Legislature(2003 - 2004)
08/26/2003 01:37 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
ALASKA STATE LEGISLATURE
JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
Anchorage, Alaska
August 26, 2003
1:37 p.m.
MEMBERS PRESENT
Representative Ralph Samuels, Chair
Representative Mike Hawker
Representative Vic Kohring (via teleconference)
Representative Jim Whitaker (via teleconference)
Representative Beth Kerttula
Representative Bill Williams, alternate (via teleconference)
Senator Gene Therriault, Vice Chair (via teleconference)
Senator Ben Stevens
Senator Con Bunde
Senator Gary Wilken (via teleconference)
MEMBERS ABSENT
Representative Reggie Joule, alternate
Senator Lyman Hoffman
Senator Lyda Green, alternate
COMMITTEE CALENDAR
APPROVAL OF MINUTES
EXECUTIVE SESSION
REVISED PROGRAM - LEGISLATIVE (RPLs)
AUDIT REQUESTS
OTHER COMMITTEE BUSINESS
WITNESS REGISTER
CHERYL FRASCA, Director
Office of Management & Budget (OMB)
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Presented the RPLs to the Joint Committee
on Legislative Budget and Audit.
JANET CLARK, Director
Division of Administrative Services
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Presented information and answered
questions pertaining to RPLs 06-4-0011, 06-4-0042, 06-4-0059,
06-4-0062, 06-4-0063, 06-4-0064, and 06-4-0065.
RICHARD McMAHON, Chief
Lands Records Information
Division of Support Services
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Testified on RPL 10-4-5022.
MR. NICO BUS, Acting Director
Division of Support Services
Department of Natural Resources (DNR)
Juneau, Alaska
POSITION STATEMENT: Testified on RPL 10-4-5023.
NANCY SLAGLE, Director
Division of Administrative Services
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Presented information and answered
questions pertaining to RPL 25-4-3287.
DAVID TEAL
Legislative Fiscal Analyst
Legislative Finance Division
Juneau, Alaska
POSITION STATEMENT: Provided information to the Joint Committee
on Legislative Budget and Audit, testifying on RPL 25-4-3287.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the audit request
regarding the University of Alaska, and clarified questions
regarding other audit issues.
TINA CUNNING
State-Federal Issues Program Manager
Commissioner's Office
Alaska Department of Fish & Game (ADF&G)
Anchorage, Alaska
POSITION STATEMENT: Provided information and answered questions
pertaining to navigable waters and RS 2477s.
BOB LOEFFLER, Director
Division of Mining, Land and Water
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Provided information pertinent to navigable
waters and RS 2477s.
ACTION NARRATIVE
TAPE 03-7, SIDE A
Number 0001
CHAIR RALPH SAMUELS called the Joint Committee on Legislative
Budget and Audit meeting to order at 1:37 p.m. Members present
at the call to order were Representatives Samuels, Hawker, and
Kerttula, Senators Ben Stevens and Bunde. Representatives
Kohring, Whitaker, Williams and Senators Therriault and Wilken
were on line via teleconference.
APPROVAL OF MINUTES
Number 0005
REPRESENTATIVE HAWKER made a motion to approve the minutes of
July 9, 2003. There being no objection, the minutes from the
meeting of July 9, 2003, were approved as read.
EXECUTIVE SESSION
Number 0007
REPRESENTATIVE HAWKER made a motion to move to executive session
for the purpose of discussing confidential audit reports under
AS 24.20.301. There being no objection, the committee went into
executive session.
CHAIR SAMUELS brought the committee back to regular open session
at approximately 2:15 p.m.
Number 0012
REPRESENTATIVE HAWKER made a motion for the preliminary
statewide single audit, audit control number 1030017-03, to be
released to the appropriate agencies for response, and for the
final release of the 0240003-03 report. There being no
objection, the audits were released for response.
REVISED PROGRAM - LEGISLATIVE (RPLs)
Number 0020
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0011, Increase Real Choices Federal Grant, Department of Health
and Social Services (DHSS).
CHAIR SAMUELS objected for purposes of discussion.
Number 0025
CHERYL FRASCA, Director, Office of Management & Budget (OMB),
Office of the Governor, explained that because DHSS's
reorganization doesn't allow for the transfer of sufficient
federal authorization to the newly formed Division of Senior and
Disabilities Services, this request [for $500,000] in federal
receipts [will rectify] the situation.
Number 0032
REPRESENTATIVE KERTTULA asked if the existing filled non-
permanent program coordinator [position] was being paid from the
same $75,000 as the personal services position.
JANET CLARK, Director, Division of Administrative Services,
Department of Health & Social Services (DHSS), responded that it
was the same $75,000.
CHAIR SAMUELS removed his objection and asked if there were any
further questions.
REPRESENTATIVE KERTTULA asked if existing money was paying for
the coordinator position or if additional funds were needed.
MS. CLARK explained that in FY03, approximately $150,000 was
spent for this particular grant. Two errors were made in the
budget development: federal authority wasn't transferred from
the previous Division of Mental Health & Developmental
Disabilities to the new division, and additional federal
authority wasn't requested. As the grant amount was larger than
what was budgeted, this $500,000 provides for correction of
those two mistakes.
Number 0049
SENATOR THERRIAULT commented that rather than making a transfer,
additions were being made to the overall authorization. He
asked if there was an over appropriation of authorization, and
whether insufficient federal funds had been transferred to the
newly formed division.
