Legislature(2013 - 2014)HOUSE FINANCE 519

03/04/2013 01:30 PM FINANCE

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01:32:29 PM Start
01:33:31 PM HB65 || HB66
03:48:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
- Introduction & adoption of CS incorporating
subcommittee recommendations
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 4, 2013                                                                                            
                         1:32 p.m.                                                                                              
1:32:29 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Austerman called the House Finance Committee                                                                           
meeting to order at 1:32 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 Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative David Guttenberg                                                                                                 
ALSO PRESENT                                                                                                                  
Pete Ecklund, Staff, Representative Alan Austerman; Joan                                                                        
Brown, Staff, Representative Alan Austerman.                                                                                    
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."                                                                                                        
1:33:31 PM                                                                                                                    
Co-Chair Austerman  discussed the schedule for  the week. He                                                                    
asked committee members to  have operating budget amendments                                                                    
to his  office by  5:00 p.m. on  Wednesday. He  talked about                                                                    
protocol for the current meeting.                                                                                               
1:34:35 PM                                                                                                                    
Co-Chair Stoltze MOVED to ADOPT the proposed committee                                                                          
substitute for HB 65, Work Draft 28-GH1799\C (Bailey,                                                                           
3/2/13). There being NO OBJECTION, it was so ordered.                                                                           
PETE ECKLUND, STAFF, REPRESENTATIVE ALAN AUSTERMAN, read                                                                        
from a statement:                                                                                                               
     This  year the  Governor  submitted  an FY14  operating                                                                    
     budget  with  modest  growth   over  the  current  FY13                                                                    
     budget.   Including  the   amendments  submitted   mid-                                                                    
     February,  the General  Fund growth  in agency  budgets                                                                    
     was  just  1.3%.  That is  a  significant  downturn  in                                                                    
     agency growth  from the average  of 6.5% over  the last                                                                    
     ten years.                                                                                                                 
     While  that  is  encouraging and  commendable,  further                                                                    
     work to  slow the growth  of government remains.   When                                                                    
     the  legislature  left  last   session,  there  was  an                                                                    
     expectation that  there would be an  end-of-fiscal year                                                                    
     surplus  of   over  $400  million  dollars.   When  the                                                                    
     legislature convened in  January, those projections had                                                                    
     changed.  Now it is likely  we will be using some level                                                                    
     of  savings in  FY13; perhaps  hundreds of  millions of                                                                    
     The  price  per  barrel  to   balance  our  budget  has                                                                    
     increased from  $64 in FY10  to $110 in FY13.   Because                                                                    
     of  declining  production, if  we  have  the same  size                                                                    
     budget in FY14  as FY13, it would take  $115 dollar oil                                                                    
     to balance our budget.                                                                                                     
     Since the  price forecast for  oil in FY14  is $109.61,                                                                    
     if  our FY14  spending  equaled FY13,  we  would run  a                                                                    
     deficit of over $900 Million dollars.                                                                                      
     In order to further lower  the growth of government and                                                                    
     to  preserve  savings,   subcommittees  were  asked  to                                                                    
     review  and  develop  their respective  agency  budgets                                                                    
     with   an  overall   goal  of   no  growth   in  agency                                                                    
     Mr. Co-Chair,  you also  directed the  subcommittees to                                                                    
    review the agency budgets via a five-step process:                                                                          
     1.   Review  the  agency  Mission, Core  Services,  and                                                                    
     Performance  Measures (with  the  thought that  through                                                                    
     results based  budgeting, agencies should  be measuring                                                                    
     the effectiveness  of programs in order  to demonstrate                                                                    
     what   value   the   public  is   receiving   for   our                                                                    
     2.   Review budget changes since  FY2005, the last year                                                                    
     of relatively flat  budgets - this enables  us to track                                                                    
     the  GF  and  Total  Funds changes  over  the  ten-year                                                                    
     period  via graphs  (with extensive  data reports  also                                                                    
     3.   Review agency 10-year plans  - this highlights the                                                                    
     future budget  changes anticipated  by the  agency, for                                                                    
     instance, some  agencies have shown  their expectations                                                                    
     of  federal  funding   reductions  with  an  associated                                                                    
     backfill of general funds                                                                                                  
1:38:20 PM                                                                                                                    
Mr. Ecklund continued to read from a statement:                                                                                 
     4.   Accountability check:  Review audit  findings made                                                                    
     by the Division of  Legislative Audit - this highlights                                                                    
     areas  where  improvement  was or  is  needed  and  the                                                                    
     agency's response to those findings                                                                                        
     5.   Get  a status  update on  budget changes  approved                                                                    
     for the current fiscal year:  FY13 - this indicates the                                                                    
     agency's responsiveness to  changes incorporated in the                                                                    
     current   year  budget;   for  example;   are  projects                                                                    
     started,  are  positions  filled,  are  backlogs  being                                                                    
     processed more quickly, etc.                                                                                               
     Then,  after  looking  at   the  agencies  mission  and                                                                    
     results, looking back, looking  forward, and looking at                                                                    
     current year  progress, subcommittees had a  context in                                                                    
     which to review the budget requests for FY14.                                                                              
     I'd  like  to  thank  David   Teal  and  the  staff  at                                                                    
     Legislative Finance as they  were integral in preparing                                                                    
     the 2005 Look-back graphs  and associated data, 10-year                                                                    
     plan graphs,  and consolidating information  on current                                                                    
     year  progress   for  the  subcommittees,   along  with                                                                    
     providing their normal budget  support function for the                                                                    
     subcommittees.   The Legislature  is fortunate  to have                                                                    
     such  a talented  group assisting  with development  of                                                                    
     the budget.                                                                                                                
     I'd also like  to thank Karen Rehfeld and  the staff of                                                                    
     the   Office  of   Management  and   Budget,  and   the                                                                    
     leadership of  the Executive Branch agencies  for their                                                                    
     help in the budget review process.                                                                                         
     Do  we have  more  work to  do on  this  process?   The                                                                    
     answer  is "yes."   We  still need  to spend  more time                                                                    
     with  agency  staff  to ensure  alignment  of  agencies                                                                    
     mission,  core services,  and performance  measures and                                                                    
     to  finalize efficiency  and effectiveness  performance                                                                    
     measures. The subcommittees had  just 46 days to review                                                                    
     budgets  prior to  the March  1 subcommittee  close-out                                                                    
     deadline.   We plan to continue  subcommittee work over                                                                    
     the  interim,  specifically   with  the  Department  of                                                                    
     Health  and  Social  Services,   and  during  the  next                                                                    
     legislative session.                                                                                                       
     Mr.  Co-Chair,  you   charged  the  Subcommittees  with                                                                    
     reviewing  their assigned  agency budgets  contained in                                                                    
     section  1  (the  numbers  section)  of  the  operating                                                                    
     budget  bill, HB  65, and  in section  1 of  the mental                                                                    
     health budget bill, HB 66.                                                                                                 
     Language  section  appropriations  were not  under  the                                                                    
     purview of the  subcommittees. Language section changes                                                                    
     will be explained by Joan next.                                                                                            
1:40:49 PM                                                                                                                    
Mr. Ecklund continued to read from a statement:                                                                                 
     Subcommittees were also  provided with the supplemental                                                                    
     budget requests  submitted by  the Governor  on January                                                                    
     29  and were  charged with  reviewing their  respective                                                                    
     agencies' non-language  budget amendments  submitted by                                                                    
     the  Governor  on  February  12.    As  expected,  many                                                                    
     supplemental  requests were  precursors to  FY14 budget                                                                    
     amendments.    We  appreciate the  efforts  of  OMB  to                                                                    
     highlight  those  facts   in  both  their  supplemental                                                                    
     spreadsheet and their amendment spreadsheet.                                                                               
     Mr.  Co-Chair,  all  of the  subcommittee  reports  are                                                                    
     found on  the Legislative Finance website.   Reports on                                                                    
     these  two  committee  substitute bills  will  also  be                                                                    
     posted on  the Legislative Finance  website immediately                                                                    
     after this hearing.                                                                                                        
     And now to the numbers:                                                                                                    
     The  operating   budget  Committee   Substitute  totals                                                                    
     $9.718  Billion  (all  funds), a  reduction  of  $195.9                                                                    
     Million from the Governor's  Amended budget (an overall                                                                    
     2.0% reduction).                                                                                                           
     Agency budgets  have been reduced  by $74.2  Million in                                                                    
     General Funds  from the  Governor's Amended  budget and                                                                    
     $6.7 Million from FY13 Management Plan.                                                                                    
     So Mr.  Co-Chair, at  this point we  have met  our goal                                                                    
     and  are  below  current  year GF  spending  in  agency                                                                    
     Combined  agency  operations  and  the  statewide  item                                                                    
     General funds equal $6.403 Billion,  for a GF reduction                                                                    
     of  $203.2  Million ($125  Million  is  related to  the                                                                    
     AIDEA sustainable  energy and  transmission development                                                                    
     fund and will be addressed in a fiscal note)                                                                               
     Other Funds  increased $769,000 for  a total  of $1.281                                                                    
     Billion,  and   Federal  Receipts  increased   by  $6.5                                                                    
     million to $2.033 Billion                                                                                                  
     Although  there are  general fund  reductions from  the                                                                    
     Governor's  amended budget  and  from Management  plan,                                                                    
     there are $108.6 Million of  GF increases from adjusted                                                                    
     The  legislature   begins  its  budget   analysis  from                                                                    
     adjusted  base  and  builds   the  budget  from  there.                                                                    
     Increases  from adjusted  base have  been made  in most                                                                    
     agencies,  although   not  as  much  as   the  Governor                                                                    
1:43:29 PM                                                                                                                    
JOAN BROWN, STAFF, REPRESENTATIVE ALAN AUSTERMAN, read from                                                                     
a statement:                                                                                                                    
     Mr. Co-Chair, section  1 of HB 65,  the numbers section                                                                    
     of  the  bill, is  the  compilation  of the  department                                                                    
     budget  recommendations adopted  by  the House  Finance                                                                    
     budget  subcommittees,  with  one exception.    In  the                                                                    
     Department of Corrections,  after consultation with the                                                                    
     Subcommittee Chair,  we included  a fund  source change                                                                    
     of   $674,400  from   unrestricted  general   funds  to                                                                    
     designated  general funds  in  the  Inmate Health  Care                                                                    
     appropriation,  Physical  Health  Care  allocation,  to                                                                    
     correspond  with  a  change we  made  in  the  language                                                                    
     section, which I will describe later.                                                                                      
     Mr.  Co-Chair,   now  I'll  go  through   the  language                                                                    
     sections  and  indicate  whether  or not  we  made  any                                                                    
     changes and  if so, what  those changes are.   Starting                                                                    
     on page 55 of the bill:                                                                                                    
     We made no changes to:                                                                                                     
