Legislature(1999 - 2000)

02/09/2000 09:05 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
GENERAL SUBJECT(S):    OVERVIEW:                                                                                                
PRESENTATION BY PUBLIC MEMBERS                                                                                                  
    OF THE COMMISSION ON PRIVATIZATION AND                                                                                      
    DELIVERY OF GOVERNMENTAL SERVICES                                                                                           
                                                                                                                                
The following overview was taken in log note format.  Tapes and                                                                 
handouts will be on file with the House Finance Committee through the                                                           
21st Legislative Session, contact 465-2156. After the 21st Legislative                                                          
Session they will be available through the Legislative Library at 465-                                                          
3808.                                                                                                                           
                                                                                                                                
Time Meeting Convened: 9:05 a.m.                                                                                                
                                                                                                                                
Tape(s):   HFC 00 - 29, Side 1                                                                                                  
  HFC 00 - 29, Side 2                                                                                                           
                                                                                                                                
                                                                                                                                
PRESENT:                                                                                                                        
                                                                                                                                
                                                                                                                                
Absent                                                                                                                          
Co-Chair Therriault                                                                                                             
X                                                                                                                               
Co-Chair Torgerson                                                                                                              
Absent                                                                                                                          
Co-Chair Mulder                                                                                                                 
X                                                                                                                               
Co-Chair Parnell                                                                                                                
X                                                                                                                               
Vice Chair Bunde                                                                                                                
X                                                                                                                               
Senator Adams                                                                                                                   
Absent                                                                                                                          
Representative Austerman                                                                                                        
X                                                                                                                               
Senator Donley                                                                                                                  
X                                                                                                                               
Representative J. Davies                                                                                                        
X                                                                                                                               
Senator Green                                                                                                                   
X                                                                                                                               
Representative G. Davis                                                                                                         
X                                                                                                                               
Senator P. Kelly                                                                                                                
Absent                                                                                                                          
Representative Foster                                                                                                           
X                                                                                                                               
Senator Leman                                                                                                                   
X                                                                                                                               
Representative Grussendorf                                                                                                      
Absent                                                                                                                          
Senator Phillips                                                                                                                
X                                                                                                                               
Representative Moses                                                                                                            
X                                                                                                                               
Senator Wilken                                                                                                                  
X                                                                                                                               
Representative Phillips                                                                                                         
                                                                                                                                
                                                                                                                                
X                                                                                                                               
Representative Williams                                                                                                         
                                                                                                                                
                                                                                                                                
ALSO PRESENT: SENATOR WARD; REPRESENTATIVE JOHN COWDERY; KATHRYN                                                                
THOMAS, COMMISSION MEMBER, COMMISSION ON PRIVATIZATION AND DELIVERY                                                             
OF GOVERNMENT SERVICES; MARCO PIGNALBERI, STAFF, REPRESENTATIVE JOHN                                                            
COWDERY; DON VALEKSO, COMMISSION MEMBER, COMMISSION ON PRIVATIZATION                                                            
AND DELIVERY OF GOVERNMENT SERVICES.                                                                                            
TESTIFIED VIA TELECONFERENCE:  BILL ALLEN, COMMISSION MEMBER,                                                                   
COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES;                                                                
GEORGE WEURCH, COMMISSION MEMBER, COMMISSION ON PRIVATIZATION AND                                                               
DELIVERY OF GOVERNMENT SERVICES; TOM FINK, COMMISSION MEMBER,                                                                   
COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES.                                                                
                                                                                                                                
LOG                                                                                                                             
SPEAKER                                                                                                                         
DISCUSSION                                                                                                                      
                                                                                                                                
TAPE HFC 00 - 29                                                                                                                
SIDE 1                                                                                                                          
                                                                                                                                
