Legislature(2011 - 2012)HOUSE FINANCE 519
02/07/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB137 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 108 | TELECONFERENCED | |
| *+ | HB 109 | TELECONFERENCED | |
| *+ | HB 137 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 7, 2011
1:32 p.m.
1:32:58 PM
CALL TO ORDER
Co-Chair Thomas called the House Finance Committee meeting
to order at 1:32 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Mike Chenault; Representative Alan
Austerman; Karen Rehfeld, Director, Office of Management
and Budget, Office of the Governor.
SUMMARY
HB 108 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 108 was HEARD and HELD in committee for
further consideration.
HB 109 APPROP: MENTAL HEALTH BUDGET
HB 109 was HEARD and HELD in committee for
further consideration.
HB 137 SUPPLEMENTAL/CAPITAL/OTHER APPROPRIATIONS
HB 137 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 108
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, and to capitalize funds; and providing for
an effective date."
HB 108 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 109
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
HB 109 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 137
"An Act making supplemental appropriations, capital
appropriations, and other appropriations; amending
appropriations; repealing appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
1:34:17 PM
Co-Chair Thomas explained the process by which the
supplemental budget would be presented to the committee,
using the 17-page spreadsheet, "FY2011 Supplemental
Requests, Office of Management and Budget, Submitted to the
Legislature January 31, 2011" (copy on file). He noted that
each item had a line number in the spreadsheet and would be
referred to using that number.
1:35:10 PM
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided a high-level overview of
the supplemental request using the 17-page summary. She
noted that the Office of Management and Budget (OMB) had
attempted to highlight whether a request was one-time, had
been considered and included in the governor's FY 12
budget, or was being considered for a potential amendment.
She reminded the committee that the amendments to the FY 12
budget were due on February 16, 2011.
Ms. Rehfeld summarized that HB 137 totaled $160,512,100
overall; $43.6 million of the total was unrestricted state
general funds, $105.2 million represented federal funds,
and about $19.5 million were other funds.
Ms. Rehfeld highlighted a few items from the federal funds
category:
· $46.8 million - Formula programs
· $4.5 million - University Pell Grant program
· $18.3 million - Airport improvement projects
· $32.9 million - Surface transportation projects
Ms. Rehfeld highlighted that $18.5 million of the other
funds category related to Alaska Permanent Fund investment
management fees, which were based on the value of the fund.
She noted that the FY 12 budget included language to
reflect adjustments that would be made over time.
Ms. Rehfeld reviewed items from the formula programs
category (from within the Department of Health and Social
Services):
· Children's services
· Alaska temporary assistance program
· General relief
· Senior benefits
· Medicaid growth
· Home and community-based services
1:39:03 PM
Ms. Rehfeld recalled specific contingency language in the
FY 11 budget addressing the possibility that the higher
Medicaid reimbursement rate would not be extended under the
American Recover and Reinvestment Act (ARRA). General funds
would have been made available if ARRA had not been
extended. When the language was included in the FY 11
budget, OMB had contemplated a straight extension of ARRA
provisions. However, Congress enacted a new bill and
changed the reimbursement rates for the remainder of FY 11;
Section 10 of HB 137 contained proposed amendments to the
contingency language to reflect the new federal provisions.
The total amount would be known at the end of the year and
would be reflected in the final authorized budget; it
represented approximately $15 million in general funds.
Ms. Rehfeld added that requests for fire suppression
represented about $9.9 million of the general funds. She
reminded the committee that the item generally reflected a
particular fire season.
Co-Chair Thomas noted that the agency personnel were not
present at the meeting and that Ms. Rehfeld would answer
questions or get needed information to the committee.
Representative Gara referred to a misunderstanding related
to the governor's FY 12 budget, an assumption that the
higher federal Medicaid assistance percentage (FMAP) rate
would apply. He noted that there was a deficit in the FY 12
budget before the law was changed. The law was not changed
and there was a larger FMAP deficit than shown in the FY 12
budget. He asked how the mentioned anticipation of an FMAP
change worth $12 million applied to the earlier
misunderstanding.
Ms. Rehfeld responded that the $14 million referred to was
for the remainder of FY 11. The contingency language
included in the FY 11 budget needed to be amended, as the
extension was treated differently than expected at the time
the FY 11 budget was done. She noted that the situation
could be the same for FY 12; part of the discussion related
to the amended budget would be about contingency language
in the event that the higher reimbursement rate was
extended into the FY 12 budget; if it was not, about $123
million general funds would be needed.
1:42:43 PM
Co-Chair Stoltze pointed out that the issue had been
discussed extensively.
