Legislature(1999 - 2000)
03/18/1999 08:05 AM House CRA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
March 18, 1999
8:05 a.m.
MEMBERS PRESENT
Representative Andrew Halcro, Co-Chairman
Representative John Harris, Co-Chairman
Representative Carl Morgan
Representative Lisa Murkowski
Representative Fred Dyson
Representative Reggie Joule
MEMBERS ABSENT
Representative Albert Kookesh
COMMITTEE CALENDAR
*HOUSE BILL NO. 40
"An Act combining parts of the Department of Commerce and Economic
Development and parts of the Department of Community and Regional
Affairs by transferring some of their duties to a new Department of
Commerce and Rural Development; transferring some of the duties of
the Department of Commerce and Economic Development and the
Department of Community and Regional Affairs to other existing
agencies; eliminating the Department of Commerce and Economic
Development and the Department of Community and Regional Affairs;
relating to the Department of Commerce and Rural Development and
the commissioner of commerce and rural development; adjusting the
membership of certain multi- member bodies to reflect the transfer
of duties among departments and the elimination of departments;
creating the office of international trade and relating to its
duties; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 40
SHORT TITLE: DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT
SPONSOR(S): REPRESENTATIVES(S) KOHRING, Cowdery
Jrn-Date Jrn-Page Action
1/19/99 28 (H) PREFILE RELEASED 1/15/99
1/19/99 28 (H) READ THE FIRST TIME - REFERRAL(S)
1/19/99 29 (H) CRA, L&C, FINANCE
3/09/99 (H) CRA AT 8:00 AM CAPITOL 124
3/16/99 484 (H) COSPONSOR(S): COWDERY
3/18/99 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE KOHRING
Alaska State Legislature
Capitol Building, Room 421
Juneau, Alaska 99801
Telephone: (907) 465-2186
POSITION STATEMENT: Testified as Sponsor of HB 40.
ANNALEE MCCONNELL, Director
Office of Management & Budget
Office of the Governor
PO Box 110020
Juneau, Alaska 99811-0020
Telephone: (907) 465-4660
POSITION STATEMENT: Testified on HB 40.
MIKE KRIEBER, Legialtive Administrative Assistant
to Representative Kohring
Alaska State Legislature
Capitol Building, Room 421
Juneau, Alaska 99801
Telephone: (907) 465-2186
POSITION STATEMENT: Answered questions regarding HB 40.
DEBORAH SEDWICK, Commissioner
Office of the Commissioner
Department of Commerce & Economic Development
PO Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-2500
POSITION STATEMENT: Answered questions.
LAMAR COTTEN, Deputy Commissioner
Office of the Commissioner
Department of Community & Regional Affairs
PO Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4700
POSITION STATEMENT: Answered questions.
JEFF BUSH
Deputy Commissioner
Office of the Commissioner
Department of Commerce & Economic Development
PO Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-2500
POSITION STATEMENT: Answered questions.
KEVIN RITCHIE
Alaska Municipal League
217 Second Street
Juneau, Alaska
Telephone: (907) 586-1325
POSITION STATEMENT: Discussed HB 40.
ACTION NARRATIVE
TAPE 99-16, SIDE A
Number 0001
CO-CHAIRMAN HARRIS called the House Community and Regional Affairs
Standing Committee meeting to order at 8:05 a.m. Members present
at the call to order were Representatives Halcro, Harris, Morgan,
Murkowski, Dyson and Joule. Representative Kookesh was not
present.
HB 40-DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT
Number 0040
CO-CHAIRMAN HARRIS announced that the only order of business before
the committee would be HOUSE BILL NO. 40, "An Act combining parts
of the Department of Commerce and Economic Development and parts of
the Department of Community and Regional Affairs by transferring
some of their duties to a new Department of Commerce and Rural
Development; transferring some of the duties of the Department of
Commerce and Economic Development and the Department of Community
and Regional Affairs to other existing agencies; eliminating the
Department of Commerce and Economic Development and the Department
of Community and Regional Affairs; relating to the Department of
Commerce and Rural Development and the commissioner of commerce and
rural development; adjusting the membership of certain multi-
member bodies to reflect the transfer of duties among departments
and the elimination of departments; creating the office of
international trade and relating to its duties; and providing for
an effective date."
REPRESENTATIVE KOHRING, Sponsor of HB 40, asked the committee if
Annalee McConnell could provide the committee with her testimony
since she has a commitment at 8:30 a.m.
ANNALEE MCCONNELL, Director, Office of Management & Budget, Office
of the Governor, thanked Representative Kohring for accommodating
her schedule. With regard to consolidations, Ms. McConnell stated
that the governor views consolidations as a necessary part of the
balanced budget plan. Everyone realizes that budget cuts have to
be a part of that plan. Ms. McConnell said that consolidations
could be a viable element of budget cuts if done properly. There
have been consolidations in recent years between divisions within
departments. She noted that there was consolidation between
departments with the consolidation of the Division of
Administrative Services between DNR and DMVA. Further, much is
done on a more informal basis.