MS. CLARK explained that funds were in separate appropriations
and couldn't be transferred; the department wouldn't spend the
funds unless an additional federal grant was received.
SENATOR THERRIAULT inquired if the request was "dollar for
dollar" and asked what amount of the old authorization would be
restricted.
MS. CLARK said she could provide the specific dollar amounts,
but her understanding was that about $150,000 was spent and was
in the budget.
SENATOR THERRIAULT noted that the information could be forwarded
to David Teal. He offered that perhaps in the supplemental
[budget], a reduction might be made to areas where there might
be a surplus of federal authorization.
Number 0072
SENATOR BUNDE asked if the $10,000 in travel pertained to travel
for state employees or was for others who testify on policy.
MS. CLARK responded that this travel amount was for state
employees.
SENATOR BUNDE commented that this seemed like a lot of trips.
MS. CLARK replied that this was an estimate and that she didn't
know how many trips were indicated by this amount.
Number 0078
CHAIR SAMUELS asked if there was any objection. There being
none, the motion to approve RPL 06-4-0011 carried.
Number 0080
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0042, Temporary Medicaid FMAP [Federal Medicaid Authorized
Percentage] Relief, DHSS.
CHAIR SAMUELS objected for purposes of discussion.
Number 0082
MS. CLARK explained that four different RPLs are associated with
the FMAP increase that the state received from the Congressional
Jobs and Tax Relief Reconciliation Act ("Tax Reconciliation
Act") of 2003. Under the Tax Reconciliation Act, to assist
states experiencing economic difficulty, [U.S. Congress]
"Congress" increased the federal match rate for Medicaid. In
Alaska, that rate was increased by 2.95 percent, resulting in a
total of approximately $22 million in additional federal
receipts for the current fiscal year. Governor Murkowski took
that into account in the general fund vetoes that were done in
June, and counted on the FMAP increase as a way to save general
fund money. Alaska's rate is now 61.34 percent, up from 58.39
percent. Ms. Clark pointed out a typographical error in the
RPL; the amount indicates 59.38 rather than the correct amount
of 58.39.
SENATOR BUNDE asked, "How many times are we going to spend that
money?" noting that the governor had already taken this into
account and that continuation [of the higher reimbursement rate]
was not anticipated.
MS. FRASCA replied that the money won't be spent again because
the reduction was already considered in the veto process; the
savings have already been achieved. She said that because it's
not expected that Congress will continue to reimburse at this
rate, that hole will need to be covered in FY05, either through
other reductions or increased revenues. At the time the veto
reduction was made, there was recognition that this was a one-
time savings; budget planning for FY05 is being made with this
in mind.
Number 0116
REPRESENTATIVE KERTTULA referred to the FMAP's effective date of
April, 2003, and asked if, other than the veto, those funds were
taken into account or received.
MS. FRASCA explained that Congress did not pass the legislation
until after adjournment of the legislative session; this is a
retroactive effective date.
REPRESENTATIVE KERTTULA commented that this would create a gap
for the following year.
Number 0125
CHAIR SAMUELS removed his objection and asked if there was any
further objection. There being none, the motion to approve RPL
06-4-0042 carried.
Number 0127
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0059, Non-Primary Health Care Facilities Improvements, DHSS -
CIP [capital improvement project].
CHAIR SAMUELS objected for purposes of discussion.
MS. CLARK testified that this request for $3,650,000 was a
capital item. She said the department has requested funds from
the Denali Commission for a number of capital projects already
authorized by the commission. The Denali Commission was looking
for an agency to implement these capital grants to healthcare
facilities and DHSS is familiar with such facilities. In FY04,
the department agreed to administer these grant projects; it's
expected that in FY05, the Denali Commission will again work
with the department, and the budget will reflect those projects.
She said regarding the FY04 grants, there was some question that
"we seem to be doing this for free." She continued that
Commissioner Gilbertson wants to develop a closer working
relationship with the Denali Commission and if this becomes a
permanent part of the capital grant process, these costs will be
addressed through the indirect cost plans to ensure that there
is appropriate reimbursement for administrative work. At this
point, she said, timing is a consideration, and at the request
of the Denali Commission, DHSS had agreed to [administer the
grants].
SENATOR BUNDE asked which grantee would provide the 50 percent
match required of the grant recipient.
MS. CLARK said a list of the grantees was included in the
committee packet, and noted that many of those were local
community hospitals.
SENATOR BUNDE asked if operating costs, after the capital
improvement, would be the responsibility of the grantee as well.
MS. CLARK replied that this was correct.
CHAIR SAMUELS removed his objection and asked if there were any
further questions.
Number 0159
REPRESENTATIVE KERTTULA asked if administrative costs would be
charged towards mental health expenditures.
MS. CLARK responded, "For FY04, that's correct."
REPRESENTATIVE KERTTULA asked if there would be mental health
expenditures in the following fiscal years.
MS. CLARK said, "No."
CHAIR SAMUELS asked if there was any objection. There being
none, the motion to approve RPL 06-4-0059 carried.
Number 0166
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0062, Temporary Medicaid FMAP Relief, DHSS.
CHAIR SAMUELS objected for purposes of discussion.