Co-Chair Thomas added that the legislature was aware of the
issue; he mentioned that language could be put into the
budget on the Senate side, if it was not put in on the
House side because of timing.
Ms. Rehfeld noted that all of the items on the spreadsheet
would be reviewed at the subcommittee level and that she
would flag prominent items. She began with page 1, line 5:
· Section 1, line 5, Department of Administration,
Office of Public Advocacy, $900,000 unrestricted
general funds.
· Section 1, line 6, Department of Administration,
Public Defender Agency, $300,000 unrestricted general
funds.
Ms. Rehfeld detailed that both the organizations were
caseload-driven. Need has typically been addressed through
the supplemental with an adjustment to the following year's
budget based on the direction of the caseload. She noted
that both (line 5 and line 6) requests were being
considered for potential amendments in the FY 12 budget.
She added that the Department of Administration was
carefully considering contract service practices and cost
containment.
Representative Doogan queried the current base budget for
the $900,000 to the Office of Public Advocacy (OPA). Ms.
Rehfeld did not know the answer but offered to get the
information.
1:45:48 PM
Representative Gara pointed out that the head of OPA had
done something controversial that did not sit well with the
staff, which he believed was very overworked. The agency
had given money back to the state from the prior fiscal
year to demonstrate fiscal conservation. He asked whether
the money in the supplemental budget was to replace the
funds returned by OPA. Ms. Rehfeld replied that she was not
familiar with the circumstances described. She understood
the request in the supplemental was related to OPA's
ability to address the caseload for staff attorneys and
contracted support.
Ms. Rehfeld turned to page 2 of the spreadsheet:
· Section 1, line 8, Department of Commerce, Community
and Economic Development, Alaska Seafood Marketing
Institute, fund switch from designated general funds
to unrestricted general funds.
Ms. Rehfeld detailed that the request was a one-time
request to address a cash-flow issue in the Alaska Seafood
Marketing Institute (ASMI) that was the result of an
accounting change needed to comply with governmental
accounting standards. She explained that ASMI's accounting
structures were changed to put all receipts into a separate
fund; ASMI industry receipts come in at certain points of
the year and a substantial portion do not come in until the
end of the fiscal year. The institute was unable to access
the funds without the one-time switch to general funds that
would allow them to carry industry receipts into the
beginning of the next fiscal year. The request would put
the organization on a cash basis for the future.
Ms. Rehfeld moved to items related to the Department of
Corrections (DOC); the department's total request in the
supplemental was about $8.5 million. She highlighted two
items:
· Section 1, line 10, DOC, Institution Director's
Office, $3,504,400 unrestricted general funds.
· Section 1, line 14, DOC, Physical Health Care,
$4,011,500 unrestricted general funds.
Ms. Rehfeld detailed that the two significant requests were
based on higher-than-anticipated numbers of prisoners,
overtime costs, and healthcare costs. She noted that there
had been a significant FY 10 supplemental and the FY 11
budget had been adjusted to accommodate that. However, the
number of prisoners was higher than anticipated. The
supplemental request also reflected the need to make
adjustments to the FY 12 budget. She assured the committee
that DOC was searching for ways to contain costs while
meeting the required standard of care for inmates. Personal
services costs were being considered. The number of
corrections officers was being looked at as well in order
to address overtime issues.
1:50:04 PM
Vice-Chair Fairclough referred to past discussion regarding
inmate healthcare and opined that the best choices had not
always been made regarding expenses. For example, a
dialysis machine could be rented and kept at a corrections
facility rather than using the more expensive option of
transporting an inmate daily for dialysis. She queried
auditing medical treatments being provided. Ms. Rehfeld
answered that DOC was engaging external assistance as well
as using internal resources to study practices and
possibilities.
Vice-Chair Fairclough commended efforts to audit and
improve healthcare practices in correctional facilities.
She referred to the use of telemedicine.
Ms. Rehfeld continued with the next highlighted items for
the Department of Health and Social Services (DHSS):
· Section 1, line 17, DHSS, Foster Care Base Rate,
$120,000 federal funds.
· Section 1, line 18, DHSS, Foster Care Augmented Rate,
$100,000 federal funds.
· Section 1, line 19, DHSS, Subsidized
Adoptions/Guardians, $260,000 federal funds.
Ms. Rehfeld detailed that the three items were formula
programs under Title IV-E and totaled $480,000 in federal
funds to the state.
· Section 1, line 21, DHSS, McLaughlin Youth Center,
$450,000 unrestricted general funds.
