Legislature(1999 - 2000)
06/14/1999 01:10 PM House BUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
June 14, 1999
1:10 P.M.
MEMBERS PRESENT
Representative Gail Phillips, Chair
Representative Con Bunde
Representative Eric Croft
Representative Gary Davis
Representative Gene Therriault
Senator Randy Phillips, Vice Chair
Senator Al Adams
Senator Rick Halford
Senator Sean Parnell, (teleconference)
Senator Gary Wilken, (teleconference)
MEMBERS ABSENT
Representative Eldon Mulder (alternate)
Senator Drue Pearce (alternate)
COMMITTEE CALENDAR
APPROVAL OF PREVIOUS MINUTES
March 19, 1999
March 26, 1999
REVISED PROGRAMS (RPL'S)
EXECUTIVE SESSION
Preliminary Audit Reports
Final Audit Reports
AUDIT REPORTS
Release of Final Audits
Consideration of Audit Requests
OTHER COMMITTEE BUSINESS
WITNESS REGISTER
TOM MAHER, Legislative Assistant
to Representative Gail Phillips
Alaska State Legislature
Capitol Building, Room 411
Juneau, Alaska 99801
Telephone: (907) 465-6873
POSITION STATEMENT: Audit Reports
DAVID TEAL, Legislative Fiscal Analyst
Division of Legislative Finance Division
State Office Building, Sixth Floor
Juneau, Alaska 99811
Telephone: (907) 465-3795
POSITION STATEMENT: Introduced RPL's
NICO BUS, Administrative Services Manager
(Testified Via Teleconference)
Department of Natural Resources
Division of Support Services
400 Willoughby Ave - 5th Floor
Juneau, Alaska 99801
Telephone: (907) 465-2406
POSITION STATEMENT: Spoke in favor of the RPL's
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
State Office Building, Sixth Floor
Juneau, Alaska 99801
Telephone: (907) 465-3830
POSITION STATEMENT: Introduced audit reports.
DEAN BROWN, Deputy Director
Department of Natural Resources
Division of Forestry-Central Office
3601 C Street, #1034
Anchorage, Alaska 99503
Telephone: (907) 269-8476
POSITION STATEMENT: Spoke in support of the RPL's
Provided briefing on the State's fire
status.
MERLE JENSON, Deputy Legislative Auditor
Division of Legislative Audit
State Office Building, Sixth Floor
Juneau, Alaska 99801
Telephone: (907) 465-3830
POSITION STATEMENT: Audit Reports
DOUGLAS BAILY, Attorney
Legal Counsel to the Legislative Audit Division
PMB 1444
3705 Arctic Boulevard
Anchorage, Alaska 99502
Telephone: (907) 274-2484
POSITION STATEMENT: Executive Session
ACTION NARRATIVE
TAPE 99-4, SIDE A
COMMITTEE CHAIR REPRESENTATIVE GAIL PHILLIPS called the
Joint Committee on Legislative Budget and Audit meeting to
order at 1:10 P.M. on June 14, 1999. Members present at the
call to order were Representatives Phillips, Bunde, Croft,
Gary Davis, Therriault and Senators Randy Phillips, Halford
and Parnell. Chair Phillips noted that staff from
Representative Mulder's office was also present.
CHAIR PHILLIPS stated that the Legislative Budget and Audit
(LBA) Committee would not receive the Alaska Railroad
Corporation report at this meeting. There was a request
from Senator Pearce to delay that action until the next
meeting of the Committee in order that she could be present
for the discussion.
APPROVAL OF MINUTES
CHAIR PHILLIPS announced that the first order of business
would be the approval of minutes from the March 19th and
March 26th Legislative Budget and Audit Committee meetings.
SENATOR PHILLIPS made a motion for approval of the minutes
and asked for unanimous consent. There being NO OBJECTION,
the minutes were approved and adopted.
REVISED PROGRAMS (RPL's)
DAVID TEAL explained that there were two RPL's before the
Committee for action.
RPL Number: 10-9-4043
Department of Natural Resources
Resource Development BRU
Emergency Firefighters Non-Emergency
Projects Component
$200,000 SDPR - Capital
Appropriation Authority: Chapter 4, SLA 94, pg. 10, In 23
Statutory Authority: AS 41.15.030
DAVID TEAL noted that Nico Bus from the Department of
Natural Resources was available by teleconference to answer
questions from the Committee.
