Legislature(2003 - 2004)
02/26/2003 03:07 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 26, 2003
3:07 PM
TAPE HFC 03 - 27, Side A
TAPE HFC 03 - 27, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 3:07 PM.
MEMBERS PRESENT
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Eric Croft
Representative Mike Chenault
Representative Mike Hawker
Representative Carl Moses
Representative Jim Whitaker
MEMBERS ABSENT
Representative John Harris, Co-Chair
Representative Richard Foster
Representative Reggie Joule
Representative Bill Stoltze
ALSO PRESENT
Steve White, Assistant Attorney General, Department of Law;
Nancy Slagle, Director, Division of Administrative Services,
Department of Transportation and Public Facilities; Karen
Morgan, Director, Division of Administrative Services,
Department of Public Safety; Larry Persily, Deputy
Commissioner, Department of Revenue
PRESENT VIA TELECONFERENCE
Howard Starbard, Capt., Director, Division of Fish and
Wildlife Protection, Department of Public Safety; Cam
Leonard, Assistant Attorney General
SUMMARY
HB 100 "An Act making supplemental and other
appropriations; amending appropriations; and
providing for an effective date."
HB 100 was HEARD and HELD.
HB 110 "An Act making supplemental and other
appropriations; amending appropriations; making
appropriations to capitalize funds; and providing
for an effective date."
HB 110 was HEARD and HELD.
DEPARTMENT OF LAW BRIEFING IN EXECUTIVE SESSION:
CARLSON V. CFEC
Co-Chair Williams called the Committee to order at 3:05 pm.
They entered immediately into EXECUTIVE SESSION.
HOUSE BILL NO. 100
"An Act making supplemental and other appropriations;
amending appropriations; and providing for an effective
date."
HOUSE BILL NO. 110
"An Act making supplemental and other appropriations;
amending appropriations; making appropriations to
capitalize funds; and providing for an effective date."
The regular session RECONVENED at 3:48 pm. Co-Chair Harris
brought forward a letter from Cheryl Frasca, Director,
Division of Management & Budget, Office of the Governor,
regarding an appropriation of $100 thousand from the General
Fund. He explained that the funds are requested for the
Department of Environmental Conservation for legal services
provided from the Department of Law, representing the
State's petition before the United States Supreme Court in
the Red Dog Mine air permit dispute with the Environmental
Protection Agency (EPA). Co-chair Harris stated that this
appropriation would be added to the current supplemental
requests.
DEPARTMENT OF PUBLIC SAFTEY
Section 5, Fast Track Supplemental
Increased costs for vehicle, heating oil, electricity,
airplane and helicopter fuel
KAREN MORGAN, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF PUBLIC SAFETY, explained that the Department
was seeking an appropriation of $229.3 thousand for
increased fuel costs. She recalled past supplemental
requests for fuel cost changes, and noted that it was
difficult to budget for such changes. She noted that the
budget for the Department of Fish and Game had not been
increased to cover costs for fuel.
Responding to a question from Co-Chair Harris, Ms. Morgan
explained that the request simply addressed a change in the
price of fuel, which had increased by as much as 60% in some
areas, and not a change in the amount. She also noted that
no addition in personnel corresponded to this request.
HOWARD STARBARD, CAPT., DIRECTOR, DIVISION OF FISH AND
WILDLIFE PROTECTION, DEPARTMENT OF PUBLIC SAFETY testified
via teleconference. He confirmed that there was no increase
of personnel. He went on to clarify that seasonal hiring
was in process, while other personnel were on seasonal leave
without pay. He affirmed that the increase only addressed
fuel costs.
Co-Chair Harris pointed out the language in the request that
referred to personnel ("to hire authorized seasonal support
and support personnel") and asked if this was indeed a
factor.
Mr. Starbard noted that this was an approach to create a
cost savings in personnel if the supplemental was not
funded, but that the actual request was due to fuel cost
increases only.
