Legislature(2003 - 2004)

04/07/2004 09:06 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 256                                                                                                        
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec. 17(c), Constitution  of the State of Alaska; and providing                                                            
     for an effective date."                                                                                                    
     SENATE BILL NO. 258                                                                                                        
     "An Act making appropriations for the operating and capital                                                                
     expenses of the state's integrated comprehensive mental health                                                             
     program; and providing for an effective date."                                                                             
This was  the first hearing  for these bills  in the Senate  Finance                                                            
Co-Chair  Green  stated that  due  to the  fact  that  the House  of                                                            
Representatives  operating  budget  companion  bills  have not  been                                                            
transmitted  to the  Senate,  today's meeting  would  be limited  to                                                            
reviewing  the  differences  between the  Senate  Finance  Committee                                                            
subcommittee  FY  05 operating  budget  report  recommendations  and                                                            
Governor Frank  Murkowski's proposed FY 05 budget.  She reviewed the                                                            
proposed  timeline for developing  a committee  substitute,  hearing                                                            
public  testimony,  and the  deadline for  the receipt  of  Members'                                                            
amendments to the Committee's proposed operating budget.                                                                        
Department of Administration                                                                                                  
Senator Con Bunde, Chair                                                                                                        
Senator John Cowdery                                                                                                            
Senator Bert Stedman                                                                                                            
Senator Georgianna Lincoln                                                                                                      
Senator   Bunde  commented   that   in  the   development  of   this                                                            
Department's  budget recommendations,  the subcommittee had  closely                                                            
adhered, "where practical"  to the Governor's proposed FY 05 budget.                                                            
He noted that minor changes were necessary in a few areas.                                                                      
LYNN SMITH, Staff to Senator  Con Bunde, informed the Committee that                                                            
the  lone  change  to  the  Governor's  proposed  FY  05  Department                                                            
operating budget  was a funding source change from  General Funds to                                                            
receipt-supported services in the Division of Motor Vehicles.                                                                   
Senator   Dyson  asked   whether  the  subcommittee   reviewed   the                                                            
Department's Missions and Measures statement.                                                                                   
Senator  Bunde   responded  that  he  had  requested   each  of  the                                                            
departments  whose  budgets  he oversaw  to  provide a  Mission  and                                                            
Measures report.  He noted that the  Department of Administration's                                                             
report   was  quite   extensive  and   when   asked  regarding   its                                                            
corresponding   volume  of   paperwork,  the   Department  saved   a                                                            
significant amount  of money by making its report  available on-line                                                            
rather than  by printing  the report to paper.  He shared that  this                                                            
dialogue between  the Subcommittee and the Department  resulted in a                                                            
small, but cost-saving, change in the process.                                                                                  
Senator Dyson  asked whether the subcommittee chair  agreed with the                                                            
Department's Missions and Measures report.                                                                                      
Senator Bunde  replied yes. He noted that the Department's  Missions                                                            
have not  changed and that  its attempt to  measure efforts,  "while                                                            
not perfect", is an ongoing process.                                                                                            
Department of Labor and Workforce Development                                                                                 
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins                                                                                                           
Senator Bert Stedman                                                                                                            
Senator Bettye Davis                                                                                                            
Ms.  Smith  informed  that in  contrast  to  the  Governor's  single                                                            
appropriation  to  this  Department,  the  Committee  separated  the                                                            
appropriation    into    four    components:    the   Commissioner;                                                             
Administrative  Services;   Workers  Compensation  and  Safety;  and                                                            
Workforce Development and Vocational Rehabilitation.                                                                            
Senator Bunde  noted that considerable time was spent  reviewing the                                                            
Department's Missions  and Measures report. The report  presented no                                                            
area of discomfort.                                                                                                             
Senator  Dyson expressed  pleasure and surprise  at Senator  Bunde's                                                            
comment,  as he had found  that the Department  reports he  reviewed                                                            
were measuring  activity rather than the results and  benefits being                                                            
provided to State residents.                                                                                                    
Co-Chair  Green  asked  for  confirmation   that the  appropriation                                                             
structure  being recommended  by the subcommittee  would divide  the                                                            
appropriation into four rather than one allotment.                                                                              
Senator Bunde concurred.                                                                                                        
Department of Law                                                                                                             
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins                                                                                                           
Senator Tom Wagoner                                                                                                             
Senator Kim Elton                                                                                                               
Ms.  Smith  commented that  the  subcommittee  recommends  only  one                                                            
change to that  proposed by the Governor.  This change would  reduce                                                            
the  Department's  overall  General  Fund  budget  by  $100,000  and                                                            
transfer  those   funds  to  the  Alaska  Court  System   as  it  is                                                            
anticipated  that the  Court System,  whose budget  was held  to its                                                            
prior year's level  in the Governor's budget, would  need this money                                                            
as both the  Department of Law's and  Department of Public  Safety's                                                            
budgets have increased and might impact the Court System.                                                                       
Senator Bunde explained  that the Department of Law would be able to                                                            
identify the  area from whence this  funding reduction would  occur.                                                            
He  also  informed  Senator  Dyson   that  limited  review  of  this                                                            
Department's  Missions  and  Measures  was undertaken  as  time  was                                                            
devoted to  addressing the Department's  budget issues. However,  he                                                            
noted  that the  Department was  made aware  of  the importance  and                                                            
interest allocated to its Missions and Measures report.                                                                         
Department of Natural Resources                                                                                               
Senator Con Bunde, Chair                                                                                                        
Senator Gary Stevens                                                                                                            