Ms. Rehfeld noted that there were two clients in the youth
center who were suffering from very significant medical
conditions. The $450,000 cost was expected to be one-time;
the number would not be incorporated into the FY 12 budget.
· Section 1, line 22, DHSS, McLaughlin Youth Center,
$500,000 unrestricted general funds.
Ms. Rehfeld detailed that the second youth-center item was
for personal services. She noted that staff had been
retained over the past couple years and the high turnover
rate had changed from previous years. The funding was
included in the FY 12 proposed budget as well as in the
supplemental for the current year.
· Section 1, line 23, DHSS, Alaska Temporary Assistance
Program (ATAP), $4,500,000 federal funds.
Ms. Rehfeld noted that the $4.5 million federal funds were
from a block grant for temporary assistance to needy
families.
1:54:40 PM
Vice-Chair Fairclough returned to page 3, line 15
(Department of Environmental Conservation, increased lease
costs) and asked which facility had increased lease
expenses at 87 percent in the past seven years. She
wondered whether the number was a cumulative total spread
across a variety of buildings. Ms. Rehfeld responded that
the Department of Environmental Conservation was referring
to all department facilities statewide on which leases were
paid. She offered to get a break-down of the lease-spaces
included.
Representative Gara pointed to page 2, line 8 (Department
of Commerce, Community and Economic Development, ASMI); he
thought the description sounded like funds had to be
transferred at an earlier time to meet some kind of
compliance requirement. He stated that it sounded like an
extra $6.4 million was put into ASMI, which should come out
of the next year's budget. On other lines, the item looked
like a fund transfer. He asked for explanation. Ms. Rehfeld
responded that the proposal in the FY 11 budget was for a
one-time general funds supplemental to ASMI, which would
allow the use of industry receipts that would not come in
until late in the year. The FY 12 budget would show
industry receipts available. She stated that the one-time
adjustment for general funds was required.
Representative Gara thought that the state should get the
$6.4 million back if the money came in sooner. He asked
whether the state was providing an additional $6.4 million
that it would not get back. Ms. Rehfeld responded that
general funds given in the current year would be spent in
the current year; the industry receipts would be available
at the end of the year. Otherwise, FY 12 would be started
in the same place, as the money was now segregated in its
own fund and ASMI would not have the opportunity to utilize
the receipts until they were received. The proposal was a
one-time action to cover the shortfall, as the receipts
would not come in until the end of the fiscal year. The
item would put ASMI on a cash basis and they would know
what they had in FY 12.
1:58:12 PM
Representative Gara did not want the budget to increase
without legislative approval. He did not understand whether
ASMI was getting $6.4 million more than the legislature had
appropriated the previous year. Ms. Rehfeld replied that
ASMI would not be getting $6.4 million more than what was
appropriated. She described the action as a fund switch in
the current year. She reiterated that ASMI would not end up
with more than what was appropriated in the current year.
Representative Doogan stated that he did not understand. He
thought there was either $6.4 million more or not. He
understood the issue was timing, but he asked when the $6.4
million came back to the state. Ms. Rehfeld explained that
the item was a fund switch. The budget was currently
written for industry receipts, which would not come in
until the end of the year. The supplemental proposed
switching the fund to unrestricted general funds, which
would pay for the planned budget. At the end of the year,
the $6.4 million of industry receipts would be available
for ASMI to spend in FY 12. The FY 12 budget was built
around the $6.4 million.
Representative Doogan asked whether the FY 12 budget would
be $6.4 million smaller. Ms. Rehfeld answered that the
budget would not be smaller, but ASMI would have actual
receipts in the fund that could be spent.
Representative Doogan wanted a more coherent explanation.
Representative Edgmon explained that ASMI got funding from
three different sources: state general funds, federal
funds, and program receipt authority. Because of the
schedule, the program receipt authority changed and caused
a cash-flow shortage. The state has to inject the $6.4
million to help the agency get where they needed to go from
a cash-flow standpoint.
Representative Gara did not see the state getting the money
back. He saw an extra $6.4 million that the state would in
theory get back for the general fund when the program
receipts came in. It appeared to him that the state was
spending $6.4 million more and not getting it back. Ms.
Rehfeld noted that the issue was timing. The general fund
had always filled in until the industry receipts came in,
even before the separate, segregated fund was established,
which the auditor suggested to meet accounting standards.
The new accounting structure was more appropriate, and
would allow ASMI to be on a cash basis. She acknowledged
that the account should have been set up in originally the
proposed way.
2:02:27 PM
Representative Joule asked whether the legislature had
appropriated the amount at one point. Ms. Rehfeld replied
that the annual ASMI budget had included the projected
industry receipts.