Representative Croft asked whether a $154 thousand increment
was requested last fiscal year for fuel costs.
Mr. Starbard responded that the Department had indeed asked
for an increment to offset known fuel cost increases.
Responding to another question from Representative Croft,
Ms. Morgan confirmed that the request was denied by the
legislature.
Representative Croft asked why, when the legislature did not
allocate the funding, the Department did not take the budget
steps to absorb the decrement.
Ms. Morgan acknowledged that there were options for managing
the increase, such as not filling seasonal positions and
cutting back on patrols in fisheries. She also stated that,
since the Department did not recommend these options, they
sought supplemental funding.
Representative Croft clarified whether the question in fact
was still about fuel, or whether it was about sustaining
certain programs and services.
Ms. Morgan maintained that the issue was definitely about
fuel. She noted that the possible discontinuation of
programs would only be considered if they did not receive
the supplemental funding.
Representative Hawker asked how many flight hours would not
occur if the request were not funded.
Mr. Starbard responded that the amount of specific efforts
corresponding with the request had not been identified. He
maintained that significant restrictions would certainly be
imposed if the request were not funded.
Representative Hawker speculated as to whether an increment
in maintenance and support costs also corresponded with the
request.
Ms. Morgan confirmed that this was the extent of the
request, and that resources existed to fund other expenses.
Representative Hawker asked if these resources could be
reallocated to cover fuel costs and flight hours.
Ms. Morgan stated that the Department had thoroughly
examined their budget and found savings to mitigate the
costs of increases, which were initially $250 thousand.
Co-Chair Harris asked whether the Department operated the
aircraft used by the Governor. Ms. Morgan confirmed that
this was true. He asked if the aircraft had been over-
expended during the first six months of the fiscal year.
Ms. Morgan explained that there were two separate RSA's for
the aircraft for accounting purposes to clarify the
transition between administrations.
Co-Chair Harris continued to inquire whether the entire
budget for that aircraft fuel had been expended in the first
six months, and whether this accounted for any of the
request.
Ms. Morgan stated that this did not affect the supplemental
request. She, along with Mr. Starbard, confirmed that the
governor's aircraft was not included in this request.
FISH AND GAME FUND
Section 6
Revise language appropriating criminal fines, penalties
and forfeitures into the Fish and Game Fund based upon
an analysis conducted by the Department of Public
Safety and the Court System.
Ms. Morgan discussed the history of the change in language,
referring to a 1997 appropriation to Fish and Wildlife as a
result of criminal fines, penalties and forfeitures. She
explained that the court system could not adequately
estimate the amount deposited in the General Fund from these
fines. She noted that the Department entered records into
the Public Safety Information System from the court system
and developed an estimate. Each year the amount was
verified and forwarded to the Division of Finance and an
account transfer was completed. She went on to explain that
this year the system was being changed to allow for more
adequate estimates, but could not yet adequately predict
amounts. The Division of Finance recommended language
changes in the bill (Section 16 (b)) that would more
accurately reflect the current process.
Responding to a question by Co-Chair Harris, Ms. Morgan
stated that the amount of the transfer was the amount
adjudged by the court system. The court system collects the
money and it is then deposited into the General Fund.
Representative Croft asked why, if deposits were only what
was collected, it was not simply accounted for as ordered.
He asked if there was a general fund component.
Ms. Morgan conceded that there was a lack of clarity
surrounding this amount. She stated that the court system
collected a sizable portion of the amount, and then turned
non-collections over to the Department of Law. She pointed
out that the court system does not actually account for
specific criminal fines and forfeitures, so they cannot
report the actual amount of collections.
Representative Croft followed up that someone must know the
actual amount collected, even if they could report only the
amount charged.
Ms. Morgan noted that it is not the Department's
responsibility to document what was actually collected. She
noted that the process had been to account for the amount
ordered by a judge, but they realized this year that the
amounts were only an estimate and not an actual.
Representative Croft asked why the funds were not
differentiated when received.