The purpose of the revised program would provide a
cooperative agreement with the Municipality of Anchorage for
services received from the Hotshot firefighting crew.
Additionally, the program would reduce the fire hazard on
the Anchorage Hillside by removing dead spruce trees/hazard
trees from select areas, constructing or improving fuel-
breaks and other related activities. The intent would be to
break up the continuous fuel complex that can cause wildland
fires to become uncontrollable.
DAVID TEAL explained that the RPL would amend an existing
federally funded capital appropriation for Multi-Mission
Village Work Crews appropriated for the purpose of allowing
emergency fire-fighters to do non-emergency hazard
mitigation and prescribed burn work. The situation is
confusing and the RPL would provide funding to that area for
fire prevention activity. At this time, there is
approximately $40 thousand dollars in statutory designated
program receipts available in the operating budget and that
money can be used to pay for activity this fiscal year. The
RPL would provide the required financing to continue these
activities after July 1st.
SENATOR PHILLIPS asked if funding would be used only for the
Anchorage Hillside area.
DEAN BROWN replied that the intent of the agreement with the
Municipality of Anchorage would include Eagle River. There
is a plan to create firebreaks and defensible breaks
throughout the Anchorage Hillside and Eagle River areas. The
Municipality had undertaken a process to determine which
areas would be most effective to implement the plan. After
July 1st, the crews will be working in Eagle River.
CHAIR PHILLIPS commented that there are concerns regarding
this circumstance without the approval of the Legislative
Budget and Audit Committee. She reiterated that work on
this project was being addressed without approval of the
Committee. She understood that there was $40 thousand
dollars found in the Department's budget for the project.
As a result, Chair Phillips suggested that the RPL be for
$160 thousand dollars rather than the requested $200
thousand dollars. She questioned how such action could be
prevented from happening again.
NICO BUS explained that initially, the Department planned to
use the $40 thousand dollars for the FY99 portion. When it
was clear that the entire project was going to be $200
thousand dollars, the Department realized that money was not
in the FY00 budget. A request was then submitted to LBA for
the entire $200 thousand dollars.
NICO BUS added that the $40 thousand dollars resulted from a
"fall-back" position. That money was not intended for
suppression use. It was money in the budget which allows
for special large mining projects. In a fire season
arrangement, the Department does not know when they can
request personnel to do the work.
NICO BUS explained given the contract was for $200 thousand
dollars, it was presented in that manner. To avoid the
situation from occurring in the future, the Department did
submit a capital project labeled "Multi-mission Village
Crew", work that was intended specifically for these
purposes. At that time, it was understood that funding
would come mostly from the federal government, however, the
funds came through Federal Emergency Management Agency
(FEMA) for a special purpose municipal grant. That
eliminated use of the federal authority in the capital
projects. The Department's solution for the future is to
request legislative authority to use federal receipts and
statutory designated program receipts with the
municipalities.
CHAIR PHILLIPS acknowledged the arrival of SENATOR ADAMS.
DEAN BROWN added to the comments of Mr. Bus. She explained
the situation involving the Municipality of Anchorage and
the availability of FEMA money. The Municipality and the
Division of Forestry were concerned with the current fire
situation in that area. Early in the spring, the Mat-Su
area alone had 55 fires with a total of 649 acres burned.
The advantage of the agreement with the federal government
and the City of Anchorage provided a type-one crew, the most
elite fire fighting crew available. The practical aspects
of the agreement were evident. Problems arose with the
timing of putting that crew on without the approval of the
LBA Committee.
REPRESENTATIVE BUNDE understood the concern, however,
pointed out that the crew was not working on private
property but instead on public lands.
REPRESENTATIVE G. DAVIS asked how the crew was paid and if
they received wages only when serving on a fire crew.
DEAN BROWN replied that this is a type-one crew and that
they are the only ones in the State that are not on the
federal payroll. In order to maintain national standards,
they are required to work together 40 hours a week. This
team has created a national reputation and that they are
well sought after.