     Section 4, Legislative Intent                                                                                              
     Section 5, Costs of Job Reclassifications                                                                                  
     Section 6, Personal Services Transfers or to                                                                               
     Section 7, Alaska Aerospace Corporation                                                                                    
     Page 55 Section 8, ALASKA HOUSING FINANCE CORPORATION                                                                      
     Mr. Co-Chair, in subsection (a)  we replaced the phrase                                                                    
     "adjusted net  income" with the  phrase "change  in net                                                                    
     assets" to conform with AHFC's statutes;                                                                                   
     In subsection  (b) we made changed  the lead-in wording                                                                    
     to reflect  the fact  that AHFC  will be  retaining the                                                                    
     entire $10.6  Million dollar dividend  in order  to pay                                                                    
     debt service;                                                                                                              
     In subsection (c) we changed  the location of where any                                                                    
     excess AHFC Dividend funds would  be deposited from the                                                                    
     Budget  Reserve Fund  as the  Governor proposed  to the                                                                    
     Alaska  Capital  Income  Fund.    This  recognizes  the                                                                    
     legislature's "tradition" of  using corporate dividends                                                                    
     for capital  projects.   However, no  "excess" dividend                                                                    
     funds are anticipated.                                                                                                     
     Page 56 Section 9, ALASKA PERMANENT FUND CORPORATION                                                                       
     Mr.  Co-Chair, we  accepted  the Governor's  amendments                                                                    
     correcting  the amounts  in  subsection  (a) from  $943                                                                    
     Million dollars  to $958 Million for  the dividend fund                                                                    
     and  in  subsection  (b)  from  $958  Million  to  $939                                                                    
     Million dollars for inflation proofing.                                                                                    
     Page 57  Section 10, ALASKA INDUSTRIAL  DEVELOPMENT AND                                                                    
     EXPORT AUTHORITY                                                                                                           
     Mr.  Co-Chair, just  as we  did in  the Alaska  Housing                                                                    
     Finance Corporation section,  we revised subsection (b)                                                                    
     so if there should be  any excess AIDEA Dividend funds,                                                                    
     they will  be deposited into the  Alaska Capital Income                                                                    
     Fund, instead of the budget  reserve fund as originally                                                                    
     proposed.    Again,  no  "excess"  dividend  funds  are                                                                    
     Page 57 Section 11, DEPARTMENT OF ADMINISTRATION                                                                           
     We made no change.                                                                                                         
     Pages  57  - 59  Section  12,  DEPARTMENT OF  COMMERCE,                                                                    
     COMMUNITY, AND ECONOMIC DEVELOPMENT                                                                                        
     In  subsection (d)  we added  the  estimated amount  of                                                                    
     $10.1  Million dollars  to the  salmon enhancement  tax                                                                    
     revenue appropriation for informational purposes                                                                           
     In subsection  (e) we also  added the  estimated amount                                                                    
     of $1.9 Million dollars  to the seafood development tax                                                                    
     In  subsection  (h)  paragraph  (1)  we  made  a  minor                                                                    
     $13,300  dollar   correction  to  the   Alaska  Seafood                                                                    
     Marketing  Institute's  program receipt  carry  forward                                                                    
     projection  from  $15,562,600  dollars  to  $15,549,300                                                                    
     We deleted subsection (j),  the $500,000 dollar general                                                                    
     fund  appropriation  to  Commerce for  payment  to  the                                                                    
     Department  of  Administration   for  the  Alaska  Land                                                                    
     Mobile  Radio  system  costs  on  behalf  of  political                                                                    
1:47:27 PM                                                                                                                    
Ms. Brown continued to read from a statement:                                                                                   
    Pages 59 - 60 Section 13, DEPARTMENT OF CORRECTIONS                                                                         
     This  is a  new  language section.  In  section 1,  the                                                                    
     subcommittee  reduced  $2  Million dollars  of  General                                                                    
     Funds due  to the expectation that  the department will                                                                    
     receive  $2 Million  dollars more  in Federal  Receipts                                                                    
     than  had originally  been  budgeted.  Over the  period                                                                    
     FY11   through  FY13,   the  department   has  annually                                                                    
     collected  on  average  nearly  $1.9  Million  more  in                                                                    
     Federal Receipts.   That  amount was  rounded up  to $2                                                                    
     Million  and  added  to   the  department's  budget  in                                                                    
     section 1.                                                                                                                 
     In order to ensure  that Corrections is not underfunded                                                                    
     if the  Federal Funds are  not received, we  added this                                                                    
     backstop language  to the effect that  any reduction in                                                                    
     the collection  of the appropriated Federal  Funds will                                                                    
     be replaced by General Funds.                                                                                              
     Page 60  Section 14, DEPARTMENT OF  EDUCATION AND EARLY                                                                    
     We made no change.                                                                                                         
     Page 60 Section 15, DEPARTMENT OF FISH AND GAME                                                                            
     We just added the $700,000  dollar estimate of the dive                                                                    
     fishery management assessment.                                                                                             
     We deleted  what had  been Section  15 in  the original                                                                    
     bill,  for   the  DEPARTMENT   OF  HEALTH   AND  SOCIAL                                                                    
     SERVICES.  The section  had  provided backstop  general                                                                    
     funds  if the  amounts appropriated  in section  1 were                                                                    
     insufficient to  pay energy assistance benefits  to all                                                                    
     qualified applicants.                                                                                                      
     Pages  60 -  61  Section 16,  DEPARTMENT  OF LABOR  AND                                                                    
     WORKFORCE DEVELOPMENT                                                                                                      
     We made no change.                                                                                                         
     Page  61   Section  17,  DEPARTMENT  OF   MILITARY  AND                                                                    
     VETERANS AFFAIRS                                                                                                           
     We made no change.                                                                                                         
     Pages  61  -  62  Section  18,  DEPARTMENT  OF  NATURAL                                                                    
     In  subsection  (b)  we just  corrected  the  estimated                                                                    
     amount from $75,000 dollars to $50,000                                                                                     
     In  subsection  (c)  we also  corrected  the  estimated                                                                    
     amount from $25,000 to $50,000 dollars                                                                                     
     Page 62 Section 19, DEPARTMENT OF REVENUE                                                                                  
     We made no change.                                                                                                         
     Pages 62 - 64 Section 20, OFFICE OF THE GOVERNOR                                                                           
     We did  not include the Governor's  budget amendment of                                                                    
     $1,750,000  dollars  for   costs  associated  with  the                                                                    
     redistricting   board.     The   Co-Chair  intends   to                                                                    
     consolidate  this  item   with  the  FY13  supplemental                                                                    
     request  for an  overall supplemental  appropriation of                                                                    
     $2   Million   dollars   of  general   funds   to   the                                                                    
     redistricting board  for the fiscal years  FY13 through                                                                    
     Page 64  Section 21, UNIVERSITY  OF ALASKA  and Section                                                                    
     22, BANKCARD SERVICES                                                                                                      
     We made no changes.                                                                                                        
     Pages 65 -  69 Section 23, DEBT  AND OTHER OBLIGATIONS.                                                                    
     We made five changes in this section:                                                                                      
     First,  on  page  68, we  added  the  appropriation  in                                                                    
     subsection (h) paragraph (8)  which uses the $1,040,000                                                                    
     dollar balance of the debt  retirement fund to help pay                                                                    
     debt service  on the  general obligation  bonds, series                                                                    
     2010A and B.                                                                                                               
     Second, we  then reworded subsection (h)  paragraph (9)                                                                    
     to incorporate  a reference to  our new  subsection (h)                                                                    
     paragraph  (8) and  to reduce  the estimated  amount of                                                                    
     general  funds  from  $3.7   Million  to  $2.7  Million                                                                    
     Third,  in subsection  (h) paragraph  (10) we  accepted                                                                    
     the  Governor's  amendment   to  reduce  the  estimated                                                                    
     general fund  amount from $35 Million  to $17.7 Million                                                                    
     dollars  for debt  service on  four general  obligation                                                                    
     bonds series: 2013A, B, C, and D.                                                                                          
1:50:47 PM                                                                                                                    
Ms. Brown continued to read from a statement:                                                                                   
     Fourth, we  deleted subsection (h) paragraph  (13) that                                                                    
     had  appropriated an  estimate of  $300,000 dollars  of                                                                    
     general  funds to  pay remarketing  costs if  the state                                                                    
     issued  general   obligation  bonds  with   a  variable                                                                    
     interest  rate.   The  Co-Chair  does  not believe  the                                                                    
     issuance  of  variable rate  bonds  is  prudent and  so                                                                    
     removed this appropriation.                                                                                                
     And, finally, in subsection (m)  the word "airport" was                                                                    
     made plural and a statutory reference corrected.                                                                           
     Pages 69  - 70  Section 24,  FEDERAL AND  OTHER PROGRAM                                                                    
     We made no change.                                                                                                         
     Pages 70 - 71 Section 25, FUND CAPITALIZATION                                                                              
     In  subsection (b),  we reduced  the capitalization  of                                                                    
     the Crime Victim Compensation  Fund by $674,400 dollars                                                                    
     to maintain  the 90% --  10% funding ratio  between the                                                                    
     Department   of  Corrections   and  the   Crime  Victim                                                                    
     Compensation  Fund  in  the use  of  the  PFD  Criminal                                                                    
     As  I  mentioned earlier,  in  Section  1, the  numbers                                                                    
     section, of  HB 65, we  made a corresponding  change to                                                                    
     the Department  of Corrections  budget in  the Physical                                                                    
     Health  Care  allocation,  by  reducing  general  funds                                                                    
     $674,400 dollars and increasing  the PFD Criminal Funds                                                                    
     by the same amount.                                                                                                        
     In  subsection (h)  we deleted  the $2M  dollar General                                                                    
     Fund   appropriation   for   the  Trauma   Care   Fund.                                                                    
     Appropriations  to this  fund are  discretionary.   The                                                                    
     legislature capitalized  the fund with $2.5  million in                                                                    
     FY11  when it  was created,  did not  add any  money in                                                                    
    FY12, and appropriated $2 million dollars in FY13.                                                                          
     Pages 71 - 74 Section 26,  FUND  TRANSFERS.    We  only                                                                    
     made a few changes in this section:                                                                                        
     In subsection (f) on page  72, we reduced the estimated                                                                    
     amount of the  bulk fuel revolving loan  fund fees from                                                                    
     $70,000  dollars  down  to  $45,000,  the  actual  fees                                                                    
     collected in FY13 prior to  the termination of the fees                                                                    
     on January 1, 2013.                                                                                                        
     In subsection  (h) paragraph  (2) on  page 73,  we also                                                                    
     reduced  the  estimate  of  the  one  cent  per  barrel                                                                    
     surcharge  down from  $1.9 Million  to $1.1  Million as                                                                    
     the surcharge  was suspended  January 1,  2013, because                                                                    
     the balance of the  Oil and Hazardous Substance Release                                                                    
     Response  Account  had  reached   its  ceiling  of  $50                                                                    
     In  subsection (n),  the  statutory  reference for  the                                                                    
     regional  educational attendance  area school  fund was                                                                    
     We did  not include the  Governor's request for  a $125                                                                    
     Million  dollar general  fund deposit  into the  Alaska                                                                    
     Industrial    Development   and    Export   Authority's                                                                    
     sustainable energy transmission  and supply development                                                                    
     fund.  Instead  this amount should be  added to AIDEA's                                                                    
     fiscal  note  to HB  74,  their  Liquefied Natural  Gas                                                                    
     Page 74 Section 27, RETIREMENT SYSTEM FUNDING                                                                              
     We made no change.                                                                                                         
     Pages  74   -  76   Section  28,  SALARY   AND  BENEFIT                                                                    
