Legislature(1995 - 1996)
02/06/1995 01:35 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
FEBRUARY 6, 1995
1:35 P.M.
TAPE HFC 95 - 16, Side 1, #000 - end.
TAPE HFC 95 - 16, Side 2, #000 - end.
TAPE HFC 95 - 17, Side 1, #000 - end.
TAPE HFC 95 - 17, Side 2, #000 - #328.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:35 P.M.
PRESENT
Co-Chair Hanley Representative Kohring
Co-Chair Foster Representative Martin
Representative Mulder Representative Navarre
Representative Brown Representative Parnell
Representative Grussendorf Representative Therriault
Representative Kelly
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division;
Representative Ivan Ivan; Annalee McConnell, Director,
Office of Management and Budget; Nancy Slagle, Director,
Division of Budget Review, Office of Management and Budget;
Tina Kobayashi, Assistant Attorney General - General Civil
Section, Department of Law; Arthur Snowden, II,
Administrative Director, Alaska Judicial Council, (Testified
via Teleconference); Bob Baratko, Director, Administrative
Services, Department of Revenue; Jeff Morrison, Director,
Division of Administrative Services, Department of Military
and Veterans Affairs; Ervin Paul Martin, Director, Alaska
Division of Emergency Services, Department of Military and
Veterans Affairs; Pete Wuerpel, Chief of Operations,
Division of Emergency Services, Department of Military and
Veterans Affairs; Ken Bischoff, Director, Division of
Administrative Services, Department of Public Safety;
Margaret Pugh, Commissioner, Department of Corrections;
Robert Cole, Director, Division of Administrative Services,
Department of Corrections.
SUMMARY
HB 137 An Act making supplemental appropriations for
operating expenses of state government for fiscal
year 1995; and providing for an effective date.
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HB 137 was HELD in Committee for further
discussion.
HOUSE BILL 137
"An Act making supplemental appropriations for
operating expenses of state government for fiscal year
1995; and providing for an effective date."
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
(OMB), OFFICE OF THE GOVERNOR, discussed the current
Administration's intent to have the full budget funded at
the beginning of the fiscal year. Although, she added, that
this year the five supplemental departmental requests would
not be unfamiliar to the Committee.
1. The Department of Corrections is under court order
to correct problems in the prisons.
2. The mental health land settlement which was
accepted by Judge Greene in December, 1994,
requires that the Administration establish the
Mental Health Trust Authority immediately.
3. Response to last summer's Koyukuk River flood
requires expenditures in excess of the amounts in
the disaster relief fund.
4. She concluded that there would be serious
consequences to leaving trooper positions vacant,
as necessitated by the funding level approved last
spring.
5. Finally, Ms. McConnell said the Legislature funded
oil and gas litigation for only half of last year.
Additional information relating to these requests are
available to the Legislature from the Office of Management
and Budget. Ms. McConnell urged the Committee to consider
and pass the proposed supplementals.
DEPARTMENT OF LAW
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained
that the Department of Law's FY95 supplemental request for
oil and gas litigation was originally $20.8 million dollars.
Due to the BP and ARCO tax settlements, that amount should
be reduced to $18.0 million dollars which will create a
savings of $2.8 million dollars.
Representative Martin questioned any increase request at a
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time when most cases are being settled.
TINA KOBAYASHI, ASSISTANT ATTORNEY GENERAL, GENERAL CIVIL
SECTION, DEPARTMENT OF LAW, stated there are currently three
major cases moving toward litigation at which time the
Department is in a trial preparation stage for. One of
these cases involves royalty matters scheduled for trial in
Spring 1995. The remaining cases are tax matters scheduled
for formal administrative proceedings. These cases are
complex, involving substantial amounts of time and expense
in order to prepare. Other on-going disputes include title
challenges involving resource-rich lands that have high
potential value to the State, the validity of a federal ban
on the export of Alaska North Slope (ANS) crude oil,
violations of the statehood contract affecting the recovery
of oil and gas revenues from withdrawn federal lands, close
monitoring of compliance with the TAPS settlement, and
whether certain operating costs should be included in
pipeline tariffs.