                                                                                                                                
000                                                                                                                             
CO-CHAIR TORGERSON                                                                                                              
Co-Chair Torgerson convened the Joint                                                                                           
House & Senate Finance Committee meeting                                                                                        
at 9:05 a.m. He voiced appreciation for                                                                                         
the work done on privatization by the                                                                                           
Commission. The final report was                                                                                                
distributed to Committee members.  [Copy                                                                                        
on File].  He noted that there would be                                                                                         
four presenters on teleconference.                                                                                              
025                                                                                                                             
REPRESENTATIVE                                                                                                                  
COWDERY                                                                                                                         
Introduced his staff and voiced his                                                                                             
appreciation for the work done by all                                                                                           
Commission members.                                                                                                             
035                                                                                                                             
MARCO PIGNALBERI,                                                                                                               
STAFF,                                                                                                                          
REPRESENTATIVE JOHN                                                                                                             
COWDERY                                                                                                                         
Pointed out the outstanding volunteer                                                                                           
effort.  Mr. Pignalberi noted that the                                                                                          
volume of work represented by the                                                                                               
subcommittee reports was extraordinary.                                                                                         
We have never seen such a prolific                                                                                              
contribution by Alaskan citizens to their                                                                                       
state government.  Mr. Pignalberi                                                                                               
commented that the State of Alaska needs                                                                                        
a better budget format.  If there is a                                                                                          
consistent theme that resounded from                                                                                            
nearly every subcommittee, it is this:                                                                                          
state budget documents are frustrating                                                                                          
and incomprehensible to the citizens of                                                                                         
the state. Subcommittee members and                                                                                             
Commissioners wanted to discover what                                                                                           
costs accompany specific activities                                                                                             
performed by state government. They could                                                                                       
not. The budget does not reveal the cost                                                                                        
of performing state services. The                                                                                               
services themselves are not well defined                                                                                        
and the cost of carrying them out is no                                                                                         
where to be found. It was frustrating for                                                                                       
subcommittee members. He suggested that                                                                                         
the budget structure and format do not                                                                                          
serve the public and should be changed or                                                                                       
supplemented to accommodate public                                                                                              
interest.                                                                                                                       
100                                                                                                                             
MR. PIGNALBERI                                                                                                                  
Continued, a review of privatization                                                                                            
commission work in other states indicates                                                                                       
that this is a widespread and fundamental                                                                                       
problem. It is fundamental because we                                                                                           
always want to know if a privatization                                                                                          
proposal will save money. Without the                                                                                           
ability to match costs to services                                                                                              
performed, there will be many cases in                                                                                          
which where we will not know if a saving                                                                                        
will accrue. One of the recommendations,                                                                                        
number 9, passed by the Commission, in                                                                                          
Table #5, deals with the issue. Its                                                                                             
supporting rationale is in Attachment #1.                                                                                       
It is provided as a handout.  [Copy on                                                                                          
File].  He invited members attention to                                                                                         
one comparison of that task                                                                                                     
Based Budget with the current budget.                                                                                           
(Table, Page 2)                                                                                                                 
                                                                                                                                