     In subsection (a)  we deleted the word  "ongoing" as it                                                                    
     is not  needed, in  paragraph (6)  we changed  the word                                                                    
     "union"  to  "unit" and  added  a  new bargaining  unit                                                                    
     agreement as paragraph (8)  for the Alaska Correctional                                                                    
     Officers  Association.   This was  a Governor's  budget                                                                    
     amendment and  the funding ($5,671,000) is  included in                                                                    
     section 1.                                                                                                                 
     In subsections  (c) and (d) the  phrase "appropriations                                                                    
     made   by    this   Act"   was   corrected    to   read                                                                    
     "appropriations made in this Act".                                                                                         
1:54:48 PM                                                                                                                    
Ms. Brown continued to read from a statement:                                                                                   
     Page 76 Section 29, SHARED TAXES AND FEES                                                                                  
     The  only  change  we  made  was to  add  a  column  in                                                                    
     subsection (a) to reflect the  estimated amounts of the                                                                    
     six listed taxes for informational purposes.                                                                               
     Pages  76  -  77  Section  30,  AMERICAN  RECOVERY  AND                                                                    
     REINVESTMENT ACT OF 2009  and Section 31, RATIFICATIONS                                                                    
     OF SMALL AMOUNTS IN STATE ACCOUNTING SYSTEM                                                                                
     We made no changes to these sections                                                                                       
     Page 77 Section 32, BUDGET RESERVE FUND                                                                                    
     We made no change                                                                                                          
     Page 7 Section 33, LAPSE OF APPROPRIATIONS                                                                                 
     The only  change we made  was to update  section number                                                                    
     Page 77 Section 34, RETROACTIVITY                                                                                          
     We made no change.                                                                                                         
     Page 77 Section 35                                                                                                         
     We added this new  effective date section applicable to                                                                    
     Section 30,  American Recovery and Reinvestment  Act of                                                                    
     2 thousand 9 and  Section 34, the Retroactivity section                                                                    
     as both take effect on June 30, 2013.                                                                                      
     Page 77 Section 36                                                                                                         
     We made no change.                                                                                                         
     Page 77 Section 37                                                                                                         
     We made no change other than to update section number                                                                      
     references; the bill is effective July 1, 2013.                                                                            
Representative Gara  looked at agency summary  general funds                                                                    
and asked for  further detail on the document.  He asked how                                                                    
the subcommittee  operating budget number of  $9.718 billion                                                                    
had  been  compiled;  he  wondered  if  federal  funds  were                                                                    
included in the number.                                                                                                         
Mr. Ecklund  replied that four  reports labeled A  through D                                                                    
were included in  members' packets (copy on  file). Report A                                                                    
pertained  to  the  numbers  section of  the  bill  and  was                                                                    
limited to general funds. Report  B included the numbers and                                                                    
language  sections of  the bill  related  to general  funds.                                                                    
Report  C referred  to the  numbers section  for all  funds.                                                                    
Report D pertained to the  numbers and language sections for                                                                    
all funds. He  pointed to statewide total  of $9.718 billion                                                                    
(Report  D,  page  7,   House  subcommittee  column),  which                                                                    
included all funds.                                                                                                             
1:58:08 PM                                                                                                                    
Representative Gara  asked for verification that  the figure                                                                    
represented  a  2  percent  reduction  from  the  governor's                                                                    
budget proposal and  a $200 million increase  from the prior                                                                    
year's adjusted base.                                                                                                           
Mr. Ecklund  responded that the report  pertained to numbers                                                                    
and language for all funds  and pointed to the column titled                                                                    
"Adj  Base to  Hse Subco";  the  first total  in the  column                                                                    
showed  that the  budget was  $158,255,200 over  the numbers                                                                    
and language. He pointed to  the last column showing a total                                                                    
of  $67,959,200  less  than the  governor's  amended  budget                                                                    
proposal (in  all funds). When factoring  in statewide items                                                                    
including   debt   service,  fund   capitalization,   direct                                                                    
appropriations  to  retirement, and  special  appropriations                                                                    
the  budget  (for  all  funds,  numbers  and  language)  was                                                                    
$193,000,000 above the adjusted  base and $195,000,000 below                                                                    
the governor's amended budget proposal.                                                                                         
Representative  Wilson asked  about a  budget item  that had                                                                    
been removed  and put  into HB 74.  Ms. Brown  answered that                                                                    
the  item  was a  budget  amendment  that  had been  on  the                                                                    
administration's fiscal  summary totaling  $125,000,000, but                                                                    
it had  not been  included in  the language  of the  bill. A                                                                    
budget amendment  had been submitted that  the House Finance                                                                    
Committee did not adopt.                                                                                                        
2:00:40 PM                                                                                                                    
Co-Chair  Stoltze  MOVED  to ADOPT  the  proposed  committee                                                                    
substitute  for  HB  66,   Work  Draft  28-GH1797\C  (Baily,                                                                    
3/2/13). There being NO OBJECTION, it was so ordered.                                                                           
Ms. Brown read from a statement:                                                                                                
     Mr. Co-Chair, now I'll describe  the changes we made in                                                                    
     the Mental  Health bill, HB  66.   Before I get  to the                                                                    
     language, I need to mention  the change made on Page 11                                                                    
     in Section 4, CAPITAL PROJECTS.                                                                                            
     We  removed  one of  the  seven  mental health  capital                                                                    
     projects from the  bill:  it was the  Health and Social                                                                    
     Services  project  for   MH  Deferred  Maintenance  and                                                                    
     Accessibility  Improvements  for   $1  million  dollars                                                                    
     General  Fund/Mental Health.    In its  version of  the                                                                    
     Mental  Health bill,  the other  body  will likely  add                                                                    
     back that  project and remove the  six capital projects                                                                    
     we included, thus  making the all of  the mental health                                                                    
     capital projects subject to Conference Committee.                                                                          
Co-Chair   Stoltze  relayed   that  creating   a  conference                                                                    
committee on  the budget was  a common  procedural practice.                                                                    
He noted  that the  committee was  respectful of  the budget                                                                    
put  forth  by  the  Alaska Mental  Health  Trust  Authority                                                                    
(AMHTA). He furthered that the  practice did not represent a                                                                    
deliberate effort to excise a project from the budget.                                                                          
Ms. Brown resumed reading from a statement:                                                                                     
     Mr. Co-Chair,  the language sections  begin on  Page 14                                                                    
     Section  6,  PURPOSE  and Section  7,  NONGENERAL  FUND                                                                    
     We made no changes.                                                                                                        
     Pages   14  -   15  Section   8,  SALARY   AND  BENEFIT                                                                    
     ADJUSTMENTS.    In subsection  (a), as we did in HB 65,                                                                    
     we added  a new bargaining unit  agreement as paragraph                                                                    
     (8) for the Alaska Correctional Officers Association.                                                                      
     We also made  the same corrections in  subsections ( c)                                                                    
     and (d):  the phrase "appropriations made  by this Act"                                                                    
     was changed to read "appropriations made in this Act".                                                                     
     Page 16 Section 11                                                                                                         
     We  added   a  new  effective  date   section  for  the                                                                    
     reappropriation in section 9,  making it effective June                                                                    
     30, 2013.                                                                                                                  
     Page 16 Section 12                                                                                                         
     We  changed  the wording  to  reflect  the addition  of                                                                    
     section 11.  This bill is also effective July 1, 2013.                                                                     
2:03:33 PM                                                                                                                    
Co-Chair Austerman  announced that the committee  would hear                                                                    
reports from subcommittee chairs.                                                                                               
Representative  Holmes reviewed  the  budget highlights  for                                                                    
the Department  of Administration (DOA). The  budget totaled                                                                    
$334,745,400  including   $84,609,200  unrestricted  general                                                                    
funds  (UGF), $24,285,900  designated  general funds  (DGF),                                                                    
$222,056,600  in  other  funds, and  $3,793,700  in  federal                                                                    
funds.  The total  amount represented  a  decrease from  the                                                                    
governor's amended  FY 14 request  of $1,839,300  in general                                                                    
funds (GF); and an increase from  the FY 14 adjusted base of                                                                    
$1,486,100  UGF   and  $312,500  DGF,  and   a  decrease  of                                                                    
$1,200,000  in  federal funds.  The  budget  would also  add                                                                    
three temporary positions.                                                                                                      
Representative Holmes communicated  that items accepted from                                                                    
the   governor's   proposed   budget  were   a   centralized                                                                    
administrative  core  services  increase in  the  amount  of                                                                    
$725,400;  retirement  and benefits  through  Administrative                                                                    
Services for  consolidation and atomization of  processes in                                                                    
the  amount  of  $323,900  from  the  group  benefits  fund,                                                                    
$380,700  from  the   Public  Employees'  Retirement  System                                                                    
(PERS)  trust  fund,   $153,900  from  Teachers'  Retirement                                                                    
System  (TRS), $3,900  from the  Judicial Retirement  System                                                                    
(JRS) fund,  and $12,600 from  the National Guard  and Naval                                                                    
Militia  Retirement  System   (NGNMRS)  fund;  approximately                                                                    
$1,500,000 from the Group Health  and Life Benefits fund for                                                                    
a new  third-party administrator for the  AlaskaCare system;                                                                    
$465,900  in  interagency  receipts and  $197,700  from  the                                                                    
public building fund  to cover costs for  space and services                                                                    
provided to  user agencies; $1,200,000 from  the information                                                                    
services  fund  and  a decrease  of  $1,700,000  in  federal                                                                    
receipts for  Enterprise Technology Services (ETS)  in order                                                                    
to eliminate uncollectable federal  receipt authority and to                                                                    
add additional receipt authority from other departments.                                                                        
Representative Holmes  continued to discuss the  DOA budget.                                                                    
She  relayed that  $4,224,200  in  interagency receipts  had                                                                    
been authorized for Risk Management  due to escalating costs                                                                    
of property  insurance premiums, medical costs  for Workers'                                                                    
Compensation,  and  litigation  costs; the  increment  would                                                                    
allow the  agency to cover  costs without taking  money from                                                                    
the catastrophe fund.                                                                                                           
2:07:50 PM                                                                                                                    
Representative  Holmes communicated  that  an ETS  increment                                                                    
totaling  $1,500,000 UGF  had been  restored for  the Alaska                                                                    
Land Mobile  Radio (ALMR)  program to pay  for the  41 sites                                                                    
the  state  had  taken  over from  the  federal  government;                                                                    
$500,000  of  a  $1,600,000   request  for  additional  ALMR                                                                    
funding had been shifted to  federal receipts from statutory                                                                    
designated   program  receipts,   $500,000  in   interagency                                                                    
receipts  from the  Department  of  Commerce, Community  and                                                                    
Economic Development  (DCCED) had been denied,  and $600,000                                                                    
UGF had been denied.                                                                                                            
Representative Holmes  relayed all  three of  the governor's                                                                    
amendments  had   been  accepted.   The  first   related  to                                                                    
centralized Administrative Services  retirement and benefits                                                                    
(as a  result of  the federal Patient  Protection Affordable                                                                    