Representative Martin asked if there had been an increase in
the Department of Law's employees. Ms. Kobayashi stated
that an increase in personnel had resulted from a TAPS
settlement case. Representative Brown pointed out that most
oil royalties have been settled, whereas, gas royalties are
still pending. Representative Mulder asked the amount of
money currently at risk in the court proceedings. Ms.
Kobayashi offered to provide that information to the
Committee at a later date.
Co-Chair Hanley commented that ten to twelve new attorneys
had been hired at the end of last year's session; he asked
for further information regarding the savings resulting from
that hire. Ms. Kobayashi responded that the $2.8 million
dollar revenue was the savings which resulted from settling
the BP case. Ms. Slagle added, the additional positions had
been a cost cutting measure as a long term savings rather
than short term savings.
DEPARTMENT OF REVENUE
Ms. Slagle noted that the Department of Revenue request
would be reduced by $100 thousand dollars. She explained
that there had been an amount included in the request for a
RSA to the Department of Natural Resources (DNR), although
there were adequate funds in that budget to cover those
expenses.
The Department of Revenue has requested a "fast track"
supplemental for FY95 Alaska Mental Health Trust Authority
start-up costs. In meetings with Deborah Smith, the
Executive Director of the Alaska Mental Health Board, the
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Administration has developed an operating budget for FY95 in
the amount of $611.1 thousand dollars. That amount would be
funded from the Mental Health Trust Settlement income
account (1092).
Representative Martin suggested that the Alaska Mental
Health Trust Authority Board members should be the ones to
determine the amount of needed funds.
BOB BARATKO, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF REVENUE, stated that advance funds are
necessary in order to furnish the equipment and reserve a
space. He added, the Alaska Mental Health Trust Authority
was established on December 16, 1994 and from that
settlement, the Authority was then established within the
Department of Revenue. Without supplemental funds, the
functions and responsibilities of that Board would be
delayed.
Representative Martin voiced a complaint regarding the
requested funds. Mr. Baratko advised that start up costs
would amount to $611.1 thousand dollars.
Ms. Slagle pointed out that the fiscal note for Chapter 66
had been prepared by the Senate Finance Committee. The
request includes funding to contract with the Permanent Fund
Corporation to manage the monetary portion of that fund
which was not included in the fiscal note.
Mr. Baratko responded to Representative Brown's question
regarding the eleven people to be hired, three positions in
Anchorage and eight positions in Juneau by April 1, 1995.
Representative Brown commented that the Authority should
begin office staffing with surplus furniture and equipment.
Discussion followed among Committee members regarding the
office space, equipment ordered and the need to man two
offices located in Juneau and Anchorage.
Co-Chair Hanley advised of the fiscal dilemma in that
currently no Trust Authority has yet been established. In
the future, the Trust Authority will provide their funding
for their budgetary needs. Although, if the original funds
provided by the Legislature are not spent, they would lapse
back into the Alaska Mental Health Trust.
Representative Navarre questioned how the number of
representatives of the Board had been established. Mr.
Baratko replied that eleven member seats was designated by
the Alaska Mental Health Trust Board as the number projected
to be needed in order to implement the purpose of the Trust
Authority. He clarified that four positions had been
established in statute; there would also be clerical
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support. Discussion followed among Committee members
regarding the number of people that should be considered to
determine the real costs in establishing the Trust
Authority. Ms. Slagle pointed out that the purpose or
responsibility of the Mental Health Board would not change
with the addition of the Alaska Mental Health Trust
Authority.
(Tape Change, HFC 16-2, Side 2).
Ms. McConnell emphasized that a decision had been reached in
the Weiss vs. State case. Therefore, the Department was
unable to prepare a FY95 budget in the normal process. It
is the intent of the Department of Revenue to begin
operations of the Authority as soon as possible, thus
necessitating the "fast track" supplemental request.
