Legislature(2013 - 2014)HOUSE FINANCE 519

01/25/2013 01:30 PM FINANCE

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01:34:02 PM Start
01:34:27 PM HB65 || HB66
01:35:53 PM Fy 14 Governor's Budget Overview: Department of Environmental Conservation
02:35:49 PM Fy 14 Governor's Budget Overview: Department of Commerce, Community and Economic Development
03:31:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Governor's FY14 Budget Overview: TELECONFERENCED
- Dept. of Environmental Conservation
- Dept. of Commerce, Community & Economic
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 25, 2013                                                                                           
                         1:34 p.m.                                                                                              
1:34:02 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair  Austerman   called  the  House   Finance  Committee                                                                   
meeting to order at 1:34 p.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Mia Costello                                                                                                     
Representative David Guttenberg                                                                                                 
ALSO PRESENT                                                                                                                  
Larry  Hartig,  Commissioner,   Department  of  Environmental                                                                   
Conservation;   Thomas   Cherian,   Director,   Division   of                                                                   
Administrative   Services,   Department    of   Environmental                                                                   
Conservation;   Susan  Bell,   Commissioner,  Department   of                                                                   
Commerce,  Community  and  Economic   Development;  Jo  Ellen                                                                   
Hanrahan,  Director,  Division  of  Administrative  Services,                                                                   
Department of Commerce, Community and Economic Development.                                                                     
GOVERNOR'S FY 14 BUDGET OVERVIEWS:                                                                                              
     Department of Environmental Conservation                                                                                   
     Department   of   Commerce,   Community   and   Economic                                                                   
HB  65    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          HB 65 was HEARD and HELD in committee for further                                                                     
HB  66    APPROP: MENTAL HEALTH BUDGET                                                                                          
          HB 66 was HEARD and HELD in committee for further                                                                     
HOUSE BILL NO. 65                                                                                                             
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan  program  expenses  of  state  government  and  for                                                                   
     certain    programs,   capitalizing   funds,    amending                                                                   
     appropriations,   and   making   reappropriations;   and                                                                   
     providing for an effective date."                                                                                          
HOUSE BILL NO. 66                                                                                                             
     "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."                                                                                                        
1:34:27 PM                                                                                                                    
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL                                                                         
CONSERVATION (DEC), introduced himself.                                                                                         
THOMAS CHERIAN, DIRECTOR, DIVISION OF ADMINISTRATIVE                                                                            
SERVICES,   DEPARTMENT    OF   ENVIRONMENTAL    CONSERVATION,                                                                   
introduced himself.                                                                                                             
^FY   14   GOVERNOR'S   BUDGET    OVERVIEW:   DEPARTMENT   OF                                                                 
ENVIRONMENTAL CONSERVATION                                                                                                    
1:35:53 PM                                                                                                                    
Commissioner Hartig discussed the PowerPoint, "Department                                                                       
of Environmental Conservation, House Finance Overview"                                                                          
(copy on file). He looked at slide 2: "DEC's Mission."                                                                          
     Protects human health and the environment.                                                                                 
Commissioner Hartig  detailed slide 3: "Responsibilities  and                                                                   
     -Develop standards                                                                                                         
     -Issue permits                                                                                                             
     -Provide compliance and financial assistance                                                                               
     -Respond to spills of oil and other hazardous                                                                              
     -Safeguard the quality of food and seafood                                                                                 
     -Operate the State Environmental Health Lab                                                                                
     -House the Office of the State Veterinarian                                                                                
     -Regulate pesticides and certain types of use                                                                              
     -Educate and assist the public                                                                                             
     -Interact with our federal agency counterparts                                                                             
     -Investigate violations and enforce state law                                                                              
Commissioner  Hartig  explained  that  compliance  was  often                                                                   
enabled with the help of the agency.                                                                                            
Commissioner Hartig explained slide 4: "Divisions."                                                                             
     -Environmental Health                                                                                                      
     -Air Quality                                                                                                               
     -Spill Prevention and Response                                                                                             
1:37:50 PM                                                                                                                    
Commissioner  Hartig discussed  the  various divisions  which                                                                   
were  used to  divide  the  various responsibilities  of  the                                                                   
division. The  Division of  Administration included  in crime                                                                   
unit.  He  noted  that  the work  with  the  law  enforcement                                                                   
agencies.  He  noted  that the  criminal  investigations.  He                                                                   
noted  that  some  challenges  included  the  human  resource                                                                   
capacity.  The public sector  had an  aging demographic.  The                                                                   
average level of experience in spill response was 31 years.                                                                     
Commissioner   Hartig   detailed   slide  5:   "Division   of                                                                   
          Commissioner's Office                                                                                                 
          Administrative Services                                                                                               
               -Environmental Crimes Unit                                                                                       
               -Information Services                                                                                            
               -Financial Services                                                                                              
               -Budget Services                                                                                                 
               -Procurement and Building Management                                                                             
          State Support Services                                                                                                
               -Lease and Contracts                                                                                             
          Commissioner: Larry Hartig                                                                                            
          Deputy: Lynn Kent                                                                                                     
          Director: Tom Cherian                                                                                                 
          Reintegration of Human Resources staff to                                                                             
          Recruitment and Workforce Development                                                                                 
               -Aging workforce at or near retirement                                                                           
              -Highly specialized job classes                                                                                   
