Co-chairman  Frank  called  for objections  to  adoption  of                 
  AMENDMENT NO.  2  AS  AMENDED.   No  objection  having  been                 
  raised, AMENDMENT NO. 2 was ADOPTED AS AMENDED.                              
  Co-chairman  Frank  next noted  AMENDMENT  NO. 3  by Senator                 
  Donley.    Senator  Donley  said  he  would  not  offer  the                 
  Senator Donley also said he would not offer AMENDMENT NO. 4.                 
  He voiced his understanding that the proposed bill now deals                 
  only    with    collective   bargaining    agreements,   the                 
  constitutional budget reserve fund, "this telephone  issue,"                 
  and the MatSu fire.  Co-chairman Frank concurred.                            
  Senator Donley  referenced AMENDMENT NO. 5 and noted that an                 
  appropriation to the Dept. of  Public Safety for victims for                 
  justice was discussed toward the end  of the budget process,                 
  in  regular  session,  and attempts  were  made  to identify                 
  alternative  sources  of  funding through  reappropriations.                 
  None  of  those  efforts  were  successful.   As  background                 
  information, he advised  that seven or eight  years ago, the                 
  state eliminated funding  for advocates for victims.   Since                 
  that time,  a non-profit organization, "victims for justice"                 
  has stepped in to fill the gap.   The organization is active                 
  in assisting the  judicial council and "putting  on seminars                 
  for judges," relating to  sensitivity to victims.   He urged                 
  support for the  $25.0 appropriation since attempts  to find                 
  reappropriated funding failed.                                               
  Co-chairman  Frank directed  that  the  meeting  be  briefly                 
                       RECESS - 5:45 P.M.                                      
                      RECONVENE - 5:55 P.M.                                    
  Upon reconvening the meeting, Co-chairman Frank acknowledged                 
  general support for the appropriation within AMENDMENT NO. 5                 
  but recommended  that it not be  approved at this  time.  He                 
  advised it could be kept in mind for a floor amendment along                 
  with other potential amendments that may be  offered as part                 
  of the final  operating and capital  item package.   Senator                 
  Donley acknowledged ongoing negotiations but voiced  concern                 
  that the request for  victims for justice did not  appear in                 
  the Governor's budget.  For that reason, he stressed need to                 
  address  the request  in  special session.   He  attested to                 
  support for the  appropriation in both the House  and Senate                 
  and  suggested  that it  "just  kind  of  fell  through  the                 
  Co-chairman Frank called for a show  of hands on adoption of                 
  AMENDMENT NO.  5.  The amendment  failed to be adopted  on a                 
  vote of 2 to 5.                                                              
  Senator Sharp MOVED  for adoption  of AMENDMENT NO.  6.   He                 
  explained that it would retain balances in the power project                 
  fund and the rural electrification revolving fund that would                 
  otherwise lapse into  the general fund  on June 30.   Totals                 
  are $650.0 for the former  and approximately $350.0 for  the                 
  latter.   He  attested  to  a  list of  backlogged  projects                 
  submitted to the Dept. of Community and Regional Affairs and                 
  noted need for the foregoing funds  to be used as originally                 
  budgeted.    Co-chairman  Frank  called  for  objections  to                 
  AMENDMENT NO. 6.  Senator Rieger asked if "regional intertie                 
  projects"  could include the  Glennallen intertie.   Senator                 
  Sharp  responded  negatively,  saying  that  it  relates  to                 
  "small, village- intertie-type" projects.                                    
  Senator Donley raised a question concerning what appeared to                 
  be  a deletion  of language  relating to the  Bethel Seawall                 
  Construction.  Senator Sharp explained that an appropriation                 
  to the seawall was contained in the original SB 1005 but not                 
  in  the  second  version.    He  reiterated  that  amendment                 
  language would merely roll the  funding forward within cited                 
  funds rather than  allowing it to  lapse.  Reference  within                 
  the amendment to  seawall construction  should be lined  out                 
  because the current draft does not contain that language.                    
  In  response  to  a request  from  Senator  Donley  that the                 
  administration  speak to  the amendment,  ANNALEE McCONNELL,                 
  Director,  Office  of  Management  and  Budget,  came before                 
  committee.  She said  that the balance of the  power project                 
  fund was supposed  to have gone  into the general fund  when                 
  the statutory change was made.  The administration proposed,                 
  in both  its original submission  and a pared  down version,                 
  that both sources of funding be used for the Bethel Seawall.                 