She suggested that the request be broken into the "fast
track" needs and add the remainder be allocated in the
regular supplemental request.
ALASKA COURT SYSTEM
ARTHUR SNOWDEN, II,(TESTIFIED VIA TELECONFERENCE),
ADMINISTRATIVE DIRECTOR, ALASKA JUDICIAL COUNCIL, noted that
the court system would be requesting supplemental
appropriations for two budgetary shortfalls. One request
relates to the upcoming trial for the Arctic North Slope
Royalty case. The litigation involves a dispute over
natural gas royalties. In 1992, certain oil royalty
disputes were resolved. The trial was scheduled to start
April, 1995 and finish in September, 1995. This request is
limited to costs for FY95.
Mr. Snowden added, the other appropriation request would be
for funding retroactive pay increases for certain
magistrates. During an annual review of the magistrate
classifications, the courts discovered that some magistrates
had not been given pay increases as required by the Supreme
Court Order.
He added that the extraordinary costs associated with the
Arctic North Slope Royalty case are requested and that
amount would permit hiring clerical and legal support staff
and paying other trial costs.
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
JEFF MORRISON, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
(DMVA), stated that the Department would need an FY95
supplemental appropriation for the Disaster Relief Fund.
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The need for the supplemental appropriation has resulted
from the 1994 Fall flood disaster based on the Koyukuk
River. This disaster will require more additional money
than amounts that had been previously allocated. Mr.
Morrison provided the Committee with a handout addressing
the fiscal circumstances. [Attachment #1].
The handout differentiates between the Federal Emergency
Management Agency (FEMA) estimated costs and the State
estimated costs. The total estimated costs for the disaster
would be $74.3 million dollars of which $55.3 million
dollars would be covered through the federal program and
$18.9 million dollars would be requested through the State.
Mr. Morrison pointed out that to date $3.2 million dollars
has been allocated from the Disaster Relief Fund, depleting
that fund; $9.6 million dollars in federal funds have also
been allocated. The Department has borrowed $4 million
dollars from the FY91 Spring Floods Disaster fund; this
needs to be repaid. The amount of money requested to date
has been estimated in order to carry the Department through
February, 1995.
He added, the Department is pursuing additional funding from
the federal government. None of these have been approved to
date; the current estimate is based on the Department's best
funding projection of participation to date.
ERVIN PAUL MARTIN, DIRECTOR, ALASKA DIVISION OF EMERGENCY
SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
stated that the federal government could respond from now up
to a year and a half down the road.
Mr. Morrison pointed out that the State has applied for 100%
funding for the emergency situation and a 90%/10% for the
non-emergency situation resulting from the flooding. He
emphasized that it is important to recognize that the
federal government possibly will not participate at all,
which will result in 100% State responsibility. That could
increase the total requested percentage above the previous
amounts.
Representative Martin asked if any of the losses had been
insured.
PETE WUERPEL, CHIEF OF OPERATIONS, DIVISION OF EMERGENCY
SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
replied that the only place covered by insurance were a few
school buildings; everything else was uninsured, and the
only part of the school underwritten by disaster funds was
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the portion that the school paid to cover their deductible.
Co-Chair Hanley questioned how long the total spending for
this flooding circumstance was anticipated to continue. Mr.
Wuerpel stated that the goal was to close expenditures by
August 31, 1995. Because of past disaster experience, the
Department of Military and Veterans Affairs has established
that date as the targeted goal. Discussion followed among
Committee members and Mr. Wuerpel regarding individual
community requests and responsibilities.
Representative Martin questioned future planning of flooding
sites. Mr. Wuerpel cautioned that the current flood could
not be compared to that of spring break-up. The 1995 flood
has been characterized by the experts as a flood that occurs
only once every hundred years. Some village locations are
being relocated on higher grounds. Allakaket is being
reconfigured to alleviate future damage due to flooding.
(Tape Change, HFC 95-17, Side 1).
Co-Chair Hanley questioned the legal authority for
supplemental requests anticipated in FY96. Mr. Morrison
pointed out that the appropriation would be to the Disaster
Relief Fund, not to the Department of Military and Veterans
Affairs although, the Department will manage that fund. Mr.