He asked that members compare that                                                                                              
information with the table, Page #3.                                                                                            
131                                                                                                                             
MR. PIGNALBERI                                                                                                                  
Mr. Pignalberi commented that                                                                                                   
privatization is a smart idea anywhere                                                                                          
but especially in Alaska. After the                                                                                             
federal government, State government is                                                                                         
the largest owner of Alaska's land and                                                                                          
resource wealth. Additionally, the State                                                                                        
owns the $28 billion Permanent Fund, the                                                                                        
Alaska Railroad, the most extensive ferry                                                                                       
system in the U.S., all airport gateways                                                                                        
into the state, more than 250 rural                                                                                             
airports, a fleet of aircraft, fish                                                                                             
hatcheries, major roads within local                                                                                            
government jurisdictions, a variety of                                                                                          
laboratories, most docks and harbors, a                                                                                         
rocket launch facility, a dairy and more.                                                                                       
Additionally, the state owns every major                                                                                        
hydro-electric dam, the main electrical                                                                                         
transmission grid, one eighth of the oil                                                                                        
flowing through the oil pipeline and is                                                                                         
the major financier for residential                                                                                             
housing and development financing within                                                                                        
Alaska. This unique preponderance of                                                                                            
government ownership and control                                                                                                
inevitably leads to government growth,                                                                                          
often at the expense of private sector                                                                                          
growth.                                                                                                                         
169                                                                                                                             
MR. PIGNALBERI                                                                                                                  
Privatization cannot be accomplished by                                                                                         
occasional foray. It is clear that some                                                                                         
longer-term mechanism should be put in                                                                                          
place to carry on the work begun here.                                                                                          
? The first step is to begin immediate                                                                                          
consideration of the 20                                                                                                         
recommendations adopted by the                                                                                                  
commission.                                                                                                                     
? The second step is to enact some                                                                                              
version of the proposed legislation                                                                                             
requiring the Executive Branch to                                                                                               
identify activities that are                                                                                                    
inherently non-governmental and to                                                                                              
provide for privatizing those that are                                                                                          
not.                                                                                                                            
184                                                                                                                             
MR. PIGNALBERI                                                                                                                  
 FAIRA requires the agency to make the                                                                                          
list public after consultation with the                                                                                         
Office of Management and Budget. Then,                                                                                          
whenever a non-inherently governmental                                                                                          
activity is proposed for outsourcing, the                                                                                       
federal agency must use a competitive                                                                                           
procurement process that allows the                                                                                             
federal work force to compete with the                                                                                          
private sector.                                                                                                                 
FAIRA does not mandate privatization. Its                                                                                       
importance is that it provides a process                                                                                        
to:                                                                                                                             
? Identify government activities that                                                                                           
are not inherently governmental in                                                                                              
nature; and                                                                                                                     
? flush out full costs for performance                                                                                          
of certain tasks by government                                                                                                  
220                                                                                                                             
MR. PIGNALBERI                                                                                                                  
Mr. Pignalberi noted that the jury is                                                                                           
still out about Alaska's involvement in                                                                                         
privatization. Legislation like FAIRA                                                                                           
will provide the basis for long term,                                                                                           
consistent effort toward privatization.                                                                                         
At Representative Cowdery's request,                                                                                            
FAIRA has been given a sister for                                                                                               
Alaska's statutes, named SAIRA, the State                                                                                       
Activities Inventory Reform Act.                                                                                                
230                                                                                                                             
KATHRYN THOMAS,                                                                                                                 
COMMISSION MEMBER,                                                                                                              
COMMISSION ON                                                                                                                   
PRIVATIZATION AND                                                                                                               
DELIVERY OF                                                                                                                     
GOVERNMENT SERVICES,                                                                                                            
& THE ALASKA STATE                                                                                                              
CHAMBER OF COMMERCE,                                                                                                            
HOMER                                                                                                                           
Noted how important the Commission has                                                                                          
been to the Alaska State Chamber of                                                                                             
Commerce.  She spoke to the work of the                                                                                         
Subcommittee.  To seriously consider                                                                                            
privatization in the State, there must be                                                                                       
a mechanism available with a set of goals                                                                                       
to identify different functions of the                                                                                          
government, and to analyze how best save                                                                                        
money.                                                                                                                          
253                                                                                                                             
MS. THOMAS                                                                                                                      
Would to see the Commission charged with                                                                                        
developing a budget process so that                                                                                             
everyone in the State would become                                                                                              
accountable for the budget.  Each person                                                                                        
would have the responsibility how the                                                                                           
money in the State is spent.  She                                                                                               
suggested that there could also be an                                                                                           
Audit Committee to help the original                                                                                            
Committee provide the evaluation.                                                                                               
268                                                                                                                             
DON VALESKO,                                                                                                                    
COMMISSION MEMBER,                                                                                                              
COMMISSION ON                                                                                                                   
PRIVATION AND                                                                                                                   
DELIVERY OF                                                                                                                     
GOVERNMENT SERVICES                                                                                                             
Noted that he had distributed a handout.                                                                                        
[Copy on File].  He commented that                                                                                              
serving on the Commission was an exercise                                                                                       
in frustration.  He stated that the                                                                                             
Commission had an impossible mission                                                                                            
which was evidenced by the final report.                                                                                        
The Commission staff performed admirably                                                                                        
under a tremendous workload and a very                                                                                          
short time frame.  He commented that the                                                                                        
loyal staff did everything they could to                                                                                        
insure their superiors' wishes were                                                                                             
carried out.                                                                                                                    
301                                                                                                                             
MR. VALESKO                                                                                                                     
Suggested that the Commission staff                                                                                             
process of the subcommittees was                                                                                                
deplorable.  The focus they were given                                                                                          
was very near-sighted and the time in                                                                                           
which they were expected to make informed                                                                                       
decisions was woefully inadequate.  The                                                                                         
subcommittee selection process was done                                                                                         
entirely by the Co-Chairman and staff.                                                                                          
Partisan politics appeared to have played                                                                                       
a major role in the selection of the                                                                                            
subcommittee members.  Definite patterns                                                                                        
of significant conflicts of interest                                                                                            
appeared in almost every subcommittee.                                                                                          
328                                                                                                                             
MR. VALESKO                                                                                                                     
Noted that the research and review of                                                                                           
each department was superficial at best.                                                                                        
With the inadequate amount of time                                                                                              
subcommittees were allotted, it was                                                                                             
impossible to educate and inform the                                                                                            
members.  The commission did not require                                                                                        
the subcommittee to require a                                                                                                   
cost/benefit analysis of their                                                                                                  
recommendations.  Consequently, all the                                                                                         
recommendations did not have any                                                                                                
information regarding the cost                                                                                                  
effectiveness of each recommendation.  He                                                                                       
added that a conflict of interest                                                                                               
prevailed in each of the subcommittees.                                                                                         
There were many private industries that                                                                                         
sat on the subcommittee and continued to                                                                                        
represent only their personal interest.                                                                                         
He suggested that the State is often                                                                                            
