Legislature(1997 - 1998)
04/11/1997 01:47 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 11, 1997
1:47 P.M.
TAPE HFC 97-93, Side 1, #000 - end.
TAPE HFC 97-93, Side 2, #000 - end.
CALL TO ORDER
Co-Chair Hanley called the House Finance Committee meeting to order
at 1:47 P.M.
PRESENT
Co-Chair Hanley Representative Kelly
Representative Foster Representative Martin
Representative Grussendorf Representative Mulder
Co-Chair Therriault and Representatives Davis, Davies, Kohring and
Moses were absent from the meeting.
ALSO PRESENT
Annalee McConnell, Director, Office of Management and Budget,
Office of the Governor: Keith Kelton, Director, Division of
Facility Construction and Operation, Department of Environmental
Conservation; Thomas Brigham, Director, Division of State Planning,
Department of Transportation and Public Facilities.
SUMMARY
HB 165 "An Act making and amending capital and other
appropriations and to capitalize funds; and providing for
an effective date."
HB 165 was HELD in Committee for further consideration.
HOUSE BILL NO. 165
"An Act making and amending capital and other appropriations
and to capitalize funds; and providing for an effective date."
Co-Chair Hanley provided members with spreadsheets by the
Legislative Finance Division showing project funding and statewide
agency totals and a letter from the Office of Management and
Budget, dated 4/4/97, (copy on file).
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR stated that the Administration focused on
state appropriations that would leverage federal or other dollars.
She noted that the general fund match appears to be $28.9 million
dollars. She explained that $4.5 million dollars from Alaska
Industrial Development and Export Authority (AIDEA) dividends were
also applied to the federal airport match. In addition, a $1.5
million dollar reappropriation will be used to match federal
dollars. She concluded that $35 million dollars of the capital
project proposal will leverage federal funds. The state will
receive an additional federal match for water and sewer projects.
She stressed that half of the CIP proposal will be matched by
federal funds.
Ms. McConnell observed that Alaska Housing Finance Corporation
(AHFC) receipts were used in FY 97 for water and sewer projects
that principally affect residential areas. The FY 98 request also
includes funding from AHFC corporate receipts. She noted that one
time federal funding is available in FY 98 for drinking water.
This funding will be used for grants to medium and larger
communities and to expand grants in small communities.
Ms. McConnell discussed the $16 million dollar AHFC dividend. She
observed that the Administration used the dividend dollars for
economic development projects in order to reinvestment the state's
original investment. She noted that the Majority has proposed to
deposit the dividend into the General Fund. She acknowledged that
the Administration also considered depositing the dividend into the
General Fund. The Administration concluded that, without AIDEA
funding, economic develop projects would be below the level the
Administration thought was needed. She stressed that life and
safety issues receive priority. She maintained that economic
development projects would come to a "screeching halt" without the
AHFC dividend.
Ms. McConnell stated that the loss of $16 million AHFC dividend
dollars, to the General Fund, would be offset by an increase in oil
revenues and a $28 million dollar savings from refinancing the
State Mortgage Insurance Fund. The Administration's plan uses $5
million dollars from the State Mortgage Insurance Fund to match
federal drinking water money. The remainder could go into the
General Fund.
Ms. McConnell provided members with a list of projects that were
proposed but not included in the supplemental budget (copy on
file). She maintained that these projects should be contained in
the capital budget. She identified appropriations for additional
items that were not included. An appropriation to pay Cleary fines
was not included in HB 113 or SB 83. She observed that funding for
the Fairbanks Youth Center's security improvements was not included
in SB 83. Funding for emergency communications equipment was not
included. An appropriation for the Old Eagle school site building
removal was included in HB 113 but not in SB 113. Funding for the
Sitka Training Academy was not included in either bill.
Ms. McConnell referred to the capital matching grant program. She
provided the Committee with a memorandum, dated 4/4/97 amending the
program (copy on file).
Ms. McConnell noted that after three years of relatively small
capital budgets the pressure on available funding is pretty
intense. She maintained that the Administration's proposal only
accommodates basic needs.