Co-Chair Thomas thought the state was appropriating money
that had not been received yet. Ms. Rehfeld explained that
the appropriation was based on projected annual receipts.
She offered to get more information to the committee.
Representative Gara expressed confusion. Ms. Rehfeld
reported that there were good written explanations on the
issue that she would get to the committee.
Ms. Rehfeld continued with her highlights with two formula
programs that were included in the FY 12 budget:
· Section 1, line 24, DHSS, General Relief Assistance,
$250,000 unrestricted general funds.
· Section 1, line 25, DHSS, Senior Benefits Payment
Program, $1,300,000 unrestricted general funds.
Ms. Rehfeld detailed that the second item reflected
additional costs in the current year for the Senior
Benefits Program; the changes were also reflected in the
fiscal note passed out of committee [with HB 16].
· Section 1, line 26, DHSS, Energy Assistance Program,
$2,500,000 federal funds.
Ms. Rehfeld detailed that the item represented $2.5 million
in federal authorization for the low-income Home Energy
Assistance Program.
Representative Neuman referred to line 25 (senior benefits)
and queried the 10 percent increase for caseload growth. He
wondered whether there was a 10 percent increase in the
number of seniors in the state or a decrease in income
levels. Ms. Rehfeld responded that there were two things
happening, an increase in the number of seniors and an
increase in the number of seniors qualifying for the higher
payment level.
Representative Neuman thought it would be interesting to
see the trend over the past five years related to the
increase in the number of seniors as well as a decrease in
senior income. The information could provide better
information and help plan future appropriations.
2:05:59 PM
Representative Wilson returned to page 4, line 21 (two
individuals in the McLaughlin Youth Center with medical
needs). She asked what would happen when the individuals
moved out of the system and how the number was arrived at.
Ms. Rehfeld replied that one individual was a cardiac
patient and one had cancer. The state was responsible as
long as the individuals were in the facility.
Representative Wilson asked how many years the
appropriation would cover. Ms. Rehfeld answered that DHSS
had not asked the item to be considered in the next year's
budget; she assumed the supplemental request provided
sufficient authorization to address the needs of the two
clients.
· Section 1, line 29, DHSS, Nursing, $1,750,000
unrestricted general funds.
Ms. Rehfeld noted that the nursing item related to an issue
that OMB had been trying to address throughout the DHSS
budget. In the past, federal funds have been included in
personal services lines, and then later the federal funds
had not been available for the relevant positions. The FY
12 budget already included $1 million dollars for public
health nursing. She assured the committee that the item
would be looked at very carefully when considering the
amended budget. She did not want to decrease public health
nurse capacity.
· Section 1, line 32, DHSS, General Relief for Temporary
Assisted Living, $825,000 unrestricted general funds.
Ms. Rehfeld noted that there had been an increase in the
utilization of the funds as well as an increase in both the
costs and the length of stay. The item was being considered
for an FY 12 budget amendment.
2:08:40 PM
Ms. Rehfeld turned to the next item:
· Section 1, line 33, DHSS, Senior and Disabilities
Services Administration, $1,400,000 unrestricted
general funds.
Ms. Rehfeld reported that item was related to the
department's centers for Medicare/Medicaid services
corrective action plan. The administration has been working
hard to address a backlog of applicants and services to
participants in the program. The increment would cover some
of the non-permanent employees that had been helping
address the backlog; $1,250,000 of the amount was included
in the FY 12 budget.
· Section 1, line 34, DHSS, Behavioral Health Medicaid
Services, $556,400 unrestricted general funds,
$4,061,100 federal funds, total $4,617,500.
· Section 1, line 35, DHSS, Adult Preventative Dental
Medicaid Services, $72,100 unrestricted general funds,
$141,900 federal funds, total $214,000.
· Section 1, line 36, DHSS, Health Care Medicaid
Services, $4,296,100 unrestricted general funds,
$20,312,200 federal funds, total $24,608,300.
· Section 1, line 37, DHSS, Senior and Disabilities
Medicaid Services, $1,473,200 unrestricted general
funds, $2,046,800 federal funds, total $3,520,000.
· Section 1, line 38, DHSS, Senior and Disabilities
Medicaid Services, $4,982,100 unrestricted general
funds, $15,270,300 federal funds, total $20,252,400.
Ms. Rehfeld highlighted items related to the Department of
Law (DOL).
· Section 1, line 43, DOL, Oil, Gas and Mining,
$3,870,000 unrestricted general funds.