1:42:02 PM                                                                                                                    
Commissioner  Hartig  noted that  the  quality  of water  was                                                                   
regulated  by systems.  He  stated  that the  two  increments                                                                   
included that  all of the  public drinking water  plants must                                                                   
follow the  rules. He  stated that  all systems received  $11                                                                   
million in  federal funding  to implement  the new  rules. He                                                                   
stated  that  communities  were  helped to  comply  with  the                                                                   
rules  including food  safety  and environmental  health.  He                                                                   
noted  that  the  division  addressed  the  entire  state  to                                                                   
inspect  facilities to  determine risks.  He stated  that the                                                                   
federal  government required  and  additional  31 people  and                                                                   
$200 million,  and as a  result the risks were  substantially                                                                   
Co-Chair  Austerman pointed  out saving  questions until  the                                                                   
end.  Commissioner Hartig  mentioned  that the  need for  the                                                                   
tsunami corrections.                                                                                                            
Commissioner   Hartig  discussed   slide   6:  "Division   of                                                                   
Environmental Health."                                                                                                          
          -Director's Office                                                                                                    
          -Food Safety and Sanitation                                                                                           
          -Laboratory Services                                                                                                  
          -Drinking Water Solid Waste Management                                                                                
          -Building Maintenance and Operations                                                                                  
     Acting Director: Elaine Busse Floyd                                                                                        
          -Drinking Water EPA Rule Implementation                                                                               
          -High Risk Food Safety Inspections                                                                                    
          -Unique Laboratory Technology and Equipment Needs                                                                     
Commissioner  Hartig  discussed  the Fairbank's  air  quality                                                                   
assessment   as  addressed  by   Representative  Wilson.   He                                                                   
mentioned  the  declining  federal funding,  and  noted  that                                                                   
different  divisions had  different funds  and some  would be                                                                   
forced to react.                                                                                                                
Commissioner  Hartig  detailed  slide  7:  "Division  of  Air                                                                   
          -Director's Office                                                                                                    
          -Air Quality                                                                                                          
     Director: Alice Edwards                                                                                                    
          -Fairbanks Air Quality                                                                                                
          Declining Federal Funding                                                                                             
1:47:44 PM                                                                                                                    
Commissioner  Hartig   remarked  that  a  large   portion  of                                                                   
operating  funds  came from  the  five  cent barrel  tax.  He                                                                   
shared that  the as the waters  above Alaska and  near Russia                                                                   
were opening up, DEC would face new regulatory challenges.                                                                      
Commissioner  Hartig detailed  slide  8:  "Division of  Spill                                                                   
Prevention and Response."                                                                                                       
          -Director's Office                                                                                                    
          -Industry Preparedness and Pipeline Operations                                                                        
          -Prevention and Emergency Response                                                                                    
          -Contaminated Sites Program                                                                                           
          -Response Fund Administration                                                                                         
     Director: Larry Dietrick                                                                                                   
          -Declining Prevention Account Balance                                                                                 
          -Increasing Natural Resource Activity                                                                                 
Commissioner Hartig discussed slide 9: "Division of Water."                                                                     
     Water Quality                                                                                                              
     Facility Construction                                                                                                      
          -Village Safe Water Program                                                                                           
          -Municipal Grants & Loan Program                                                                                      
     Director:  Michelle Bonnet Hale                                                                                            
          -Continuing to build APDES permitting program                                                                         
          -Sustaining the Village Safe Water Program                                                                            
Commissioner  Hartig   detailed  slide  10:  "FY   14  Budget                                                                   
     Operating Request:  $85,271.1       2.2 percent growth                                                                     
                                         $1,052.2 GF                                                                            
     Capital Request:    $96,905.8                                                                                              
Commissioner  Hartig explained that  the federal  portion had                                                                   
many strings  attached.  He pointed out  the capital  request                                                                   
under  the  all funds  section.  He  noted that  the  capital                                                                   
money was  used to fund sewer  and water projects  in Alaska.                                                                   
He   explained  the   various   projects   included  in   the                                                                   
department's  capital requests,  and noted  that federal  law                                                                   
led to loan forgiveness under the capital request.                                                                              
Commissioner Hartig  pointed out  slide 11: "FY  14 Operating                                                                   
Budget  by  Fund  Source."  He   noted  that  the  fees  were                                                                   
provided  for  various  permits.  The bars  for  the  various                                                                   
divisions  and he  stated that  air quality  program must  be                                                                   
run by fees collected.                                                                                                          
Mr.  Hartig  detailed  slide   12:  "How  the  Response  Fund                                                                   
     Response Account                                                                                                           
          Funded by 1¢ surcharge on each barrel of oil.                                                                         
          Surcharge suspended when fund exceeds $50                                                                             
               -Suspended as of January 1, 2013                                                                                 
          Pays for emergency response activities.                                                                               
          Department    recovers   costs   from    identified                                                                   
          responsible parties.                                                                                                  
     Prevention Account                                                                                                         
          Funded by a 4 cent surcharge on each barrel of                                                                        
          Pays   for   operational    costs   and   readiness                                                                   
          activities within the Spill Prevention & Response                                                                     
1:54:32 PM                                                                                                                    
Commissioner  Hartig  detailed   slide  13:  "Status  of  the                                                                   