In response to a question by Representative Foster, Ms. McConnell
explained that the priority system used in evaluating school
projects has been reviewed. Modifications and clarifications on
the point system were made. She emphasized that the number of
appeals to the priority list have been reduced.
Co-Chair Hanley asked for a copy of the priority list. Ms.
McConnell clarified that the only adjustment to the priority list
was a bulk fuel system upgrade on the North Slope. The full state
amount would be $6 million dollars. This amount was reduced to
$500 thousand dollars. This is a reimbursement for payments that
have been and are entitled to reimbursement under state law.
Representative Martin referred to requests by the Exxon Valdez
Trust Council that have come before the Legislative Budget and
Audit Committee. He emphasized that the total legislative body
should consider these requests. Ms. McConnell responded that the
process works throughout the year. These projects have been added
to the back section. She stressed that there needs to be some
flexibility.
Co-Chair Hanley summarized that projects should be included, when
they can, in the full operating budget.
Ms. McConnell noted that the municipal matching grant program is
funded at the same level as FY 97, $15 million dollars. The bulk
of the funding goes to incorporated communities. All projects that
have the appropriate backup are included. She noted that there are
some changes as requested by communities. She stressed that
legislators receive copies of requests in their districts.
Requests are not edited by the Office of Management and Budget.
Funds can be retained in a community's account until a specific
project request is developed.
Co-Chair Hanley summarized that communities decide how to spend the
funding, providing the requirements have been met.
THOMAS BRIGHAM, DIRECTOR, DIVISION OF STATE PLANNING, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES noted that Senator Stevens
spoke in regards to the reauthorization of the Intermodal Surface
Transportation Act (ISTEA). Senator Stevens stated that an
expansion of ISTEA from $20 to $26 billion dollars a year is not
sufficient. Mr. Brigham noted that the state could receive an
additional $60 million federal dollars for surface transportation
projects.
Ms. McConnell noted that the Administration estimated the general
fund match for the federal highway program at $25.5 million
dollars. She noted that $25.5 million dollars would not be
sufficient to cover the required match if additional federal
funding is acquired. She suggested intent language be included to
clarify that a supplemental request will be submitted if additional
federal funding is available.
Co-Chair Hanley asked if $25.5 million dollars covers the over-
authorization. He questioned how much of this amount would fund
non-conforming items, that the federal government will not fund.
In response to a question by Representative Martin, Mr. Brigham
explained that there are no dollars associated with over-
authorization. He noted that more than $200 million dollars in old
authorization has been taken off the books.
Mr. Brigham provided members with a flow chart of the Statewide
Transportation Improvement Program (STIP) process (copy on file).
He reviewed the flow chart. He observed that the statewide plan is
required by federal law. The program is broken into three parts,
the National Highway System (NHS), the Community Transportation
Program (CTP), and Trails and Recreational Access (TRAAK). He
noted that NHS projects deal with major roadways. Roads are
evaluated and prioritized based on grade, alignment, capacity and
constraints. The program was developed to upgrade all routes
within two federal transportation cycles (12 years).
Mr. Brigham noted that CTP and TRAAK requests are nominated by
local governments, agencies and other groups. The are collected
and scored. Scores are published in the STIP. These projects are
not edited. The list is subject to public review. He observed
that in Anchorage, AMATS has a parallel process that is folding
into the STIP. The STIP is compared to the existing legislative
authority.
Co-Chair Hanley referred to page 19, line 26. Ms. McConnell
clarified that this item appropriates $2.5 million dollars in AIDEA
corporate receipts to the Corps of Engineers Program. Co-Chair
Hanley noted that the appropriation may be allocated among the
projects listed in the bill. Legislative intent states that the
Department of Transportation and Public Facilities may request a
fiscal year 1998 supplemental if the amount of funds secured in the
federal budget require state matching funds in excess of this
appropriation.
Ms. McConnell explained that the list includes projects that are
currently in the President's budget or are likely to be funded if
there is federal funding available. She stressed that the federal
process is early and it is unknown which projects will be funded.