  They  would otherwise  lapse into the  general fund.   While                 
  there are  pending projects, the  cited funds have  not been                 
  designated for any particular  projects.  The administration                 
  thus felt it  was appropriate for "them  to go ahead and  be                 
  reappropriated to the Bethel Seawall."   That was one of the                 
  sources recommended for capturing the  $5 million in federal                 
  funds.   The administration  does not  support the  proposed                 
  amendment.   It  believes  the funding  should  be used  for                 
  another purpose.                                                             
  Senator  Rieger  asked if  the funds  lapsed  in 1994.   Ms.                 
  McConnell  explained  that  one  piece  of the  funding  was                 
  supposed  to  have lapsed  at that  time.   However,  it was                 
  missed in effecting  the transition  under the new  statute.                 
  It was only recently noticed  (long after budget preparation                 
  last fall)  as something  that should  have lapsed when  the                 
  statutory change was  made.   It is thus  available for  the                 
  Bethel Seawall.                                                              
  Senator Sharp referenced three  projects identified as  high                 
  priority by utilities throughout the state.  The first is $1                 
  million  for  the  Old Harbor  hydroelectric  project  to be                 
  matched by $600.0  from AVEC to reduce the draw on PCE.  The                 
  Senator further  noted projects  between Klawock  and Thorne                 
  Bay and Kasaan.   He  said that matching  power project  and                 
  rural electrical  funds to  a Bethel  Seawall does  not bode                 
  well when projects within the original intent are in need of                 
  Co-chairman Frank called for further discussion or objection                 
  to  AMENDMENT  NO. 6.   Senator  Donley  OBJECTED.   The Co-                 
  chairman called for  a show of  hands.  AMENDMENT NO.  6 was                 
  ADOPTED on a vote of 6 to 1.                                                 
  Co-chairman Halford  explained that AMENDMENT  NO. 7 relates                 
  to disaster relief associated  with the MatSu fire.   The $1                 
  million appropriation to  the Dept.  of Military &  Veterans                 
  Affairs  would increase  the  total to  $4  million, at  the                 
  request of  the administration.   In response to  a question                 
  from  Senator  Sharp,  both  Co-chairmen  advised  that  the                 
  appropriation would not lapse.  The effective date  would be                 
  immediate.   Senator Rieger acknowledged need as a result of                 
  the fire, but noted that  the proposed appropriation appears                 
  to be  contrary to  recent committee  policy of  not placing                 
  large  amounts  of funding  in  disaster relief  in advance.                 
  Concerns  have  been  raised   regarding  administration  of                 
  disasters by the department.  He said he was uneasy with the                 
  proposal  and  would be  more  comfortable with  a different                 
  approach, once it  is known  what the funding  will be  used                 
  for.  Senator Sharp voiced similar reservations in  light of                 
  procedures used in a recent disaster where cost controls and                 
  responsibilities were not effected.                                          
  Ms. McConnell  explained  that in  response  to  legislative                 
  concerns  and  issues  raised  in  a subsequent  audit,  the                 
  administration instituted new procedures with very  specific                 
  expenditure authority.   As the dollar value  increases, the                 
  level  of  required  scrutiny also  increases.    A disaster                 
  response cabinet  includes  all  commissioners  in  impacted                 
  departments.  Past situations giving  rise to concern should                 
  not be repeated.                                                             
  She  stressed  that  news  regarding  the  current  fire  is                 
  changing by the minute, and the magnitude is quickly growing                 
  because of winds.   The administration has  assured citizens                 
  in the area  that necessary  suppression (DNR) and  disaster                 
  (DMVA) resources will be  in place.  Ms.  McConnell attested                 
  to increased  evacuations  and  expanded  temporary  housing                 
  facilities.  She advised  of a 5:00 p.m. briefing  to update                 
  legislators  and  others  on the  status  of  the situation.                 