MS. MCCONNELL stated that this would be the first time for a
merging of activities between two or more departments. Prior
legislation has focused, as does HB 40, on the Department of
Commerce and Economic Development and the Department of Community
and Regional Affairs. She pointed out that there have been several
changes at the federal level with regard to job training funds. If
review is given to the reconfiguration of services in order to
provide economic development or work force development services to
communities and businesses in a user-friendly fashion, those
changes could become part of this equation. Ms. McConnell informed
the committee that there has been review of the possibility of
reconfiguration of the job functions which over time have been in
a number of different departments. Some functions were placed in
specific departments due to federal requirements.
Number 0361
MS. MCCONNELL expressed the desire to work with the legislature,
however she was not prepared to provide a specific plan at this
point. Ms. McConnell believed it important to establish some clear
goals at the beginning for this effort. She pointed out that
community health and economic viability are critical to the overall
health of Alaska and therefore should be strived for in this plan.
The plan should also address the key issues for rural Alaska such
as power cost equalization. The plan should make it easier for
communities, businesses, and individuals seeking job training and
employment to relate to available state services. Ms. McConnell
indicated the possibility of integrating services provided by
several departments in order to achieve one-stop shops for
communities which would improve the economic health of that
community. The plan should also maintain an emphasis on high
unemployment areas. Ms. McConnell acknowledged that overall budget
savings are critical during this time. Further, the
reconfiguration of services must be done in a manner which actually
improves services. Ms. McConnell cited the moving of the Division
of Motor Vehicles to the Department of Administration as an example
of reconfiguration creating improved services. Improving services
is as important if not more important than budget savings because
in the long-term such will either help or hinder the economic
viability of Alaska's communities and the state as a whole.
MS. MCCONNELL stated that she was not prepared to provide detailed
discussion of HB 40. She informed the committee that in
discussions with Representative Kohring, he had realized that it
would be preferable from Ms. McConnell's standpoint to review all
of the areas rather than the Administration speaking specifically
to elements of HB 40.
Number 0731
CO-CHAIRMAN HALCRO asked if the collapsing of these two departments
would still protect the constitutional requirement for a local
government affairs agency.
MS. MCCONNELL recognized that the Alaska Constitution does require
a local government affairs agency, but the constitution does not
specify that the local government affairs agency be a separate
department. She emphasized the importance of not making local
government seem a lesser priority during discussions of this.
CO-CHAIRMAN HALCRO agreed with Ms. McConnell's comments. He
mentioned that he and Co-Chairman Harris had discussions with
Representative Kohring regarding the protection of the feel of the
DCRA and the rural and local governance aspect of the DCRA during
the merging of the two departments. Co-Chairman Halcro said that
Representative Kohring had assured him and Co-Chairman Harris that
had been taken into consideration.
REPRESENTATIVE DYSON inquired as to how money would be saved if the
work load remains the same. He requested that Ms. McConnell speak
to Representative Kohring's idea about reducing upper levels of
management by spreading their responsibilities to others. Further,
if the consolidation occurs would money be saved with regard to the
amount of office space, equipment and facilities that are utilized.
Number 0967
MS. MCCONNELL said that most people feel that large budget savings
will not be the principle result of consolidation because in many
areas all the services that could be or would be wise to provide
are not provided. Therefore, as Representative Dyson mentioned,
some of the resources saved by reducing upper management may be
applied to other areas to fully satisfy the need. That approach
should be reviewed. Ms. McConnell agreed that there could be some
savings from reducing the number of managers in particular areas
which has been reviewed in the job training arena.
REPRESENTATIVE DYSON pointed out that Ms. McConnell had inferred
and Representative Kohring had stated that cooperation of economic
development may be enhanced. Representative Dyson felt it a worthy
goal if the functions are consolidated under one roof. He inquired
as to how long before savings could be realized.
MS. MCCONNELL said that savings would be dependent in part on the
type of changes being made. Perhaps, the plan would be a phased
approach. Ms. McConnell indicated that her goal would be to make
it easier for communities to know what resources are available.
The key will be to retain the current diversity with a couple of
departments because the large business sector approach would not
necessarily be the appropriate approach for individual communities.
REPRESENTATIVE DYSON informed the committee that he always tells
urban business leaders they should hope that rural Alaska does well
because virtually all the commodities that can be delivered to the
world come from rural Alaska. Anchorage only exists because there
is a creek where barges can be floated in during high tide in order
to off-load things.
REPRESENTATIVE DYSON noted that there are numerous programs in the
U.S. that address job training issues. Would there ever be a point
at which there would be a single point of contact in a community
which could direct and facilitate the use of all of the available
programs.
Number 1350
MS. MCCONNELL stated, "We're certainly headed in that direction."
There was a recent change in federal law which will make a
difference in the ability of states to integrate their job training
programs. She pointed to welfare reform and one-stop shops as an
example of Alaska heading in the direction of a single contact
point. Alaska is poised to take advantage of the federal changes.