Care Act there  was a progressive fee  on self-insured plans                                                                    
to fund  a research institute  trust fund) in the  amount of                                                                    
$35,300 from the group benefit  trust fund, $21,700 from the                                                                    
PERS  trust fund,  and $8,000  from the  TRS trust  fund. An                                                                    
increase had  been added in  the amount of $93,300  from the                                                                    
group benefit  fund, $57,300 from  the PERS trust  fund, and                                                                    
$21,000  from the  TRS  trust fund  to  handle workload  and                                                                    
management  of the  AlaskaCare  plans.  The third  amendment                                                                    
added  $187,500  in  GF  program  receipts  related  to  the                                                                    
centralization  of  drivers'   licenses  and  identification                                                                    
2:10:45 PM                                                                                                                    
Representative  Holmes  communicated  that  a  reduction  of                                                                    
$250,000  GF had  been made  for centralized  administrative                                                                    
services DOA leases. She explained  that the fund held money                                                                    
for a  portion of the department's  lease payments; $250,000                                                                    
GF  had been  taken from  DOA state  facilities rent,  which                                                                    
held the  funding to pay  costs associated with  state owned                                                                    
facilities;  $204,300  GF  had   been  eliminated  from  ETS                                                                    
related  to the  agency's  chargebacks; $4,400  GF had  been                                                                    
eliminated from  risk management;  $7,300 GF for  the Alaska                                                                    
Oil  and Gas  Conservation  Commission  had been  eliminated                                                                    
(the  program  would  be supported  entirely  by  receipts);                                                                    
$23,300 GF  had been eliminated  from the Division  of Motor                                                                    
Vehicles (DMV).                                                                                                                 
2:12:49 PM                                                                                                                    
Vice-Chair Neuman asked whether  DMV collected more money in                                                                    
license and registration fees than  was currently needed for                                                                    
agency operations.                                                                                                              
Representative Holmes  affirmed that DMV returned  above the                                                                    
amount it needed  to operate and stated that  the agency was                                                                    
funded entirely by money it generated.                                                                                          
Co-Chair   Austerman   reminded    the   public   that   the                                                                    
subcommittee reports were posted  on the Legislative Finance                                                                    
Division (LFD) website.                                                                                                         
2:13:45 PM                                                                                                                    
Representative Costello  addressed the  recommendations from                                                                    
the  DCCED budget  subcommittee. She  communicated that  the                                                                    
proposed budget  totaled $129,549,100  including $31,161,400                                                                    
UGF,  $41,503,000  DGF,  $39,831,000  in  other  funds,  and                                                                    
$17,043,700  in  federal  funds;  the  total  represented  a                                                                    
reduction in  GF from the  governor's request  of $1,375,000                                                                    
and  the   governor's  recommended  GF  increase   from  the                                                                    
adjusted  base of  $15,417,200,  the majority  of which  was                                                                    
tourism   marketing  funding.   Requests  accepted   by  the                                                                    
committee  included  $2,700,000  in  statutorily  designated                                                                    
receipts  to restore  tourism marketing  related third-party                                                                    
receipts.  She detailed  that  two  accepted requests  would                                                                    
appear  as a  decrement  in the  Division of  Administrative                                                                    
Services including  an Alcohol Beverage Control  (ABC) Board                                                                    
increment   of   $127,000   general  program   receipt   for                                                                    
administrative  support  costs  and $62,500  in  GF  program                                                                    
receipts  to   maintain  Department   of  Law   (DOL)  legal                                                                    
assistance. The  total of $189,500 was  decremented from the                                                                    
Division  Administrative Services  because the  subcommittee                                                                    
believed the  department should have  the ability  to accept                                                                    
the  increased cost  resulting from  the ABC  Board transfer                                                                    
from the Department of Public Safety (DPS) to DCCED.                                                                            
Representative  Costello relayed  that the  subcommittee had                                                                    
accepted  the  Alaska   Industrial  Development  and  Export                                                                    
Authority  (AIDEA)   Sustainable  Energy   Transmission  and                                                                    
Supply  (SETS)  development in  the  amount  of $200,000  in                                                                    
receipt authority.  A $500,000  receipt authority  for AIDEA                                                                    
had  been accepted  related to  funding for  consultants and                                                                    
legal counsel  to plan and develop  infrastructure projects.                                                                    
Several modifications  to the governor's budget  request had                                                                    
been made  including a reduction  of $1,000,000  for tourism                                                                    
marketing  funding and  an  accepted  amount of  $15,000,000                                                                    
2:16:40 PM                                                                                                                    
Representative  Costello  shared   that  the  committee  had                                                                    
denied  a $100,000  request from  the ABC  Board to  replace                                                                    
interagency receipts  with GF  program receipts  to maintain                                                                    
the  underage drinking  enforcement program.  She elaborated                                                                    
that the  item represented a  loss of federal funds  and the                                                                    
committee  had  questioned  whether it  represented  a  core                                                                    
service  of state  government.  The  committee restored  the                                                                    
Alaska Seafood Marketing Institute  (ASMI) funding to the FY                                                                    
13  level of  $4,500,000  in federal  receipt authority  and                                                                    
$12,560,800 in GF program receipt  authority; a decrement of                                                                    
$1  million  was  also  recommended   to  a  $7,770,100  UGF                                                                    
increment  in   the  language  section.   Additionally,  the                                                                    
committee recommended  a 10 percent reduction  to the Alaska                                                                    
Regional Development  Organizations (ARDORs) for a  total of                                                                    
$85,500  UGF.  She  restated  an   earlier  comment  that  a                                                                    
decrement was  taken from Administrative Services  to offset                                                                    
an ABC Board request for $189,500 UGF.                                                                                          
Representative   Costello   communicated    that   after   a                                                                    
presentation by  the Division of Business,  Corporations and                                                                    
Professional  Licensing  the subcommittee  was  recommending                                                                    
that  a report  should be  submitted to  the legislature  by                                                                    
October  1,  2013  showing  a   six-year  look-back  of  the                                                                    
division.  The goal  was to  provide more  transparency into                                                                    
the division.  The report should  be provided in  a template                                                                    
created by LFD that  would include information about various                                                                    
items such as revenues from  license fees and other sources,                                                                    
expenditures  by  line  item, departmental  and  other  cost                                                                    
allocation plans, the number  of licenses, and carry-forward                                                                    
2:19:25 PM                                                                                                                    
Representative  Gara   asked  for  verification   that  ASMI                                                                    
funding would  be reduced from  the prior year's  funding of                                                                    
$16 million  down to $15 million.  He asked if there  was no                                                                    
longer a match requirement for the tourism industry.                                                                            
Representative  Costello  replied   that  the  $2.7  million                                                                    
receipt  authority  was  the  tourism  industry  match.  She                                                                    
explained that  the $2.7 million  would be added to  the $15                                                                    
million increment for  a total of $17.7 million  to fund the                                                                    
marketing program as a whole.                                                                                                   
Representative Gara  asked whether the $2.7  million receipt                                                                    
authority was  actual funds or  in-kind (where  the industry                                                                    
took out its own advertisements in publications).                                                                               
Representative Costello answered that  the industry paid for                                                                    
advertisement  placements; the  department would  accept the                                                                    
$2.7  million. Representative  Gara  asked for  verification                                                                    
that the funding  mechanism counted. Representative Costello                                                                    
answered in the affirmative.                                                                                                    
2:20:49 PM                                                                                                                    
Representative   Edgmon   addressed    the   Department   of                                                                    
Corrections  (DOC) budget.  He  shared that  the budget  was                                                                    
largely  comprised   of  GF  money;   the  one   change  the                                                                    
subcommittee had recommended  was a GF switch  of $2 million                                                                    
UGF to expected receipts and  federal receipts that had been                                                                    
covered   in  Section   13  of   HB  65.   The  subcommittee                                                                    
recommended  a   total  budget  of   $332,760,000  including                                                                    
$296,000,000  UGF, $16  million  DGF,  $14,500,000 in  other                                                                    
funds,  and  $5,300,000  in federal  funds.  The  total  was                                                                    
$9,800,000 in all funds above  the adjusted base; $7,700,000                                                                    
GF of  the total represented  a GF increase of  2.5 percent.                                                                    
He noted  that there was  no change in position  counts. The                                                                    
subcommittee recommendation would reduce  UGF by $2 million.                                                                    
The only change from  the governor's proposed amended budget                                                                    
was  to switch  a $2  million increment  from GF  to federal                                                                    
receipts (the  department had collected federal  receipts in                                                                    
the  past  several  years  and had  over  collected  in  the                                                                    
process).  He pointed  out intent  language associated  with                                                                    
the item:                                                                                                                       
     It  is   the  intent   of  the  legislature   that  the                                                                    
     Department of  Corrections work with the  Department of                                                                    
     Health  and   Social  Services  and   interested  local                                                                    
     parties  to  explore  options that  would  address  the                                                                    
     critical need  for upgrades to the  water supply system                                                                    
     at the Yukon-Kuskokwim Correctional Center.                                                                                
Vice-Chair   Neuman  wondered   whether   the  Goose   Creek                                                                    
Correctional  Center would  be fully  funded. Representative                                                                    
Edgmon  replied  that the  subcommittee  had  not taken  any                                                                    
action on Goose Creek.                                                                                                          
2:23:56 PM                                                                                                                    
Representative Wilson addressed  the Department of Education                                                                    
and  Early  Development   (DEED)  budget.  The  subcommittee                                                                    
recommended  a   total  budget  of   $348,232,700  including                                                                    
$64,119,400  UGF,  $24,308,800  DGF,  $26,006,500  in  other                                                                    
funds, and $233,798,000 in federal  funds. The committee had                                                                    
approved  a $158,400  core  service  rate increase  request,                                                                    
over $2,600,000 of the  $5,900,000 request for digitization,                                                                    
and $250,000  of a $500,000 request  for assessment contract                                                                    
costs. She  explained that  the $250,000  that had  not been                                                                    
approved  for contract  assessment costs  was federal  funds                                                                    
that may  not occur  due to  the federal  sequestration. The                                                                    
subcommittee approved  a $320,000 request for  a K-3rd grade                                                                    
literacy   project  and   $305,000  for   a  new   dormitory                                                                    
management contract at Mt. Edgecumbe.  A $100,000 GF request                                                                    
for  rural transition  services had  been denied  (she noted                                                                    
the amount  had been additional). The  committee also denied                                                                    
an  $800,000 UGF  request for  Jobs for  America's Graduates                                                                    
and $480,000  for a  Pre-K grant  program. Funding  had been                                                                    
reduced  for  Best  Beginnings   by  $137,500  (the  program                                                                    
continued  to  be  funded  at   $800,000),  and  Parents  as                                                                    
Teachers by $242,500 (the program  continued to be funded at                                                                    
$800,000). She furthered that one  position had been removed                                                                    
in  the amount  of $119,500.  Unallocated UGF  reductions of                                                                    
$250,000 had been  made to the department and  of $50,000 to                                                                    
Teaching  and Learning  Support.  She relayed  that over  $3                                                                    
million out of  a $9 million request had  been approved [for                                                                    
the  Teaching and  Learning Support  allocation]. She  noted                                                                    
that Pre-K  and Head Start  programs would receive  over $30                                                                    
million in  federal funds. She  furthered that Pre-K  was in                                                                    