Number 0169
MS. CLARK told the committee that this was the second of the
four appropriations related to the FMAP increase; the
explanation given for the previous RPL regarding the increase in
the federal Medicaid match rate for FY04 is applicable to this
RPL as well.
Number 0176
CHAIR SAMUELS removed his objection. He asked if there was any
further objection. There being none, the motion to approve RPL
06-4-0062 carried.
Number 0177
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0063, Medicaid - Private Hospital ProShare, DHSS.
CHAIR SAMUELS objected for purposes of discussion.
Number 0181
MS. CLARK explained that in the FY04 budget, the department
saved $17 million through the Medicaid private hospital ProShare
program. She pointed out that ProShare funds that could be
earned in the current quarter of FY03 were not factored into the
budget. This request for $21,084,000 in federal receipts allows
for payments to be made at a higher level than was budgeted;
this, in turn, frees up between $10 and $15 million in general
funds that the department has suggested be used to offset
potential decreases in FairShare, another Medicaid program,
which is currently under administrative appeal. She said this
request was a way to earn more federal money and free up some
general funds.
Number 0200
REPRESENTATIVE HAWKER asked if general funds were being
generated due to ProShare's funding of certain activities
through medical providers, thereby allowing for partial claim
reimbursement.
MS. CLARK confirmed that this was correct.
REPRESENTATIVE HAWKER continued that there was an even greater
opportunity to do this than was identified in the original
budget process, and asked if general fund savings generated by
routing the support for certain activities through a qualifying
ProShare structure would occur within the DHSS budget.
MS. CLARK confirmed that this was correct and said, "It will be
generated in different components that house a number of
different grant programs in our department."
Number 0222
REPRESENTATIVE HAWKER asked if there was a high degree of
comfort that savings would be between $10 and $15 million.
MS. CLARK said that the department had detailed information and
the amount was close to $14 million. She said that the amount
of saved general funds would be restricted in the accounting
system so that it couldn't be spent, thereby ensuring its
availability.
REPRESENTATIVE HAWKER said he would like the Joint Committee on
Legislative Budget and Audit to include a legislative intent
recommendation with this RPL, indicating that the freed-up
general funds be embargoed/restricted, so that those general
fund monies don't just disappear into the DHSS system as a "de-
facto supplemental unrestricted budget, but that they in fact be
held, should we wish to reconsider them, that we consider that
money later in the supplemental budgeting process for potential
reallocation, should we determine that we want to put this money
to work in the [DHSS] budget."
CHAIR SAMUELS questioned the consideration of this as an
amendment to the RPL.
REPRESENTATIVE HAWKER said he would state this as "an amendment
for intent."
CHAIR SAMUELS asked if there was any objection. There being
none, the amendment was adopted.
Number 0258
SENATOR BUNDE asked, "What are the chances that these are one-
time funds and is that part of your consideration, that we freed
it up this week, but next week, that federal money is gone?"
MS. CLARK replied that nothing lasts forever, but said that at
this point, the state's plan for this program has been accepted
by the federal government, and is consistent with regulation.
She said she assumed that the program could continue for four
quarters, but asked, "Which year are you in?" She stated that
there was no indication that the basic underlying policy of the
program would be discontinued. She noted that analysis would
still need to be generated for the FY05 budget.
SENATOR BUNDE said he was glad that these programs could be used
to benefit the state, but noted concern for the federal
government deficit.
Number 0287
SENATOR STEVENS asked for clarification of the second "budgetary
issue" which read as follows [original punctuation provided]:
A total ProShare payment of $61.9 million is available
in SFY04 - federal match is $37.8 million. Of the
$37.8 million federal match required, $21 million in
additional federal authority is needed by the Health
Care Services to utilize 100% of the available
proportionate share funds.
Number 0300
MS. CLARK responded that there was excess federal authority in
healthcare services, and the $21 million was the net increase
needed to make the program work.
SENATOR STEVENS asked if this net increase would appear on
Medicaid services that were actually approved in the budget.
MS. CLARK said this was correct.
SENATOR STEVENS asked about the third budgetary issue: "DHSS
grant funds are utilized as state match with no change in
funding to the grantees." He wondered if this referred to using
other grant funds, asking if this was what "no one really wants
to talk about."
MS. CLARK said the payment methodology for grant programs was
being changed in this program.
SENATOR STEVENS asked if this grant fund included state matching
or if it referred to federal grant funds.
Number 0321
MS. CLARK said that Medicaid requires a 40 percent state match.
She explained that previously, a program such as a mental health
provider grant was 100 percent funded by general funds, but this
was changed to a Medicaid payment with a 60/40 split. She said
that grant funds still need to pay the state match, but the 60
percent that was paid in the state's 100 percent was now freed
up to be a federal payment.
SENATOR STEVENS asked about FairShare.
MS. CLARK replied that FairShare is a program for tribal
entities, and "we get 100 percent match for that program."
SENATOR STEVENS asked if this was a matter of using the 60 or
100 percent.
MS. CLARK said, "That's correct."
Number 0341
REPRESENTATIVE KERTTULA asked if FairShare's status was at about
$53 million.
MS. CLARK responded that a decision about Fairshare's status
hadn't been made yet, even though there is an administrative
appeal; there are discussions about whether to settle or to
continue litigation.
Number 0355
MS. FRASCA told the committee that Commissioner Gilbertson
recently talked with [U.S. Secretary of Health & Human
Services] Tommy Thompson about this issue, and legal counsel was
involved in the discussion.