Ms. McConnell pointed out that the Human Resource Investment
Council (HRIC), the umbrella organization which was created in many
states to determine how to integrate, has done much of the leg work
in this area. She reiterated that the change in the federal law
will make it easier to integrate from this point on.
REPRESENTATIVE DYSON asked if there was anything that could be done
in state law to facilitate integration and even move to the next
level, one-person contact points that would provide information
regarding the federal, state, local and Native programs.
Number 1500
REPRESENTATIVE JOULE reiterated Co-Chairman Halcro's previous
concerns regarding maintaining the integrity of the local
government affairs agency as required in the Alaska Constitution.
He pointed out that the Alaska Constitution also says that the
local government affairs agency is at the Executive Branch level.
Under the current system, there is an advocate strictly for rural,
municipal, and local government agencies. Representative Joule
said, "And my worry is that if we're looking at consolidating with
something like commerce, then you have somebody who has to make
probably some hard choices when those--in those times, they may be
few, but when they conflict between commerce and that development
and those things in rural Alaska and in local government."
Representative Joule wondered how Ms. McConnell foresaw such a
scenario. He saw it as a watered-down roll in the constitution
which would be further watered-down with the split of duties.
MS. MCCONNELL recognized Representative Joule's concern as very
legitimate. The Governor has insisted that regardless of the name
of the department, every department needs to give attention to the
needs of rural Alaska and how well those needs are being met.
Therefore, it would become a fundamental part of every department's
mission to look out for all parts of the state. Much of what has
been done over the last four years has been to ensure that
responsibilities to rural Alaska and children, for instance, are
embedded in the thinking in each department. Such an approach is
beneficial because then no matter the department each will have the
responsibility to rural Alaska. Ms. McConnell acknowledged that
such an approach depends upon having employees who take such
responsibility seriously and do not simply abandon one choice in
favor of the other. Unfortunately, not enough people in urban
Alaska realize their existence is dependent upon the economic
health and viability of rural areas.
Number 1766
REPRESENTATIVE JOULE commented that consolidation is being
considered in part because Alaska is faced with fiscal issues. He
implied that the continued economic health of Alaska is dependent
upon the resources in rural Alaska. Representative Joule pointed
out the opposing perceptions of Alaska. One perception is that the
state is looking toward the development of the resources of rural
Alaska for the continued economic health of the state. Another
perception is of diminished availability for rural people to access
government whether through the legislature or departments.
CO-CHAIRMAN HALCRO mentioned that he and Co-Chairman Harris talked
with Commissioner Irwin early in the session regarding the goals of
the Department of Community & Regional Affairs. One of the topics
of discussion was the role of economic development in rural Alaska
and how that would dove-tail with the Department of Commerce &
Economic Development. During the discussion, Commissioner Irwin
had the opinion, as stated by Co-Chairman Halcro, "...that unless
somebody from London comes to one of my communities in Larson Bay,
I don't consider what we do the same thing." Co-Chairman Halcro
said that having people from the Department of Commerce & Economic
Development promoting Alaska overseas in various industries seems
to have one voice promoting Alaska on a broader wavelength.
Casting the nets in a broader fashion may result in better interest
than the results of isolated targeted efforts.
MS. MCCONNELL stated that economic development is not a one size
fits all plan. Therefore, attention must be given to the fact that
some trade marketing would not be appropriate for rural Alaska.
Ms. McConnell pointed out that, "...you don't go in and do economic
development to someone in rural Alaska. It can't be that kind of
process." Ms. McConnell said that Alaska cannot have an economic
development entity that markets Alaska in the broad sense, but
rather the marketing would have to be targeted and very specific
requiring relationships with the community and its local
government.
Number 2137
REPRESENTATIVE KOHRING informed the committee that the concept of
HB 40 was initiated three years ago by now Senator Pete Kelly.
Senator Pete Kelly's bill has been modified to HB 40 as before the
committee. With regard to the merger of the two departments,
Representative Kohring emphasized that this merger is to make the
programs more effective. He informed the committee that most of
the length of HB 40 can be attributed to the necessary statutory
modifications. Representative Kohring thanked Ms. McConnell for
her attention to HB 40 and the interest from the Administration in
general to work with the legislature.
REPRESENTATIVE KOHRING believed that with regard to Alaska's
deficit situation, the budget will have to be cut and all
department's would be subject to cuts and streamlining of programs.
This bill, HB 40, really speaks to the protection of the integrity
of programs. The thrust of HB 40, aside from the economics, is to
create a new entity that will offer "more bang for our buck."
Representative Kohring described this entity as one which would
have less management, preserves the integrity of programs and
allows resources to be focused on the development of rural and
urban Alaska. He indicated that HB 40 is a two-fold approach to
save money and focus on the development of the economy.