Ms. Morgan conceded that the Department of Law could report
the amount of fees that were collected. She also noted that
the Department could not accurately reflect the amount due
to fish and game fines, since they only dealt with bad debt.
Representative Hawker requested further research into this
issue, and expressed concern over this lack of knowledge in
our financial system.
Representative Croft suggested two solutions: either to
project based on what was fined, or to budget based on what
was actually collected, and expressed his preference for the
latter.
Miscellaneous Claims
Section 16 (9)
Miscellaneous Claims and Stale-dated Warrants $47.50
Ms. Morgan explained that the claim was a result of a bill
for long distance and facsimile usage as a result of an
investigation in a community.
Section 17
Ratification of $2,615 for an RSA with the Department
of Transportation for an advertising campaign. The RSA
was closed out before the last billing was received.
DEPARTMENT OF REVENUE
Section 6 of Fast Track
Additional bond issuance costs
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
addressed the requested authority to expend $142 thousand in
receipts for the Alaska Municipal Bond Bank Authority. He
explained that the budget for the current year was $522
thousand in receipts, based on projections from the prior
year. He stated that more debt would be issued this year
for additional municipal projects. He pointed out that this
was not a liability of the State but rather of the
municipalities. He noted that in FY 03 they had already
considered issuing debt for a number of municipal projects,
and that the supplemental was to ensure timeliness in
entering the bond market and building during construction
season.
Section 13, Regular Supplemental
Contractual expenses for hearing officers for increased
number of formal hearings in contested liquor license
complaints and suspensions, and staff travel and per
diem for hearings.
Mr. Persily explained that the request was for $26 thousand
for the Alcohol Beverage Control (ABC) Board. He noted
that the ABC Board expected several more appeal hearings.
Each hearing costs approximately $5-6 thousand. He stressed
that the ABC Board had never experienced as many hearings
before. He stated that the requested was to be funded with
program receipts from licensing.
Representative Croft asked why the request was listed as
General Fund. He also asked if they were truly unexpected
costs.
Mr. Persily pointed out that the request was for authority
to expend receipts, and that authority was not open ended.
Representative Croft also asked whether a $134 thousand
increment had been previously requested.
Mr. Persily confirmed that the ABC board had asked for two
increments of $36 thousand that were denied. He noted that
the current request was lower due to fewer hearings.
Section 15A
The appropriation in sec 31(e), ch 94, SLA 2002, pg 71,
lines 12-19 to pay airport bond debt is short $2000.00
Mr. Persily discussed the request of funds for the
International Airport Revenue Fund.
Responding to a question by Co-Chair Harris, Mr. Persily
noted that, although it pertains to an airport facility,
Section 14b might better be addressed by the Department of
Transportation.
DEPARTMENT OF TRANSPORATION (DOT)
Section 7a of the Fast Track
Title change: Nondalton: Airport Resurfacing to
Nondalton: Airport Improvements and Airport Layout Plan
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
discussed the title change of the Dalton airport project.
She explained that last year a request was submitted for two
projects. The FAA requested that the two projects be
combined into one grant. Changes occurred requiring a change
of name in order to combine the two projects.
Section 7(b)
Title change: Anchorage: Muldoon Road Landscaping and
Pedestrian Improvements - Glenn Highway to 36th Avenue
to ". . . Improvements - Regal Mountain to Bartlett
Drive
Ms. Slagle explained the location of the Regal Mountain
project. She noted that the request allowed an expansion of
the original project, which also required a name change from
the amendment process.
Section 7(c)
Title change: Juneau West Douglas Highway Extension to
Juneau: Gastineau Channel Second Crossing
Ms. Slagle noted that the request was for a name change, and
pointed out that the name was changed in a congressional
appropriation bill, but was not complete. She stated that
the city was in support of the change in order to go forward
with project research.
Representative Croft asked for clarification as to the
definition of name change. He speculated that, since the
project was changed from a road to a bridge, this stretched
the definition of a name change.