Senator Tom Wagoner                                                                                                             
Senator Lyman Hoffman                                                                                                           
Ms. Smith expressed that  the lone change in this budget as compared                                                            
to  that  proposed  by the  Governor  was,  at the  request  of  the                                                            
Department,  the addition of receipt  authority in the Agricultural                                                             
Revolving Loan  Fund. As a result of this change,  $150,000 would be                                                            
made available  for the Alaska Grown  Marketing Program and  $60,000                                                            
would be  made available  for the organic  program. She stated  that                                                            
Representative  Bill Stoltze had furthered this request  in order to                                                            
better  market the  State's organic  grown program.  She noted  that                                                            
other  Legislators have  voiced support  for  the marketing  program                                                            
Co-Chair  Green understood  that  there would  be no  change to  the                                                            
overall General Fund request level.                                                                                             
Ms. Smith affirmed.                                                                                                             
Department of Fish and Game                                                                                                   
Senator Ben Stevens, Chair                                                                                                      
Senator Scott Ogan                                                                                                              
Senator Tom Wagoner                                                                                                             
Senator Kim Elton                                                                                                               
Senator B.  Stevens shared  that the three  differences between  the                                                            
Senate subcommittee  budget recommendation and that  proposed by the                                                            
Governor  include: "an  improved fund  source  change" that  "swaps"                                                            
$830,000 of General Funds  designated for the Division of Commercial                                                            
Fisheries with an identical  amount of funding by the Revolving Loan                                                            
Fund designated for the  Division of Subsistence; an increase in the                                                            
Commercial  Fisheries  Limited Entry  Commission  Receipt  Supported                                                            
Services  to provide  funding for  the Public  Employees  Retirement                                                            
System (PERS)  increase; and a $1.25  million General Fund  increase                                                            
to provide funding to the Department's PERS expenses.                                                                           
Senator   Hoffman  asked   how  these  changes   would  affect   the                                                            
Department's overall budget.                                                                                                    
Senator B. Stevens  responded that the changes would  result in less                                                            
than an overall $1.025 million increase.                                                                                        
Senator  Hoffman  understood  that  the  increase   would  primarily                                                            
address PERS expenses.                                                                                                          
Senator B. Stevens concurred.                                                                                                   
Department of Public Safety                                                                                                   
Senator Ben Stevens, Chair                                                                                                      
Senator Gene Therriault                                                                                                         
Senator Ralph Seekins                                                                                                           
Senator Gretchen Guess                                                                                                          
Senator B. Stevens informed  the Committee that the subcommittee, as                                                            
compared to the Governor's  FY 05 budget proposal, has recommended a                                                            
General Fund  reduction of $50,000  in the Division of Alaska  State                                                            
Troopers  and a  General Fund  reduction  of $50,000  in the  Alaska                                                            
Bureau of  Investigation's  budget. In addition,  he continued,  the                                                            
subcommittee  allowed for  a $200,000 General  Fund increase  to the                                                            
Council on  Domestic Violence  & Sexual Assault  grants category  to                                                            
provide  funding   for  Shelters.  A  $200,000  transfer   from  the                                                            
Permanent Fund  Felon Account in the Division of Personnel  Services                                                            
Contracts would further supplement the shelter increment.                                                                       
Co-Chair Green understood  therefore that the proposal would provide                                                            
an additional $400,000 for shelters.                                                                                            
Senator B.  Stevens concurred, but  clarified that the net  increase                                                            
would only  amount to $200,000,  as $200,000  of the total  $400,000                                                            
would be a supported by a funding transfer.                                                                                     
Senator  B. Stevens  noted that  the subcommittee  also accepted  an                                                            
increase of $9,900  in General Funds as the result  of a transfer of                                                            
funds from the Department  of Administration to the State facilities                                                            
Rentals Category in the Department of Public Safety.                                                                            
Senator B.  Stevens characterized  the subcommittee changes  to this                                                            
budget as "minor."                                                                                                              
University of Alaska                                                                                                          
Senator Ben Stevens, Chair                                                                                                      
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Con Bunde                                                                                                               
Senator Fred Dyson                                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator  B.  Stevens  explained  that  due  to  the  fact  that  the                                                            
University  of Alaska  FY  05 funding  has  been included  in  other                                                            
legislation, specifically  SB 35 and HB 283, no subcommittee  report                                                            
would be presented.                                                                                                             
Senator  Dyson  asked whether  Senator  B.  Stevens's subcommittees                                                             
addressed any  of their departments' Missions and  Measures reports.                                                            
Senator   B.   Stevens   responded   that  the   majority   of   the                                                            
subcommittees'  efforts focused  on the budgetary  process  and that                                                            
limited time was available to address Missions and Missions.                                                                    
Department of Community and Economic Development                                                                              
Senator Gary Wilken, Chair                                                                                                      
Senator Bert Stedman                                                                                                            
Senator Gary Stevens                                                                                                            
Senator Donny Olson                                                                                                             
Co-Chair  Wilken pointed  out that  the changes  recommended by  the                                                            
subcommittee as compared  to the Governor's proposed budget included                                                            
replacing  all  General Fund  support  for  the Office  of  Economic                                                            
Development  and the  Commercial  Fisheries Revolving  Loan  Funding                                                            
with business  licensing receipts.  He stated that the subcommittee                                                             
"accepted  the Governor's  amendments  to transfer  trade  positions                                                            
between" the  Department and the Governor's  Office due to  the fact                                                            
that  the  entirety  of  the  Division's   general  funds  had  been                                                            
eliminated and replaced with business license receipts.                                                                         
Co-Chair Wilken  continued that the subcommittee showed  support for                                                            
