02/04/1997 01:34 PM Senate L&C

         SB  55 AMEND DEFINITION OF "PROGRAM RECEIPTS"                        
                                                                              
  CHAIRMAN LEMAN  called the Senate Labor and Commerce Committee               
 meeting to order at 1:34 p.m. and announced  SB 55  to be up for              
 consideration.                                                                
                                                                               
  MS. ANNALEE MCCONNELL , Director, Office of Management and Budget,           
 said this bill is intended to deal with an accounting catch 22.               
 Some items in their budget expenditures could grow and actually are           
 in the economic development area and are seen as a real positive.             
 Yet that increase in the expenditures counts as an increase in the            
 total budget.  Either those activities get held back a little bit             
 because of the concern with increasing the State budget or other              
 areas take cuts to allow for the expansion in these "designated               
 program receipts."                                                            
                                                                               
 The bill proposed last year started as a measure to look at test              
 fisheries and recognizeD the fact that there are many places where            
 the industry is very interested in getting a test fishery started.            
 The fishermen realize the State doesn't have unlimited resources              
 and are willing to pay for the costs of doing the test fisheries,             
 but they realize it's important for the State to be the one to                
 actually conduct the test so there's the proper kind of oversite.             
                                                                               
 Number 90                                                                     
                                                                               
 MS. MCCONNELL said that many of these "designated programs" are in            
 the economic development area ranging from test fisheries to                  
 permitting or licensing.                                                      
                                                                               
 This bill proposes not to take this off budget, but to show much              
 more consistently through the budget process all of the fund                  
 sources whether they are federal funds, fees, or any other source             
 of money so people can get the full picture of what State revenues            
 and expenditures are.  It would not treat them as part of the                 
 unrestricted general funds category but set them into a different             
 category acknowledging that the cost of the service will equal the            
 revenue that's collected for it.  This is being done on the basis             
 of some criteria that are outlined in the fiscal note.  One of the            
 groupings is contracts and in this case there are a number of areas           
 where there would be an increase between '97 and '98.  This ranges            
 from training classes and specialized training.  There are                    
 approximately $1.8 million worth of increases between the two                 
 years' budgets.                                                               
                                                                               
 The next category is restricted fees where they charge for a                  
 particular service, for instance for the criminal background check            
 that's part of the teacher's certification process, and then they             
 have a category where by statute the legislature has determined the           
 cost of service should be fully borne by the users (mostly in the             
 commerce area).  There are a couple of examples where federal law             
 restricts use of funds, like the WIC program.                                 
 MS. MCCONNELL said they would continue to show these in the budget            
 so everyone was well aware of them.  The key point in all of this             
 is that you can have an increase in these arenas, mostly economic             
 development, without increasing the fiscal gap.                               
                                                                               
 She said these receipts would still be treated as a revenue source            
 to the State.  The legislature would still appropriate the revenues           
 so there would be no difference with legislative control. It would            
 make the process easier to understand.                                        
                                                                               
  MR. ROYCE WELLER  said he was available to answer their questions            
 should they have any.                                                         
                                                                               
  CHAIRMAN LEMAN  said his problem with this approach is shifting from         
 general program receipts to non-general fund program receipts.                
 There are times when that is appropriate and there are other times            
 when that can be done as a way to make it look like we're reducing            
 spending, when in reality we're not.  He thought it made sense,               
 though, if it wasn't abused.  Another concern he had was that it              
 really was increasing State spending.  He asked how they adjusted             
 the expenses and receipts if they weren't exactly the same.  MS.              
 MCCONNELL replied to his first concern that they have taken that              
 into account by taking an apples to apples comparison.  It is true            
 that changing the terminology does not indicate a cut in total                
 State spending, but they are still showing both years with and                
 without designated program receipts.  They have made a point in the           
 last few years in letting agencies know they are scrutinizing the             
 areas funded by means other than general fund as stringently as               
 regular general fund items.                                                   
                                                                               
 Number 244                                                                    
                                                                               
  SENATOR KELLY  asked how this affects the fiscal gap.  MS. MCCONNELL         
  explained that increases in these fees don't affect the fiscal gap           
 and the reason is, using the Badami Pipeline as an example, that              
 industry wanted to get the permitting for Badami and they were                
 going to pay the full cost of doing that.  Although the total                 
 expenditure of the Department went up, basically the Department and           
 industry entered into a contractual relationship saying they would            
 pay for all of the State's work.  AS expenditures go up revenues              
 increase by the same amount.  Therefore, there is no increase in              
 the fiscal gap.                                                               
                                                                               
  SENATOR KELLY  asked if they would increase the program receipts and         
 take them off budget.  MS. MCCONNELL said they wouldn't be off                
 budget; they would still be appropriated by the legislature.                  
 Instead of being in the column along with unrestricted general                
 funds, there is a separate category for designated program                    
 receipts.                                                                     
                                                                               
 MS. MCCONNELL noted that SB 55 also contains some clean-up items              
 that weren't in last year's bill.  It codifies corporate receipts             
 and clarified that the Children's Trust and the Public School Fund            
 are not part of the unrestricted general funds.                               
                                                                               
 Number 310                                                                    
                                                                               
  SENATOR KELLY  asked if they go to this approach the difference              
 between the amount from the general fund and the new program                  
 receipts?  MS. MCCONNELL replied that between '97 and '98 it's                
 about a $3 million increase.    She said there is a small increase in         
 the category of restricted fees; much of it is in the economic                
 development area.                                                             
                                                                               
 SENATOR KELLY asked if this accounting method were to be used in              
 the next fiscal year, did they have to pass this legislation this             
 session.  She answered that they already use this approach, but               
 passing SB 55 would enable them to show it more clearly.                      
                                                                               
 Number 328                                                                    
                                                                               
  MR. GUY BELL,  Director, Administrative Services, Department of              
 Commerce, said his division sets professional licensing fees on a             
 bi-annual basis.  This requires a lot of work aggregating the                 
 licenses and projecting into the future.  It is a cyclical                    
 operation and they try to balance the number of professionals                 
 renewing in any fiscal year by license category.                              
                                                                               
 Another approach that has been successfully used with the                     
 legislature allows the division to carry forward excess receipts              
 collected in one year into the next year.  This is so that the                
 receipts collected in one year exceeding the amount spent by the              
 division are allowed to be carried over into the next fiscal year.            
                                                                               
  CHAIRMAN LEMAN  asked if there was a substantial carry over each             
 year.  MR. BELL said the division carried-over about $1 million               
 from FY 96  to FY 97, but '96 was a high year.  He offered to get             
 the projected carry-over from '97, although, he noted, they are new           
 at doing projections.                                                         
                                                                               
  SENATOR KELLY  said he thought the bill had merit and   moved to pass        
 SB 55 from committee with individual recommendations.  There were             
 no objections and it was so ordered.