Ms. Slagle agreed that the project had indeed changed, but
noted that the city was in support of the project.
Responding to a further comment by Representative Croft, Ms.
Slagle conceded that one could instead issue a repeal and
re-appropriation. She pointed out that without the name
change the previously appropriated funds could not be used.
Representative Croft observed that this might not be the
proper use of the name change mechanism. He suggested that
this could lead to misuse of this type of process.
Section 7 (d & e)
Title change: Nunapitchuk Resurfacing and Lighting to
Nunapitchuk Airport Relocation (SLA 2001) and Title
change: Nunapitchuk Resurfacing and Lighting to
Nunapitchuk Airport Relocation (FSSLA 1999)
Ms. Slagle explained that the Nunapitchukk airport needed to
be shifted over in order to be appropriately extended. She
stressed that more than a resurfacing was necessary. She
stated that the project also includes a snow removal
equipment building and overhead power lines.
Section 7 (f)
Restore highways and maintenance cuts as directed by
Governor Murkowski on Dec 12.
Ms Slagle discussed the need for $2.5 million to restore
maintenance and operations of the Department. She explained
that the Department had contended with budget cuts and
closed several maintenance stations, resulting in the layoff
of 40 personnel. The Department had subsequently determined
that adequate highway maintenance was not possible with
those resources. She stated that the Governor decided to
restore the stations and personnel to continue adequate road
maintenance.
Co-Chair Harris asked whether the Department could absorb
the cuts with any other budgetary items.
Ms. Slagle responded that no other portion of the Department
could absorb such a substantial cut. She noted that
approximately 85 percent of the General Fund budget was for
maintenance and operations.
Co-Chair Harris observed that, with such little snowfall in
the current year, perhaps the amount for road maintenance
might be reduced.
Ms. Slagle pointed out that a large amount of snow was
present in some areas, combined with warmer temperatures in
the fall, causing the need for more winter chemicals to deal
with ice on roads. She concluded that, although the
expenditures may be different, a great deal of maintenance
was still needed.
TAPE HFC 03 - 27, Side B
Ms. Slagle conceded the possibility of reducing some costs
in other areas, but stated that maintenance was a fixed
cost.
Representative Croft maintained that essentially the
Department was deciding not to take a budget cut. He asked
by what authority, given the knowledge of budget reductions
required in FY 03, the Department would not implement
necessary cuts.
Ms. Slagle maintained that the Department had indeed
implemented the required budget cuts. She further stated
that the new Governor had issued directives to reopen the
maintenance stations.
Representative Croft emphasized that the question at hand
was of constitutional authority for appropriation. He
stressed that the legislature must expect Departments to
adhere to budgetary decisions.
Ms. Slagle explained that, if the request were not funded,
layoffs would occur and maintenance stations would again be
closed.
Representative Croft reiterated his belief that, if this
procedure were followed by the supplemental, it negated the
budgeting process and made it non binding.
Co-Chair Harris concurred with Representative Croft and
committed to investigating such patterns.
Section 7g
Central Region Planning new capital project:
Dillingham-Aleknagik Road Milepost 8-23 Resurfacing.
Accelerated in the STIP to coincide with the airport
runway-repaving project scheduled for summer of 2003.
Ms. Slagle discussed request of $8.2 million for the
Dillingham airport runway-repaving project, scheduled to
occur in April. She noted that if the Department delayed
funding until July, it would delay construction during the
appropriate season.
Responding to a question by Co-Chair Harris, Ms. Slagle
stated that the project was part of the FY 04 budget, and
was being accelerated by a few months. She explained that
the 9 percent funding match was part of the overall program.
Representative Joule asked what kind of surface would be
used.
Ms. Slagle speculated that since the road would be
resurfaced, that gravel would not be used.
Representative Joule asked if consideration was given to
dust problems when gravel was used.
Ms. Slagle noted the Department's research done into that
concern.