the Local Boundary Commission  in the Division of Community Advocacy                                                            
by  allowing  for  an  increase  of  one  position  as  well  as  an                                                            
additional $50,000 in General  Funds. Furthermore, he noted that the                                                            
Qualified Trade Association's  (QTA) $1.125 million of General Funds                                                            
was replaced  with business  license receipts.  He stated  therefore                                                            
that  the  total  budget  for  the QTA  would  remain  at  both  the                                                            
contracted  amount and the  $4.005 million  amount specified  in the                                                            
Governor's budget.                                                                                                              
Co-Chair  Wilken   furthered  noted  that  the  subcommittee   added                                                            
language to allow lapsed  FY 04 business license receipts to support                                                            
the FY 05 budget.                                                                                                               
Co-Chair  Wilken also  stated that  the subcommittee  supported  the                                                            
Governor's  proposal to transfer six  positions from the  Regulatory                                                            
Commission of Alaska (RCA) to the Department of Law.                                                                            
Co-Chair  Wilken noted that  other than  the aforementioned  changes                                                            
regarding  the QTA,  no  other language  changes  were  made to  the                                                            
Governor's proposed budget.                                                                                                     
Department of Education and Early Development                                                                                 
Senator Gary Wilkin, Chair                                                                                                      
Senator Bert Stedman                                                                                                            
Senator Bettye Davis                                                                                                            
Co-Chair  Wilken  thanked  the Department  of  Education  and  Early                                                            
Development  and  the Subcommittee  members  for the  assistance  in                                                            
developing  the subcommittee budget  recommendations. He  noted that                                                            
the  K-12 Public  Education  Foundation  Funding Formula  budget  is                                                            
embodied  in other separate  budgetary legislation,  and  therefore,                                                            
while  it  was  included  in  the  FY  04  budget,   its  associated                                                            
$8,400,000 expense is not  reflected in the FY 05 proposed operating                                                            
Co-Chair   Wilken  stated   that  the  subcommittee   approved   the                                                            
authorization  for the State  to receive  an additional six  million                                                            
dollars  in  federal  funding  for  various  [indiscernible  due  to                                                            
coughing]  programs.  He  pointed  out that  due  to organizational                                                             
changes,  $4,088,000  has  been  eliminated  from  the Department's                                                             
budget  due to  this being  the first  year that  the Yukon/Koyukuk                                                             
School District  would be  operating the  State's distant  education                                                            
correspondence  program, Alyeska Central School (ACS),  as a charter                                                            
school. This structural  change also allowed for the  elimination of                                                            
26 permanent  full-time, 27 permanent  part-time, and one  temporary                                                            
employee  in addition  to the elimination  of two  positions  in the                                                            
Pupil Transportation category.                                                                                                  
Co-Chair Wilken  noted that an Education Specialist  II position was                                                            
added  to oversee  "at  least for  one budget  cycle"  of the  newly                                                            
structured correspondence  program and its 11,000 student enrollees.                                                            
He  noted  that  this  position  would  assist   in  furthering  the                                                            
development  of  this  program,  which  has experienced   tremendous                                                            
growth in recent years.                                                                                                         
Co-Chair  Wilken  also  noted  that  $75,000  was  restored  to  the                                                            
Division  of Libraries  archives  section  and intent  language  was                                                            
added  to  address  concerns  regarding   the  increasing  usage  of                                                            
interagency   receipt   funding   for   executive   administration,                                                             
administrative  services, and information services.  The goal of the                                                            
intent  language would  be  to recognize  these expenses  as  "true"                                                            
budget expenditures.                                                                                                            
Senator  Hoffman   asked  the  funding  source  for  the   Education                                                            
Specialist II position.                                                                                                         
Co-Chair  Wilken  replied  that  the position  would  be  funded  by                                                            
$119,500 of General Funds.                                                                                                      
Senator   Olson   asked   how  the   oversight   of   the   previous                                                            
correspondence program was managed.                                                                                             
Co-Chair  Wilken replied that  other than  Department, there  was no                                                            
specific  person responsible  for the oversight  of the program.  In                                                            
the  year  2000, a  position  was  established  to  oversee  charter                                                            
schools; however, it was  deemed necessary to authorize one specific                                                            
person to be  responsible for overseeing  all alternative  education                                                            
programs being offered  by the State as concerns have been raised in                                                            
regards  to  how  the  programs,  and  specifically  correspondence                                                             
programs, were  being managed. He noted that this  position would be                                                            
able  to provide  assistance  to  the programs,  especially  as  the                                                            
growth  of  alternative  programs   has  been  significant  and  has                                                            
resulted in fragmentation within the Department.                                                                                
Senator  Olson  asked  whether  the  $119,500  designated  for  this                                                            
position   would  provide   sufficient  funds   for  the   Education                                                            
Specialist II to travel to various program locales.                                                                             
Co-Chair Wilken responded  that a business plan that includes travel                                                            
has been developed for this position.                                                                                           
Senator Dyson,  while voicing  appreciation  in regards to  adding a                                                            
position to monitor correspondence  programs, noted that the charter                                                            
school  overseer position  had not  reached its  full potential.  He                                                            
therefore, asked whether  the Specialist II position would be a one-                                                            
year  position  and whether  the  original  charter  school  monitor                                                            
position  would   assume  the  responsibility  for  monitoring   all                                                            
alternative school programs thereafter.                                                                                         
Co-Chair Wilken  responded that the  position would "probably  be" a                                                            
two-year  position as the  individual would  travel and gather  data                                                            
during  the   first  year,  and  then   implement  Legislative   and                                                            
regulatory  recommendations  the  second  year.  He  suggested  that                                                            
continuance of these positions  should be re-evaluated at that time.                                                            
Senator Dyson  voiced the hope that these "two positions  could work                                                            
Co-Chair Wilken  stated that the Department  understands  the intent                                                            
of  establishing  the  position   and  would  be  developing  a  job                                                            