Number 2345
REPRESENTATIVE KOHRING informed the committee that the name of the
department would be the Department of Commerce and Rural
Development. That name was chosen in order to provide the
perception that commerce and economic development will be promoted
in rural as well as urban Alaska. With regard to the costs
associated with the merger of the two departments, Representative
Kohring stated that the merger would result in a cost savings of
about $1 million. That cost savings is the result of the
elimination of one of the two commissioner's offices, including
that commissioner's staff. Representative Kohring acknowledged the
concern that the duties and responsibilities would be increased for
the new upper management staff. However, the agency is relatively
small. When the total employees from both departments are
combined, there are just under 500 employees. Representative
Kohring did not feel the management structure would be overloaded.
REPRESENTATIVE KOHRING pointed out that there are many programs
that are similar in nature in both departments. He explained that
the basic mission of DCRA and DCED are similar in that both
promote the economy in communities in Alaska; DCRA promoting the
economies in rural Alaska and DCED promoting economies primarily in
urban Alaska. Therefore, it would be logical to merge these two
departments. Representative Kohring referred to the committee
packet which includes a list of the overlapping missions and
related activities of DCED and DCRA. Merging the two departments
would provide a more focused effort with the delivery of programs.
Representative Kohring hoped that as a result of merging these
programs, greater efficiencies and focus would be achieved which
would save further dollars. He indicated that it would be
difficult to quantify how much would be saved as a result of the
merger of the programs.
Number 2637
REPRESENTATIVE KOHRING referred to the information in the committee
packet which specifies the benefits of the merger to rural Alaska.
The primary goal for HB 40 is the economic development and growth
in rural Alaska. He cited the following benefits to rural Alaska.
First, the focus on economic development and commerce through the
integration of programs would focus attention to strictly economic
development as opposed to the current scattered approach. Second,
the scoping and planning aspect of economic development is
important due to the ability to utilize expert staff under one
management roof. Third, infrastructure construction would, "Once
the community has identified development projects through scoping,
infrastructure can be planned and constructed. The new department
will assist the community in obtaining financing for the
construction phase of various projects." The fourth benefit is
centralized financial assistance, the one-stop shop effort, could
be applied in this situation by housing the funding sources for
different programs unified under one roof.
REPRESENTATIVE KOHRING noted that the committee packet includes
information regarding the organizational structure. The new
department, Department of Commerce and Rural Development, has three
divisions as well as a grouping for independent agencies. The
three divisions are the Rural Affairs Division which is formerly
DCRA, the Statewide Economic Development Division which is formerly
DCED, and the Division of Administration. He explained that the
Rural Affairs Division essentially replaces DCRA, but most of the
economic development related programs formerly located in DCRA will
be located under the Statewide Economic Development Division. The
name for DCRA is eliminated not its mission.
REPRESENTATIVE KOHRING said, in response to Representative Joule,
that the organizational chart was developed for both HB 400 and
HB 40.
Number 2860
REPRESENTATIVE JOULE referred to Section 73, page 41, which
outlines seven divisions and directors which is not the case with
the organizational chart.
MIKE KRIEBER, Legislative Administrative Assistant to
Representative Kohring, referred to the organizational chart. He
clarified that under the Independent Agencies heading the listings
for Occupational Licensing, Insurance, Alaska Public Utilities
Commission, and Banking, Securities & Corporations are all separate
divisions. Also under the Division of Administration the Division
of Investments is included.
REPRESENTATIVE KOHRING noted that the organizational chart
specifies what portions of DCRA and DCED will be placed in other
agencies and state government. This legislation also realizes that
there are programs in DCRA and DCED that are not economic
development related. For example, the child care programs, the
Jobs Training Partnership Act, the statewide service delivery, and
state training & employment programs would all be better suited in
other agencies. As the organizational chart indicates three job
training related programs are moving into the Department of Labor,
and four programs related to child care will be moved into the
Department of Health & Social Services.
Number 2963
CO-CHAIRMAN HALCRO mentioned the discussion regarding moving the
Division of Energy under the Alaska Industrial Development and
Export Authority (AIDEA). Was that taken into consideration?
REPRESENTATIVE KOHRING acknowledged that he had heard such
discussion, but was not terribly familiar with the proposal. He
stated that he would be open to modifications regarding energy
development in Alaska.
TAPE 99-16, SIDE B
REPRESENTATIVE KOHRING expressed concern with the issue of power
cost equalization (PCE) running out. There is a proposal to
establish an endowment to phase out PCE while simultaneously
building infrastructure related to energy development in the state.
Therefore, rural Alaska could become more self-sufficient.
Number 2966
REPRESENTATIVE MORGAN pointed out that child care and job training
were being placed in different departments, although the two
programs are directly linked. He expressed concern that the child
care program would get lost in the Department of Health & Social
Services (DHSS). Under welfare to work, child care and job
training work together towards the goal of transitioning people
from welfare to work. In order to reach this goal, child care is
necessary at the one-stop center which is the current organization.