REPRESENTATIVE G. DAVIS noticed that Department of Natural
Resources has stated that dead spruce beetle bark trees are
more of a fire threat than the live trees. He asked if that
was policy.
DEAN BROWN replied that was not a policy. It would depend
on the fuel type which would include early spring grass
which can act as a serious flash fuel. Early spring
problems result from grass fires. Additional concerns are
the time of year and whether the live trees are more
flammable than the dead ones. There is no strict policy,
but rather, ideas studied in "Fire Science" have indicated
the type of fuels which ignite more quickly and are more
dangerous.
REPRESENTATIVE BUNDE pointed out that some local community
councils have recommended citizens remove dead trees from
their property because they encourage fires to move more
rapidly.
REPRESENTATIVE G. DAVIS inquired about the responsibilities
of the Tazlina Hotshots.
DEAN BROWN commented that the company is responsible for
paying their crewmembers during the summer. Even during
times of no employment, they still have to make payroll.
REPRESENTATIVE G. DAVIS asked about the statutory designated
program receipts and where the $200 thousand dollars would
come from. He understood that it would be federal money.
DEAN BROWN explained that initially, FEMA money had been
administered to the Municipality for a grant. Since the
Department has a limitation on receiving federal receipts,
in the future, there will be a need to include designated
receipts. The money referred to by Mr. Bus as "designated
receipts" was authority made available through the operating
budget for $40 thousand dollars.
NICO BUS responded to concerns expressed by Representative
G. Davis. Designated program receipts come from the
Municipality. The Municipality of Anchorage is paying the
Department of Natural Resources to fund the project. The
federal government pays the Municipality.
CHAIR PHILLIPS clarified the intent of the request. The
Department has expended the $40 thousand dollars and intents
to spend the remaining $160 thousand dollars in the next
two-year period. The LBA Committee must determine if that
money should be authorized.
DAVID TEAL commented that the $40 thousand dollars was
considered operative authority for only FY99. The
Department could spend $30 thousand dollars by the end of
June, 1999. If the request was lowered, funds could be left
on the "table". He recommended that the amount not be
dropped to $160 thousand dollars. Such a move could create
a "short end" situation for the next fiscal year.
NICO BUS discussed the $200 thousand dollar agreement with
the Municipality of Anchorage. He requested that the RPL be
approved for that amount. The Department's plan is to come
to the full Legislature to update the project to include
statutory dedicated program receipts for future years.
REPRESENTATIVE THERRIAULT asked if the $40 thousand dollars
had been general funds or FEMA funds.
NICO BUS stated that the Department has a component in it
for statutory designated program receipts that is labeled
"Special and Development Projects", which became the source
of the $40 thousand dollars. The source of the funding
would be the agreements such as the one made with the
Municipality or with a private company.
REPRESENTATIVE THERRIAULT asked why the $40 thousand dollars
was not anticipated funds.
DEAN BROWN replied that there had been discussions regarding
that matter, however, there had been no contract development
with the Municipality of Anchorage to go forward with the
project. The request came up very suddenly at the end of
the year.
REPRESENTATIVE THERRIAULT commented on an article he had
read that eliminating fire fuels was not necessarily the
best way to address or save building structures.
DEAN BROWN advised that she had not seen that article,
however, she was aware of various view points regarding that
concern. The advantage that the fuel breaks make is that it
allows a defensible line to trough before fires get down to
the structures allowing rapid entry before other trees are
dropped. The topography of the Anchorage Hillside and the
Eagle River area has been studied to provide extensive fuel
modeling to determine fire felocity and where a firebreak
could be effective.
CHAIR PHILLIPS spoke to the potential fire disaster that had
just occurred in the Homer area. She asked if the
Department anticipated additional federal dollars to any
other locations for this type contract.
DEAN BROWN replied not at this time.
SENATOR ADAMS asked if the Department was aware of the
amount of money being spent on fire suppression and if a
supplemental would be needed this year.
NICO BUS responded to how the Department is addressing FY99
needs for additional general fund monies and other fires.