Ms. Rehfeld detailed that the item related to oil, gas, and
mining legal cases. She noted that the supplemental item
had to do with the timing of when cases would move to
litigation and funding for the work necessary, such as
outside counsel or experts supporting the state's position.
The cases were related to oil and gas royalty issues, the
Trans-Alaska Pipeline System (TAPS), and others. A $5
million continuation of the item was proposed in the FY 12
capital budget. She acknowledged concerns about
incorporating the item into the capital budget. She argued
that it was difficult to predict when the larger cases
moved forward and what would be needed.
Ms. Rehfeld turned to a highlighted item in the Department
of Natural Resources (DNR).
· Section 1, line 49, DNR, Fire Suppression Activity,
$9,894,700 unrestricted general funds.
2:12:09 PM
Representative Wilson asked who decided whether a fire was
put out quickly or allowed to burn and whether the decision
affected costs. Ms. Rehfeld thought the state fire
personnel could answer the question.
Ms. Rehfeld moved to items by the Department of Revenue
(DOR).
· Section 1, line 52, DOR, Permanent Fund Corporation,
$18,500,000 other funds (Permanent Fund Receipts).
Ms. Rehfeld detailed that the Alaska Permanent Fund
Corporation had requested the funds for additional
investment-management fees, which were calculated based on
the market value of assets. She noted that a language
section was being proposed that would adjust the management
fees as necessary throughout the fiscal year.
Ms. Rehfeld discussed highlighted items for the Department
of Transportation and Public Facilities (DOT/PF).
· Section 1, line 57, DOT/PF, Northern Region Highways
and Aviation, $431,100 unrestricted general funds.
Ms. Rehfeld detailed that the operating item was for
additional costs due to the Fairbanks ice storm, a unique
occurrence that required overtime expense and additional
supplies.
Vice-Chair Fairclough returned to the $18.5 million DOR
item on line 52 (Alaska Permanent Fund Corporation
investment management fees) and noted that the DOR
subcommittee would hear a report by the corporation
addressing interest rates, management fees, and management
of assets.
Vice-Chair Fairclough turned to line 45 (DNR, Land
Acquisition and Title Defense, $41,700 general funds). She
noted that the oversight of federal land transfers had
included Native allotments and Alaska Native Claims
Settlement Act (ANCSA) conveyances. She asked whether the
state was putting in money to replace federal funds that
were no longer available to the state. Ms. Rehfeld did not
have details; she referred to declining federal receipts
available and the significant amount of work still to be
done on the land transfers. The administration felt the
item was appropriate; it was addressed in the FY 12 budget
as well.
2:16:26 PM
Vice-Chair Fairclough hoped the administration would go
after the federal government related to unfulfilled
commitments.
Representative Gara directed attention to page 10, line 52
(Alaska Permanent Fund Corporation investment management
fees, $18,500,000) and expressed concerns. He wanted the
corporation to manage itself without interference from the
legislature, but he questioned the management fee
increasing 20 percent just because the value of the fund
increased. Ms. Rehfeld replied that there was a specific
allocation for the permanent fund investment management
fees. She believed work was being done at the subcommittee
level and that the topic had been discussed; she thought
the corporation should answer the question.
Representative Neuman pointed to line 49 (fire suppression
payment to the Bureau of Land Management (BLM) for fire-
fighting efforts on state lands). He asked whether the
federal government reimbursed the state. Ms. Rehfeld
responded that during fire season, the state and federal
agencies cooperated on all fire-fighting activities. The
reimbursement in the item was specific to costs that BLM
incurred; BLM invoices the state. She noted a ratification
request further down in the supplemental for fire
suppression from the prior year. The effort was a joint
one, with shared costs and reimbursements on both sides.
Co-Chair Thomas spoke to fund management by the Alaska
Permanent Fund Corporation. He understood that the amount
was based on an 18 percent return during half of the year
and the projection was based on an 8 percent return; the
difference accounted for the difference in management fees.
He did not mind paying for making 10 percent more than what
had been projected.
2:20:14 PM
Representative Doogan informed the committee that the chair
of the permanent fund corporation had been in his office to
discuss the topic. The corporation was going to provide him
and by extension the committee with a simple explanation of
the return to the fund and why the amount was increasing.
He suggested that additional information would have to be
taken in an executive session.
Ms. Rehfeld turned to the last operating item she was
highlighting in the supplemental budget spreadsheet.
· Section 1, line 59, University of Alaska, Anchorage
Campus, $4,500,000 federal funds.