Prevention  Account." He  noted that  the graph detailed  the                                                                   
decline in the  prevention account. He stated  that there was                                                                   
a surplus  20 years prior. He  furthered that the  funds were                                                                   
decreasing   substantially,   because   of   oil   production                                                                   
Commissioner  Hartig  detailed   slide  14:  "Status  of  the                                                                   
Prevention  Account." He noted  that the  graph showed  FY 13                                                                   
and the spills  and the cost of the projected  through FY 22.                                                                   
He  continued   to  detail   the  graph   and  the   one-time                                                                   
expenditures and the projected total expenses.                                                                                  
Commissioner  Hartig  detailed  slide  15: "Rural  Water  and                                                                   
Sewer."  He noted  that the  graph showed  federal and  state                                                                   
contribution declining.  Funding for rural  Alaska sanitation                                                                   
projects had  declined by  over $61  million, or 64  percent,                                                                   
between 2004  and 2013. The graph  on the right  included two                                                                   
types  of needs:  1)  First time  service  for homes  without                                                                   
piped  or covered  haul; and  2) Upgrades  or replacement  to                                                                   
address significant health threats.                                                                                             
1:59:39 PM                                                                                                                    
Commissioner  Hartig   described  slide  16:   "Village  Safe                                                                   
Water: New Approaches."                                                                                                         
     $667 Million = Current Cost of unfunded significant                                                                        
     health related water and sewer needs in rural Alaska.                                                                      
     State/Federal funding insufficient to construct new                                                                        
     systems or ensure continued functionality of aging                                                                         
     New Technologies                                                                                                           
          -Innovative  and  new   approaches  are  needed  in                                                                   
          Alaska  villages  in   order  to  cut  capital  and                                                                   
          operating  costs  of  providing running  water  and                                                                   
          -Issues a challenge to the private sector.                                                                            
          -Three-Phased Approach:                                                                                               
               FY13:  Request For Proposals (RFP) and                                                                           
               selection for funding.                                                                                           
               FY14:  Demonstration of projects, research                                                                       
               and development.                                                                                                 
               FY15:  Initial pilot testing and refinement                                                                      
               for implementation.                                                                                              
     "Band-Aid" Projects                                                                                                        
          -Repairs and enhancements to prolong useable life                                                                     
          of select systems.                                                                                                    
Commissioner  Hartig detailed  slide  17:  "Leg. Finance:  10                                                                   
year  look  back   (GF  Only)."  He  mentioned   the  various                                                                   
programs paid  for by  attacks on  vessels. He remarked  that                                                                   
some  funds  had  been transferred  from  the  University  of                                                                   
Alaska  budget (UA)  to DEC.  The growing  programs were  the                                                                   
ocean rangers program and the drinking water program.                                                                           
Commissioner  Hartig described  slide 18:  "Leg. Finance:  10                                                                   
Year  Plan  Growth  (GF  Only)." He  stated  that  the  graph                                                                   
detailed  all  of   the  needs  for  the  increases   of  the                                                                   
department needs.                                                                                                               
Commissioner  Hartig displayed  slide 20:  "Leg. Finance:  10                                                                   
Year Plan Growth (GF Only)."                                                                                                    
2:05:28 PM                                                                                                                    
Commissioner  Hartig  discussed  slide 21:  "Department:  10-                                                                   
Year Plan Highlights."                                                                                                          
     Operating Budget                                                                                                           
          -Assumes AGIA startup in FY2016.                                                                                      
          -General funds to address inspection rates at                                                                         
          high-risk food establishments from FY2015 to                                                                          
          -Retain drinking water primacy by adopting                                                                            
          additional required rules.                                                                                            
          -Permits, approvals, oversight, and response of                                                                       
          large mining projects throughout the state                                                                            
          starting in FY2015.                                                                                                   
     Capital Budget                                                                                                             
          -Replaces declining federal funds with general                                                                        
          funds in the Village Safe Water program beginning                                                                     
          in FY2015.                                                                                                            
Commissioner Hartig  discussed slide 22:  "Current Challenges                                                                   
to Departmental  Performance." He noted that  the contingency                                                                   
plans  for  the  current  permits  and  enforcement  actions.                                                                   
Increasing  development   activity  and  strained   personnel                                                                   
resources  threated permitting  timelines.  He stressed  that                                                                   
the  burden  of  new  EPA  rules  threatened  drinking  water                                                                   
safety by limiting resources for technical assistance.                                                                          
Commissioner   Hartig   mentioned    slide   23:   "Long-Term                                                                   
Challenges to  Departmental Performance." He shared  that the                                                                   
village  homes  served  by safe  water  were  in  challenging                                                                   
communities;  had declining  funding  with increasing  costs;                                                                   
and  required  innovation and  sustainability.  He  furthered                                                                   
that  spill   prevention  and  response  was   threatened  by                                                                   
declining  response fund  receipts as  a result of  declining                                                                   
TAPS throughput.                                                                                                                
2:11:36 PM                                                                                                                    
Co-Chair  Austerman asked  about slide  14 and the  reduction                                                                   
of  the size  of the  budget.  Commissioner Hartig  responded                                                                   
that the  general  fund increments  will be  used to make  up                                                                   
the $5 million per year.                                                                                                        
Vice-Chair  Neuman saw  a large  increase  in FY  14 in  cost                                                                   
recovery.   He  asked   which   statutes   cover  the   spill                                                                   