public  schools and  had $12  million in  the Department  of                                                                    
Health  and Social  Services (DHSS).  She  relayed that  the                                                                    
subcommittee would  look at the programs  during the interim                                                                    
to identify any inefficiencies.                                                                                                 
2:26:25 PM                                                                                                                    
Representative Gara  asked if the $480,000  denied for Pre-K                                                                    
grants was an  increment and not a reduction  from the prior                                                                    
year's budget.                                                                                                                  
Representative Wilson  replied that  the request was  a one-                                                                    
time  increment of  $480,000 that  would  bring the  program                                                                    
back to $2 million in grants.                                                                                                   
Representative Gara  pointed to decrements of  $137,500 from                                                                    
Best  Beginnings, $242,500  from  Parents  as Teachers,  and                                                                    
$119,500 for  an early  childhood education  coordinator. He                                                                    
asked  if the  decrements were  subtractions from  the prior                                                                    
year's budget.                                                                                                                  
Representative  Wilson  replied   in  the  affirmative.  She                                                                    
elaborated that the education  coordinator position had been                                                                    
included in  an initial $4  million request from  Parents as                                                                    
Teachers, over  $2 million of  which had been denied  by the                                                                    
governor.  She   stated  that  there   continued  to   be  a                                                                    
significant  amount of  money going  into the  programs. The                                                                    
subcommittee  would  look  at the  programs  more  over  the                                                                    
interim to ensure funds were utilized effectively.                                                                              
Representative  Munoz  thanked  LFD,   her  staff,  and  the                                                                    
department for their work on  the budgets. She addressed the                                                                    
Department of  Environmental Conservation (DEC)  budget. The                                                                    
subcommittee  recommended  a  total  budget  of  $84,817,600                                                                    
including $21,784,500  UGF, $26,895,200 DGF,  $11,199,200 in                                                                    
other funds,  and $24,938,700 in  federal funds.  There were                                                                    
552  full-time  positions  and 7  part-time  positions.  She                                                                    
relayed that  the subcommittee accepted $175,000  UGF, which                                                                    
represented   half   of   an  increment   request   for   an                                                                    
environmental health drinking  water allocation; the funding                                                                    
would allow the  agency to implement two  new drinking water                                                                    
rules under the federal Safe  Drinking Water Act. The budget                                                                    
also included  $271,500 ($7,000 DGF),  which was half  of an                                                                    
increment related to water quality  to help the agency under                                                                    
the Alaska Pollutant Discharge  Elimination System to assume                                                                    
responsibility   for  oil   and  gas   wastewater  discharge                                                                    
permitting  from the  U.S. Environmental  Protection Agency.                                                                    
The total approved increase  was $453,500, representing half                                                                    
of the governor's proposed $907,000 increase.                                                                                   
Representative  Munoz  discussed   three  issues  that  were                                                                    
highlighted   in  the   budget  process   including  tsunami                                                                    
response,   the   Oil   and  Hazardous   Substance   Release                                                                    
Prevention  and Response  Fund,  and  cruise ship  discharge                                                                    
reporting   requirements.  She   relayed   there  had   been                                                                    
considerable  discussion on  debris cleanup  efforts related                                                                    
to the [2011  Japanese] tsunami. She furthered  that DEC had                                                                    
commissioned  an aerial  survey of  the Alaska  coastline in                                                                    
2012,   which  had   identified   seven  collector   beaches                                                                    
statewide  with  serious  impacts  of  tsunami  debris  from                                                                    
Japan. The  subcommittee supported the  governor's amendment                                                                    
to  the  supplemental  budget  for  $1  million  in  receipt                                                                    
authority   from  the   Japanese  government;   however,  it                                                                    
believed  the  funding  would  not  adequately  address  the                                                                    
problem.  She  encouraged  the   committee  to  support  the                                                                    
governor's  receipt authority  recommendation  and to  match                                                                    
the funds with a capital budget GF increment.                                                                                   
2:32:08 PM                                                                                                                    
Representative Munoz  stated the  second concern  related to                                                                    
the  Oil  and  Hazardous Substance  Release  Prevention  and                                                                    
Response Fund. The fund was  anticipated to be in deficit by                                                                    
FY  15  and  would  require approximately  $5  [million]  in                                                                    
additional funding  to enable the  current level  of service                                                                    
to  continue. The  subcommittee recommended  that the  House                                                                    
Finance  Committee include  intent language  encouraging the                                                                    
Office of  Management and Budget to  provide recommendations                                                                    
to the  legislature on statutory  changes that  would result                                                                    
in  the  fund's  solvency.  The  third  area  of  discussion                                                                    
related   to   cruise    ship   discharge   reporting;   the                                                                    
subcommittee felt  that it  was important  to direct  DEC to                                                                    
make  current information  available on  its website  to the                                                                    
extent  possible  regarding  cruise ship  mixing  zones  and                                                                    
discharge locations in Southeast.                                                                                               
2:33:48 PM                                                                                                                    
Co-Chair  Stoltze   gave  a   review  of   the  subcommittee                                                                    
recommendations for  the Department of Fish  and Game (DFG).                                                                    
He communicated  his intent to work  with Co-Chair Austerman                                                                    
and others  on issues  related to  DFG management.  He noted                                                                    
that the length of session  stopped him from proceeding with                                                                    
ideas   that   would   lead   to   a   more   constitutional                                                                    
administration   of    following   sustainability   mandates                                                                    
(especially  for  fisheries   resources).  He  commented  on                                                                    
decreased  federal  funds  and  referred  to  a  legislative                                                                    
briefing from Alaska's U.S. Senator  Mark Begich that deeper                                                                    
reductions were  expected. He  stated that  the subcommittee                                                                    
had  taken a  cautious approach  towards the  replacement of                                                                    
federal funds  with general funds. He  believed more caution                                                                    
would need to be exercised in the future.                                                                                       
Co-Chair   Stoltze  relayed   that   the  subcommittee   had                                                                    
increased the  DFG budget by  $2.327 million from  the prior                                                                    
year  and  had  denied   increases  of  $1.716  million.  He                                                                    
continued  that  a  $300,000   DGF  test  fisheries  receipt                                                                    
authority request had been accepted  for Bering Sea Aleutian                                                                    
crab fisheries. The budget also  included $175,000 UGF for a                                                                    
Tanana  sonar  project,  $155,000   UGF  to  fund  part-time                                                                    
positions  for the  Susitna  drainage  sockeye project  (the                                                                    
project  had  previously been  operated  by  the Cook  Inlet                                                                    
Aquaculture Association),  $437,000 for core  service costs,                                                                    
and  $185,000  for  monitoring  compliance  related  to  the                                                                    
former coastal  zone management  program. He  discussed that                                                                    
salmon  assessments for  the  Karluk,  Chignik, Nelson,  and                                                                    
Bear Rivers had been slightly reduced.                                                                                          
2:38:08 PM                                                                                                                    
Co-Chair  Stoltze communicated  that DFG  was looking  at an                                                                    
issue  where   the  subcommittee  may  not   have  maximized                                                                    
matching of  the Pittman-Robertson Act funds  [also known as                                                                    
the Federal Aid in Wildlife  Restoration Act]; the total was                                                                    
$2.5  million. He  believed the  subcommittee  had made  the                                                                    
correct   decision,   but   noted   that   perhaps   further                                                                    
information   would   reveal    something   different.   The                                                                    
subcommittee  denied a  request  of $550,000  for a  Sockeye                                                                    
salmon  identification program  and biometrician  on Chinook                                                                    
issues  (predominately   in  Southeast);   the  subcommittee                                                                    
deferred the  issue to the overall  Chinook assessment issue                                                                    
throughout the state through the  capital budget. A $130,000                                                                    
request for the North  Slope bear removal/Muskox enhancement                                                                    
program  had been  denied, $140,000  had been  denied for  a                                                                    
replacement of  DFG funds with  GF. Additionally,  there was                                                                    
an agency-wide  unallocated reduction of 5  percent totaling                                                                    
$316,500  that  would  be  absorbed   in  travel  and  other                                                                    
internal actions. He communicated  that the governor had not                                                                    
proposed any amendments to his original budget.                                                                                 
2:40:31 PM                                                                                                                    
Vice-Chair  Neuman pointed  to the  extensive work  that had                                                                    
been done  on the DHSS budget.  The subcommittee recommended                                                                    
a  total budget  of $2,641,783,300  including $1,228,636,800                                                                    
billion UGF,  $71,751,600 DGF,  $94,537,200 in  other funds,                                                                    
and  $1,246,828,200  in   federal  funds.  The  subcommittee                                                                    
recommended  authorizing $1,304,018,400  GF for  3,679 total                                                                    
positions including  3,502 full-time, 64 part-time,  and 113                                                                    
temporary  positions,  which  was equal  to  the  governor's                                                                    
amended FY  14 budget.  He remarked  that the  committee had                                                                    
worked to stay  out of core service  areas. The subcommittee                                                                    
recommended  a  total  increase of  $15,310,600  UGF  and  a                                                                    
decrease  of  $2,368,800  DGF  for  a  total  GF  change  of                                                                    
Vice-Chair Neuman  stated that the change  from the adjusted                                                                    
base totaled  $30,035,200 including  a decrease  of $918,050                                                                    
in other funds and $18,011,900  in federal funds. He relayed                                                                    
that 80  increments had been submitted  to the subcommittee;                                                                    
7 of  the 80  increments had been  denied. He  detailed that                                                                    
the  7   increments  totaled  $5,129,000   ($4,279,000  UGF,                                                                    
$850,000 GF  mental health) and  included 2  from Behavioral                                                                    
Health,  2   from  Children's  Services,  1   from  Juvenile                                                                    
Justice, 1  from Public  Assistance, and  1 from  Senior and                                                                    
Disability Services.                                                                                                            
2:44:19 PM                                                                                                                    
Vice-Chair Neuman  pointed to  budget analysis  sheets (page                                                                    
7,  lines   103  through  104),  which   showed  unallocated                                                                    
reductions  totaling   $16,737,060  UGF.   He  spoke   to  a                                                                    
Behavioral Health  reduction of  $8,368,800 UGF  in Medicaid                                                                    
services and explained that the  item had been placed in the                                                                    
budget in FY 13 for DHSS  to look at self-applying the item.                                                                    
He  elaborated that  DHSS  took a  $25  million decrease  in                                                                    
Medicaid  services  in  the governor's  FY  14  supplemental                                                                    
budget;  the $8,368,800  represented less  than half  of the                                                                    
governor's proposed reduction.                                                                                                  
Vice-Chair Neuman spoke to  recommended modifications to the                                                                    
governor's  request  including  $75,000 for  the  Bureau  of                                                                    
Vital  Statistics  to  replace  lost  revenue  from  issuing                                                                    
paperwork related  to deceased  veterans. He pointed  to the                                                                    
budget analysis  sheets (page 6,  lines 91 through  94) that                                                                    
illustrated   tobacco   education  and   cessation   funding                                                                    
decrements;  in order  to provide  a  more sustainable  fund                                                                    
balance,   the  subcommittee   removed  $2,237,400   of  the                                                                    
governor's  $10   million  request  including   $279,400  in                                                                    
chronic disease prevention  and health promotion, $1,746,400                                                                    
from  the  Tobacco  Prevention   Council,  and  $191,700  in                                                                    
Medicaid services.                                                                                                              
Vice-Chair  Neuman relayed  that a  cap had  been placed  on                                                                    
grantees'  administrative  costs;   the  subcommittee  added                                                                    
language  "all  Department  of Health  and  Social  Services                                                                    