Senator Hoffman  noted that the FY  05 management plan, as  compared                                                            
to the FY 04 management  plan, reflects a reduction  of 25 full-time                                                            
Co-Chair  Wilken  explained  that  the reductions  result  from  the                                                            
change with the ACS correspondence school program.                                                                              
Senator  Dyson  asked   regarding  the  Department's   Missions  and                                                            
Co-Chair  Wilken stated that  the Department  was asked to  evaluate                                                            
its Missions  and Measures  and provide any  change requests  to the                                                            
subcommittee. Minimal discussion in this regard ensued.                                                                         
Co-Chair  Green interjected  that she had  not requested a  Missions                                                            
and Measures report from  the departments whose budgets she oversees                                                            
due  to  the  fact  that  all  Legislators  had  received  a  letter                                                            
requesting  "a  one-year  delay"  pertaining  to  the  Missions  and                                                            
Measures  process. The intent  of this delay  was to allow  time for                                                            
Departments to re-evaluate their goals and missions.                                                                            
Senator Dyson  understood that the  request had originated  from, at                                                            
that   time,   the    newly   seated   Governor   Frank    Murkowski                                                            
Administration.  The one-year time frame has expired  and therefore,                                                            
he understood,  as discussed at this table, that this  should be the                                                            
year that the  subcommittees would  review the revised Missions  and                                                            
Measures reports.                                                                                                               
Co-Chair Wilken  remarked that during  the Legislative Interim,  "an                                                            
arduous process"  was conducted between the Administration  and each                                                            
Department to  further their Missions and Measures  goals. He stated                                                            
that rather  than being  ignored,  the results of  that process  are                                                            
embodied in  the FY 05 budget, and  that a subcommittee's  review of                                                            
the Missions and Missions  relating to the Department's budget would                                                            
be a repeat  of what had  already occurred  and would be shallow  in                                                            
Senator Dyson  voiced therefore  that there  might be a fundamental                                                             
difference between how  the Missions and Measures process is viewed,                                                            
as he understood  it to  be a method through  which the Legislature                                                             
could  measure "performance  against  agreed upon  missions" in  the                                                            
budgetary  process.  Therefore,  a subcommittee's  acceptance  of  a                                                            
department's  FY  05 budget,  as  presented,  without  conducting  a                                                            
Missions  and  Measures  review,  could  be  likened  to  accepting,                                                            
without examination,  that  budget. This would  be contrary  to what                                                            
should  be  a  Legislator's  responsibility.   He  stressed  that  a                                                            
Legislator  "has  a very  keen responsibility"  in  determining  the                                                            
validity of  how taxpayers dollars  are spent and to adjust  budgets                                                            
in order to  support the missions  of a department in an  economical                                                            
manner. He opined that  what he is hearing today is contrary to that                                                            
Co-Chair   Wilken  clarified   that   the  Missions   and   Measures                                                            
responsibility  for  the  FY  05 budget  has  been  assumed  by  the                                                            
Administration,  and that, while a  subcommittee could also  conduct                                                            
its own Missions  and Measures review, it would be  a duplication of                                                            
effort.  Those who  participated  in the  Department/Administration                                                             
Missions  and Measures  review  process  characterized  it as  being                                                            
exactly what the  process should have been and even  a step further.                                                            
In  conclusion,  he stated  that  while he  considers  Missions  and                                                            
Measures   to  be   an   important   and  necessary   process,   his                                                            
subcommittees  did  not conduct  such  a review,  as  it would  have                                                            
repeated efforts already conducted.                                                                                             
Senator  Dyson  opined  therefore,  that the  subcommittee  had  not                                                            
utilized   the  process   to  determine  how   the  department   was                                                            
performing.  Continuing,  he asked  why the  tools  provided by  the                                                            
Missions and Measures process were not being utilized.                                                                          
Co-Chair Wilken  reiterated that his subcommittee  had not conducted                                                            
a  review due  to  the  fact that  the  Administration  had  already                                                            
conducted  the process during  the months  of May through  September                                                            
15, 2003.                                                                                                                       
Senator Dyson suggested  that the Legislature should either continue                                                            
or modify  the  measures regarding  the  results  of a department's                                                             
efforts.  The  intended result  should  be  positive for  people  of                                                            
Alaska. Things that do not work should not be funded.                                                                           
Co-Chair Green  pointed out that the current Director  of the Office                                                            
of Management  and Budget had participated  in the Administration's                                                             
Missions  and Measures  department review,  and had  in years  past,                                                            
participated  in a similar process.  This is "a particular  passion"                                                            
of hers.  "There is  a point at  which Missions  and Measures  is an                                                            
Administrative  tool,  probably more  so than  it  is a Legislative                                                             
tool." Therefore,  at this time, the Administration's  participation                                                            
in the process should be allowed.                                                                                               
Department of Transportation and Public Facilities                                                                            
Senator Gary Wilken, Chair                                                                                                      
Senator Scott Ogan                                                                                                              
Senator Tom Wagoner                                                                                                             
Senator Georgianna Lincoln                                                                                                      
Co-Chair  Wilken acknowledged  the efforts  of Department staff  and                                                            
the subcommittee  members in addressing  this budget. He  noted that                                                            
other than expanding  the Department's appropriation  structure into                                                            
five rather  than one appropriation  as requested by the  Department                                                            
and as reflected  in the Governor's  FY 05 Amended budget,  no other                                                            
changes   were  made.   The  five   appropriation   components   are                                                            
Administration  and Support; Design,  Engineering and Construction;                                                             
Highways, Aviation,  and Facilities;  International Airport  System;                                                            
and the Marine Highway System.                                                                                                  
Senator Hoffman  noted that the FY 05 budget, as compared  to the FY                                                            
04 management  plan, indicates  that there  would be a reduction  of                                                            
126 fulltime and 34 part-time  staffing positions. This is reflected                                                            
on page  two of  the "Agency  Totals -  FY 2005  Operating Budget  -                                                            