Morrison reiterated that the total cost of the disaster has
been either spent or will be obligated by the end of May.
Representative Kohring asked if preventative spending
measures had been considered by the Department. Mr. Wuerpel
advised that addressing erosion problems had not been
attempted, although, there are structures which are being
elevated for flood proofing.
Mr. Morrison concluded that if the federal government
provided for the requested funds, the Department would then
ask for an adjustment in the regular supplemental
legislation.
DEPARTMENT OF PUBLIC SAFETY
KEN BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF PUBLIC SAFETY, explained that the Department
of Public Safety requested an approval of a FY95
Supplemental Appropriation in the amount of $265.0 thousand
dollars for the AST/Detachment Component in order to fill
ten vacant State Trooper positions.
Representative Parnell questioned if funds had been
previously appropriated for these positions. Mr. Bischoff
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stated that the positions had been authorized although there
had been insufficient personnel services money to fill them.
He added, since 1983, the Division of Alaska State Troopers
has been reduced from 308 to 251 commissioned officers.
During that same time period, three posts have been closed,
while the population served by the troopers has increased
39%, and violent crimes have increased 127%. Mr. Bischoff
emphasized the public policy issue at hand.
Representative Parnell asked if the Department could live
within the budget provided by the FY95 budget allocation.
Mr. Bischoff stated they could without hiring the additional
troopers. Discussion followed regarding the time and
placement of the recruits and the training needed for basic
service.
REPRESENTATIVE IVAN IVAN asked how many Village Public
Safety Officer (VPSO) vacancies there currently exists in
the State. Mr. Bischoff replied that there are one hundred
twenty-four authorized VPSO positions and that those
positions would be employees of the non-profit corporations.
The current budget, as submitted by Governor Hickell,
authorized filling ninety-five of those positions.
Representative Martin agreed with Representative Parnell
that the request was not a supplemental request, and rather
should be included in the FY96 budget request.
Representative Brown asked about the vacancy rate for the
Division of Alaska State Troopers. Mr. Bischoff advised
that under the Hickel budget, the total Department personnel
services underfunding would require $3.7 million dollars.
The normal vacancy and attrition would be half that amount;
approximately $1.8 million dollars would be adequate. The
State Troopers represent 45% of the Department of Military
and Veteran Affairs operating budget. The State Trooper
budget totals $42 million dollars. He added, usually $1
million dollars is allowed for vacancy rate and attrition.
Mr. Bischoff pointed out that if the Hickel budget goes
forward without adjustment, there will be twenty-nine
commissioned vacancies by the end of FY96. There are
currently thirteen commissioned vacancies within the Alaska
State Troopers. Co-Chair Hanley understood that more
positions had been authorized in last years budget. He
emphasized that the request was a policy call, not a
supplemental request.
Ms. Slagle concurred that the request was not an appropriate
supplemental request. Governor Knowles has stated that
there is a need for additional State Troopers on the
streets. The supplemental provides a way to implement that
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concern. The process to get the Troopers on the road will
take a while and this request begins that process. Co-Chair
Hanley interjected that an equal reduction must be made to
the budget for the requested increase.
Representative Parnell expressed support of placing new
troopers on the streets although agreed that the
supplemental was not the place for that request.
DEPARTMENT OF CORRECTIONS
MARGARET PUGH, COMMISSIONER, DEPARTMENT OF CORRECTIONS,
stated that the supplemental funds would provide the
resources necessary for short-term stabilization of the
Alaska Correctional System and would provide resources that
will keep the system out of contempt of court action
relating to the Cleary Final Settlement Agreement. The FY95
Supplemental Request totals $13.4 million dollars, and an
additional $2.5 million dollars. Receipt is imminent and
will be recorded to the unrestricted general fund, which
opens up the possibility of an add/delete supplemental
request for the FY95 operating budget, or a request to the
Legislative Budget and Audit Committee for approval to
receive and expend the funds as a capital authorization.