Section 7(h)
Central Region Planning new capital project:
Glenn Highway Intersection Improvements & Resurfacing,
Gambell to McCarrey. Accelerated in STIP to address
increasing deterioration of the roadway surface.
Ms. Slagle discussed the $6 million in Federal Receipts for
the Glenn Highway intersection improvement, and noted the
desire to accelerate the project by a few months in order to
take advantage of the full construction season. She pointed
out problems with extreme deterioration of the road surface.
Co-Chair Harris asked whether there were roads in Fairbanks
that could receive accelerated construction.
Ms. Slagle responded that she was unaware of any projects in
that area that were critical and ready for early
construction.
Co-Chair Harris referenced his participation on a delegation
in which mention was made of road projects in Fairbanks that
had been delayed.
Representative Foster observed that whenever one road
project was accelerated, other projects were forced to wait.
He pointed out that, in his area and other rural area, roads
often had to wait several years.
Co-Chair Harris concurred that projects should be handled in
order and questioned how that order was determined or
altered.
Ms. Slagle responded that she did not participate in the
project evaluation boards that rank projects for
construction.
Section 7j
Barrow runway apron paving and safety area expansion
project.
Ms. Slagle discussed the request for $4.9 million. She
noted that the problem with the Barrow project was that the
bids came in higher than anticipated. She also stressed the
narrow window of construction ability in such an area, and
explained that if the window was missed, it could delay the
project by as much as five years. She noted that there were
only two paved runways in the world that were north of
Barrow.
Section 14a of the Regular Supplemental
Carry forward excess Whittier Tunnel toll revenue above
FY2002 appropriation to comply with federal code
requiring all toll revenue to be spent on the toll
facility. 819.1
Ms. Slagle discussed the request for authority to expend, in
FY 03, $819.1 thousand of unused toll revenue collected by
the Whittier Tunnel in FY 02. She explained that under
federal it was necessary to use collected tolls first for
debt service and then for maintenance and operation. The
requirements also specified that excess income could only go
to another highway project. She stressed the need to carry
forward revenues in order to support maintenance for the
tunnel in this year.
Co-Chair Harris clarified that the amount reflected fees
from tolls, totaling $819 thousand.
Ms. Slagle pointed out that receipt supported services
authority currently existed in the budget, and that the
revenues simply support this authority. She proposed that,
in the case that revenues came in below projections, revenue
from the prior year could then support the budget.
Co-Chair Harris asked if the funds could be used to lower
the cost of the tunnel. Ms. Slagle confirmed that it would
be used for tunnel maintenance and operations.
Representative Hawker asked for detailed plans for the
expenditure of the funds. Ms. Slagle reiterated that the
Department was not increasing their budget authority, but
rather seeking to direct revenues toward an existing
authority. She maintained that the request was inaptly fit
into the automated budget format, but that was simply for
the revenue and not the expenditure authority.
Representative Hawker clarified that the money would be used
for maintenance. He suggested that the Department consider
that it be used to keep the tunnel open longer.
Representative Croft asked for clarification on whether the
revenues were initially integrated into the General Fund,
and now were being segregated from the General Fund, or if a
separate fund had existed all along.
Ms. Slagle explained that this was revenue collected last
year, not spent on the tunnel, which they desired to bring
forward to use for maintenance.
Representative Croft asked if we should therefore lower the
fee for the tunnel, since its seemed to be generating a
profit.
Ms. Slagle explained that tolls were just a portion of the
operating revenue, and that federal funds were also used for
maintenance. She noted that last year more money was spent
out of federal funds than receipt revenues. This request
brings forward the toll revenues for use in maintenance.
Co-Chair Harris asked if these federal funds would sunset at
some point.
Ms. Slagle suggested that the Administration consider a plan
for the continuation for the Whittier Tunnel, and decide how
much federal money to dedicate toward the tunnel in the long
term.
Section 14(b)
Federal Homeland authority fund source switch from
federal funds to International Airport Revenue Fund for
mandated security activities at Fairbanks airport.