doing the work cheaper than the private                                                                                         
sector can.                                                                                                                     
354                                                                                                                             
MR. VALESKO                                                                                                                     
Listed the problems occurring within the                                                                                        
commission:                                                                                                                     
? Time constraints flawed Commission's                                                                                          
ability to deliver a realistic                                                                                                  
product;                                                                                                                        
? Cursory contact with affected public                                                                                          
and affected employees;                                                                                                         
? Appalling press relations; and                                                                                                
? No cost/benefit analysis.                                                                                                     
377                                                                                                                             
MR. VALESKO                                                                                                                     
Concluded that after hearing the                                                                                                
abbreviated presentation of each of the                                                                                         
subcommittees, the full commission                                                                                              
decided to forego a formal process of                                                                                           
reviewing each subcommittee's                                                                                                   
recommendations.  Instead, each                                                                                                 
commissioner put together his/her own                                                                                           
list of recommendations.                                                                                                        
385                                                                                                                             
BILL ALLEN,                                                                                                                     
COMMISSION MEMBER,                                                                                                              
COMMISSION ON                                                                                                                   
PRIVATIZATION AND                                                                                                               
DELIVERY OF                                                                                                                     
GOVERNMENT SERVICES,                                                                                                            
FAIRBANKS,                                                                                                                      
(TESTIFIED VIA                                                                                                                  
TELECONFERENCE)                                                                                                                 
Noted that the work requested by the                                                                                            
Commission was very broad.  He stressed                                                                                         
that the size of the job with regard to                                                                                         
the time that it was allocated was a                                                                                            
large undertaking.  He urged that members                                                                                       
study the proposed plan.  Mr. Allen                                                                                             
suggested that the plan could contain the                                                                                       
first step, which should show                                                                                                   
opportunities for bettering the State                                                                                           
services.  He recommended that the                                                                                              
Commission's work time be extended in                                                                                           
order to provide better details and                                                                                             
further backup, stressing the necessity                                                                                         
of that action in order to address the                                                                                          
true oversight of the Commission's work                                                                                         
for the Legislature's consideration.  He                                                                                        
concluded, noting that the work had been                                                                                        
a good service for the State.                                                                                                   
419                                                                                                                             
GEORGE WEURCH,                                                                                                                  
COMMISSION MEMBER,                                                                                                              
COMMISSION ON                                                                                                                   
PRIVATIZATION AND                                                                                                               
DELIVERY OF                                                                                                                     
GOVERNMENT SERVICES,                                                                                                            
FAIRBANKS,                                                                                                                      
(TESTIFIED VIA                                                                                                                  
TELECONFERENCE)                                                                                                                 
Voiced his appreciation for being asked                                                                                         
to serve on this Commission.  He                                                                                                
acknowledged that when combining such a                                                                                         
group, there is bound to be advocates for                                                                                       
various viewpoints and interests. Mr.                                                                                           
Weurch advised that the fact that there                                                                                         
were different points of view should not                                                                                        
invalidate the submitted study.  There                                                                                          
are common themes reoccurring throughout                                                                                        
the material with the search for                                                                                                
efficiency and common services for                                                                                              
residents of the State.                                                                                                         
430                                                                                                                             
MR. WEURCH                                                                                                                      
Pointed out that local governments are                                                                                          
striving to deal with reduced revenue                                                                                           
streams.  He hoped that would be                                                                                                
addressed through private sector                                                                                                
activities.  He commented that "being a                                                                                         
owner State" should not be confused with                                                                                        
"being an operating State".  He pointed                                                                                         
out that many people are more than happy                                                                                        
being employed in the private sector and                                                                                        
that it does not necessarily spell "doom                                                                                        
and disaster".  Mr. Weurch addressed the                                                                                        
fact that the government needs to be                                                                                            
addressing the missions, goals and                                                                                              
objectives when determining                                                                                                     
privatization.                                                                                                                  
465                                                                                                                             
TOM FINK, COMMISSION                                                                                                            
MEMBER, COMMISSION                                                                                                              
ON PRIVATIZATION AND                                                                                                            
DELIVERY OF                                                                                                                     
GOVERNMENT SERVICES,                                                                                                            
ANCHORAGE,                                                                                                                      
(TESTIFIED VIA                                                                                                                  
TELECONFERENCE)                                                                                                                 
Advised that the Commission had provided                                                                                        
the legislature with a source book.  He                                                                                         
applauded that work undertaken by                                                                                               
Committee.  He believed that substantial                                                                                        
amounts of money that could be saved                                                                                            
through extending the propositions                                                                                              
itemized through the work of the                                                                                                
Commission.                                                                                                                     
477                                                                                                                             
SENATOR JERRY WARD                                                                                                              
Commented that each aspect had not been                                                                                         
thoroughly detailed.  He suggested that                                                                                         
was work would be best done in the House                                                                                        
and Senate Finance Committees.  He                                                                                              
explained that the consideration of the                                                                                         
Commission was if the work currently done                                                                                       
could be done at the same level of                                                                                              
adequacy, service and cost as performed                                                                                         
by the State.  He urged that the Finance                                                                                        
Committee's consider these facts.                                                                                               
495                                                                                                                             
SENATOR AL ADAMS                                                                                                                
Noted that he also worked with the                                                                                              
Commission.  He applauded the work of all                                                                                       
the volunteers, while acknowledging that                                                                                        
some of the volunteers did have a                                                                                               
conflict of interest.  Senator Adams                                                                                            
agreed that the time frame given to                                                                                             
perform the work was too short.  He                                                                                             
stressed that the work of privatization                                                                                         
is a major consideration and that the                                                                                           
State must develop methods for the                                                                                              
transition.  He acknowledged that there                                                                                         
are many prospects for being privatized,                                                                                        
and equally important there are many                                                                                            
concepts that should not be considered                                                                                          
for the health, welfare and safety of                                                                                           
Alaskans.  He pointed out the work of the                                                                                       
Department of Corrections and prisons.                                                                                          
He urged that such considerations be                                                                                            
scrutinized closely.                                                                                                            
515                                                                                                                             
SENATOR ADAMS                                                                                                                   
Reiterated the need for qualify of                                                                                              
service as currently being received by                                                                                          
the Alaska State residents.  Another                                                                                            
consideration is the benefit package that                                                                                       
the employees receive and how that can be                                                                                       
met.  A cost savings will exist which                                                                                           
should be considered.                                                                                                           
525                                                                                                                             
CO-CHAIR PARNELL                                                                                                                
Advised that he had requested that all                                                                                          
subcommittee chairs review the proposals                                                                                        
of the Commission so that every                                                                                                 
recommendation would be considered within                                                                                       
the appropriate subcommittee and                                                                                                
discussed at the level.  He acknowledged                                                                                        
that there are numerous avenues in which                                                                                        
the work could be incorporated.  He                                                                                             
agreed that it should be brought before                                                                                         
the full Finance Committees for approval.                                                                                       
                                                                                                                                