MR. KRIEBER clarified that currently, the Child Care Program and
the Jobs Training Partnership Act (JTPA) are both housed in DCRA as
separate programs under one umbrella and therefore are not one-stop
shopping. He referred to information in the committee packet
entitled, "Benefits to Moving Child Care and Headstart Programs
into the Department of the Health and Social Services" and
"Benefits of moving Job Training Programs into the Department of
Labor." Mr. Krieber noted the past two sessions the legislature
has reviewed missions, measures, and the effectiveness of all
departments. These programs seem to be better suited, based on
departmental mission statements, within the departments as assigned
under HB 40. With regard to the Child Care Program and Headstart,
federal legislation has indicated the desire to fully integrate
child care systems which DHSS oversees. Mr. Krieber read from the
"Benefits to Moving Child Care & Headstart Programs into the
Department of Health and Social Services" which states, "This
federal grant initiative program is designed to develop linkages of
various child and health care programs to promote comprehensive
services to families: 'To remain self-sufficient, many families
need other services along with child care. State and local
planning should link child care to the following services: Health,
Family Support Services, Head Start, and others." Furthermore, Mr.
Krieber pointed out that both departments have a memorandum of
agreement regarding coordination between the two departments on
issues of child care.
MR. KRIEBER informed the committee, with regard to moving the job
training programs to the Department of Labor, that the Department
of Labor's mission says, "...shall foster and promote the welfare
of wage earners in the state, improve their working conditions, and
advance their opportunities for profitable employment." Therefore,
the job training programs seem to be better suited as Ms. McConnell
mentioned by integrating those programs.
REPRESENTATIVE MORGAN emphasized that the Bush does not have direct
access to the Department of Labor or DHSS.
REPRESENTATIVE KOHRING echoed Ms. McConnell's earlier comments that
the economies of rural and urban Alaska are closely connected.
Helping rural Alaska, as HB 40 would by promoting economic growth
and dollars, directly benefits urban Alaska. With regard to the
long-term cost savings, he reiterated that roughly $1 million in
cost savings annually have been identified. The implementation of
HB 40 would roughly cost $200,000.
Number 2701
REPRESENTATIVE JOULE asked if the various affected departments had
been asked to prepare a fiscal note. At what point will the
committee have the department's version of a fiscal note?
MR. KRIEBER informed the committee that he had contacted the
departments which have not yet prepared the fiscal notes. Last
year, the departments did combine into one fiscal note. Mr.
Krieber believed that the committee had requested that fiscal note
a couple of weeks ago, but it has not yet come forward.
CO-CHAIRMAN HALCRO clarified that the fiscal note had been
requested over three weeks ago and has not yet been received.
Statute requires that a fiscal note be provided to a committee
within five days of request. Furthermore, HB 40 was originally
scheduled to be heard March 9, 1999.
REPRESENTATIVE KOHRING pointed out that does not mean there has not
been a thorough analysis of the cost. He reiterated that the
committee packet does contain a fiscal note that was prepared by
the sponsor last year on this issue.
REPRESENTATIVE JOULE asked if there would be time to hear from the
department today.
REPRESENTATIVE KOHRING noted that there are several letters
included in the committee packet, one of which was from Paul Fuhs,
former Commissioner of the DCED, who supports the concept of HB 40.
REPRESENTATIVE MURKOWSKI noticed that Mr. Fuhs' letter urged
Representative Kohring to contact and work with the Alaska
Municipal League; she asked if that contact had been made.
MR. KRIEBER said that there were conversations with the Alaska
Municipal League (AML) last year. The AML testified that the main
concern was that the constitutional provision requiring an agency
dealing with rural affairs be maintained. The AML has not spoken
any objection to HB 40 as written this year.
REPRESENTATIVE KOHRING also noted that the committee packet
includes a letter of support from former Deputy Commissioner of the
DCRA, Dan Tanner. Mr. Tanner's letter points out that this type of
legislation is a good way to cut government, increase efficiencies
and enhance economic growth, particularly in rural areas. Mr.
Tanner's letter also acknowledges that the two departments perform
similar tasks, therefore consideration of a merger is justified.
Number 2447
CO-CHAIRMAN HARRIS stated that conceptually HB 40 is a good idea.
However, the main concern is not to alienate or separate the duty
and responsibility to help rural Alaska. Co-Chairman Harris
informed everyone that in order for HB 40 to receive his support on
the floor, there would have to be assurances that rural Alaska
would not be left out as a result of this consolidation.
REPRESENTATIVE JOULE inquired as to where the new sections of HB 40
were taken. He referred to the office of international trade
language, the child care grants, and the revolving loan fund
language. Was that language taken from somewhere else?
MR. KRIEBER explained that the language is the original statutory
language. He agreed that the location is only being moved.
REPRESENTATIVE JOULE asked if there are any existing DCRA programs
that will be eliminated as a result of HB 40.
REPRESENTATIVE KOHRING replied no, but noted that there would be
the elimination of one of the commissioner's offices that currently
administers the programs in DCRA.
REPRESENTATIVE KOHRING said, in response to Co-Chairman Halcro,
that he had not had any recent discussions with Commissioner Irwin,
DCRA. He noted that he had made efforts to reach Commissioner
Irwin. He mentioned that the Deputy Commissioner from DCRA was
present. Representative Kohring indicated the signals from DCRA
suggest that the department is willing to work with him on the
issue. Last year, DCRA was very much a part of the process on the
legislation. Further, Representative Kohring informed the
committee that last year the bill was filed quite late and refined
extensively in the House Labor & Commerce Committee. Last year's
legislation passed out of the House Finance Committee, but time
simply ran out although there was support to pass the legislation
from the House floor.