Ms. Slagle explained that the Fairbanks International
Airport received federal receipt authority related to
Homeland Security to deal with increased security needs.
She stated that, based on security needs, staff was
increased. She pointed out that these federal funds did not
come forward, either from TSA or Federal Aviation
Administration (FAA). They were requesting a source change
from federal receipts to international airport revenue funds
to cover increased expenses.
Co-Chair Harris asked why the funds were available for the
Anchorage Airport and not for Fairbanks.
Ms. Slagle explained that the two airports' budgets were of
different sizes. She noted that Anchorage was able to make
adjustments from their existing budget, even though they did
not receive federal funds either.
Responding to a follow up question by Representative Croft,
Ms. Slagle explained that federal grants were made available
and were applied for and that limited funds were received.
She stated that the funding subsequently ended with no
opportunity to recover costs.
Section 14 (c)
Increased costs per negotiated contract with the
Confidential Employees Association, retroactive to
September 2001 and full FY 2003 costs. 72.6
Ms. Slagle discussed $72.6 thousand in increased costs
associated with a classification study completed in July.
The study was initiated by labor management committee
recommendations. She noted that, after the survey was
completed, a union agreement required that staff changes
must be retroactive. 14 positions were affected, and the
request reflects the retroactive payment.
Representative Croft referred to Section 6 in the Budget
that prohibits appropriations to pay for job
reclassifications.
Ms. Slagle stated that the item was negotiated two years
prior to the language to which Representative Croft
referred.
Representative Croft maintained that even if the agreement
existed before the language, the spending authority was
still prohibited.
Co-Chair Harris suggested that the language might need to be
amended.
Section 14 (d)
Marine Highway System increased fuel costs. July 2
fuel cost projected at 81.4 cents per gal with 8.7mm
gallon use; Jan 27 revised projection at 90.7 cents
with 9.6mm gallon use. Increased use was due to
cancellation of private service contract to Metlakatla.
Ms. Slagle noted that service to Metlekatla had been
increased and that subsequently fuel prices had also
increased. She observed that fuel prices were at 90.7 cents
vs. 84 cents per gallon, resulting in an increase in $6
million based on fuel needs. She pointed out that all but
$450 thousand of the increases had been covered under their
current budget.
Co-Chair Harris asked if $450 thousand was to cover service
from Metlekatla to Ketchikan.
Ms. Slagle stressed that the increased service added to
overall fuel need, and that the request was to cover the
increased fuel costs.
Section 14(e)
Title change: Scammon Bay: Snow Removal Equipment
Building should include "and Airport Layout Plan"
Ms. Slagle explained that, similar to a previous name change
item, the FAA had requested that two projects be combined.
She noted that the combination had already occurred in the
Governor's amended budget, but that titles still needed to
be changed.
Section 14(f)
Title change: Hatcher Pass: Milepost 34 to 39 -
Rehabilitation should be Milepost 25 to 39 -
Rehabilitation
Ms. Slagle noted that Hatcher Pass was a project expansion,
already included in the Governor's amended budget. She
explained that the expansion allowed more roadwork to be
done, including culvert repair. She pointed out the
efficiencies achieved by combining projects.
Section 16(10)
Miscellaneous Claims and Stale-dated Warrants
Ms. Slagle noted a request for $26.82 to pay invoices dating
from FY 2000.
Representative Foster expressed frustration in dealing with
the impact of transportation cuts on his more rural area, as
compared with urban centers. He also maintained that if
money was cut from urban areas, the cuts were many times
actually implemented in rural areas. He referenced his work
with the Department and complimented Ms. Slagle on her
professionalism and patience and thanked her for her work.
Co-Chair Harris announced that on Monday a Committee
Substitute would be brought before the Committee for
amendment and expressed his intention to move the
Supplemental bills out of committee by Tuesday.
HB 100 and HB 110 were heard and HELD in Committee for
further consideration.
ADJOURNMENT
The meeting was adjourned at 5:08 PM
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