SENATOR ADAMS                                                                                                                   
Reiterated that it is essential that                                                                                            
guaranteed cost savings be considered.                                                                                          
541                                                                                                                             
REPRESENTATIVE J.                                                                                                               
DAVIES                                                                                                                          
Added his concern that the time period                                                                                          
undertaken to do the study was too short.                                                                                       
He added that he was concerned that the                                                                                         
mission, which had been directed, was                                                                                           
toward privatization.  He asked that both                                                                                       
avenues should be considered.                                                                                                   
549                                                                                                                             
REPRESENTATIVE J.                                                                                                               
DAVIES                                                                                                                          
Referenced the detail books and the                                                                                             
amount of information included in each                                                                                          
consideration.  He requested that Mr.                                                                                           
Valesko respond to the recommendations.                                                                                         
556                                                                                                                             
MR. VALESKO                                                                                                                     
Responded that there were over 400                                                                                              
different subcommittee recommendations                                                                                          
made.  He pointed out that in the final                                                                                         
process, only information was taken from                                                                                        
the member commissioners.  The final list                                                                                       
of recommendations contained only 200 or                                                                                        
+ of the material initially presented.                                                                                          
567                                                                                                                             
SENATOR ADAMS                                                                                                                   
Countered that all members were given                                                                                           
opportunity to provide recommendations.                                                                                         
He commented that everyone played with                                                                                          
the same rules and that each item was                                                                                           
voted upon.                                                                                                                     
579                                                                                                                             
CO-CHAIR TORGERSON                                                                                                              
Pointed out that there are statutory                                                                                            
requirements in law, which must be                                                                                              
addressed in order to implement these                                                                                           
concerns.  What has been presented are                                                                                          
only recommendations for the Legislature                                                                                        
to consider.                                                                                                                    
589                                                                                                                             
SENATOR LEMAN                                                                                                                   
Agreed that this report is a good start                                                                                         
in the consideration on privatization. He                                                                                       
reiterated that there are many good ideas                                                                                       
contained in the report.  He agreed that                                                                                        
not all the recommendations would save                                                                                          
money and he recommended that the process                                                                                       
continue to stay active.  He asked if                                                                                           
impediments had been identified that                                                                                            
would not improve the delivery of                                                                                               
services and additionally, how these                                                                                            
concerns would be paid for.                                                                                                     
                                                                                                                                