Ms. Rehfeld detailed that the item was for federal receipt
authority to accept an increase in Pell Grants by the
university. She noted that $3.5 million had already been
included in the FY 12 budget and that OMB was researching
whether the federal authorization had to be adjusted
further.
Ms. Rehfeld informed the committee that the capital portion
of the supplemental (Section 3) began on page 11 of the
spreadsheet.
· Section 3, line 64, Department of Public Safety,
Alaska Public Safety Information Network (APSIN),
$1,356,600, unrestricted general funds.
Ms. Rehfeld detailed that the Department of Public Safety
(DPS) had hoped to secure federal dollars to help with the
migration of the system from the state mainframe to the
department network. The move was scheduled to occur by
October 2011. She noted that the system was a critical
component of the state's public safety information system.
· Section 3, line 65, DOT/PF, Airport Improvement
Program, Appropriation Level, $18,250,000 federal
funds.
Ms. Rehfeld detailed that the item was for federal aviation
funds for four specific projects that were ready to go to
bid and begin work in the upcoming construction season.
· Section 3, line 70, DOT/PF, Surface Transportation
Program, Appropriation Level, $32,960,000 federal
funds.
Ms. Rehfeld detailed that the item was for federal highway
funds for three specific surface transportation projects
ready to go out for bid.
Representative Gara pointed to page 11, line 64 (DPS, APSIN
migration). He supported the APSIN system but asked why the
request was not a FY 12 general fund one. He wondered why
the request was special.
2:24:36 PM
Ms. Rehfeld replied that OMB had asked the same question.
The issue was timing; the department would not able to get
the federal dollars for the on-going work if the next step
in the project was not taken in a timely manner.
Representative Gara thought the item should have been in
the previous year's general funds request. He thought it
reflected bad budgeting. Ms. Rehfeld agreed and reported
that the departments were encouraged to work with federal
agencies to apply for competitive and discretionary grants
as well as appropriate formula funds. However, without
authorization in the budget, departments would not be able
to accept the federal funds without going through the
supplemental process or through the Legislative Budget and
Audit Committee. She thought that departments should budget
for federal funds when they really believed the funds were
available. However, when the funds cannot be secured (such
as occurred with the public health nursing item) the
function must continue.
Vice-Chair Fairclough acknowledged the presence of
Anchorage Assembly Chair Dick Traini.
Vice-chair Fairclough referred to updates that had been
received on ARRA funding. She thought five or ten of the
DOT/PF projects listed in the supplemental looked similar
to projects that had been in the previous year's capital
budget appropriation for ARRA funds. She wondered whether
the prior year's numbers were related to the planning phase
of projects that were in later phases in the current
budget. She requested more information.
2:28:03 PM
Representative Doogan turned to line 65 (DOT/PF, airport
improvement program) with $18,250,000 federal funds. He
asked where the extra money came from. He thought the
budget for the previous year had used the funds. Ms.
Rehfeld believed the projects were Statewide Transportation
Improvement Program (STIP) approved and had gone through
the various steps (including design and environmental
phases) and were ready to be put out to bid in the summer
of 2011. However, the projects did not have specific
authorization to spend the money. She added that there may
have been specific projects in the FY 11 budget approved
the year prior that were not able to move as quickly. The
items listed in the supplemental needed legislative
authorization in order to move forward.
Representative Doogan asked whether the projects were new
in terms of what has been before the committee. Ms. Rehfeld
offered to get more information. She pointed out that the
notes should highlight whether the projects were new.
Representative Doogan also wanted to know whether the
requests were the result of other projects that the
legislature thought it had approved but for which
appropriating the money had not been approved. He wanted to
know which projects were not going forward.
Co-Chair Thomas asked why the requests were in the
supplemental budget instead of waiting for the regular
capital budget. He thought there were other projects that
should be on the list. He believed that some of the items
on the list had been authorized previously. Ms. Rehfeld
answered that the projects were in the supplemental only
because of their ability to go to bid in order to take
advantage of the summer 2011 season. She understood that
DOT/PF had a pool of projects that were approved either
through the STIP or through the appropriation process, but
the actual timing depended on the various steps associated:
the planning, design, environmental, and then construction
phases.
Co-Chair Thomas maintained that during the ARRA hearings,
four projects were approved for his district that he had
not even heard about because the designs had been approved
before his tenure and happened to be in the queue. He asked
why the particular projects in the supplemental were being
highlighted. He questioned the consistency of the process.
Ms. Rehfeld replied that the department would respond to
the questions.