REPRESENTATIVE KERTTULA asked if there was a timeline on the
decision.
MS. CLARK replied that there wasn't a required timeline on the
decision.
REPRESENTATIVE KERTTULA asked if there was an appeals deadline
involved, and upon receiving an answer [from an unidentified
speaker], she relayed her understanding that there was no
appeals deadline involved.
Number 0384
SENATOR THERRIAULT referred to Representative Hawker's previous
amendment regarding funds being embargoed or accounted for, and
questioned whether the expenditure had been made and if general
funds had already been freed up.
MS. CLARK responded that the expenditures are freed up as the
grant payments are paid out. She continued that this is done on
a quarterly basis, and the department is in the process of
estimating this to restrict how the funds are held. She said
that it's complicated because the money is sent to hospitals and
the hospitals then pay the grantees. The department will be in
a good position to restrict general funds that would have gone
out in grant payments after the federal FY03 closeout period,
which ends this week.
SENATOR THERRIAULT commented that doing this on a quarterly
basis makes sense. He asked if a distribution had been made on
the new ProShare money, thereby freeing up some general funds.
He asked if any general funds had been used in other areas
within the department.
MS. CLARK said that the first quarter grant payments had been
made, and she was unsure if this was at the higher payout
[rate].
REPRESENTATIVE KERTTULA asked if other states were doing this.
MS. CLARK confirmed that other states have done this and said
that states are "scrambling to try to bridge their own fiscal
gaps."
CHAIR SAMUELS removed his objection. He asked if there was any
further objection. There being none, the motion to approve RPL
06-4-0063 carried.
Number 0407
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0064, Temporary Medicaid FMAP Relief, DHSS.
CHAIR SAMUELS objected for purposes of discussion.
MS. CLARK said this was the third in the series of four RPLs
related to the raise in the state's Medicaid amount by
approximately 3 percent. She said this request for $290,800 in
federal funds was a request from The Office of Children's
Services.
Number 0418
CHAIR SAMUELS removed his objection. He asked if there was any
further objection.
SENATOR STEVENS responded by noting that the amount being
requested didn't equal the vetoed amount. He directed the
committee's attention to [the amount indicated] on page 17, line
29, "Residential Child Care," indicating a difference of
[$403,300].
MS. CLARK said that in addition to this veto, there were other
items the governor vetoed in reductions to grant programs.
SENATOR STEVENS asked if [those items] "showed up on that line?"
MS. CLARK replied, "That's correct, in Residential Child Care,"
adding that this was just one of several vetoes.
SENATOR STEVENS commented that there was a net loss of general
funds on that line and said, "But we don't know where that shows
up, or what agency gets it."
MS. FRASCA said she would need to see the veto letter.
SENATOR STEVENS said that the RPL indicates that appropriation
authority was on page 17, line 29 [of CCS SSHB 75], and falls
under Residential Child Care. The amount is [$403,300] while
the RPL only requests that $290,800 be put back in; he
questioned why the amounts differed.
MS. CLARK responded that Residential Child Care included a
number of vetoes.
SENATOR STEVENS asked if the cumulative effect was about
$403,000.
MS. CLARK said that was correct and that $290,800 was a portion
of that total amount.
Number 0459
CHAIR SAMUELS asked if there were any further objections. There
being none, the motion to approve RPL 06-4-0064 carried.
REPRESENTATIVE HAWKER moved that the committee approve RPL 06-4-
0065, Temporary Medicaid FMAP Relief, DHSS.
CHAIR SAMUELS objected for purposes of discussion.
MS. CLARK said this request, the fourth in the series of four,
was from the Division of Behavioral Health, requesting
$3,029,900. The explanation is the same as for the previous
three RPLs.
Number 0472
CHAIR SAMUELS removed his objection. He asked if there was any
further objection. There being none, the motion to approve RPL
06-4-0065 carried.
REPRESENTATIVE HAWKER moved that the committee approve RPL 10-4-
5022, Alaska Oil & Gas Exploration, Development, and Permitting
Project, Division of Natural Resources (DNR) - CIP.
CHAIR SAMUELS objected for purposes of discussion.
Number 0479
MS. FRASCA explained that this provided additional authority for
a federal grant from the [Federal] Department of [Energy.] She
noted that on page 3 of the request, the additional authority
was spread between the Alaska Oil & Gas Conservation Commission,
DNR, and the [Alaska] Department of Fish & Game (ADF&G). The
total additional authority was $503,702 even though the total
grant was for almost $1.4 million. The departments have
existing capital project authority for approximately $738,000 of
the grant amount, she said.
REPRESENTATIVE KERTTULA asked about the amount being taken for
the [Alaska Coastal Management Program (ACMP)], and wondered
what the timeline was.
Number 0510
RICHARD McMAHON, Chief, Lands Records Information, Division of
Support Services, Department of Natural Resources (DNR),
testified that with new legislation on the [ACMP], there was
enough definition to move forward with the coastal questionnaire
process and to move on that project.
REPRESENTATIVE KERTTULA asked how many other agencies would be
involved in the project.
MR. McMAHON replied that the ACMP is now the Office of Project
Management and Permitting (OPMP) within DNR and it will take the
lead with that component and work with various agencies.