prevention   allocation  requirement.   Commissioner   Hartig                                                                   
recalled two  pipeline spills.  He stated  that there  was an                                                                   
allocation  in October  for $250  million, which  replenished                                                                   
the  response  account.  Title  46 was  in  statute  for  the                                                                   
response fund, and  noted that the legislature  preserved the                                                                   
response fund.                                                                                                                  
Vice-Chair Neuman  thought that the responsibility  should be                                                                   
dependent upon the industry.                                                                                                    
Representative  Gara   asked  recalled  problems   that  were                                                                   
addressed. He  pointed out page  13, and remarked  that there                                                                   
had been discussion  regarding requiring a surcharge  on each                                                                   
barrel of oil  in order to avoid increased  state funds going                                                                   
toward spill prevention.  He wondered why DEC did  not make a                                                                   
similar proposal.  Commissioner  Hartig responded  that those                                                                   
policy  calls were  not  under the  jurisdiction  of DEC.  He                                                                   
stated  that the response  fund  was used  across a range  of                                                                   
industries,  but noted that  the crude  oil industry  was the                                                                   
only industry that paid directly into the fund.                                                                                 
2:17:37 PM                                                                                                                    
Commissioner  Hartig  stressed  that crude  oil  spills  used                                                                   
approximately 7 percent  of the response fund,  but the crude                                                                   
oil industry was  the only industry paying  into the response                                                                   
fund.  He remarked  that there  were many  efforts to  refine                                                                   
the fund.                                                                                                                       
Representative  Gara commented that  the proposal  to respond                                                                   
differently  did not  exist. He  pointed out  slide 6  and he                                                                   
recalled  that  food  inspectors   were  not  available.  The                                                                   
subcommittee  deemed  that the  proposal  be  drafted by  the                                                                   
department. He asked  if he had a third  option. Commissioner                                                                   
Hartig   responded  that   a  reprioritization   was  in   an                                                                   
incremental  solution  phase.   He  noted  that  the  federal                                                                   
recommendations were there.                                                                                                     
2:22:55 PM                                                                                                                    
Representative  Gara noted  that  the problem  was without  a                                                                   
proposed  solution.   He  recommended  a   proposal,  because                                                                   
without  one  the  public  should   be  warned.  Commissioner                                                                   
Hartig stated  that the  increment in  the positions  and was                                                                   
implemented for documentation to be provided.                                                                                   
Representative  Munoz wondered  if there  was $50 million  in                                                                   
the prevention  fund account.  Commissioner Hartig  responded                                                                   
in the affirmative.                                                                                                             
Representative Munoz  noted that by 2015, OMB  estimated that                                                                   
there would  be $6 million  to subsidize the  prevention fund                                                                   
account. Commissioner  Hartig responded that the  $50 million                                                                   
was in  a revolving  fund. He  stated that the  replenishment                                                                   
came from  cost recovery through  1 cent a barrel.  He stated                                                                   
that in order  maintain operations; a general  fund increment                                                                   
was required.                                                                                                                   
Representative  Munoz asked if  there had been  consideration                                                                   
regarding  combining the  two  accounts. Commissioner  Hartig                                                                   
responded  that  the  two accounts  were  somewhat  combined,                                                                   
because  there  was an  estimated  $1.2  million a  year  for                                                                   
earned  income  on  the $50  million  that  was  historically                                                                   
appropriated back into the prevention account.                                                                                  
Representative  Munoz  asked if  the potential  of  combining                                                                   
the    two   accounts,    because    there   was    long-term                                                                   
sustainability in  the response account.  Commissioner Hartig                                                                   
responded  that if the  $50 million,  replenishment  would be                                                                   
2:27:14 PM                                                                                                                    
Representative  Wilson  wondered how  particulate  prevention                                                                   
could  be affordable  without  other resources.  Commissioner                                                                   
Hartig replied  that there  had been  an increase  in federal                                                                   
regulations, and  the states were  often not able to  keep up                                                                   
with the  rapid changing  regulations.  He stressed  that DEC                                                                   
looked  at various  funding strategies  to determine  whether                                                                   
the impact fell  into its mission of protecting  human health                                                                   
and  the environment.  He  remarked that  conversations  with                                                                   
communities across  the state helped to  determine regulatory                                                                   
change to EPA's standards.                                                                                                      
Representative  Wilson wondered  whether  there were  reasons                                                                   
why there  were more programs  in the drinking  water systems                                                                   
and  not  air quality.  Commissioner  Hartig  responded  that                                                                   
every  community  was  required  to  have  a  drinking  water                                                                   
system, and  there was more work  in that arena.  He stressed                                                                   
that water was not considered more important than air.                                                                          
Vice-Chair  Neuman looked  at  AS 46.08.060,  and noted  that                                                                   
the  commissioner   shall  make   available  report   to  the                                                                   
legislature  not later  than tenth  day following  convening.                                                                   
The report  should include  the amount  of money expended  by                                                                   
the  department.   He  wondered  if  that  report   had  been                                                                   
conducted.  Commissioner  Hartig  responded that  the  report                                                                   
was delivered the previous.                                                                                                     
2:32:33 PM                                                                                                                    
AT EASE                                                                                                                         
2:35:46 PM                                                                                                                    
^FY 14  GOVERNOR'S BUDGET  OVERVIEW: DEPARTMENT  OF COMMERCE,                                                                 
COMMUNITY and ECONOMIC DEVELOPMENT                                                                                            
2:35:49 PM                                                                                                                    
SUSAN BELL,  COMMISSIONER, DEPARTMENT OF  COMMERCE, COMMUNITY                                                                   
AND ECONOMIC DEVELOPMENT (DCCED), introduced herself.                                                                           