grantees may spend for administrative  costs no more than 15                                                                    
percent of  the grant award."  He explained the goal  was to                                                                    
have grant money  reach recipients as much  as possible; the                                                                    
subcommittee  had  worked  to equally  distribute  cuts.  He                                                                    
observed that  the state was  looking at a  budget shortfall                                                                    
in excess of  $920 million. The budget  structure change had                                                                    
created  a   new  performance  bonuses  allocation   in  the                                                                    
departmental  support  services   appropriation  and  $3.993                                                                    
million   in   unrestricted   federal  receipts   had   been                                                                    
appropriated   for    the   Children's    Health   Insurance                                                                    
Reauthorization program.                                                                                                        
Vice-Chair  Neuman communicated  that  the subcommittee  had                                                                    
funded  all  nine of  the  governor's  budget amendments  in                                                                    
full.   Additionally,  the   subcommittee  recommended   the                                                                    
removal  of open-ended  language for  the energy  assistance                                                                    
program.  He  pointed  to  additional  reports  included  in                                                                    
members' packets (copy on file).                                                                                                
2:49:00 PM                                                                                                                    
Representative  Gara  pointed  to   an  $8  million  cut  to                                                                    
substance abuse treatment that would  be covered in FY 14 by                                                                    
one-time  funding. He  asked for  verification  that the  $8                                                                    
million would not reoccur in the following year.                                                                                
Vice-Chair Neuman replied in the affirmative.                                                                                   
Representative Wilson addressed the  Department of Labor and                                                                    
Workforce  Development (DLWD)  subcommittee recommendations.                                                                    
The subcommittee recommended a  total budget of $189,425,800                                                                    
including $34,570,800  UGF, $33,696,400 DGF,  $22,879,800 in                                                                    
other funds,  and $98,778,800 in  federal funds.  There were                                                                    
928 positions  within the department.  She relayed  that the                                                                    
department had  come to the subcommittee  with a significant                                                                    
increase  in  lease  costs; therefore,  out  of  a  $984,500                                                                    
increase the  subcommittee had approved $492,200.  A request                                                                    
of $100,000  for the expansion of  independent living grants                                                                    
had  been denied,  given a  $200,000  increase the  previous                                                                    
year.  A  $200,000 UGF  request  for  the Alaska  Vocational                                                                    
Technical  Center  (AVTEC)  had  been  denied;  the  request                                                                    
represented an increase and  the subcommittee requested that                                                                    
the center to generate  the money through tuition increases.                                                                    
Funding  had  been reduced  by  $500,000  for the  Statewide                                                                    
Training  and  Employment  Program  (STEP)  funding  in  the                                                                    
business   partnerships   business   component;   DWLD   was                                                                    
currently spending  more STEP funding  than it  was bringing                                                                    
in.  Over $7.8  million  in STEP  funding  was remaining  in                                                                    
business services.                                                                                                              
2:51:10 PM                                                                                                                    
Representative Holmes discussed the  Department of Law (DOL)                                                                    
budget.  The  subcommittee  recommended a  total  budget  of                                                                    
$92,358,300  including  $59,306,500   UGF,  $2,698,700  DGF,                                                                    
$28,332,700  in  other  funds,  and  $1,966,400  in  federal                                                                    
funds. The  total represented a  decrease $3,755,000  GF and                                                                    
$100,000 in other  funds from the governor's  FY 14 request;                                                                    
however, it represented an increase  from the FY 14 adjusted                                                                    
base  in the  amount of  $3,867,600 UGF,  $772,800 in  other                                                                    
funds, and in two  new full-time positions. The subcommittee                                                                    
recommended replacing $250,000  in uncollectable interagency                                                                    
receipts with  $250,000 UGF  to fund a  new attorney  in the                                                                    
first judicial district (Juneau had  not seen a new position                                                                    
in many decades).                                                                                                               
Representative  Holmes  relayed  that the  subcommittee  had                                                                    
approved $140,000  in the Criminal  Division for  the fourth                                                                    
judicial  district to  hire a  victim  witness paralegal  in                                                                    
Bethel given high caseloads.  Additionally, $140,000 UGF had                                                                    
been approved for  the hire of a  child protection paralegal                                                                    
in  Fairbanks;   the  office  had  been   pulling  paralegal                                                                    
resources from  other jurisdictions and using  attorney time                                                                    
to  make up  caseloads.  An $80,000  one-time increment  had                                                                    
been approved  for the Criminal Justice  Litigation Division                                                                    
in order to implement  a victim information and notification                                                                    
system,  which  would  provide  automatic  notification  for                                                                    
victims of changes in trial  schedules and other; the system                                                                    
should provide better services to  victims and witnesses and                                                                    
free up  paralegal time. She  communicated that  $100,000 in                                                                    
statutory  designated program  receipts  out  of a  $200,000                                                                    
request for  the Commercial and  Fair Businesses  Section of                                                                    
the  Criminal Division  had been  approved  to hire  outside                                                                    
investigative  services for  consumer  protection; the  one-                                                                    
time funding  was derived from money  earmarked for consumer                                                                    
protection  and  would allow  the  section  to contract  out                                                                    
investigative services to help  with scamming operations and                                                                    
other. Additionally, $1 million  UGF had been authorized for                                                                    
the Civil  Division, Oil, Gas  and Mining Section as  a one-                                                                    
time increment for gas pipeline  work (the total request had                                                                    
been $2 million).  A one-time $2 million  increment had been                                                                    
approved for  work related to  major oil and  gas litigation                                                                    
(the total request  had been $4 million). She  shared that a                                                                    
substantial amount of the work  on the Trans-Alaska Pipeline                                                                    
System (TAPS)  case was set to  wind up by the  beginning of                                                                    
FY 14 and  with the settlement of the BP  corrosion case the                                                                    
subcommittee hoped  the department could operate  with fewer                                                                    
funds due to the reduced number of large cases.                                                                                 
Representative  Holmes discussed  that the  subcommittee had                                                                    
authorized $107,300  UGF for core services  provided by DOA.                                                                    
She relayed that $91,200 UGF had  been added to fully fund a                                                                    
language  interpreter   position  for  the   third  judicial                                                                    
district  and  a  cold  case   prosecutor  position  in  the                                                                    
Criminal  Appeals  Special  Litigation   Unit.  A  total  of                                                                    
$906,900 in interagency receipt  authority had been approved                                                                    
for  unbudgeted reimbursable  service agreements  with DHSS,                                                                    
DOR, DCCED, DPS, and DOA.                                                                                                       
2:56:37 PM                                                                                                                    
Representative  Holmes  stated  that  the  subcommittee  had                                                                    
denied a  $225,000 UGF request  for a new  criminal attorney                                                                    
position in  Juneau; a  new criminal  attorney had  begun in                                                                    
the  past year.  A $225,000  request had  been denied  for a                                                                    
prosecuting  attorney   for  Bethel;  the  budget   added  a                                                                    
paralegal in  the community, which  would address  a greater                                                                    
need.  The  subcommittee  denied  $225,000  UGF  for  a  new                                                                    
prosecuting  attorney  in  Fairbanks   and  a  $100,000  UGF                                                                    
request  for mitochondria  and Y-chromosome  DNA testing  in                                                                    
criminal justice  litigation (the funds would  have replaced                                                                    
a federal  grant). She elaborated that  the department would                                                                    
need to operate with existing  funding until the state crime                                                                    
lab that  was currently  undergoing certification  took over                                                                    
some of the testing in the future.                                                                                              
2:57:45 PM                                                                                                                    
Representative    Thompson   addressed    the   subcommittee                                                                    
recommendations for the Department  of Military and Veterans                                                                    
Affairs  (DMVA). He  relayed that  the subcommittee  had met                                                                    
five  times   and  had  discussed  missions   and  measures,                                                                    
budgets,   and   the   department's   ten-year   plan.   The                                                                    
subcommittee  had accepted  the governor's  amended proposal                                                                    
with several  adjustments. A request  for $300,000  to cover                                                                    
base realignment and closure impact  under the Office of the                                                                    
Commissioner   was   changed   to  a   temporary   five-year                                                                    
increment;  the item  would be  reviewed again  in 2018.  He                                                                    
discussed  that  a  $170,000 request  had  been  reduced  to                                                                    
$120,000  for  Homeland  Security and  Emergency  Management                                                                    
(new  generators   currently  would  not  require   as  much                                                                    
maintenance  as they  would in  years to  come). A  $150,000                                                                    
increase for  veterans' outreach  had been denied.  He noted                                                                    
that  veterans' outreach  had been  successful to  date with                                                                    
existing   funding.   A   $75,000   request   for   cemetery                                                                    
maintenance had  been denied for  the Interior as  the money                                                                    
had not been acquired to purchase land for the cemetery.                                                                        
Representative  Thompson  communicated  that an  $8  million                                                                    
Alaska Aerospace Corporation request  had been reduced by $3                                                                    
million. The  subcommittee had  denied $80,000  for National                                                                    
Guard  education   benefits  (over  $400,000  went   to  the                                                                    
university  system  to  cover education  of  National  Guard                                                                    
members).  An  Air  Guard  facility  maintenance  Star  base                                                                    
increment  of  $85,000  had been  reduced  by  $50,000  (the                                                                    
program  had received  $45,000 more  in  federal funds  than                                                                    
were  expected).  He  relayed   that  the  total  reductions                                                                    
equaled $3,405,000.                                                                                                             
3:00:53 PM                                                                                                                    
Representative Costello  looked at recommendations  from the                                                                    
Department  of  Natural  Resources (DNR)  subcommittee.  The                                                                    
subcommittee  recommended  a  total budget  of  $158,826,300                                                                    
including $78,916,900  UGF, $25,649,500 DGF,  $40,325,800 in                                                                    
other  funds, and  $13,934,100 in  federal funds.  The total                                                                    
represented a  reduction of  $2,276,000 and  the elimination                                                                    
of  nine temporary  positions from  the governor's  proposed                                                                    
budget; the total was an  increase of $2,900,300 GF from the                                                                    
adjusted  base. The  subcommittee accepted  several one-time                                                                    
increments  including  $1,000,000  in  statutory  designated                                                                    
program receipts  for the Office  of Project  Management and                                                                    
Permitting  for permitting  coordination, $1,290,000  UGF to                                                                    
restore gas  pipeline project  office staff  and operations,                                                                    
and  $1,150,000  UGF to  restore  the  gas pipeline  project                                                                    
office  contractors   and  consultants.   Additionally,  the                                                                    
subcommittee approved  a funding  source change  of $555,700                                                                    
DGF to UGF for  administrative services information resource                                                                    
management in the Land Disposal  Income Fund. A $350,000 UGF                                                                    
increment  had been  approved for  the  Division of  Mining,                                                                    
Land and Water for the  navigable and public waters research                                                                    
and assertion of states' access  rights. She elaborated that                                                                    
the  increment   would  enable  the  state   to  assert  its                                                                    
ownership on  submerged lands beneath navigable  waters. The                                                                    
subcommittee  recommended moving  $300,000 UGF  to an  open-                                                                    
ended  language section  appropriation for  the Oil  and Gas                                                                    
Division related to  the arbitration of oil  and gas royalty                                                                    
Representative   Costello    continued   with   subcommittee                                                                    
recommendations.  The  subcommittee recommended  a  language                                                                    
section  appropriation capped  at $600,000  for the  Oil and                                                                    