TAPE CHANGE 00 - 29                                                                                                             
SIDE 2                                                                                                                          
                                                                                                                                
584                                                                                                                             
SENATOR LEMAN                                                                                                                   
Questioned if items had been considered                                                                                         
which keep the State from making progress                                                                                       
toward the goal.                                                                                                                
580                                                                                                                             
MR. PIGNALBERI                                                                                                                  
 Of the 408 recommendations advanced by                                                                                         
the subcommittees and commissioners, the                                                                                        
assembled commission considered 26.                                                                                             
Twenty were adopted and 5 failed. One was                                                                                       
adopted and rescinded.                                                                                                          
 The full reports, with all their                                                                                               
attachments have been submitted to:                                                                                             
? the Governor,                                                                                                                 
? the Senate President, and                                                                                                     
? the Speaker of the House                                                                                                      
564                                                                                                                             
SENATOR LEMAN                                                                                                                   
Applauded the process made to allow the                                                                                         
considerations to become simpler.  He                                                                                           
recommended that considerations from this                                                                                       
study be closely scrutinized.                                                                                                   
555                                                                                                                             
MR. PIGNALBERI                                                                                                                  
In response to Representative J. Davies,                                                                                        
Mr. Pignalberi pointed out that the                                                                                             
detail budget book does contain current                                                                                         
information but the current budget does                                                                                         
not relate those expenses to the work                                                                                           
performed.  The Commission is speaking to                                                                                       
relating the costs identified with the                                                                                          
work product.                                                                                                                   
550                                                                                                                             
CO-CHAIR TORGERSON                                                                                                              
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 9:59 A.M.                                                                                              
                                                                                                                                
                                                                                                                                
JOINT HOUSE & SENATE FINANCE COMMITTEE                                                                                          
LOG NOTES                                                                                                                       
February 9, 2000                                                                                                                
                                                                                                                                
H.F.C. & S.F.C. 9 2/09/00                                                                                                       
                                                                                                                                

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