REPRESENTATIVE KERTTULA commented that this was a lot of money
to spend in [FY]04, considering that the system hasn't yet been
devised.
MR. McMAHON responded that this RPL was for the capital budget,
even though last year it came in under the operating budget. He
stated that it is a five-year grant through the Department of
Energy and that "we have the flexibility to move at the
appropriate pace."
REPRESENTATIVE KERTTULA asked if it made sense to do this now so
that the grant could be taken advantage of, knowing that it
wouldn't all be spent. She asked, "We'll see how it's being
spent as it goes along?" and upon receiving confirmation that
this was the case, she said, "This alleviates a lot of my
concern about how it was going to happen."
Number 0560
CHAIR SAMUELS removed his objection. He asked if there was
further objection. There being none, the motion to approve RPL
10-4-5022 carried.
Number 0563
REPRESENTATIVE HAWKER moved that the committee approve RPL 10-4-
5023, State Fire Suppression Cooperators and Reimbursable
Agreements, DNR.
CHAIR Samuels objected for purposes of discussion.
MS. FRASCA testified that this RPL would increase DNR's fire
suppression and fire activity component, granting authority to
receive receipts from other states to assist with firefighting
efforts. Traditionally these receipts have been received
directly from the federal government, but now, receipts will be
received from western states in the Northwest Compact.
REPRESENTATIVE HAWKER asked if the federal authority would be
restricted.
Number 0596
MR. NICO BUS, Acting Director, Division of Support Services,
Department of Natural Resources (DNR), replied that federal
receipts would be restricted so the amount wouldn't be spent
beyond the reimbursement.
Number 0605
CHAIR SAMUELS removed his objection. He asked if there was any
further objection. There being none, the motion to approve RPL
10-4-5023 carried.
REPRESENTATIVE HAWKER moved that the committee approve RPL 25-4-
3287, Port Security Grant Program, Department of Transportation
& Public Facilities (DOT&PF) - CIP.
CHAIR SAMUELS objected for purposes of discussion.
Number 0613
MS. FRASCA explained that this would allow for the receipt of
$2,650,000 from the U.S. Department of Homeland Security for
improvement to ports in Alaska and also to Bellingham,
Washington. She said that the answer to her question as to why
Bellingham was included was that Alaska would bear the cost if
the improvements were desired by the state. She mentioned that
the lease is currently being negotiated, so perhaps a better
deal could be struck.
CHAIR SAMUELS asked if there was a timeline involved. [Tape
ends.]
TAPE 03-7, SIDE B
Number 0637
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation & Public Facilities (DOT&PF)
replied, "[We have] some time restrictions put upon us by the
USCG [United States Coast Guard] concerning development of
security plans and implementation of those plans." The USCG has
identified that these items need to be in place by July 1, 2004.
CHAIR SAMUELS asked when the lease in Bellingham would expire.
MS. SLAGLE relied that the lease would be up in October, 2004.
Number 0645
SENATOR BUNDE asked for clarification of the available match
funding from the Chenega Terminal Modification project
{"Chenega").
MS. SLAGLE explained that the TSA [Transportation Security
Administration] grant being received requires a general fund
match. STIP [Surface Transportation Improvement Program]
funding was originally going to be used for Chenega but instead,
it has been decided that Shakwak funds, federal highway monies
not requiring a match, will be used instead. Therefore, the
match monies associated with that particular project are now
available to be used for this TSA grant.
Number 0659
REPRESENTATIVE KERTTULA referred to the last legislative session
and noted that the legislative intent for Shakwak money had to
include an investment plan for the federal receipts, to create
an efficient and effective transportation system. She asked if
this had been done, could the Shakwak funds be legitimately
transferred to fund Chenega. She also asked, "What happens to
the STIP money that we aren't using for Chenega?"
MS. SLAGLE said that she would investigate the investment plan
for the Shakwak federal receipts. She said if the STIP monies
are not used for Chenega, there is a lot of demand for those
funds. She noted that the intent language is attached to the
appropriation for the Alaska Marine Highway System (AMHS) and
that she would investigate whether this intent language
pertained to both projects.
REPRESENTATIVE KERTTULA asked for a specific answer regarding
the intent language. She said her bottom line was that she did
not want to see "Chenega falling out" and wanted assurance that
this would not happen.
MS. SLAGLE related her understanding that "it was not going to
fall out" and that work would continue towards that terminal
project.
Number 0690
DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance
Division, explained that the intent language is confusing
because it is at the allocation level rather than at the
appropriation level. He said that Chenega was going to use
surface transportation money but is now going to use Shakwak
money and that both appear in the budget as federal receipts so
"you can't tell the difference between them." He said, the
question becomes, if Shakwak money is going to be used at
Chenega, what project won't be done because of this transfer of
Shakwak money.
SENATOR BUNDE noted that the state rebuilt the dock facility for
the community of 150 or 200 people and now more money is being
spent in modifications, for "how much per capita?" He
commented, "So, if it falls out, and I don't hear it, nothing
happened."
MS. FRASCA said she could report back to the committee on the
status of Chenega.
MR. TEAL said the intent language indicates that [DOT&PF] will
provide the plan for spending the Shakwak money, but doesn't
have to provide that until the next [legislative] session.
REPRESENTATIVE KERTTULA said this had been voted in the budget
and that she was hearing that "Chenega's not going anywhere,
it's simply a matter of changing the funding source."