Gas  Division   and  the   Alaska  Gasline   Inducement  Act                                                                    
commercial  monitor and  adviser. A  $125,000 UGF  increment                                                                    
had been denied  for the Division of Mining,  Land and Water                                                                    
for  the   restoration  of  the  Guide   Concession  Program                                                                    
development. Additionally, $450,000 UGF  had been denied for                                                                    
the  Guide Concession  Program implementation;  $120,000 UGF                                                                    
for  the  program  development had  also  been  denied.  She                                                                    
communicated  that  the  subcommittee believed  the  program                                                                    
should  be  a   policy  call  introduced  in   the  form  of                                                                    
3:04:46 PM                                                                                                                    
Representative    Costello   relayed    the   subcommittee's                                                                    
recommendation  to move  a $500,000  UGF increment  into the                                                                    
language section  for the  Oil and  Gas Division  related to                                                                    
the  arbitration   of  oil  and  gas   royalty  issues.  The                                                                    
subcommittee  denied   a  $181,000   UGF  request   for  the                                                                    
continuation of the Farm to School Program.                                                                                     
Co-Chair Stoltze  noted that he and  Representative Costello                                                                    
had both  spoken with the  commissioner of DNR.  He remarked                                                                    
that the department  needed to be proactive.  He referred to                                                                    
historical occurrences related to the current situation.                                                                        
3:06:14 PM                                                                                                                    
Representative  Edgmon  addressed DPS  recommendations.  The                                                                    
subcommittee  recommended  a  total budget  of  $204,051,000                                                                    
including $171,000,000  UGF, $6,400,000 DGF,  $15,300,000 in                                                                    
other  funds,   and  $10,800,000   in  federal   funds.  The                                                                    
subcommittee recommended  an increase  of 4.1  percent above                                                                    
the adjusted  base. The increase included  $2,300,000 in all                                                                    
funds (including  15 new full-time positions);  the total GF                                                                    
increase was  $7 million, which included  the backfilling of                                                                    
federal funds for the Bureau  of Highway Patrol positions of                                                                    
$4,200,000 million.  The total  represented a  decrease from                                                                    
the governor's proposed budget of  $5,400,000 GF and 6 full-                                                                    
time state  trooper positions. The  subcommittee recommended                                                                    
a  decrease  of $1,390,000  for  new  troopers, which  would                                                                    
enable  the department  to hire  15 troopers  out of  the 21                                                                    
positions  proposed  by  the governor.  He  noted  that  the                                                                    
department currently  had 386 out  of 409  trooper positions                                                                    
Representative  Edgmon stated  that the  subcommittee denied                                                                    
replacing  $1,090,000 in  federal Bureau  of Highway  Patrol                                                                    
funds  and  recommended  that DPS  look  for  other  funding                                                                    
options for  the item. The subcommittee  recommended funding                                                                    
5 of the  15 Village Public Safety  Officer (VPSO) positions                                                                    
proposed by the  governor. He relayed that  currently 93 out                                                                    
of   116  authorized   VPSO  positions   had  been   filled.                                                                    
Additionally,  a   $563,000  reduction  had  been   made  to                                                                    
dispatch  services; the  subcommittee  recommended that  DPS                                                                    
conduct  an   analysis  to  determine   whether  contracting                                                                    
dispatch  services was  more  economical  and reliable  than                                                                    
using  its internal  employees. A  reduction of  $350,000 to                                                                    
the Council of Domestic  Violence and Sexual Assault (CDVSA)                                                                    
was  recommended, which  would  cut  the CDVSA  coordination                                                                    
program and  $50,000 for  coaching boys-to-men.  Lastly, the                                                                    
subcommittee recommended a $250,000  GF reduction to trooper                                                                    
housing  and  an authorization  of  $500,000  in GF  program                                                                    
3:09:49 PM                                                                                                                    
Representative  Gara  asked  if funding  was  available  for                                                                    
current  VPSO  positions  that were  vacant.  Representative                                                                    
Edgmon replied  in the affirmative. He  relayed that funding                                                                    
5  of  the additional  15  VPSO  positions proposed  by  the                                                                    
governor for  FY 14  had been a  difficult decision,  but he                                                                    
noted  that  there were  23  vacant  existing positions.  He                                                                    
referred  to  high  turnover rates  and  the  subcommittee's                                                                    
recommendation for exit interviews  to determine reasons for                                                                    
Representative  Gara  asked  if  there  was  flexibility  to                                                                    
transfer open  VPSO positions  to other  areas if  they were                                                                    
difficult  to fill  in specific  communities. Representative                                                                    
Edgmon replied that the program  was administered by various                                                                    
nonprofits and the Northwest  Arctic Borough; the individual                                                                    
positions  were not  allocated by  to specific  communities,                                                                    
but  money was  designated for  specific nonprofit  agencies                                                                    
(with the exception of the Northwest Arctic Borough).                                                                           
Co-Chair  Austerman clarified  that  a nonprofit  such as  a                                                                    
Native  corporation   only  received  the  funding   when  a                                                                    
position had been filled.                                                                                                       
Representative  Gara  pointed  to  $350,000  that  had  been                                                                    
denied  for CDVSA  and a  coaching  boys-to-men program.  He                                                                    
queried the role of the CDVSA coordination program.                                                                             
Representative  Edgmon answered  that much  of CDVSA's  work                                                                    
was   coordination   with   state  agencies   and   entities                                                                    
throughout   the  state.   There  had   been  a   prevention                                                                    
coordinator  position for  the past  couple of  years, which                                                                    
had helped with outreach services  and with items related to                                                                    
the governor's  Choose Respect campaign. The  committee felt                                                                    
that  the   council  and   the  boys-to-men   program  could                                                                    
withstand the cuts.                                                                                                             
3:14:21 PM                                                                                                                    
Representative Thompson addressed  the Department of Revenue                                                                    
(DOR)  subcommittee. The  subcommittee  recommended a  total                                                                    
budget   of   $349,360,100    including   $31,900,000   UGF,                                                                    
$9,650,000   DGF,   $230,859,500   in   other   funds,   and                                                                    
$76,950,600 in federal funds. He  relayed that the committee                                                                    
met  seven  times  with  the  department.  The  subcommittee                                                                    
denied  increments under  the tax  division of  $148,000 for                                                                    
the film  office executive  director position;  $172,300 for                                                                    
the oil and gas auditor  position, the audit master position                                                                    
had  been  partially funded,  and  excess  funding had  been                                                                    
removed; and a  reduction of $200,000 had  been made related                                                                    
to funding transferred from  services to personnel services.                                                                    
A  capital outlay  increment to  Child Support  Services had                                                                    
been  reduced  by  $35,000.  The   total  reduction  to  the                                                                    
governor's  proposed   amended  budget  was   $582,700.  The                                                                    
subcommittee's  recommendation   included  an   increase  of                                                                    
$1,981,100.   All  other   governor's   requests  had   been                                                                    
3:16:31 PM                                                                                                                    
Vice-Chair Neuman  provided highlights of the  Department of                                                                    
Transportation  and  Public  Facilities  (DOT)  budget.  The                                                                    
subcommittee  recommended  a  total budget  of  $625,784,200                                                                    
including  $281,264,900 UGF,  $68,251,900 DGF,  $272,422,800                                                                    
in  other  funds,  and  $3,844,600  in  federal  funds.  The                                                                    
subcommittee recommended a reduction  of $2,897,900 from the                                                                    
FY 14  adjusted base,  which put  the budget  $495,200 below                                                                    
the  FY   13  management  plan  and   $9,113,900  below  the                                                                    
governor's $8,618,700 FY 14 amended  budget. He relayed that                                                                    
the reductions were $9.1 million UGF and $760,000 DGF.                                                                          
Vice-Chair  Neuman pointed  to reductions  including $55,000                                                                    
for  storm water  compliance, $166,800  for operating  costs                                                                    
for  new Central  region facilities,  $350,000 for  expanded                                                                    
Mat-Su  maintenance  services,   $469,600  for  the  airport                                                                    
deicing  chemicals, $132,500  for rural  airport maintenance                                                                    
contracts,   and  $2,580,700   for  state   equipment  fleet                                                                    
increases. The  subcommittee recommended a reduction  in the                                                                    
current   maintenance  levels   on   the  municipal   owned,                                                                    
department maintained  roads with  the intent  of completely                                                                    
eliminating  the  road  maintenance  in FY  15  as  follows:                                                                    
$1,300,000 to  aviation in the  Central region,  $500,000 to                                                                    
northern  highways and  aviation, and  $60,000 to  Southeast                                                                    
highways  and aviation.  He explained  that  the roads  were                                                                    
currently   maintained   by   DOT,   but   were   owned   by                                                                    
municipalities. He  listed reductions  to the  Alaska Marine                                                                    
Highway System (AMHS) including  $2,101,000 UGF and $760,000                                                                    
DGF  for marine  vessel  operations and  $1,400,000 UGF  for                                                                    
vessel  fuel.   He  detailed   that  the   subcommittee  had                                                                    
endeavored  to   make  reductions   to  some  of   the  most                                                                    
uneconomical ferry routes.                                                                                                      
3:20:32 PM                                                                                                                    
Vice-Chair Neuman  read intent  language recommended  by the                                                                    
subcommittee: "it is  the intent of the  legislature for the                                                                    
department to evaluate the impacts  of instituting a landing                                                                    
fee  at state  owned and  operated primary  FAA certificated                                                                    
airports and to provide a  report to the 28th legislature by                                                                    
January  15,  2014."  He pointed  to  state  funded  airport                                                                    
landing  fees (e.g.  Deadhorse) that  the legislature  would                                                                    
evaluate.  He  stated  that  it   was  the  intent  for  the                                                                    
legislature to  eliminate any future issuing  of free annual                                                                    
passes to  vehicles or departments for  employees, retirees,                                                                    
and  families on  AMHS. He  believed  the cost  was over  $1                                                                    
million to  the state. He  continued that it was  the intent                                                                    
of the  legislature for the department  to seek efficiencies                                                                    
and cost reductions in FY 14.  He noted the savings would be                                                                    
considered a carry-forward in the  FY 15 operating budget to                                                                    
increase efficiencies.                                                                                                          
3:21:59 PM                                                                                                                    
Representative  Kawasaki wondered  why the  state maintained                                                                    
city or municipal roads. Vice-Chair  Neuman guessed that the                                                                    
maintenance was  done based on political  pressure. He added                                                                    
that  with reductions  in  state revenue,  it  would not  be                                                                    
possible to continue the practice.                                                                                              
Representative Kawasaki pointed  to a potential circumstance                                                                    
where a  municipality could not  afford a blade for  a piece                                                                    
of equipment.  He wondered if  it would be possible  for the                                                                    
state   to  charge   municipalities   for  the   maintenance                                                                    
Vice-Chair  Neuman replied  that the  state participated  in                                                                    
shared services with municipalities for efficiencies.                                                                           
Co-Chair Austerman believed the  issue was more prevalent in                                                                    
rural  areas due  to  interrelations between  municipalities                                                                    
and the state on road maintenance.                                                                                              
Co-Chair  Stoltze pointed  to Anchorage  as  an example  and                                                                    
observed that there were  efficiencies for maintaining areas                                                                    
that  were contiguous.  He  relayed that  that  there was  a                                                                    
formalized  agreement in  Anchorage  between  the state  and                                                                    
municipality  and surmised  that similar  agreements existed                                                                    
in other municipalities as well.                                                                                                
Vice-Chair  Neuman  noted  that reductions  had  been  split                                                                    
evenly throughout the state.                                                                                                    