At the end of May, the Department wrote a letter to the
Office of the Governor declaring that the Fire Suppression
Emergency (FSE) was based on unavailability of funding. FSE
allows the Department to go into a financing agreement based
on statute which indicates that there can be money made
available until such time that the Legislature reconvenes
for supplemental funding. He noted that in SB 101, fire
suppression had been explicitly excluded.
REPRESENTATIVE BUNDE MOVED to adopt the amount at $200
thousand dollars based on testimony received by Mr. Teal.
SENATOR WILKEN joined the Committee by Teleconference.
There being NO OBJECTION, RPL #10-9-4043 was approved.
RPL Number: 10-0-4001
Department of Natural Resources
Forest Management & Development BRU
Forest Management & Development Component
$20,000 SDPR - Operating
Appropriation Authority: HB50, SLA 99, pg. 39, In 30
Statutory Authority: AS 41.17.055
DAVID TEAL explained that the proposed request would provide
Geographic Information Systems (GIS) support for Tanana
Chiefs Conference, Inc. (TCC). The project would identify
hazardous waste sites, and military bombing target sites on
Native Corporation lands and native allotments. The bombing
target sites could contain unexploded munitions. Under the
agreement, the identified sites would be put into GIS
coverage, and could be avoided by wild land fire fighters
during fire operations. He commented that this was a one-
time only request and that information had been received too
late to be considered during the past legislative session.
Federal funds are available as of July 1, 1999.
REPRESENTATIVE THERRIAULT pointed out that the funding would
be made available on July 1, 1999. He questioned why this
concern had not been introduced in the FY00 budget.
DEAN BROWN replied that TCC had approached the Department
after the Legislative session ended. There was no agreement
at that point and the Department needed to access their GIS
workload. There have been several fires and this is
believed to be a high priority.
REPRESENTATIVE THERRIAULT questioned the agreement with the
federal government regarding the areas in the State which
will not receive suppression.
DEAN BROWN acknowledged that was a timely question. Since
the Delta fires in the last four years, the Department has
dealt directly with the Alaska fire service (BLM) to address
the Department of Defense Military areas. The State has had
to pull people off those sites, stating that designated
ranges used for bombings are areas in which the State will
not fight fires on. Transition zones are the problem areas.
The State is working with the feds on an agreement for those
expenditures.
SENATOR WILKEN inquired the amount which the TCC had
received for work started.
DEAN BROWN replied that she did not know if there had been
an additional amount to the $20 thousand dollars.
SENATOR WILKEN questioned the role that Alaska plays in the
project.
DEAN BROWN explained that the State has the capability for
the GIS system in Fairbanks. The Department has done a
considerable amount of work identifying lands for fire
fighting and forestry resource purposes. The State has the
capability to put this on the GIS system, which is an
advantage that the feds and TCC does not have.
REPRESENTATIVE THERRIAULT questioned the outcome if the
funding was not made available.
DEAN BROWN explained that the Department had checked the
priorities for the GIS position for the timber sales, fuel
areas and GIS mapping. That area extends into the Northern
Region. Work has been reprioritized and a seasonal position
has been hired.
(TAPE CHANGE, LBA 99-4, SIDE B).
SENATOR ADAMS MOVED to adopt RPL #10-0-4001. There being NO
OBJECTION, it was approved.
DEAN BROWN provided the Committee with updated information
regarding the current fire status in the State. As of June
13th, the State has experienced 27 new fires. Alaska is in
extreme fire danger all the way from the borders through the
Interior with the current eighty-degree temperatures. At
this time, there are two large fires near Minto of two
hundred acres; one of those fires has been essentially lost.
DEAN BROWN continued, "lightning busting" through with dry
lightning is basically starting the fires. It is
anticipated that soon there should be some wet thunderstorms
moving through these regions. She spoke to the fire at
Donley Flats which has consumed six thousand acres and is
still increasing. There are fifteen crews on that fire at
this time. There are three Type I crews which is equivalent
to the Tazlina Hotshot crew. Additionally, the State has
called out task forces from Anchorage, Mat Su and Kenai, who
approach the fires with three to four engines each. There
has been extensive "house to house" fire fighting on the
facilities that remains in that region. The residents from
Ft. Greeley have been evacuated to Fairbanks with no
causalities. Retardant is being dropped on the fire at this
time. She emphasized that the fire is big and is growing.