REPRESENTATIVE KOHRING reiterated the intent of HB 40 was to
protect the programs while recognizing the fiscal situation.
Representative Kohring believed that the greatest danger to both
departments would be not doing anything which would leave these
programs subject to budget cuts which is one choice. The other
choice is to be creative through consolidation which will address
the budget cutting goals in part, while simultaneously protecting
the integrity of the programs.
CO-CHAIRMAN HARRIS asked if Deputy Commissioner Cotten, DCRA, had
a presentation for the committee which Deputy Commissioner Cotten
indicated was not the case. Deputy Commissioner Jeff Bush, DCED,
did not have a presentation for the committee either.
Number 2050
DEBORAH SEDWICK, Commissioner, Department of Commerce & Economic
Development, said that she was available for questions.
CO-CHAIRMAN HARRIS wondered why the departments were not coming
before the committee since this would have ramifications for them.
He inquired as to how Commissioner Sedwick would implement the
changes under this merger.
COMMISSIONER SEDWICK emphasized the importance of making sure that
all parties are at the table and that consolidation addresses the
concern of the loss of the "rural department." Therefore, she
believed the work on the economic development piece to be very
important. Commissioner Sedwick informed the committee that the
department had been reviewing various consolidations and did not
realize that a fiscal note had been requested. A fiscal note was
prepared last year for the consolidation. Commissioner Sedwick
pointed out that there would not be any savings, if bodies and
functions are merely transferred and review is not given to what
was done in the past. She hoped that a merger would result in
better consolidation as well as savings. Commissioner Sedwick
agreed that everyone should work together to develop something that
makes sense for everyone.
CO-CHAIRMAN HARRIS pointed out that the committee packet included
statements regarding HB 400 from the Deputy Commissioner which
states that DCED does not duplicate the efforts of DCRA. Clearly,
Representative Kohring believes there is duplication between the
two departments and cites examples of such.
COMMISSIONER SEDWICK stated that DCED does a good job working
together with other departments. She cited the Alaska Regional
Development Organization (ARDOR) as an example. Last year's
proposed legislation did not take into account those things in
state government which would not be done in the future.
Commissioner Sedwick believed that last year, the department was
responding to the fact that there would not be any dollar savings,
but it would actually cost to make the move without eliminating
programs. This year the discussions will revolve around the
possibility of transfers and agreement that some programs the state
cannot afford to continue.
CO-CHAIRMAN HARRIS clarified his question; are there any
overlapping services between the two departments that can be
combined in a cost saving manner?
COMMISSIONER SEDWICK said that there are areas in DCED that would
streamline which would be beneficial. Those areas would be
specific programs and therefore, in that sense, there is not
duplication. She acknowledged that streamlining could occur under
consolidation, if everyone agreed that would be appropriate.
REPRESENTATIVE JOULE asked if this consolidation occurred, would
the constitution's requirement for a local government agency at the
Executive Branch level be diminished due to the loss of a
department or part of the department whose sole purpose is to
fulfill that constitutional requirement.
Number 1633
LAMAR COTTEN, Deputy Commissioner, Office of the Commissioner,
Department of Community & Regional Affairs, said that the risk to
which Representative Joule commented could happen due to the
dilution of the mission under consolidation. For the record, Mr.
Cotten noted that he was not reluctant to speak on HB 40. However,
he understood that Ms. McConnell represented the Administration's
position on HB 40. He said that Ms. McConnell's message was that
review of consolidation is occurring and therefore, consolidation
and a lot of other issues are under review internally. The
expectation is to continue the internal conversations and determine
where to go with this issue.
REPRESENTATIVE JOULE inquired as to when the fiscal notes would be
available.
MR. COTTEN did not believe the fiscal notes would be very different
from those submitted last year. Last year, the conclusions of
Representative Kohring regarding the fiscal notes were disputed.
Mr. Cotten was confident that it will actually cost money to
consolidate these departments, but he believed that the Division of
Administrative Services would do a closer review in light of the
filling of the Atwood Building. If consolidation does occur, it
would make little sense if some physical relocation of personnel
did not take place.
JEFF BUSH, Deputy Commissioner, Office of the Commissioner,
Department of Commerce & Economic Development, stated that the
fiscal notes should be prepared by the end of the week. The
biggest difficulty is calculating the number of people who would be
required to move. The fiscal note will be similar to last year's,
but the numbers will be a bit different due to the Atwood Building
situation.
Number 1428
REPRESENTATIVE MURKOWSKI observed that, with regard to Commissioner
Sedwick's comment that everyone should be at the table, many people
are at the table although some are listening and not participating
in the dialogue. Are discussions occurring in departments and are
those discussions happening with the sponsor or is each party
having separate dialogues?