Representative Martin questioned the request to move the
Commissioner's Office from Anchorage to Juneau. He thought
that should occur in the FY96 proposed budget. Ms. Pugh
responded that only four positions of the office have moved
to Juneau. She reminded the Committee that there are eight
professional positions which travel from the Commissioner's
Office and the request would cover those costs.
Representative Brown remarked that last years budget funded
$43 thousand dollars for travel. That allocation was down
from $125 thousand dollars allocated the prior year.
Commissioner Pugh continued, the court appointed monitor
payment is due by May. This appointment was listed in
Section III(L) and VI(A) of the Cleary Final Settlement
Agreement. The $67.0 dollars amount of compensation, which
the court stated was to be paid by the Department of
Corrections, was determined reasonable by the court through
an analysis of the court appointed monitor's proposal of
$88.4 thousand dollars and the State's counter offer of
$58.7 thousand dollars. The FY95 operating budget for the
Agency does not contain sufficient funds to cover those
costs.
The component of Court Fines increment resulted when the
Superior Court found the State in contempt for exceeding
court ordered prison capacities. The court ordered the
State to pay $1,000 dollars per day for every day the system
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was over capacity, and $500 dollars for every day each
individual facility was over capacity. The final settlement
agreement reflects a ten day period in which a facility
could be over emergency capacity before a fine is imposed.
Commissioner Pugh added that the State Parole Board would
need $9.8 thousand dollars in order maintain an acceptable
service level in non-safety areas and to function until the
end of the year. She emphasized, this is a core state
function.
The Department must provide existing facilities with
sufficient safety and security staff to handle increased
prisoner populations. Operating facilities in an
overcrowded condition is raising the incidents of problems
in the institutions. In order to maintain a safe, orderly
operation of institutions, all available security staff
positions had to be filled. The existing Correction Academy
budget only contains minimal funds to train the existing
staff. Recruit, salaries, travel, and per diem costs
associated with attending the six week academy are not
included in the operating budget authorization. The
requested supplemental funding is needed to pay for the
fifty-one academy recruits held in the first half of FY95,
which was needed to fill critical security vacancies
throughout the correctional system and an additional twenty
academy recruits being planned for April 1995 (FY96).
Representative Brown asked the source of costs that drove
the supplemental request. Commissioner Pugh stated that the
cost of the academy is the cost of a recruit, paid at a
range 9 during recruit status.
(Tape Change, HFC 95-17, Side 2).
Representative Mulder recommended the recruits pay for their
own training. Commissioner Pugh reiterated that the academy
has recognized savings by co-training with the Anchorage
Police Training Academy. She offered to pursue options in
regard to training.
Commissioner Pugh stated that the Department of Law
represents the Department of Corrections on all pending
legal actions related to personnel. Specific information on
those cases would be privileged and pertains to strategies
and details of the case. The amount requested would be a
minimum estimate for the cost of resolution of two cases
which are close to conclusion. The request amount would be
$555.0 thousand dollars and would be necessary to maintain
acceptable service level in non-safety areas.
Commissioner Pugh requested $99.0 thousand dollars for the
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Correctional Industries-Administration Associated with
Spring Creek ($49.5) and Wildwood C.C.($45.5) necessary to
maintain acceptable service level in non-safety areas. Due
to up-scaling of the Department's prisoner population at the
Spring Creek and Wildwood Correctional Centers, the Alaska
Correctional Industries was directed to increase the number
of job opportunities and the availability of vocational
instructions at the facilities. Co-Chair Hanley questioned
the requested additional funds. He asked if the State was
in violation with the Cleary decision and if it would face
court sanctions without that appropriation.
Commissioner Pugh stated that the $194.3 thousand dollars
would address the general underfunding throughout the system
to maintain acceptable service level in non-safety areas.
She advised that the State would not specifically be in
violation of Cleary, but would managerially for delivery of
services and would then have to default on contracts
previously entered into.
HB 137 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 4:00 P.M.
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