Number 0720
CHAIR SAMUELS removed his objection. He asked if there was any
further objection. There being none, the motion to approve RPL
25-4-3287 carried.
SENATOR BUNDE commented on the difficulty in accessing the RPLs
online and requested early receipt of hard copies of the RPLs.
CHAIR SAMUELS confirmed that hard copies would be received from
the administration and distributed to committee members in a
timely fashion.
MR. TEAL asked about continuing to distribute PDF versions of
the RPLs, once data processing solved the downloading
difficulties.
CHAIR SAMUELS confirmed that members would receive copies, in
one form or another.
MR. TEAL said that RPLs would be distributed to committee
members at least one day before a scheduled meeting.
AUDIT REQUESTS
Number 0747
REPRESENTATIVE HAWKER moved that the committee approve the audit
request for additional information and for a follow-up on
matters pertaining to the University of Alaska.
Number 0750
CHAIR SAMUELS said that he had received many verbal requests to
audit the University of Alaska and the attempt was made to limit
this audit to something manageable, with the result being to
review the audit that was done 10 years ago, and to review
travel and distance education.
CHAIR SAMUELS asked if there was any objection to this audit
request.
Number 0761
SENATOR THERRIAULT asked for clarification as to whether this
was a request for a completely new audit or a request for the
auditors to update portions of the previous audit.
CHAIR SAMUELS referred to the memorandum of August 12, 2003, in
the packet, as it outlines the specifics of this request.
Number 0771
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, told the committee that the
request was to update the recommendations as well as the
calculations of unit costs that were identified in the audit
from 10 years ago. She said that items [3 and 4] were new
issues that were not related to that previous audit.
CHAIR SAMUELS inquired as to the starting date for this request.
MS. DAVIDSON predicted that this audit would begin in
approximately 6 - 8 months.
CHAIR SAMUELS asked how long it would take to complete the
audit.
MS. DAVIDSON replied that the length of time depended on how
good the data was. She referred to the report from 10 years
ago, wherein one of the recommendations was to improve upon the
utilization of existing management information systems. She
reported that at that time data accuracy and availability was
not "in very good shape," and that she predicts that this would
be a "substantial audit to do."
REPRESENTATIVE HAWKER asked Senator Therriault if the scope and
the motion were understood.
SENATOR THERRIAULT referred to the memo, saying that it directed
the legislative auditor to conduct an audit.
MS. DAVIDSON, in response to a question from Chair Samuels, said
the 1993 audit was available online, and that she could send
copies of it to committee members. She pointed out that the
downloaded version from 10 years ago utilized a different word
processing software system and the numbers in the appendices
were unclear; she said that she would be making those
corrections.
Number 0812
CHAIR SAMUELS asked if there was any objection to the approval
of the audit. There being none, it was so ordered.
OTHER COMMITTEE BUSINESS
Number 0825
TINA CUNNING, State-Federal Issues Program Manager,
Commissioner's Office, Alaska Department of Fish & Game (ADF&G),
told the committee that in 1989 the legislature audited the
state agencies' role related to management and assertion of
ownership on waterways in the state; this audit resulted in a
recommendation that the agencies establish a policy team to work
on navigability issues. The state's [Navigability and Access
Team] is co-chaired by DNR, ADF&G, and the Department of Law
(DOL). She mentioned Senator Therriault's interest in ensuring
that applications related to navigability were able to be filed
for RS [Revised Statutes] 2477s under the recordable disclaimer
[of interest] process recently adopted by the BLM [Bureau of
Land Management].
Number 0841
SENATOR THERRIAULT explained that a previous meeting with the
administration indicated that a proposal of the contractual
arrangement would be received, and as of yesterday this had not
been received. He mentioned the need for specification of
"scope of work, how much it's going to cost, what are the
deliverables of the contract" and so forth. He said he received
a draft copy of the document shortly before the meeting and
wondered what to expect regarding a formal proposal.
MS. CUNNNING said that it was agreed that a work proposal would
be put together. However, in August, four days after the last
meeting, Dick Mylius, the co-chair from DNR, went on extended
vacation; he is due back next week. She said that there has not
been time to put together a formal proposal.
CHAIR SAMUELS asked about the timeline involved for entering
into the contract.
Number 0868
BOB LOEFFLER, Director Division of Mining, Land and Water,
Department of Natural Resources (DNR), said that with respect to
navigability, they were "ready to move forward," but there was
uncertainty regarding integrating the issues involved with RS
2477s; he added that they would know more within the next month.
MS. CUNNING explained that the legal land status research
needing to get done was the same whether a ribbon was a waterway
or an RS 2477 trail, although the RS 2477s require research on
the actual location and the historic use. Based on the six
recordable disclaimers [of interest] that DNR and ADF&G have
already prepared and filed with BLM, a manpower estimate for
each application has been done. The estimate of how many
[rivers] could be done in the remaining one and one-half years
of the CIP is based upon the Joint Committee on Legislative
Budget and Audit's $400,000 appropriation.
MR. LOEFFLER said that this was approximately 40 to 50 navigable
rivers.
SENATOR THERRIAULT wondered if the committee should authorize
the chairman to enter into a contract of up to $400,000 or if
the committee should wait to receive a formal proposal; he
expressed concern that valuable time not be lost.
CHAIR SAMUELS noted that the next [Joint Committee on
Legislative Budget and Audit] meeting would be in approximately
four to six weeks.