JO  ELLEN  HANRAHAN,  DIRECTOR,  DIVISION  OF  ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                   
DEVELOPMENT, introduced herself.                                                                                                
Commissioner  Bell presented the  PowerPoint, "House  Finance                                                                   
Committee;  Alaska  State  Legislature;   January  25,  2013"                                                                   
(copy on  file). She discussed  slide 2: "Mission:  Promote a                                                                   
healthy economy,  strong communities,  and protect  consumers                                                                   
in  Alaska."   The  graph   illustrated  the  six   corporate                                                                   
agencies and  the six agencies  within DCCED.  She reinforced                                                                   
the  importance  of  the  regulatory  protection  to  protect                                                                   
consumers and businesses.                                                                                                       
Commissioner Bell detailed slide 3: "Core Services."                                                                            
     -Marketing   Alaskan  products   and  services   in  key                                                                   
     sectors  including: seafood,  tourism, minerals,  forest                                                                   
     products, film, and transportation.                                                                                        
     -Providing access to capital for business development.                                                                     
     -Reducing  the cost  of  energy through  development  of                                                                   
     renewable  resources,  financing for  energy  generation                                                                   
     and  transmission, implementation  of energy  efficiency                                                                   
     programs, grants, and technical assistance.                                                                                
     -Assisting   local   governments    and   unincorporated                                                                   
     communities   through  grants,   technical   assistance,                                                                   
     financial and utility management, and planning.                                                                            
     -Regulating    commercial    activities   in    banking,                                                                   
     securities,   corporations,    professional   licensing,                                                                   
    alcoholic beverage industry, and public utilities.                                                                          
Commissioner Bell discussed slide 4: "Challenges."                                                                              
     -High   cost   of   energy   impacts   communities   and                                                                   
     -Gaps in  critical infrastructure such as  roads, ports,                                                                   
     communications, and processing facilities.                                                                                 
    -Higher cost of goods and services in rural areas.                                                                          
    -Federal regulatory permitting delays and denials.                                                                          
     -Ongoing need to educate markets about Alaska products                                                                     
     and services.                                                                                                              
     -Uncertainty hampering private investment.                                                                                 
     -Declining federal funding for rural programs.                                                                             
     -Growth of new financial programs that increase fraud                                                                      
     and misinformation for consumers.                                                                                          
Commissioner Bell detailed slide 5: "Priority Programs."                                                                        
     Economic Growth                                                                                                            
          -Division of Economic Development, AIDEA, ASMI.                                                                       
          -$66.4 million - 33 percent of budget.                                                                                
          -Net $4.4 million increase.                                                                                           
     Sustainable Energy                                                                                                         
          -Alaska Energy Authority.                                                                                             
          -$67 million - 33 percent of budget.                                                                                  
          -Net $3.4 millon increase.                                                                                            
               PCE and Susitna-Watana Hydro.                                                                                    
Commissioner Bell  discussed slide 6: "The 16  percent of the                                                                   
     Strong Communities                                                                                                         
          -Community and Regional Affairs, Serve Alaska.                                                                        
          -$32.4 million - 16 percent of budget.                                                                                
          -Net $28 thousand decrease.                                                                                           
              Declining federal RUBA funding.                                                                                   
     Consumer Protection                                                                                                        
          -Banking    and   Securities;   Insurance;    CBPL;                                                                   
          Regulatory   Commission    of   Alaska,   Alcoholic                                                                   
          Beverage Control Board.                                                                                               
          -$35.3 million - 18percent  of budget.                                                                                
          -Net $576.8 thousand decrease.                                                                                        
     Prescription Drug Monitoring grant and OTIs                                                                                
Commissioner  Bell  detailed  slide 7:  "Budget  by  Priority                                                                   
Program." She  explained that the Sustainable  Energy Program                                                                   
was  33  percent  of  the  budget  at  $66.982  million;  the                                                                   
Economic  Growth Program  was  33 percent  of  the budget  at                                                                   
$66.416  million;  the  Consumer Protection  Program  was  18                                                                   
percent  of the  budget at  $35.336 million;  and the  Strong                                                                   
Communities Program  was 16 percent of the  budget at $32.419                                                                   
2:42:50 PM                                                                                                                    
Commissioner Bell discussed slide 8: "Economic Growth."                                                                         
     Division of Economic Development                                                                                           
               -Tourism  recovery (1.8 million  visitors) and                                                                   
               Icelandair to begin service in May 2013.                                                                         
               -25   film   productions  approved   for   tax                                                                   
               -Promoted  minerals, forest products,  Made in                                                                   
               Alaska, Alaska product preference.                                                                               
               -Partner   with  private   sector  and   state                                                                   
          Business Development:                                                                                                 
               -Provided  400   small  Alaska  business  with                                                                   
               technical assistance.                                                                                            
               -Regional economic planning with ARDORs.                                                                         
          Financing:  Commerical fishing  and small  business                                                                   
               -267  loans, $31.1 million   and  $4.8 million                                                                   
               Salmon   Enhancement   Tax   distribution   to                                                                   
               aquaculture (6 qualified associations).                                                                          
               -New  revolving  loan funds  for  mariculture,                                                                   
               commercial  halibut   charter  operators,  CQE                                                                   
               entities, alternative energy.                                                                                    
Commissioner Bell discussed slide 9: "Economic Growth                                                                           
    Alaska Industrial Development and Export Authority                                                                          
          -Increased  net asset value to over  $1.26 billion,                                                                   