MR. COTTEN pointed out that first internal alignment occurs. The
department works for the Administration and clearly the
Administration and department would have its own plan. The
conversations to date have been internal. Once the plan has been
devised and those above the department sign-off on that plan, the
conversation will become more detailed.
COMMISSIONER SEDWICK noted that she had pledged to work with
Representative Kohring on this issue, but internal alignment must
happen. She reiterated the need to ensure that the rural focus is
not diminished. Commissioner Sedwick said that there is not
internal alignment at this point.
REPRESENTATIVE MURKOWSKI pointed out that this idea has been around
for several years. She hoped the Administration and those working
on HB 40 could soon discuss the specifics of HB 40. Representative
Murkowski did not want the committees to spend time signing off on
HB 40 only to discover the Administration does not want to go that
route and the work was for not.
MR. COTTEN agreed with Representative Murkowski.
Number 1169
CO-CHAIRMAN HALCRO noted that last year's legislation, HB 400, had
several hearings in House Labor & Commerce Committee. He pointed
out that the committee packet also includes Representative
Kohring's rebuttals to various concerns raised by DCRA last year.
The majority of the dialogue occurred last year. Co-Chairman
Halcro asked if there were any unresolved issues from last year.
MR. COTTEN said that one of the outstanding issues was that the
department opposed HB 400. The Administration had a policy of
opposing the consolidation of departments over the last four years.
Mr. Cotten also pointed out that "we" are not exclusively reviewing
these two departments. The basis for the discussions on
consolidation is not driven by Representative Kohring's efforts,
"ours" is broader. Mr. Cotten noted that the department does not
agree with many of Representative Kohring's points, but that does
not exclude the possibility of consolidation or working together
towards consolidation.
REPRESENTATIVE MORGAN pointed out that DCED focuses on the big
picture such as marketing and overseas tourism while DCRA focuses
on the small rural projects that could range from $25,000 to
$50,000. In Representative Morgan's experience with contractors,
the priority was to only review contracts that were of a certain
dollar amount. He asked if that could be the case with this.
MR. COTTEN said that there are some distinctions between the
departments with regard to who the customers are and the level of
money. With any integration of government agencies, much of the
outcome is based on the personalities involved, the intent, and the
willingness to work together.
Number 0836
KEVIN RITCHIE, Alaska Municipal League (AML), understood that the
Governor is discussing consolidation which is something the AML
membership would like to review. He said that AML does not want to
get terribly involved in an efficiency move. Mr. Ritchie
emphasized the constitutional requirement for a local government
agency which places much emphasis on having a good relationship
with municipal governments and building the coordination between
municipal and state government. That creates efficiencies for
taxpayers. For example, there are currently between 20,000 to
22,000 state employees, while on the local level, including school
districts, there are 35,000 local government employees. That
illustrates the importance for municipal and state government to
work together through DCRA which, per the constitution, is the
local government agency. Mr. Ritchie said, "Our obvious concern
would be that it not be put as an optional duty to a large
department. That is something I concur in with Deputy Commissioner
Cotten."
REPRESENTATIVE JOULE asked if any of the AML members supported
HB 40.
MR. RITCHIE said that the AML had not received support for HB 40.
Last year the AML opposed HB 400. Mr. Ritchie noted that the AML
is willing to work with the Legislature and the Administration to
develop efficiencies.
REPRESENTATIVE JOULE asked if the AML had received any opposition
to HB 40.
MR. RITCHIE replied yes. Although the AML has not heard from every
community, Mr. Ritchie felt that every community has a stake in the
local government agency and would like to ensure that remains a
strong function of state government.
CO-CHAIRMAN HARRIS asked if the AML membership felt that the
merging of the two departments would diminish the focus of the
local governance.
MR. RITCHIE said that when there is one administrative head with
two missions, the workload is essentially doubled. Therefore, on
the commissioner level the answer is no. With regards to the
mission within the department, HB 40 has two sections, one of which
lays out the duties of the department with "shall" language while
the combined duties of the DCRA uses "may" language.
Number 0376
REPRESENTATIVE JOULE asked if the AML membership had instructed Mr.
Ritchie to work with the Administration or Representative Kohring
to review consolidation.
MR. RITCHIE said that he had not received specific instructions to
work with the Administration and the Legislature, but that
cooperation is inherent in the job. He believed that the board of
directors was waiting for the Governor's proposal. Therefore, the
AML has not yet reacted. In further response to Representative
Joule, Mr. Ritchie noted that the AML has regular legislative
meetings one of which will be March 23, 1999 at 10:00 a.m. during
which this issue will be discussed. Mr. Ritchie said that the AML
does not like it when the legislature or the governor do something
making it more difficult to do the job at the local level. Mr.
Ritchie noted that trying to provide appropriate input without
trying to direct a process aimed at efficiency is difficult.
CO-CHAIRMAN HALCRO inquired as to why the AML members who are
concerned have not contacted Representative Kohring or offered
suggestions in order to create a better product for everyone.