CHAIR PHILLIPS asked if any buildings had been lost in the
Fort Greeley fire to date.
DEAN BROWN understood that two buildings had burned. She
pointed out that the report did not indicate location
information.
CHAIR PHILLIPS inquired if either of those buildings were
the ones anticipated to be used for the prison.
DEAN BROWN thought they were not. The buildings to be used
for the prison are close to the airport, which has much more
defensible space surrounding it. Military bases usually
have a lot of green lawn which works well to keep the fire
on the ground and out of the trees.
DEAN BROWN listed smaller fires around the State.
* Mat Su;
* Televana fire - seven acres;
* Cod Lake - In which Fort Wainwright has responded;
* Burnwash Landing, Canada - A big fire which may
need the help of Alaskan firefighters.
DEAN BROWN addressed crew size. She explained that the
Type 1 crew consists of 20 persons, requiring training
regarding fuel types and a high level of qualification. The
only Alaskan crew which has reached that level of expertise
is the Tazlina Hotshot crew. The Alaska Fire Service has
federal crews which are paid for working 40 hours a week
even without fires. Last year, a second crew was formed
called the Denali crew. Those fire fighters had little
experience. There are 73, Type 2 crews consisting of 16
persons each. The State relies on those fire fighters, who
do basic "on the ground" fire fighting. The Type 2 crews
are sometimes requested by other states during bad fires.
Additionally, there are overhead teams who are the
management of key command and control positions. The Type 2
overhead teams handle the majority of fires unless there is
a complex incident. There are two of these teams in Alaska.
In conclusion, she noted that legislators are most often
alerted with fire updates.
EXECUTIVE SESSION
SENATOR RANDY PHILLIPS MOVED that the LBA Committee go into
Executive Session in order to address the confidential
Preliminary Audit and Final Audit Reports. There being NO
OBJECTION, it was so ordered and the Committee moved into
Executive Session.
AUDIT REPORTS
SENATOR PHILLIPS MOVED that the LBA Committee come back into
regular session. There being NO OBJECTION, it was so
ordered.
SENATOR PHILLIPS MOVED that the following new audits be
released to the public:
* Department of Revenue/for the fiscal year ended
June 30, 1998;
* Department of Community and Regional Affairs/for
the fiscal year ended June 30, 1998;
* Department of Community and Regional Affairs/Pedro
Bay Electrification Project;
* Department of Education/Lower Yukon School
District;
* Department of Commerce and Economic
Development/BSC Alaska Native Corporations; and
* Department of Law/Department of Commerce and
Economic Development/BSC/World Plus, Inc.
There being NO OBJECTION, the audits will be released to the
public.
SENATOR PHILLIPS MOVED the four special preliminary audits:
* Department of Community and Regional
Affairs/teller bulk fuel facility upgrade;
* Office of the Governor/Select public relations;
* Department of Transportation and Public
Facilities/Anchorage International Airport; and
* Department of Natural Resources/State Recorder's
Office.
There being NO OBJECTION, they were adopted.
CHAIR PHILLIPS noted that the next item on the agenda was
the Special Audit requests.
PAT DAVIDSON spoke to the first special audit request
presented by Senators Pearce, Parnell and Torgerson, which
would provide for an analysis of available funds from Alaska
Housing Finance Corporation (AHFC).
PAT DAVIDSON noted that the second request had been prepared
by Senator Donley, also addressing AHFC, focusing on the
bidding process used by that agency for demolition projects
associated with the Spruce Park project in Fairbanks, Bethel
Heights project in Bethel and the Bering View project in
Nome.
SENATOR PHILLIPS inquired why a requested copy had been sent
to Hugh Ashlock.
PAT DAVIDSON replied that in the Fairbanks Spruce Park
project, the contract was to demolish the building. The
contractor, rather than demolishing those buildings, sold
them to Mr. Ashlock. Now there is pending litigation in
which Mr. Ashlock wants to keep that property, however, AHFC
is asking that sale be deleted.
PAT DAVIDSON addressed the third special audit request by
Senator Wilken and Representative G. Davis addressing the
Department of Administration analyzing various chargeback
methodologies used to fund a variety of centralized services
provided to other state agencies.