          providing  a $20.7  million dividend  to the  State                                                                   
          for FY2014.                                                                                                           
          -S&P  Upgraded AIDEA's  credit rating  from  AA- to                                                                   
          -SETS   (AK  Sustainable   Energy  Transmission   &                                                                   
          Supply) creates new energy infrastructure.                                                                            
          -Completed  17 loan participations  totalling $34.9                                                                   
          -Issued   conduit  revenue   bond  for   Providence                                                                   
          Hospital Complex.                                                                                                     
          -Ketchikan   shipyard  and  Skagway   ore  terminal                                                                   
          expansions,Cook   Inlet   jack-up   rig  and   JBER                                                                   
          -5,500  permanent  jobs   and  34,200  construction                                                                   
          jobs in the last decade                                                                                               
Commissioner Bell detailed slide 10: "Economic Growth                                                                           
     Alaska Seafood Marketing Institute                                                                                         
          -Volume of  Alaska Seafood exports to  ASMI program                                                                   
          countries  increased by 24  percent in  2011; value                                                                   
          increased by 28 percent.                                                                                              
          -Ex-vessel  salmon value up  29 percent,  from $1.7                                                                   
          to $2.2 billion.                                                                                                      
          -Increased  value  of  fresh,  frozen,  and  shelf-                                                                   
          stable  (canned  and  pouched)  Alaska  seafood  in                                                                   
          U.S. and international markets.                                                                                       
          -Continued   international  focus   on  sustainable                                                                   
          -Expanded  collaboration   with  tourism  marketing                                                                   
          programs,  Alaska Grown,  and  Nutritious Foods  in                                                                   
          Schools grants.                                                                                                       
          -Opened   new  office  in   Brazil  to   serve  the                                                                   
          emerging market.                                                                                                      
2:48:34 PM                                                                                                                    
Commissioner Bell discussed slide 11: "Sustainable Energy."                                                                     
     Alaska Energy Authority                                                                                                    
          -Filed FY13-14 Study Plan with FERC for Susitna-                                                                      
          Watana Hydro.                                                                                                         
          -Renewable  Energy Fund approved $202.5  million in                                                                   
          227 projects to date.                                                                                                 
          -Disbursed $39.2 million in PCE grant payments.                                                                       
          -Trained   22  bulk   fuel  and   32  power   plant                                                                   
          operators;   assistance  to  47   communities,  and                                                                   
          emergency response to 10 communities.                                                                                 
          -44 Bulk Fuel Loan commitments of $12.7 million.                                                                      
          -60   energy   audits  on   commercial   buildings,                                                                   
          potential $1.1 million annual savings.                                                                                
          -Emerging  Energy Technology Fund  Program received                                                                   
          70 proposals - 16 selected for funding in 2012.                                                                       
Commissioner Bell discussed slide 12: "Strong Communities."                                                                     
     Community and Regional Affairs                                                                                             
          -Bulk  Fuel Bridge  Loans (7  percent increase)  to                                                                   
          16 communities.                                                                                                       
          -Fuel   Watch  Initiative  -   850  calls   to  341                                                                   
          communities    to    verify   adequate    financial                                                                   
          resources for fuel supplies.                                                                                          
          -RUBA  assisted  208  communities,  72  communities                                                                   
          met   sustainability    indicators;   trained   161                                                                   
          utility managers.                                                                                                     
          -$1.4 billion  distributed through 1,900  state and                                                                   
          federal  grants  - including  Nutritious  Foods  in                                                                   
          Schools Program.                                                                                                      
          -Almost  $29 million  distributed  for: PILT,  NFR,                                                                   
          fisheries business tax, fisheries landing tax.                                                                        
          -$80 million Community Revenue Sharing.                                                                               
          -Local  Boundary Commission completed  transactions                                                                   
          in 9 communities.                                                                                                     
2:53:27 PM                                                                                                                    
Commissioner Bell discussed slide 13 "Strong Communities                                                                        
     Community and Regional Affairs (cont.)                                                                                     
          -Finalized   digital    orthophoto   maps   in   14                                                                   
          -Emergency   response,  National  Flood   Insurance                                                                   
          Program support.                                                                                                      
     Serve Alaska                                                                                                               
          -285,000  hours  of   volunteer  service,  over  $6                                                                   
          million value.                                                                                                        
     Alcohol Beverage Control Board                                                                                             
          -Licensees  achieved  87  percent  compliance  with                                                                   
          laws,  continuing a steady  increase for  the third                                                                   
          -In a  recent study, Alaska  was shown to  have the                                                                   
          lowest   percentage  of   sales  by  retailers   to                                                                   
          underage persons.                                                                                                     
Commissioner    Bell    discussed   slide    14:    "Consumer                                                                   
     Banking and Securities                                                                                                     
          -52  institutions  examined;   all  profitable  and                                                                   
          well capitalized.                                                                                                     
          -Issued   new  licenses   to   5  premium   finance                                                                   
          companies,   3   payday   lenders,   203   mortgage                                                                   
          broker/lenders,  56   money  services;    issued  6                                                                   
          parity   orders  to   state  chartered   depository                                                                   
          -Issued license  renewals to 12 payday  lenders, 25                                                                   
          premium  finance  companies,   1  loan  company,  1                                                                   
          business    industrial   development    corporation                                                                   
          -5,949  mutual fund  and investment trust  filings,                                                                   