Senate Structure"  spreadsheet in the subcommittee  report. He asked                                                            
how this would  affect public service  delivery. In addition,  given                                                            
that there would be a decrease  in staffing, why would there be a $3                                                            
million  increase   in  the  Administration  and  Support   Services                                                            
Co-Chair  Wilken responded  that the majority  of the 126  full-time                                                            
positions  are vacant  and therefore,  their  elimination would  not                                                            
affect the  service area.  He was  unsure as to  the reason  for the                                                            
increase in Administration and Support services.                                                                                
Senator Hoffman  agreed that, as reflected  in the FY 04  management                                                            
plan's $267 million  budget, those positions must  have been vacant.                                                            
However,  noting  that the  FY  05 budget  is  proposed  to be  $282                                                            
million, he voiced concern  that, as the State continues efforts "to                                                            
tighten  its  belt"  a portion  of  the  "substantial"  $15  million                                                            
increase would be designated  to increase Administration and Support                                                            
funding rather than to support direct services.                                                                                 
Co-Chair Green  stated that this concerns would be  addressed as the                                                            
budgetary numbers are further reviewed.                                                                                         
Department of Environmental Conservation                                                                                      
Senator Fred Dyson, Chair                                                                                                       
Senator Scott Ogan                                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Dyson stated that  the Governor's Amended Budget reduced the                                                            
Department's  FY  05  budget  by $219,000   and that  the  House  of                                                            
Representatives   further  reduced   it  by  $270,200.  The   Senate                                                            
Subcommittee,  however, recommended that $201,400  be added back in.                                                            
The Senate agreed  with the House's $19,000 reduction  in Department                                                            
travel  and $50,000  reduction to  the Department's  new  integrated                                                            
water quality  program called "Raindrops to Oceans."  However, while                                                            
the House  did not support  the Governor's  inclusion of an  $80,500                                                            
Homeland Security position,  the Subcommittee retained that position                                                            
in its budget.  While, the House had eliminated $46,000  for Class C                                                            
Drinking  Water Program,  the Senate Subcommittee  reinstated  it in                                                            
addition  to providing  $75,000  for the  initial  phase-out of  the                                                            
Class 3 Solid Waste Program.                                                                                                    
Senator  Dyson stated  that the  Department agrees  with the  Senate                                                            
Subcommittee's recommendations.                                                                                                 
Senator Dyson noted that  the previous year, legislation was adopted                                                            
that required  departments to submit  their budgetary requests  in a                                                            
prioritized  format and that  any reductions  to a budget should  be                                                            
made respectful  of that process. However, this Department's  budget                                                            
was not prioritized.                                                                                                            
Senator  Dyson  noted  that  the  Subcommittee  held  "considerable                                                             
discussions"  with the  Department in  regards to  its Missions  and                                                            
Measures, and in conclusion,  agreed with the Department that public                                                            
health and the environment  are high priorities. However, he allowed                                                            
that it is difficult to  determine a manner through which to measure                                                            
how goals are being met.                                                                                                        
LUCKY  SCHULTZ, Staff  to  Senator Fred  Dyson, explained  that  the                                                            
Subcommittee's budget proposal  is $288,300 lower than the reduction                                                            
proposed  in the Governor's  budget.  He also noted  that while  the                                                            
Department  had requested a single  appropriation, the Subcommittee                                                             
divided  the appropriations  into four  components: Administration;                                                             
Environmental Health; Spill Prevention and Response; and Water.                                                                 
Senator  Hoffman,  a  Subcommittee  Member,  stated  that  when  the                                                            
Department  was  asked how  it  would manage  its  Public  Employees                                                            
Retirement  System (PERS)  obligation of  approximately one  million                                                            
dollars, its response was  that, while there was no definitive plan,                                                            
they were planning  on absorbing the  obligation via such  things as                                                            
staffing vacancies. However,  he argued that vacancies are already a                                                            
factor  in most  budgets and  that absorbing  a  one million  dollar                                                            
obligation  within   an  eleven  million  dollar  budget   would  be                                                            
difficult and  might negatively affect  the Department's  ability to                                                            
meet its Mission and Measures goals.                                                                                            
Senator Dyson  noted that the Department has projected  that, as the                                                            
result of efforts to consolidate  its information and administrative                                                            
divisions,  approximately   one  million  dollar  savings  would  be                                                            
realized.  The understanding  is that these  funds would be  used to                                                            
address the PERS obligation.                                                                                                    
Department of Military and Veterans Affairs                                                                                   
Senator Fred Dyson, Chair                                                                                                       
Senator Scott Ogan                                                                                                              
Senator Bert Stedman                                                                                                            
Senator Johnny Ellis                                                                                                            
Senator Dyson  stated that the proposed  FY 05 budget is  a $377,000                                                            
increase over the FY 04  budget. The Subcommittee concurred with the                                                            
House of Representative's  Finance  Committee's recommendations.  He                                                            
noted  that the  majority  of the  increase  is in  response to  the                                                            
Department's  PERS obligation combined  with the need to  expand the                                                            
military academy  in Fairbanks. He  noted that the consolidation  of                                                            
homeland  security and  emergency  services resulted  in savings  of                                                            
approximately $500,000.  Other changes offset each other in terms of                                                            
personnel  expenses and the  House/Senate  budget aligned with  that                                                            
proposed by the Governor.                                                                                                       
Senator  Dyson  described the  Department's  Missions  and  Measures                                                            
report as "healthy."  It was agreed  that two manners with  which to                                                            
test  the effectiveness   of the  Missions  were:  how much  of  the                                                            
equipment  allotted to the  Department is  functionally operational                                                             
and how many of the authorized  positions are filled and how many of                                                            
those  people  "are  trained  and  ready  to go  to  work"  were  an                                                            
emergency to arise. A new  mission has been developed through which,                                                            
when feasible,  local  and rural  facilities'  maintenance would  be                                                            