PAT DAVIDSON added in addition to those requests, Senator
Taylor has requested to withdraw a previously approved audit
request to the Ketchikan Special Education department.
SENATOR PHILLIPS inquired the number of audits outside of
the ones presented which still need attention.
PAT DAVIDSON replied that five audits remain. The average
audit takes two to three months for the Division of
Legislative Audit to prepare for and then an additional one
to three months to be released.
SENATOR HALFORD recommended adding to the first audit, an
analysis of available funds from AHFC, and a value
determination of the unrestricted net worth.
CHAIR PHILLIPS noted that it had been discussed that issue
would be addressed during the interim.
TOM MAHER explained that it was the intent for Pat Davidson
to continue to provide the financial audit and to guarantee
all the questions raised during the last legislative session
be answered. Those questions relate to many aspects for
AHFC:
(1) Public role
(2) Return received by the State
(3) Should AHFC be dismantled
TOM MAHER agreed that information should be incorporated.
The LBA Committee will be working with Legislative Finance
Division, AHFC and the Governor's Office on that project.
Hopefully, some of the concerns will be addressed by next
session.
SENATOR HALFORD commented that AHFC tends to be under the
"vigorous rule" which states that you can not make more than
1% on what you own. That rule substantially limits their
ability to support ventures of the State. He recommended
that the rule be clarified in order that more money could be
contributed to the State coffers.
TOM MAHER replied that it intended that such information be
accumulated and then presented to the Committee in order to
be made available next session to the full Legislative Body.
SENATOR HALFORD reiterated that he would like to know the
"real" value of AHFC in a "reasonable liquidation period" of
perhaps one or two years. He stated that some of the
property is worth more than face value, given the current
yield, and some less. He believed that total value of AHFC
rested somewhere in the neighborhood of $2 billion dollars.
TOM MAHER noted that the State does see $130 million dollars
per year. He agreed that the State does not know the size
of the internal assets which have been built up. The
Committee's question is: "What percentage of return is that
to the asset base?".
MERLE JENSON advised that in order to best answer the
concerns of Senator Halford, the East and West Coast
Investment Bankers would need to be consulted.
CHAIR PHILLIPS advised that there has been discussion
regarding the size and scope of such an investigation during
the interim.
SENATOR PHILLIPS MOVED the following audits as requested by
members of the Legislature.
* Two audits addressing the Alaska Housing Finance
Corporation;
* The Department of Administration analysis; and
* The Ketchikan Special Ed audit cancellation.
There being NO OBJECTION, they were so ordered.
OTHER COMMITTEE BUSINESS
PAT DAVIDSON spoke to the previous LBA Committee meeting in
which there had been a comment made regarding disclosure of
confidential information to Committee members. She
explained that her understanding came from discussions with
Tamara Cook, Director of Legislative Legal and Research
Services. She noted that she had followed up on that
conversation with Ms. Cook to determine if a change to
committee policy or statute would be required to allow
disclosure of confidential information. In summary, Ms.
Cook found that in current statute, Legislative Ethics Act,
disclosure of confidential information is a bridge of the
Ethics Act. It would be up to Committee members whether or
not they want to hear confidential information in the LBA
setting. Therefore, Ms. Cook has recommended that a
statutory change be made to authorize the Legislative
Auditor to make confidential information available to the
Committee. [Copy on File of the letter from Ms. Cook].
CHAIR PHILLIPS advised that this item would be a discussion
point on the agenda for the next scheduled LBA Committee
meeting which will allow time for Committee members to
consider the comments and recommendations of Ms. Cook and
then decide if action should be taken.
SENATOR PHILLIPS recommended that a motion should be made
regarding the position location of the Legislative Auditor.
CHAIR PHILLIPS noted that she had sent a letter to all
Committee members about keeping the Legislative Auditor in
Juneau. [Copy on File]. Money for any change to that
position has not been approved. The Auditor has more staff
in Juneau than in Anchorage. She recommended that position
stay in Juneau and proposed that a vote be taken on that
issue at the next meeting.
ADJOURNMENT
CHAIR PHILLIPS adjourned the Joint Committee on Legislative
Budget and Audit at 3:45 P.M.
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