          411 security filings/notice filings.                                                                                  
          -1,243 broker-dealers registered or renewed.                                                                          
          -Collected over $13 million in fees.                                                                                  
Commissioner Bell discussed slide 15: "Consumer Protection                                                                      
     Corporations, Business and Professional Licensing                                                                          
          -Licensees  increased nine percent  for a  total of                                                                   
          63,197  professional licenses  and 66,731  business                                                                   
          -39   professional   licensing  programs   received                                                                   
          revenue  and  expense  reports  reconciled  to  ten                                                                   
         years of state's accounting system data.                                                                               
               Quarterly financial reports are now provided                                                                     
               to all programs, and corrective actions are                                                                      
               ongoing to improve historical practices.                                                                         
          -Streamlined corporate filings.                                                                                       
          -Investigations            received           1,394                                                                   
          intakes/complaints;  opened  463  new  cases;  took                                                                   
          308 licensing actions; and closed 446 cases.                                                                          
2:58:23 PM                                                                                                                    
Commissioner Bell discussed slide 16: "Consumer Protection                                                                      
          -Issued  41,735 licenses; registered  27 purchasing                                                                   
          groups;  admitted  19  new insurance  companies,  1                                                                   
          surplus line insurer and 2 risk retention groups.                                                                     
          -Collected    $65,734,955    in   premium    taxes,                                                                   
          penalties and fees in FY2012.                                                                                         
          -Opened 57 and closed 35 criminal investigations.                                                                     
          -Investigated  290 consumer complaints,  closed 286                                                                   
          complaints,   and    took   action   resulting   in                                                                   
          additional  payments  of $145,888  to consumers  in                                                                   
     Regulatory Commission of Alaska                                                                                            
          -Implemented  electronic  filing  to reduce  filing                                                                   
          costs,    increase   efficiency   and    facilitate                                                                   
          communication    for    general   public,    public                                                                   
          utilities, and pipeline carriers.                                                                                     
          -Approved  railbelt electric  utility agreement  to                                                                   
          purchase  wind energy  over 25-year term  (payments                                                                   
          for  power from  the wind farm  could be  recovered                                                                   
          in utility rates).                                                                                                    
          -Resolved   consumer    complaints   resulting   in                                                                   
          credits to customers in multiple instances.                                                                           
Ms.  Hanrahan discussed  slide  19. She  stressed that  DCCED                                                                   
was attempting to  reduce the number of communities  that are                                                                   
noncompliant  with  management sustainability  indicators  by                                                                   
five percent each year.                                                                                                         
Ms. Hanrahan  discussed  slide 20: "Percentage  of the  Total                                                                   
Department's Budget  By Fund Group."  She explained  that the                                                                   
yellow  bar represented  the designated  general fund,  which                                                                   
reflected various increases to programs.                                                                                        
Ms.  Hanrahan discussed  slide  21:  "Share of  Total  Agency                                                                   
Operations."  She explained  that  DCCED  had various  peaks,                                                                   
based on various increases to funding.                                                                                          
3:04:00 PM                                                                                                                    
Ms.  Hanrahan described  slide 22:  "Continued Budget  Growth                                                                   
Compared to  10- year  plan (GF only)."  She stated  that the                                                                   
black  dotted line  was the  department's ten  year plan  and                                                                   
the  green  dotted line  was  LFD's  extrapolation  of a  9.8                                                                   
annual growth over time.                                                                                                        
Ms.  Hanrahan detailed  slide  23: "Continued  Budget  Growth                                                                   
Compared  to a 10  - Year  plan." She  explained that  it was                                                                   
difficult  to be  comparative  in  DCCED, because  there  are                                                                   
various funding spike years.                                                                                                    
Commissioner  Bell stressed  that  DCCED was  focused on  its                                                                   
inherent strengths,  but was careful  to focus on  the issues                                                                   
in   Alaska   particularly   in    the   areas   of   energy,                                                                   
infrastructure, and helping business thrive.                                                                                    
Co-Chair  Austerman  looked  at  slide  5  and  the  economic                                                                   
growth. He  asked of  the $66  million was used  specifically                                                                   
for economic  Development. Commissioner  Bell responded  that                                                                   
the Division  of Economic  Development was approximately  $28                                                                   
million;  AIDEA   was  nearly  $16  million;   and  ASMI  was                                                                   
approximately $29 million.                                                                                                      
Co-Chair  Austerman   wondered  if   the  $4.4   million  net                                                                   
increase   was  associated  with   ASMI.  Commissioner   Bell                                                                   
responded that  the $4.4 million was predominantly  associate                                                                   
to  a change  in  the legislative  authorization  in  general                                                                   
fund  compared to  the  program receipts  from  ASMI and  the                                                                   
Co-Chair  Austerman asked  slide  3 about  core services  and                                                                   
noted  that economic  development  was not  mentioned on  the                                                                   
page. Commissioner  Bell stated that marketing  servicing and                                                                   
financing  services  were  key to  the  economic  development                                                                   
that was provided by the department.                                                                                            
Co-Chair  Austerman  expressed  concern  about  the  lack  of                                                                   
focus  on economic  development. He  looked at  slide 8,  and                                                                   
asked what  plans were implemented  to increase  the economic                                                                   
tax base  of the state.  Commissioner Bell responded  helping                                                                   
businesses  understand  about preferences,  and  specifically                                                                   
noted  financing   for  the  minors  and   resource  minerals                                                                   
3:09:20 PM                                                                                                                    
Co-Chair  Austerman  remarked  that 90  percent  of  Alaska's                                                                   
income  was in  non-renewable  resources, and  felt that  the                                                                   
presentation did  not showcase a  growth of an  economic base                                                                   