conducted by local people.  Another proposal being developed through                                                            
which  to measure  the  ability  of the  Department's  readiness  to                                                            
protect against  such things as terrorist attacks  would be to allow                                                            
a  committee   of  Legislators   to  attend   briefings  and   other                                                            
discussions regarding the Department's readiness.                                                                               
Senator Olson  understood that, in addition to a three-quarter  of a                                                            
million  dollars  PERS debt  in FY  04, this  amount  would also  be                                                            
anticipated in FY 05. He  asked how a 1.1 percent increase in the FY                                                            
05 budget could provide that for that obligation.                                                                               
Senator Dyson responded that he did not have that information.                                                                  
Co-Chair Green asked that  an answer be provided at the next hearing                                                            
on this bill.                                                                                                                   
Department of Revenue                                                                                                         
Senator Fred Dyson, Chair                                                                                                       
Senator John Cowdery                                                                                                            
Senator Donny Olson                                                                                                             
Senator Dyson  noted that the Department originally  requested an FY                                                            
05 budget increase  of $369,000. The Governor decreased  that amount                                                            
by $315,000;  the House  eliminated an additional  $19,000;  and the                                                            
Senate subcommittee  is recommending  $125,000 more than  the House.                                                            
Of that amount,  $106,000 is result  of the Department's  request to                                                            
fund  the  Alaska  Natural  Gas  Authority.  An  additional  funding                                                            
request for  a Wood McKinzie subscription  to the North America  Gas                                                            
Insight Service/Multi-Client Study might be forthcoming.                                                                        
Senator Dyson  noted that a significant portion of  the Department's                                                            
budget  increase  was to  support the  PERS  impact as  a result  of                                                            
salary  increases. The  overall $2.5  million PERS  impact would  be                                                            
offset by internal budgetary reductions.                                                                                        
SFC 04 # 74, Side B 09:53 AM                                                                                                    
Senator  Dyson  urged the  Committee  to  designate that  the  State                                                            
employee  retirement accounts  should be viable  and not subject  to                                                            
the continuance of the  "unpleasant surprise" experienced this year.                                                            
When he suggested  to the Department of Revenue that  their missions                                                            
should include  having a healthy retirement  system, their  response                                                            
was  that they  only  control  the  investment  portion of  it,  and                                                            
another group has the mission  of making "it actuarially viable." He                                                            
declared that  this Committee should  require the Administration  to                                                            
have a  mission of a healthy  retirement system  and to require  the                                                            
people  involved in  that  mission to  develop good  standards  with                                                            
which to further it. "This is very, very important."                                                                            
Senator  Dyson  stated  that  a  great  deal  of  discussion  ensued                                                            
regarding  the performance  of  the  Department of  Revenue's  Child                                                            
Support  Enforcement  Division  (CSED).  While  that  Division  must                                                            
adhere to federal  standards, it was urged that on  the local level,                                                            
they should  respond in a quicker  fashion to the needs of  those in                                                            
the  CSED system.  A  better  coordination  of efforts  between  the                                                            
Department of  Revenue, the Department of Law, and  the Alaska Court                                                            
System is required to better serve the public.                                                                                  
Co-Chair  Green  noted  that  to  mandate  to  the  Court  System  a                                                            
timeframe in which  something should be handled would  be difficult,                                                            
particularly in regards to Court Orders.                                                                                        
Senator Dyson  agreed, but stated that this is valuable  information                                                            
for  us,  for  if the  Court  System  "is  lacking  the  people  and                                                            
resources" with  which to address things in a reasonable  timeframe,                                                            
there are impacts on other  departments and citizens. He stated that                                                            
Missions  and Measures  ought to  direct Legislators'  attention  to                                                            
"the chokepoints" in the process.                                                                                               
Co-Chair Green agreed.                                                                                                          
Senator Hoffman  inquired regarding  the increase in the  Department                                                            
of  Revenue's FY  05 retirement  budget  as  compared to  its FY  04                                                            
Senator Dyson responded that it would amount to $2.5 million.                                                                   
Senator Hoffman  asked whether the FY 05 retirement  system expenses                                                            
are fully funded in the  Department's Personal Services expenses. In                                                            
addition,  he asked  whether the  Personal Services  funding  amount                                                            
would fund salary increases.                                                                                                    
Mr. Schultz  stated  that it is  difficult to  identify whether  the                                                            
retirement  system  expenses   are  fully  funded  in  the  Personal                                                            
Services  category  as  the  expenses  could  have  been  offset  by                                                            
reductions in other budget components.                                                                                          
SUSAN  TAYLOR,  Director,  Administrative  Services,  Department  of                                                            
Revenue,  clarified  that  the majority  of  the  Department's  PERS                                                            
commitment would  be funded within this budget. She  noted that some                                                            
PERS expenses  would be offset by  such things as a small  reduction                                                            
in the  Tax Division. However,  the required  salary adjustments  in                                                            
larger  Department components  such  as the Alaska  Housing  Finance                                                            
Corporation  (AHFC) served  to significantly  increase the  Personal                                                            
Services budget.                                                                                                                
Department of Corrections                                                                                                     
Senator Lyda Green, Chair                                                                                                       
Senator Scott Ogan                                                                                                              
Senator Gary Stevens                                                                                                            
Senator Gretchen Guess                                                                                                          
Co-Chair Green  stated that the subcommittee  has recommended  a one                                                            
million dollar reduction  to the Governor's Amended FY 05 budget, as                                                            
the  net result  of  increasing  inmate  health  care costs  by  one                                                            
million  general   fund  dollars   and  reducing  the  Correctional                                                             
Industries  fund by  two million  dollars.  The increase  in  inmate                                                            
health care funding would  align funding with recent costs. "Greater                                                            
savings"  in inmate  health  care  costs are  anticipated  as a  new                                                            
health  care program  is  implemented.  She reminded  that  recently                                                            