2:32:47 PM
Vice-Chair Fairclough thought it would be helpful if the
new DOT/PF commissioner presented the supplemental with
comparisons to requests from the previous year. She
referred to past testimony by Frank Richards [previous
deputy commissioner of DOT/PF] that had included at least
five of the projects listed in the supplemental. She wanted
to know whether the past presentation was about earlier
phases of the projects. She thought the projects had been
paid for and wanted clarification from the new
commissioner. She specified that she wanted information
about the following items: line 65 ($18,250,000 for airport
improvement), line 69 (Talkeetna airport pavement), and all
the projects listed under line 70 ($32,960,000 for the
Surface Transportation Program).
Co-Chair Thomas wanted information on other DOT/PF
projects, including the history of which were appropriated
or authorized before.
Ms. Rehfeld asked how the committee wanted the follow-up to
occur.
Co-Chair Thomas responded that he wanted information on all
of the items.
Co-Chair Stoltze agreed with Vice-chair Fairclough
regarding previous expectations set by Mr. Richards in
providing full information to the committee.
Ms. Rehfeld continued with the next DOT/PF items in Section
3, (Emergency Projects). She noted that line 74 was the
appropriation request for $1,586,700 general funds for the
following emergency projects:
· Section 3, line 75, DOT/PF, Hyder-Salmon River Levee
Rehabilitation, $472,000 unrestricted general funds.
· Section 3, line 76, DOT/PF, Tatalina River Bridge
repair, $15,000 unrestricted general funds.
· Section 3, line 77, DOT/PF, Taylor Highway Repair,
$810,000 unrestricted general funds.
· Section 3, line 78, DOT/PF, Haines Highway MP 19
repairs, $89,700 unrestricted general funds.
· Section 3, line 79, DOT/PF, Ketchikan-South Tongass
Highway repair, $200,000 unrestricted general funds.
Ms. Rehfeld detailed that the repairs were done in the
current fiscal year.
2:36:21 PM
Ms. Rehfeld turned to Section 6 of the supplemental bill,
which covered lines 83 through 97. She explained that the
section corrected calculations related to bargaining unit
agreements approved by the legislature the previous year.
The lines summarized the impact of the calculation changes
by department.
Ms. Rehfeld acknowledged that the items were the result of
an OMB error and had to do with the personal services
calculations for the supervisory and general government
bargaining units (SU/GGU). She detailed that there were
numerous transactions because every personal services line
in the budget that had an SU or GGU employee had an
adjustment. In addition, a fund switch for the Department
of Law had been omitted in some of the changes submitted
the previous year. The overall effect of Section 6 was a
decrease of $2,525,200 in personal services in the FY 11
budget. She apologized for the error and pointed to
procedures that had been put in place at OMB to avoid
similar errors in the future.
2:38:09 PM
Ms. Rehfeld moved to Sections 9 through 24, the language
sections of the supplemental. She highlighted a reduction
related to the Department of Environmental Conservation
(DEC):
· Section 9, line 100, DEC, Comprehensive Oil and Gas
Infrastructure Risk Assessment Phase 1 project
reduction, ($2,250,000).
Ms. Rehfeld detailed that the original appropriation was $5
million; the project was completed and there was an
additional $2,250,000 available. The proposal was to lapse
the balance.
Representative Gara returned to a previous item related to
DCCED. He reported that he had gotten a press release from
DCCED nearly every day. The department had had difficulty
finding efficiencies, yet each agency seemed to have its
own press secretary. He thought a reduction in the number
of press secretaries should be considered in the revised
budget. Ms. Rehfeld responded that the administration had
been trying to improve communications with the public by
making information available through accessible websites
and so on. She hoped improving communication would happen
in an efficient way.
Representative Gara noted that the two issues were
separate. He supported providing the public with
information, but he was concerned about the number of press
releases. He thought a few positions could provide press
releases for many departments.
Ms. Rehfeld continued with her presentation:
· Section 10(a), line 101, DHSS, Medicaid Services
("FMAT Backstop"), $0.
Ms. Rehfeld noted that the next highlighted items were
legal settlements:
· Section 10(b), line 102, DHSS, Senior and Disabilities
Services Administration (Legal settlement to Hope
Community Resources, Inc.), $167,000 unrestricted
general funds.
· Section 10(c), line 103, DHSS, Commissioner's Office
(Legal settlement to NANA Management Services),
$132,000 unrestricted general funds.
· Section 12(a), line 105, DOL (Annual judgment and
settlement costs), $241,200 unrestricted general
funds.
Ms. Rehfeld noted that any additional legal settlement
costs that occurred would be brought to the legislature
during the course of the legislative session.