  Amounts  requested   in  the  proposed  bill   reflect  best                 
  estimates as of  earlier this afternoon.   News in the  last                 
  three  or   four  hours  may  mean  that   the  amounts  are                 
  Co-chairman   Halford   acknowledged   problems  with   past                 
  disasters  but stressed  that  the ongoing  fire  is near  a                 
  population  center.   Response,  review, and  reconstruction                 
  will be done  in the public  eye.  It  does not present  the                 
  same potential for  abuse highlighted  in the recent  audit.                 
  He attested to  the fact that the state  would likely end up                 
  spending "a great deal more than this number" and noted need                 
  to amend the number upward as more information is available.                 
  Ms. McConnell  reiterated  that  members  would  be  updated                 
  daily.    The  appropriation  to  the Dept.  of  Military  &                 
  Veterans Affairs  will  include  temporary  housing,  public                 
  assistance with utilities, and individual and family grants.                 
  Senator Rieger  inquired concerning  the likelihood  of FEMA                 
  moneys from the federal government.  Ms. McConnell explained                 
  that the state disaster declaration  would be transmitted to                 
  FEMA.  Application for federal  assistance on wildland fires                 
  will also be made.                                                           
  NANCY SLAGLE, Director, Division of Budget Review, Office of                 
  Management and Budget, came before committee with an update.                 
  She  advised  of  preliminary  approval  for  wildland  fire                 
  assistance from the  federal government.   The state  should                 
  thus  be  receiving  assistance from  FEMA.    Senator Sharp                 
  voiced his  understanding  that during  the  Koyukuk  flood,                 
  temporary housing was 100 percent paid by FEMA as  well as a                 
  $1,000 allotment for personal effects.   Ms. Slagle attested                 
  to a 70/30 split on FEMA  wildland fires.  She said she  did                 
  not know that the funding was specifically tied to temporary                 
  housing and those types of things.   It relates more to fire                 
  Co-chairman Halford cited  involvement of  two issues:   the                 
  first relates to the  fact that federal fire fighting  funds                 
  will actually  be available;  the second  issue is  disaster                 
  relief after the  fire is extinguished and  residents remain                 
  homeless,  etc.     There  has  been  no   federal  disaster                 
  Senator Zharoff  commented upon the  fire at Holy  Cross and                 
  stressed need to  devote attention to  that area as well  as                 
  MatSu.  The  interior should not  be ignored simply  because                 
  fewer residents are involved.   Ms. Slagle advised that  the                 
  Dept.  of  Natural  Resources  responded to  questions  from                 
  Senator  Lincoln  and assured  her  that there  are adequate                 
  numbers of teams to deal with fires as they develop and need                 
  Co-chairman   Frank  called   for   further  discussion   or                 
  objections  to AMENDMENT NO.  7.   No objection  having been                 
  raised, AMENDMENT NO. 7 was ADOPTED.                                         
  Senator Zharoff explained that AMENDMENT  NO. 8 is technical                 
  in  nature.   It  relates  to  a project  at  Pt.  Baker,  a                 
  community on  the northern end  of Prince  of Wales  Island.                 
  The  community seeks  to use  part  of the  capital matching                 
  grant moneys for  the water system for  the state-maintained                 
  small boat access  ramp.   Co-chairman Halford advised  that                 
  the legislature  dealt positively  with all  other community                 
  changes when the  capital budget was  under discussion.   He                 
  then  said  he  had  no  objection  to the  request  if  the                 
  administration would provide  assurance that funding belongs                 
  to the community, and the amendment merely includes a change                 
  in  terminology.    Nancy  Slagle  responded  affirmatively.                 
  Senator Zharoff MOVED for  adoption of AMENDMENT NO. 8.   No                 
  objection having been raised, AMENDMENT NO. 8 was ADOPTED.                   
  Senator Zharoff asked that AMENDMENT NO. 9 be held.                          
  Co-chairman  Frank  inquired concerning  further amendments.                 
  None were offered.  Co-chairman Halford MOVED for passage of                 
  CSSB    1005    (Fin),   AS    AMENDED,    with   individual                 
  recommendations.  No objection having been raised, CSSB 1005                 
  (FIN)  was REPORTED OUT of committee.  Co-chairmen Frank and                 
  Halford and Senators Phillips and Sharp signed the committee                 
  report with a  "do pass"  recommendation.  Senators  Donley,                 
  Rieger, and Zharoff signed "no recommendation."                              
  The meeting was adjourned at approximately 6:20 P.M.                         

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