enacted legislation required  the Correctional Industries program to                                                            
be self-sustaining.                                                                                                             
Co-Chair  Green also noted  that, while the  Department requested  a                                                            
single  appropriation,  the Subcommittee  designated  five  separate                                                            
appropriations:  Administration and Operations; Inmate  Health Care;                                                            
Institutions; Probation and Parole; and Parole Board.                                                                           
Co-Chair  Green stated  that  dividing  the appropriations  in  this                                                            
manner would  allow for  an accurate portrayal  of each component's                                                             
expenses, specifically in the field of inmate health care costs.                                                                
Senator  Hoffman noted  that  while there  would be  a five  percent                                                            
reduction  in staffing  positions,  there  would be  an increase  in                                                            
Personal  Services expenses.  He asked whether  the increase  is the                                                            
result of PERS expenses.                                                                                                        
Co-Chair Green  responded that the  Department's PERS expenses  were                                                            
included in  the Governor's PERS/TRS  Budget request because  of the                                                            
fact that its 365 day a  year, 24 hour a day operations would "skew"                                                            
its overall budget.                                                                                                             
Senator  Hoffman   asked  whether   the  Department's  five-percent                                                             
reduction in  full time positions  was comprised of existing  vacant                                                            
JERRY  BURNETT,  Director,  Division  of  Administrative   Services,                                                            
Department  of Corrections  explained  that the majority  of the  72                                                            
positions  being eliminated  were  vacant. The  identical number  of                                                            
security facility  positions would  continue in FY 05 as  FY 04, and                                                            
that due to business  practice changes in the administration  of the                                                            
Department,  18  administrative   positions  were  eliminated.   The                                                            
savings from the elimination  of the administrative positions served                                                            
to support the security staff expenses.                                                                                         
Co-Chair Green  understood that the end result would  be an increase                                                            
in the number of security facilities staffers.                                                                                  
Mr. Burnett stated that  the goal is "to not decrease" the number of                                                            
employees in the facilities.                                                                                                    
Senator Olson  noted that there is  a decrease projected  for inmate                                                            
transportation expenses.                                                                                                        
Mr.  Burnett  responded  that most  of  decrease  is the  result  of                                                            
changes  in how  inmates  are transported,  specifically  that  more                                                            
ground transportation  and fewer charter  flights would be  utilized                                                            
as well as  a reduction in the frequency  of moving inmates  between                                                            
Senator Olson  asked whether transportation expenses  have increased                                                            
as a result of the closure of the jail in Kotzebue.                                                                             
Mr. Burnett explained that  while the Department does fund community                                                            
jail expenses,  specifically  the jails in  Kotzebue and Nome,  they                                                            
are funded via  a reimbursable services agreement  (RSA) between the                                                            
Department of Corrections  and the Department of Public Safety. This                                                            
expenditure  is reflected  in the community  jails component  of the                                                            
Department  of  Public  Safety  budget.  He  noted that  the  FY  04                                                            
$#67,000 expenses  associated with this RSA component  are projected                                                            
to continue at the same level in FY 05.                                                                                         
Department of Health and Social Services                                                                                      
Senator Lyda Green, Chair                                                                                                       
Senator Ralph Seekins                                                                                                           
Senator Ben Stevens                                                                                                             
Senator Hollis French                                                                                                           
Co-Chair Green stated that  upon "review of some anticipated savings                                                            
that the Department  had brought forth," the Subcommittee  increased                                                            
the Governor's Amended  Budget proposal by $500,000 General Funds in                                                            
order  to  provide  substitute   funds  for  the  Pioneer  Home,  as                                                            
projected  receipt services  were over-projected.  In addition,  the                                                            
Safety Action Program budget  was increased by utilizing $845,000 in                                                            
federal  and  other  funds with  the  instruction  that  the  entire                                                            
program  should be  evaluated to  determine what  system would  best                                                            
serve all entities  involved in the  process, including counselors,                                                             
the Court  System, and  others. The Office  of Children's  Services,                                                            
Residential Child Care  budget was increased $375,100; a new federal                                                            
grant of $600,000  was earmarked for and provided  to the Children's                                                            
Trust Programs;  and $900,000 in federal  receipts was added  to the                                                            
Alaska  Temporary  Assistance   Program  in  the Public   Assistance                                                            
Co-Chair Green expressed  that due to projected revenue decreases in                                                            
both the Tobacco Prevention  and Control Program and the Alcohol and                                                            
Drug  Abuse  Prevention  and  Treatment  fund,  appropriations  were                                                            
adjusted to reflect this  downturn. In addition, the funding for the                                                            
Human  Services Community  Matching  Grant Program,  which is  being                                                            
phased  out,  reflects  the  first  of  the  next  three-year  equal                                                            
reductions slated to occur.                                                                                                     
Senator  Hoffman asked  regarding  the funding  of the Department's                                                             
PERS obligation.                                                                                                                
JANET  CLARKE,  Director,   Division  of  Administrative   Services,                                                            
Department  of  Health  and  Social  Services,  responded  that  the                                                            
Department's  four  million  dollar  PERS  and  Teachers  Retirement                                                            
System (TRS) General  Fund increase was absorbed by  reductions that                                                            
would  occur  throughout   the  Department.  Staffing   for  24-hour                                                            
facilities was, however, sustained.                                                                                             
Co-Chair Green  understood that these  facilities would include  the                                                            
Alaska Psychiatric Institute  (API), the Pioneer Homes, and juvenile                                                            
corrections facilities.                                                                                                         
Ms. Clarke  stated  that it  would also  include  front line  social                                                            
workers and other direct field staff.                                                                                           
Senator  Hoffman understood  that  the Department  has absorbed  the                                                            
funding for the "around the clock" staffing positions.                                                                          
Ms. Clarke  clarified that the PERS  and TRS expenses were  absorbed                                                            
throughout  the  Department.  Even  though  the  Governor's  Amended                                                            