Ms. Rehfeld pointed to reductions to three specific capital
projects proposed. One (DEC, oil and gas risk assessment)
had been addressed. She listed the others:
· Section 14(a), line 111, DPS, Public Safety Academy-
Land Acquisition and Construction project,
($4,000,000) unrestricted general funds.
Ms. Rehfeld detailed that the item related to the DPS
driving range at the trooper academy. In the FY 11 budget
there was a $5 million appropriation made for the range; it
was vetoed by Governor Parnell down to $1 million to
provide for the purchase of the land for the driving range
at the academy. However, the veto inadvertently did not get
recorded and therefore appeared in the supplemental (line
111).
· Section 14(b), line 112, DPS, Reduction in the Crime
Lab Replacement project, ($5,000,000) unrestricted
general funds.
Ms. Rehfeld recalled the $75,750,000 appropriation for
construction of the DPS crime lab; construction on the
project had been coming in under budget, enabling the
reduction of $5 million.
Representative Neuman returned to page 15, line 100,
regarding the comprehensive oil and gas infrastructure risk
assessment. Given the corrosion and other problems that had
been occurring, he questioned the change in the scope of
the project. Ms. Rehfeld answered that DEC had looked at
the actual methodology and what it could accomplish within
the appropriation and realized that all of the areas would
not be covered. The focus was narrowed to what could
reasonably be done based on specific recommendations from
the study. She thought DEC Commissioner Hartig could
provide more details.
Representative Neuman asked whether the Petroleum Systems
Integrity Office was involved in developing the scope of
the project. Ms. Rehfeld replied that several agencies were
involved.
Representative Doogan turned to page 16, line 12 (DPS,
Crime Lab Replacement reduction) and noted that he had
never seen a project cost estimate lowered in the middle of
a construction project. He asked for assurance that the
reduction would actually happen. Ms. Rehfeld responded that
the people working on the project would be able to provide
a more in-depth answer. She believed that the bids that had
come in and the work already accomplished indicated that
the project would be able to complete with the reduced
level of funding.
2:46:06 PM
Representative Doogan thought the amount listed in the
supplemental was under the amount that the designers
intended in the first place. He did not want the state to
take money from one place and then need it from another.
Ms. Rehfeld replied that there had been higher cost
estimates a few years back, but changes were made to the
project, along with the understanding that there would be
future need for expansion for certain types of testing not
currently done. Based on the project that was submitted to
the legislature last year, the construction bids came in at
a lower amount; the department was confident that the lower
amount would be sufficient to complete the project.
Representative Doogan referred to a concept he called
"innovative accounting," a practice that meant saving now
but spending at a later date.
Co-Chair Stoltze wanted to be watchful as well, but was not
surprised by the lower bids given the competitive economic
environment and the number of available workers needing
jobs. He recalled the first round of ARRA stimulus funding
when there were $30 million of projects ready to begin
right away; there was discussion about bids that came in
lower at that time. He did not think there was "evil
afoot."
2:50:33 PM
Representative Gara referred to earlier skepticism
expressed by the committee about the original price of the
crime lab at $100 million. He recalled that the price had
come down. He hoped the department had found a way to do
the project for less. He stated that he would be
disappointed if the $5 million reduction came back to cost
the state at a later date.
Co-Chair Thomas commented that his district did not get
anything out of the expensive project.
Ms. Rehfeld directed attention to two ratifications in the
supplemental budget:
· Section 19(a), line 127, Department of Natural
Resources, Fire Suppression Activity, $23,458,478.12
unrestricted general funds.
· Section 19(b), line 128, DPS, Bureau of Highway
Patrol, $18,407.80 unrestricted general funds.
Ms. Rehfeld detailed that line 128 was a closeout of a
reimbursable services agreement (RSA) with DOT/PF.
Ms. Rehfeld concluded with Section 20 (line 118), a
proposal that any unobligated balance of funds at the end
of FY 11 would go into the statutory Budget Reserve Fund.
Ms. Rehfeld thought the agencies would speak with the House
Finance subcommittees about the details of the supplemental
requests.
Representative Wilson requested a breakdown of the fires
covered by the $23 million for fire suppression. In
addition, she had questions about the state obligation to
BLM. Ms. Rehfeld replied that OMB would get DNR to provide
the information.
2:54:12 PM
Vice-Chair Fairclough commented that the university
subcommittee would meet to review the Fisher report and
that the meeting would be televised.
HB 137 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 2:55 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 137 Supplemental Spreadsheet .pdf |
HFIN 2/7/2011 1:30:00 PM |
|
| HUA 020111 0806 AM.doc |
HFIN 2/7/2011 1:30:00 PM |