MR. RITCHIE pointed out that the AML has not seen the Governor's
proposal yet. Mr. Ritchie stated that his review of HB 40 did not
uncover the importance of the local governance agency which he
believed to be the key issue for municipal governments.
TAPE 99-17, SIDE A
REPRESENTATIVE KOHRING noted that last year there was a lot of
opposition to this legislation. Now that Alaska faces a huge
deficit many folks are realizing the need to act unless programs
are to be eliminated in state government. Therefore, there has
been more receptiveness to this legislation this year.
Representative Kohring did note that this legislation has been
around for about a year. He recognized that there may never be
total agreement on the specifics within this legislation. He
indicated that the focus on HB 40 should be with regard to the
greater efficiency in government, the combining of programs with
similar missions while preserving the integrity of programs by
taking the focus away from the need to eliminate those programs.
REPRESENTATIVE JOULE inquired as to the intention of the Chair.
Number 0342
CO-CHAIRMAN HARRIS informed the committee that HB 40 has two other
committees of referral, the House Labor & Commerce Committee and
the House Finance Committee. The House Judiciary Committee may
also hear HB 40. Co-Chairman Harris noted that HB 40 does not have
a fiscal note and therefore last year's fiscal note may have to be
adopted in order to report HB 40 out of committee. Co-Chairman
Harris stated that he intended to attempt to move HB 40 forward.
REPRESENTATIVE JOULE expressed concern with reporting HB 40 out of
committee. He believed it was good to have an overview of HB 40,
but these type of changes should be dealt with in this committee.
Representative Joule hoped that HB 40 would be scheduled for
another hearing. This is the House Community & Regional Affairs
Committee and not one community has been heard from on this issue.
REPRESENTATIVE MURKOWSKI agreed with Representative Joule. This
committee probably has greater knowledge and impact on HB 40.
Representative Murkowski did not particularly want to see HB 40
held up, but indicated the need to hear from interested parties on
more specifics of the issue. She thought that those who had spoken
seemed to indicate that they conceptually endorse HB 40.
Representative Murkowski was not completely convinced that the
committee had completed its task.
CO-CHAIRMAN HALCRO agreed with Representatives Joule and Murkowski
and he noted that the committee had time on March 25, 1999 to
reschedule HB 40. Co-Chairman Halcro reviewed the history of
HB 400 last year. He pointed out that this year the legislation,
HB 40, was introduced early this session. Originally, HB 40 was
scheduled for March 9, 1999 and was postponed until today.
Co-Chairman Halcro expressed frustration with the lack of substance
provided in the testimony today as well as the lack of testimony
from the departments. There is much opportunity for input, but no
one is providing any testimony. He agreed with Representative
Joule's comment that this committee has a commitment to listen to
the considerations of communities and regions. Co-Chairman Halcro
agreed that HB 40 should be held, but emphasized the need for
people to come forward to discuss this issue.
Number 0806
REPRESENTATIVE JOULE said that last year, it was very clear that
the Administration opposed HB 400. This year the testimony did not
provide out right support or opposition for this. Representative
Joule believed there would not be a lack of people at the table at
the next hearing. He noted that he has some concerns with HB 40.
If HB 40 seems to embody the will of the legislature,
Representative Joule hoped that communities will offer
recommendations. Representative Joule noted that any time he
criticizes something he attempts to offer a solution.
REPRESENTATIVE DYSON predicted that at the next hearing most of the
testimony will be negative. The rural areas will have a legitimate
concern that the rural interest will not be maintained and the
agencies will be uneasy. Representative Dyson was heartened that
the Administration recognizes that "business as usual" cannot
continue. Mr. Cotten's comments were particularly germane in that
no matter what is done with these departments, the effectiveness
ultimately lays in the goodwill, skill and experience of those who
are charged with the implementation. Representative Dyson said
that he favored reporting HB 40 out of committee. Representative
Dyson emphasized that HB 40 would make a strong policy statement
regarding the continuation and importance of the missions of the
individual organizations. If there is a motion to report HB 40 out
of committee, Representative Dyson said he would support that
motion. In conclusion, Representative Dyson reminded the committee
that it would be near miraculous if HB 40 moves through both bodies
of the legislature.
REPRESENTATIVE MORGAN agreed that HB 40 should be held in order for
the communities to come before the committee. He felt it
irresponsible for him not to allow those communities to speak.
There being no further public testimony, the public testimony was
closed. The committee took an at-ease from 9:58 a.m. to 10:02 a.m.
Number 1340
CO-CHAIRMAN HARRIS announced that HB 40 would be heard on March 25,
1999. He encouraged all interested parties to be prepared to
testify because it is the intent of the Chair to move HB 40 at the
next meeting. Co-Chairman Harris requested that there be a fiscal
note attached to HB 40 at the next hearing.
REPRESENTATIVE KOHRING thanked the committee for its time. He also
appreciated the concerns of the committee members.
ADJOURNMENT
There being no further business before the committee, the House
Community & Regional Affairs Standing Committee meeting was
adjourned at 10:03 a.m.
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