MS. CUNNING stated that position descriptions couldn't be
drafted until there was knowledge that something was being
authorized. She noted that the sooner research was conducted
and people were trained, the sooner the projects could be
underway. She mentioned that currently a very cooperative
relationship exists with BLM and the desire is to get as much
done as possible while the administration is helpful.
Number 0909
SENATOR THERRIAULT said he understood the sensitive nature of
the RS 2477s, noting that he met with [Secretary of the
Interior] Gail Norton about two weeks ago. He said that the
work done on navigability questions and recordable disclaimers
could assist her in expressing to Congress that the recordable
disclaimer process not be eliminated. He said he wouldn't want
Congress to overreact and eliminate a viable and usable
mechanism pertaining to navigable waters.
Number 0922
SENATOR STEVENS referred to the handout in the packet which
reads: "2. Between February and August, 2003, the state filed
6 recordable disclaimer of interest applications with BLM on
waters already determined navigable. The first six applications
averaged 6 weeks staff time each." He asked how many staff were
working on this.
MR. LOEFFLER replied that this involved joint staff, from DNR
and ADF&G.
SENATOR STEVENS asked, "operating under what agreement?" He
asked if this was under the direction of the commissioner.
MR. LOEFFLER said, "Yes."
SENATOR STEVENS asked why a contract was needed to continue work
that has already been done?
MS. CUNNING replied that staff had been borrowed from existing
projects and because of backlogs created during this period, no
more work [on the project] was being done.
SENATOR STEVENS reflected that this contract was between
agencies to loan each other [staff].
MR. LOEFFLER said the contract is between the Joint Committee on
Legislative Budget and Audit and the agencies; the tasks
required by the committee would be performed.
Number 0938
SENATOR THERRIAULT explained that some suspicion has grown
between the two branches of government over the past few years.
Even with the new administration, the feeling was that if money
is allocated, it should really be focused on efforts that "we
felt have been lacking for a number of years." He said that in
effect, the Joint Committee on Legislative Budget and Audit is
purchasing the services of state agencies to work on behalf of
the legislature.
SENATOR THERRIAULT compared this to a situation from a number of
years ago when the Knowles Administration wanted money for gas
pipeline work. The legislature was leery of the amount
requested by the administration, so by steering the money
through the Joint Committee on Legislative Budget and Audit, a
fairly tight watch was kept on the contract. He relayed that
only about 50 percent of the money appropriated was used and the
remaining money was available for reappropriation. The amount
appropriated to the Joint Committee on Legislative Budget and
Audit was only about 50 percent of what the administration
originally requested. He pointed out that by exerting some
control, the committee can make sure that the funds are really
focused on navigability and RS 2477s rather than being absorbed
by the agencies and being spent on other issues.
REPRESENTATIVE HAWKER expressed concern that the focus on
navigable waters would result in the work product moving [away
from focusing on RS 2477s].
MR. LOEFFLER replied that the issues are separable; money spent
on navigability is thus spent, and money spent on RS 2477 is
spent on RS 2477s and the link between them, other than both
using recordable disclaimers, is weak. To the extent that money
is spent on one, it's not being spent on the other, he said.
Number 0988
REPRESENTATIVE HAWKER expressed concern about investing the
entire appropriation on navigability and slighting the RS 2477
assertions.
MR. LOEFFLER said the avenue for RS 2477s is uncertain, while
the avenue for navigable waters is open, clear, and helpful. He
said the next step for RS 2477s was being figured out - whether
[there will be] litigation or not. Reserving money for RS 2477s
is a question for the legislature.
Number 1007
SENATOR THERRIAULT noted that the Senate took the lead on this
issue for a number of years. Due to the discussions taking
place in Congress right now, he predicted that there will
probably be limited success with RS 2477s. He said if the power
to extend money for both navigability and RS 2477s was approved,
the departments could move on whatever front offered the chance
for the most success. He suggested perhaps moving ahead on RS
2477s that weren't currently controversial.
SENATOR THERRIAULT continued that when the House approved the
Department of Interior's budget, the language indicated that
none of the [Department of] Interior's money could be used for
recordable disclaimers on RS 2477s. It's unclear whether this
focuses on roads or trails or whether it applies to navigability
as well. He mentioned relying on U.S. Senator Ted Stevens to
clarify or eliminate that provision so that it would still be
available for navigability. He noted that there are many lakes
and navigable rivers in Alaska and there is clear criteria
coming from the [Gulkana River case] on what is navigable. He
said that Congress needs to acknowledge that, "Yes, most water
bodies in Alaska are navigable; yes, the underlying surface
belongs to the state; yes, we need to move along with the
process to clarify which are state and which are federal."
Senator Therriault said he wouldn't be opposed to a motion
giving the power to enter into the contract. He specified that
monthly reports would be desired; quarterly reports, at the very
least, regarding "what we're getting for our money," and if the
product was not a good one, the contract should be discontinued
until things are "back on track."
Number 1070
SENATOR THERRIAULT moved that the committee approve $400,000 so
that Chair Samuels could enter into a contract with the state
agencies, to move forward, and assert state ownership of
navigable waterways and the underlying properties, and also on
RS 2477s.