across the state.                                                                                                               
Representative  Gara expressed  interest  in  the numbers  of                                                                   
employees  added in  the non-renewable  sector.  Commissioner                                                                   
Bell  responded   that  she  would  provide   data  regarding                                                                   
economic  growth in  the non-renewable  resource  development                                                                   
Representative  Gara wondered how  the department  could link                                                                   
the  funds to  specific  economic growth.  Commissioner  Bell                                                                   
agreed to provide that                                                                                                          
Representative  Edgmon wondered  if AIDEA  and AEA should  be                                                                   
separated into  the two  boards. Commissioner Bell  responded                                                                   
that AIDEA  and AEA were  served by  one board and  served by                                                                   
tools. She thought  that the follow up would  prove valuable.                                                                   
She  believed that  the  organization  was growing,  and  the                                                                   
composition of the  board had changed from  two commissioners                                                                   
and five commissioners.                                                                                                         
3:15:50 PM                                                                                                                    
Representative  Edgmon  pointed out  that  slide 18  required                                                                   
additional examination.  He remarked  that 90 percent  of the                                                                   
energy in  the state  was provided  by hydrocarbons.  He felt                                                                   
that Alaska made only slight progress.                                                                                          
Representative  Holmes echoed  the interest  in working  with                                                                   
the  economic development  piece.  She  asked for  additional                                                                   
information  on  tourism. Commissioner  Bell  responded  that                                                                   
development    specialists   were    responsible   for    the                                                                   
implementation of  the tourism marketing program.  She stated                                                                   
that the  legislative intent  was both  formal and  informal.                                                                   
The   engagement  with   the  business   community  was   the                                                                   
responsibility  of DCCED,  and the  planning process  allowed                                                                   
the leverage of the state's programs.                                                                                           
3:21:09 PM                                                                                                                    
Vice-Chair Neuman  asked for  more information regarding  the                                                                   
AIDEA  investment  in the  rig  in Cook  Inlet.  Commissioner                                                                   
Bell  responded  that  AIDEA   had  the  ability  to  own  or                                                                   
partially  own   projects.  She  stated  that   the  rig  was                                                                   
partially   owned  by   AIDEA.  She   explained  that   AIDEA                                                                   
leveraged,  and  received four  to  one leverage  of  private                                                                   
funding for that  project. She stressed that  DCCED felt that                                                                   
the investment  in Cook  Inlet was prudent  to the  board and                                                                   
staff, but  she expressed  frustration that  the rig  was not                                                                   
currently drilling.                                                                                                             
Vice-Chair  Neuman   wondered  when   the  rig   would  begin                                                                   
producing.  Commissioner   Bell  responded  that   she  would                                                                   
provide more detailed information.                                                                                              
Co-Chair  Austerman  shared that  a  CDQ group  from  western                                                                   
Alaska  made some  inquiries regarding  the  ability to  move                                                                   
$68 million  worth of business  out of Seattle to  Alaska. He                                                                   
stated  that  the legislature  appropriated  a  few  planning                                                                   
dollars to examine  the dock in Seward. He  wondered if DCCED                                                                   
had  communicated  with  that CDQ  group.  Commissioner  Bell                                                                   
replied  that   she  shared   many  concerns  regarding   the                                                                   
coordinated  response times.  She looked  at DCCED stayed  in                                                                   
regular communication  with the CDQ group. She  shared that a                                                                   
portion of  the fleet was  now able  to be housed  in Alaskan                                                                   
waters over  the winter. She  stated that the  waterfront and                                                                   
business  infrastructure needed  to be  updated, in  order to                                                                   
accommodate the fleet.                                                                                                          
Co-Chair Austerman  requested a copy  of the plan on  who was                                                                   
handling the  project. Commissioner  Bell indicated  that she                                                                   
would provide that information.                                                                                                 
Representative  Munoz  wondered  what extent  the  Regulatory                                                                   
Commission  of Alaska  considered  state  energy policy  when                                                                   
reviewing applications.  Commissioner Bell offered  to follow                                                                   
up at a later date.                                                                                                             
3:27:20 PM                                                                                                                    
Vice-Chair Neuman  referred a request  for a fifty  match for                                                                   
tourism  marketing.  Commissioner  Bell  responded  that  the                                                                   
funding  in  the  governor's request  was  $16  million.  She                                                                   
stated  that DCCED  leveraged  those  funds with  some  funds                                                                   
from  communities  and  businesses that  participate  in  the                                                                   
state's program.  She shared that there was  statute language                                                                   
that  stated that  if the  state contracts  with a  qualified                                                                   
trade organization there would be a specific match.                                                                             
Vice-Chair Neuman  asked if Alaska  was following the  law as                                                                   
per statute.  Commissioner Bell  stated that entering  into a                                                                   
contract would require compliance with the statute.                                                                             
Representative  Thompson  asked  if the  marketing  plan  was                                                                   
considered part  of a match.  Commissioner Bell  replied that                                                                   
the match  would only  apply if  the contracted business  was                                                                   
directly engaged with a state program.                                                                                          
Co-Chair Austerman discussed the next meeting.                                                                                  
HB  65   was  HEARD  and   HELD  in  committee   for  further                                                                   
HB  66   was  HEARD  and   HELD  in  committee   for  further                                                                   
3:31:22 PM                                                                                                                    
The meeting was adjourned at 3:31 p.m.                                                                                          

Document Name Date/Time Subjects
FY14 HFin DCCED Overview 1_25.pdf HFIN 1/25/2013 1:30:00 PM
DEC Presentation for HFC 1.25.2013.pdf HFIN 1/25/2013 1:30:00 PM
DEC HFIN Overview
DEC Response OHSRPRF 2011-2012 Report .pdf HFIN 1/25/2013 1:30:00 PM
DEC Response Overview 1-25
1.29.13 - DEC Response to 1-25-13 Questions.pdf HFIN 1/25/2013 1:30:00 PM
DEC Overview Response 1=25
DEC Response 2.5.2013 - Rep Gara FINAL.pdf HFIN 1/25/2013 1:30:00 PM
DEC Overview Response
DEC Response RF Chart Gara.pdf HFIN 1/25/2013 1:30:00 PM
DEC Overview Response
DEC Response RF Chart 10 Year Activity FY2003 - FY2012.pdf HFIN 1/25/2013 1:30:00 PM
DEC Overview Response
DEC Response2.5.2013 - Rep Kawasaki FINAL.pdf HFIN 1/25/2013 1:30:00 PM
DEC Overview Response