3:24:40 PM                                                                                                                    
Representative Munoz thanked University  of Alaska staff for                                                                    
their  help   in  the   budget  process.   The  subcommittee                                                                    
recommended  a   total  budget  of   $945,199,600  including                                                                    
$366,413,600  UGF  (the  remainder  was  comprised  of  DGF,                                                                    
federal, and  other funds).  The university  system employed                                                                    
4,727 permanent  positions and 222 part-time  positions. The                                                                    
subcommittee   accepted   the  governor's   amended   budget                                                                    
proposal  including  funding   for  contractual  salary  and                                                                    
health  increases  and  recommended reverting  to  a  single                                                                    
appropriation   to  allow   increased  flexibility   in  the                                                                    
allocation of resources within  the university campuses. She                                                                    
highlighted    recommended   adjustments    made   by    the                                                                    
subcommittee.  The subcommittee  recommended an  unallocated                                                                    
increment  of  $407,800 UGF  and  $50,000  in mental  health                                                                    
funds;   the   system-wide   allocation  would   allow   the                                                                    
university to  distribute the funds  at its  discretion. The                                                                    
budget  included  base  funding   of  $250,000  GF  for  the                                                                    
Institute of  Social and Economic Research  (ISER) education                                                                    
policy study  (the two-year study  occurred in FY 13  and FY                                                                    
Representative  Munoz  communicated  that  the  subcommittee                                                                    
recommendations resulted  in a  $2,409,200 UGF  reduction to                                                                    
the  governor's  amended  proposed budget.  She  shared  her                                                                    
intent to bring an amendment  to the House Finance Committee                                                                    
to address  a hollow receipt  issue that had  been discussed                                                                    
by the  committee in the past;  the subcommittee recommended                                                                    
a reduction of $40 million  in hollow receipt authority. She                                                                    
elaborated  that  the  individual  campus  line  items  were                                                                    
artificially  inflated to  account  for  the hollow  receipt                                                                    
authority, which  made it difficult  to determine  where the                                                                    
money was allocated across the system.                                                                                          
3:27:37 PM                                                                                                                    
Representative  Gara  pointed  to   a  denied  $2.3  million                                                                    
increment  for  the  University  of  Alaska  Fairbanks  Life                                                                    
Sciences  facility  operating  costs.  He  wondered  if  the                                                                    
subcommittee  intended  for  the university  to  absorb  the                                                                    
Representative Munoz  replied that  the total  increment was                                                                    
$6  million (approximately  50 percent  UGF  and 50  percent                                                                    
DGF). She expounded that the  subcommittee's direction to go                                                                    
to  a single  appropriation would  allow the  university the                                                                    
flexibility to determine where it  would make the reduction.                                                                    
She   relayed   that   there   had   been   seven   separate                                                                    
appropriations in the past, which  made it difficult to move                                                                    
savings  from campus  to  campus.  She expressed  confidence                                                                    
that the  flexibility would allow  the university  to locate                                                                    
Representative Gara  thought the governor  had approximately                                                                    
$2.4  million  in  GF  increment  requests;  however,  there                                                                    
appeared to  be a $16  million difference between the  FY 13                                                                    
and FY 14 budgets.                                                                                                              
Representative  Munoz responded  that the  actual allocation                                                                    
was  about  $8  million  DGF (university  receipts)  and  $8                                                                    
million in GF; the majority  of the total (over $12 million)                                                                    
was allocated to the health and salary adjustments.                                                                             
Representative Gara  asked if there  had been a  $16 million                                                                    
increase.  Representative Munoz  answered that  the increase                                                                    
was roughly $16 million (half of which was tuition).                                                                            
3:29:57 PM                                                                                                                    
Co-Chair  Stoltze provided  the  highlights  for the  Alaska                                                                    
Court  System.  He  relayed that  the  governor's  requested                                                                    
increase  was   close  to  $4.5   million;  of   which,  the                                                                    
subcommittee approved increases of  just under $2.7 million.                                                                    
He pointed to  a large increment for a  judicial official in                                                                    
western  Alaska with  an ocular  disability.  He noted  that                                                                    
associated costs were  high due to the location  and lack of                                                                    
resources.  He  stated that  the  item  would  be met  as  a                                                                    
supplemental budget  increase as well. He  remarked that the                                                                    
increment had  probably tied the  hands of  the subcommittee                                                                    
related to its approval of other increments.                                                                                    
Co-Chair  Stoltze  discussed  that  $513,800  UGF  had  been                                                                    
accepted  for  facility  overhead costs.  Additionally,  the                                                                    
subcommittee had  ratified $605,200  in Mental  Health Trust                                                                    
Authority receipts  for therapeutic courts. He  relayed that                                                                    
a  $40,000 appropriation  for  the  Fairbanks 24/7  sobriety                                                                    
program  had  been  modified as  a  one-time  increment.  He                                                                    
shared  that a  $456,800 increment  for American  Disability                                                                    
Act accommodations  had been broken into  a $300,000 ongoing                                                                    
increment and a $56,800  one-time increment for supplies and                                                                    
necessary  equipment. He  stated that  the subcommittee  did                                                                    
not fully fund  an increase for office rent  and parking for                                                                    
the  Alaska Judicial  Council and  a reduction  of close  to                                                                    
$176,000 had been made to  a request for bandwidth increase.                                                                    
The  subcommittee  had funded  $123,300  out  of a  $177,500                                                                    
requested  increase for  facility leases.  He detailed  that                                                                    
during  work  with  staff  it had  been  determined  that  a                                                                    
facility  in Unalakleet  was not  ready  for funding,  which                                                                    
allowed the delay of $54,200 in FY 14.                                                                                          
3:36:24 PM                                                                                                                    
Co-Chair  Stoltze   pointed  to   a  cautious   approach  of                                                                    
replacing  federal funds  and relayed  that  a general  fund                                                                    
request  for the  therapeutic courts  had  been denied,  but                                                                    
$689,000 receipt  authority had  been retained.  He believed                                                                    
the item  had originally been  funded by the  mandatory seat                                                                    
belt law, but  funds were no longer  available. He commented                                                                    
that  it  was one  of  the  continuing tough  decisions  the                                                                    
legislature would  have to make  related to  the replacement                                                                    
of  federal   funds.  He   remarked  on   the  legislature's                                                                    
bicameral  process. He  relayed  that  the subcommittee  had                                                                    
denied  the  advertising  budget  for  the  Alaska  Judicial                                                                    
Council;   he  noted   the   funding   component  had   been                                                                    
controversial.  He stated  that money  used to  advocate for                                                                    
the retention  and recruitment of  judges had  been removed.                                                                    
He   read  from   a  letter   of  intent   offered  by   the                                                                    
     It  is   the  intent   of  the  legislature   that  the                                                                    
     legislative committees  may assist the  Alaska Judicial                                                                    
     Council in  public outreach throughout  the communities                                                                    
     of Alaska  through the facilitation of  public meetings                                                                    
     and outreach  to augment the Alaska  Judicial Council's                                                                    
     work   on  all   activities  including   selection  and                                                                    
     retention  of  judicial  officials.  This  support  may                                                                    
     include  office  space, video  and  telecommunications,                                                                    
     and  any  other  accommodations  deemed  reasonable  by                                                                    
     committee  chairs.  The  chairs  may  expend  funds  in                                                                    
     assisting non-advocacy public outreach.                                                                                    
Co-Chair  Stoltze  furthered  that  outreach  would  include                                                                    
informing the  public of elections  or other. He  noted that                                                                    
the legislature  had numerous facilities that  were not used                                                                    
year-round. He  relayed that the  non-advocacy piece  of the                                                                    
intent language was important to him.                                                                                           
3:40:36 PM                                                                                                                    
Representative  Gara  pointed to  the  loss  of $689,000  in                                                                    
federal funds for  wellness courts. He asked  for the amount                                                                    
of funding remaining for the wellness courts.                                                                                   
Co-Chair Stoltze did not have the information.                                                                                  
Mr.  Ecklund pointed  to  page  40 of  the  budget bill  and                                                                    
relayed that it included $2,794,900 for therapeutic courts.                                                                     
Co-Chair Austerman  reported on  the Office of  the Governor                                                                    
budget.  The  subcommittee  recommended a  total  budget  of                                                                    
$29,606,500 including $28,881,700  UGF, $4,900 DGF, $521,700                                                                    
in  other   funds,  and  $198,200   in  federal   funds.  He                                                                    
communicated that  because the  budget was flat  compared to                                                                    
the  prior  year the  only  change  was  to designate  a  $3                                                                    
million request for domestic violence  and sexual assault as                                                                    
a one-time item. He pointed  to a $250,000 increment for the                                                                    
redistricting  board costs  in  the supplemental  FY 13  and                                                                    
$1,750,000  in the  amended FY  14 budget;  the subcommittee                                                                    
elected to  combine both amounts  in the supplemental  FY 13                                                                    
3:43:45 PM                                                                                                                    
Co-Chair  Austerman  addressed  the Legislature  budget.  He                                                                    
relayed  that  some fiscal  impact  and  zero fiscal  impact                                                                    
changes  had  been  made to  the  budget.  The  subcommittee                                                                    
approved   a   total   budget   of   $71,527,000   including                                                                    
$71,052,600 UGF,  $71,400 DGF, $403,000 in  other funds, and                                                                    
zero   federal   funds.   Based   on   Legislative   Council                                                                    
recommendations  the  subcommittee  had added  $100  in  the                                                                    
legislative audit for  information technology center. Nearly                                                                    
$2  million  in  space  costs  had  been  consolidated  from                                                                    
several  allocations into  the  facilities rent  allocation.                                                                    
Expenses  for  the  Legislative Finance  Division  had  been                                                                    
reduced  to  be  evenly  split   between  House  and  Senate                                                                    
committees  in the  amount of  $250,000. Committee  expenses                                                                    
had  been reduced  by  $350,000 and  the  Commission on  the                                                                    
100th  Anniversary  of  the  Legislature  funding  had  been                                                                    
reduced by $25,000,  given that it was  close to completion.                                                                    
Session expenses that had been  allocated to the Legislative                                                                    
Council   appropriation  were   moved  to   the  legislative                                                                    
operating   budget  appropriation.   The  subcommittee   had                                                                    
transferred  to   the  legislative  state   facilities  rent                                                                    
allocation from  the Budget and  Audit appropriation  to the                                                                    
Legislative   Council   appropriation.   Expenses   in   the                                                                    
Legislative Finance Division had  been reduced by $1 million                                                                    
to be  split between House and  Senate committees; committee                                                                    
expenses  were  reduced  by  $800,000  and  by  $200,000  in                                                                    
council  and subcommittees.  The actions  brought the  FY 14                                                                    
budget  to $2,200,000  million below  the  FY 13  management                                                                    
plan and $2,537,700 below the governor's FY 14 budget.                                                                          
3:46:47 PM                                                                                                                    
Co-Chair Austerman discussed the schedule for the following                                                                     
HB 65 was HEARD and HELD in committee for further                                                                               
HB 66 was HEARD and HELD in committee for further                                                                               
3:48:06 PM                                                                                                                    
The meeting was adjourned at 3:48 p.m.                                                                                          

Document Name Date/Time Subjects
HB65CSWorkDraft-C Agency Summaries-LFD.pdf HFIN 3/4/2013 1:30:00 PM
HB 65
HB66 CS WorkDraft C-Mental Health HB 66 3-2-13.pdf HFIN 3/4/2013 1:30:00 PM
HB 66
HB65 CS WorkDraft C-Operating 3-2-13.pdf HFIN 3/4/2013 1:30:00 PM
HB 65
HB65 3-4-13 Gov to H Sub LANG Compare CSHB 65 DRAFT VERSION C.pdf HFIN 3/4/2013 1:30:00 PM
HB 65