Budget reflected a one  million dollar detriment in the Department's                                                            
budget,  the PERS  and  TRS expenses  were funded  by  a variety  of                                                            
Department reductions, refinancing, or other budgetary elements.                                                                
Senator  Hoffman  requested  that  detailed  information  about  the                                                            
reductions be provided.                                                                                                         
Co-Chair  Green asked  the Department  for  a breakout  of the  four                                                            
million dollar  PERS and TRS expenses, specific to  both the 24-hour                                                            
facilities employees and others.                                                                                                
Alaska Court System                                                                                                           
Senator Lyda Green, Chair                                                                                                       
Senator John Cowdery                                                                                                            
Senator Tom Wagoner                                                                                                             
Senator Hollis French                                                                                                           
Co-Chair  Green   stated  that  the  Subcommittee's   FY  05  budget                                                            
recommendation  is  $400,000   higher  than  that  proposed  in  the                                                            
Governor's Amended Budget  proposal as the net result of: increasing                                                            
the Trial  Court funding  by $300,000 to  allow for the anticipated                                                             
case load increase  resulting the addition of more  troopers, public                                                            
defenders,  criminal prosecutors and  CINA attorneys and  the denial                                                            
of pay increases  for jurors; the denial of the request  to increase                                                            
Court salaries,  Court House leases and security,  juror pay, and to                                                            
increase Court-Appointed  Attorney hourly pay; approving  two Mental                                                            
Health  Trust projects;  and  a minimal  reduction  in the  Judicial                                                            
Council budget.                                                                                                                 
Alaska State Legislature                                                                                                      
Senator Lyda Green, Chair                                                                                                       
Senator Gary Wilken                                                                                                             
Senator Gene Therriault                                                                                                         
Senator John Cowdery                                                                                                            
Senator Lyman Hoffman                                                                                                           
Co-Chair  Green stated that  the Subcommittee  recommended  a budget                                                            
that is  $2.1 million  less than  that approved  by the Legislative                                                             
Council  and  the  Legislative  Budget   and  Audit  Committee.  The                                                            
reduction was  the net result of: the elimination  of seven one-time                                                            
items that  were included in the FY  04 budget; the lowering  of the                                                            
funds specified  to support anticipated  re-districting lawsuits;  a                                                            
reduction in the Permanent  Fund Dividend (PFD) felon fund amount to                                                            
more accurately  reflect  the amount  of those funds  that would  be                                                            
available;  a fund source  change provided  to the Office of  Victim                                                            
Rights to replace the amount  lost by the reduction in the PFD felon                                                            
funds;  and  other  miscellaneous  adjustments   being  made  within                                                            
Personal Services                                                                                                               
Office of the Governor                                                                                                        
Senator Lyda Green, Chair                                                                                                       
Senator Gary Wilken                                                                                                             
Senator Gene Therriault                                                                                                         
Senator John Cowdery                                                                                                            
Senator Donny Olson                                                                                                             
Co-Chair  Green communicated  that although  it recommends  slightly                                                            
different  allocations, the  Subcommittee has  recommended the  same                                                            
funding level  as the Governor's Amended  Budget. The net  result of                                                            
these  changes would  include the  replacement  of $651,000  General                                                            
Funds in  the Executive  Office with business  license receipts  for                                                            
the support  of overseas trade development  functions; the  transfer                                                            
of $340,000 from  the Executive Office to the Contingency  Fund; and                                                            
the denial of  two small increments totaling $80,000  General Funds.                                                            
Senator  Hoffman  commented  that  while the  Subcommittee's  FY  05                                                            
budget  recommendation   in  total  matches  that  proposed  by  the                                                            
Governor,  there  has been  a 21-percent  increase  over  the FY  04                                                            
Management Plan budget.                                                                                                         
Co-Chair  Green responded  that the  increase is  the result  of the                                                            
transfer of  business license receipt  funds from the Department  of                                                            
Community and Economic Development to support trade functions.                                                                  
LINDA PEREZ,  Administrative  Director, Division  of Administrative                                                             
Services,  Office of the  Governor, explained  that the increase  in                                                            
the Governor's  budget  is the result  of the  transfer of funds  to                                                            
support the  International Trade operations  from the Department  of                                                            
Community  and Economic  Development  to the  Governor's office.  In                                                            
addition,  the budget reflects  the funding  required in support  of                                                            
the PERS increase.                                                                                                              
Senator  Hoffman asked  whether these  two items  accounted for  the                                                            
majority of the funding increase.                                                                                               
Ms. Perez affirmed.                                                                                                             
Co-Chair  Green   stated  that  this   concludes  the  subcommittee                                                             
operating  budget reports.  Upon the collection  of the information                                                             
and the  receipt of the  House of Representatives  Operating  Budget                                                            
legislation,   a  committee  substitute   would  be  developed   and                                                            
presented to the Committee.                                                                                                     
Senator Hoffman  asked whether any  departments anticipate  the need                                                            
to present a supplemental budget request for FY 05.                                                                             
Co-Chair Green responded  that there has been no indication that any                                                            
supplemental budget requests would be forthcoming.                                                                              
AT EASE 10:16 AM / 10:17 AM                                                                                                     
Co-Chair Green  stressed that no budget  has been short-funded  with                                                            
the expectation  that  a supplemental  request  might be  necessary.                                                            
However, whether  or not any supplemental  budget requests  might be                                                            
forthcoming is unknown.                                                                                                         
The bills were HELD in Committee.                                                                                               
[NOTE: Co-Chair Wilken chaired the remainder of the meeting.]                                                                   

Document Name Date/Time Subjects