REPRESENTATIVE HAWKER objected for purposes of discussion. He
said he supports the motion but was concerned that, despite the
obstacles, he didn't want to lose sight of the RS 2477s; he
didn't want this contract, in any way, to be indicative of
abandonment of those pursuits. Having said that, he removed his
objection.
SENATOR STEVENS asked if there was a process in place for the
prioritization of the filings.
Number 1088
MS. CUNNING replied that the [Navigability and Access Team] had
developed a process, and she noted DOL's help in identifying
priorities. She explained that the team looked at the original
estimated 200 waterways for which the state filed a notice of
intent to sue to Quiet Title in the early 1990s. Under former
Governor Hickel, it was determined which of those waterways were
likely to be navigable, and hopefully would not need court
action, but that process fell apart. She said that those 200
waterways are useful because there is sufficient evidence to
compile quality recordable disclaimer applications. The
prioritization of those 200 is based on several factors, such as
filing the simplest ones so that the BLM process can get
underway without involving complex controversial issues.
MS. CUNNING said the Black River ("Black") was filed first
because, along with the Kandik and the Nation [Rivers], it was
one of three rivers for which quiet title was originally sought,
through the court system. The court granted title on the Kandik
and Nation [Rivers] but in the [9th Circuit Court of Appeals]
title wasn't granted the Black, even though it was clearly
navigable, because BLM didn't take a position. When the
recordable disclaimer process was modified to allow for filing
for navigable waters, there was already a court history on the
Black; the state filed an application for a recordable
disclaimer of interest with BLM and BLM now has to take a
position one way or another. The comment period closed about
two weeks ago and BLM is going through comments to see if any
other claim of interest exists on that submerged land. If there
is no valid claim of interest, the presumption is that the
recordable disclaimer will be granted.
MS. CUNNING continued that after the Black, the next five rivers
were grouped by location. She pointed out that it takes a lot
of staff effort to research a particular area, so it is
efficient to file for the Klutina [River and Lake] and the
Tazlina [River and Lake] at the same time. She said that
another criteria used in filing is to avoid conservation system
units, National Parks and Refuges, until a process is
established. She said that with the initial six rivers, a clear
process should be established. She mentioned that the Wood
River System is mostly within state land and therefore a complex
process of determining if the upper-most extent of the waterway
is navigable is not necessary. She stated that as the choices
become more complex, more guidance will be desired from the DOL.
Number 1173
REPRESENTATIVE HAWKER, in response to a question from Chair
Samuels, confirmed that his objection was removed.
CHAIR SAMUELS asked if there was any further objection. There
being none, the motion carried.
SENATOR THERRIAULT said he presumed that Pat Davidson would be
involved with drafting a binding contract which would delineate
the deliverables, timelines, and so forth.
SENATOR GARY WILKEN referred to Chair Samuels' letter of August
19th to Scott Goldsmith (ph) regarding the cost of education,
and asked that the letter be distributed to committee members in
preparation for the next Joint Committee on Legislative Budget
and Audit meeting. He also asked Ms. Davidson for a status
report on communication with the state's travel office.
MS. DAVIDSON replied that she knew of no specifics other than
the Division of Finance's receipt of the letter [issued in early
August from Senator Therriault's office].
Number 1227
SENATOR THERRIAULT referred to a previous meeting which
addressed [RPL 08-4-0019, Temporary Tax Relief Payments]. He
said he was disappointed in a committee member's one-sided
[opinion/editorial] article accusing him and other committee
members of "thievery" and of "gutting proposal." He said
committee members could have disagreements but there were
aspects of the article that were incorrect; he said he hoped
this would not happen in the future.
Number 1247
REPRESENTATIVE KERTTULA replied that she stood by her article
and would be happy to discuss it further with Senator
Therriault.
SENATOR THERRIAULT said, "There are parts of that op/ed
[opinion/editorial] piece that are just flat lies, and that's
all there is to it."
REPRESENTATIVE KERTTULA said, "I disagree and you and I can talk
about that [outside of the meeting]."
SENATOR WILKEN said he would like to be included in that
conversation.
SENATOR STEVENS referred to [RPL 06-4-0042, Temporary Medicaid
FMAP Relief]. [Tape Ends.]
TAPE 03-7, SIDE A [Beginning of tape was recorded over.]
SENATOR STEVENS continued by referencing the attached Federal
Register in the committee packet [June 17,2003, page 35890],
second column, third paragraph from the bottom, "The Jobs Growth
Tax Relief Reconciliation Act" which provides $10 billion for
other temporary state relief payments, based on population. He
stated that population was the only criteria for distribution
given by the federal government.
CHAIR SAMUELS said, "So noted."
Number 1279
REPRESENTATIVE HAWKER stated that Ms. Davidson had asked for
clarification on a motion made and approved at the previous
Joint Committee on Legislative Budget and Audit meeting. The
motion authorized the department to pursue a lease renewal for
office space. He asked that the solicitation for a new lease be
not only to solicit, but also to enter into a new lease
contract, in accordance with the discussion from the meeting of
[July 9, 2003].
Number 1287
REPRESENTATIVE HAWKER moved that the committee authorize the
legislative auditor to both solicit and award a lease for office
space in Anchorage.
CHAIR SAMUELS asked if there was any objection. There being
none, it was so ordered.
ADJOURNMENT
There being no further business before the committee, the Joint
Committee on Legislative Budget and Audit meeting was adjourned
at approximately 4 p.m.
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