She observed that communities are encouraged to provide a local
match. She stated that a more accurate estimate may be available
before the legislation is enacted.
Co-Chair Hanley observed that the projects require a $6.7 million
dollar state match. He expressed concern that the list creates a
huge expectation on the part of communities. Ms. McConnell
stressed that communities are aware that the match is not
sufficient to cover all the listed projects. She stressed that
this is a message to communities that they have to help as much as
they can. She maintained that communities know that the
supplemental budget is extremely tight. She noted that projects
that are not going to make it through the federal process will be
dropped off. She asserted that some communities are researching
ways to increase their share.
Co-Chair Hanley expressed concern with the process. He was not
sure that he was willing to commit to approving a supplemental if
additional federal funding is available.
Ms. McConnell clarified that if communities supply the match the
state does not have to do anything. She noted that the
Administration has talked to communities about establishing a
process that would require a local match. She emphasized the need
to develop criteria for local contribution. She observed that
federal dollars go straight to the communities.
Representative Martin referred to the Ocean Dock Road in Anchorage.
Mr. Brigham noted that the Ocean Dock Road project is currently in
design. Funding for the project will begin in the next fiscal
year.
Co-Chair Hanley asked for an estimation of federal funds that were
not received in FY 97. Mr. Brigham clarified that the shortfall in
federal funding for FY 97 was considered in the FY 98 request. The
authorization requested is $151 million dollars. The state
anticipates receiving $179 million dollars. There was a $28
million dollar shortfall in FY 97. The authority still exists for
the amount under-funded in FY 97. Mr. Brigham noted that the
Department was under-funded in FY 97.
NANCY SLAGLE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES explained that the match
requirement varies for projects listed in the Corps of Engineer
program. She noted that all of the projects are based on a local
match equal to the state match.
Co-Chair Hanley requested more information regarding local and
state match requirements. He expressed concern that projects may
need to be prioritized for funding.
Mr. Brigham noted that projects are scored within the Department of
Transportation and Public Facilities. Ms. McConnell explained that
only projects that have a good chance of funding are listed. The
projects are not prioritized.
Mr. Brigham clarified that the Department scores projects and the
Corps of Engineers picks specific projects to fund.
KEITH KELTON, DIRECTOR, DIVISION OF FACILITY CONSTRUCTION AND
OPERATION, DEPARTMENT OF ENVIRONMENTAL CONSERVATION discussed the
funding relationships between state and federal dollars in the
Municipal Matching Grant Program and the Village Safe Water
Program. He provided members with a project summary (copy on
file). He explained that Congress re-authorized the Federal Safe
Drinking Water Act in August 1996. He noted that Alaska's federal
allocation for FY 96 was $27 million dollars. Alaska has to
provided a 20 percent state match. The state match for FY 97 is
$5,364,000 million dollars. The state can use 30 percent of their
federal safe drinking water loan for direct grants to disadvantaged
communities. The definition of "disadvantaged" was not determined.
The state's definition of "disadvantage" covers any community with
a population under 10,000. He noted that the project summary lists
projects that were scored and ranked before the Federal Safe
Drinking Water Act renewed funding for the state through the
Environmental Protection Agency (EPA). He observed that projects
were organized to maximize federal funding.
Mr. Kelton stated that $7,821,000 million dollars has been
earmarked for 10 drinking water grants to disadvantaged
communities. An additional $24,363 million dollars is available
for loans and set-asides. He emphasized that this is a one time
opportunity. He maintained that the grant level will optimize
funding and reduce the loan to a manageable size.
In response to a question by Representative Kelly, Mr. Kelton
observed that all municipalities are eligible for the loan program.
Anchorage receives 30 to 40 percent of the state's Waste Water
Program.
In response to a question by Co-Chair Hanley, Mr. Kelton clarified
that 30 percent of the funding can be used for grants under the
federal program.
Mr. Kelton discussed the criteria for project scoring. He noted
that public health, environmental concerns, readiness to proceed,
operation and maintenance, and other federal funds are considered.
Communities are given application packets around the end of
October. He noted that the Clean Drinking Water Act authorizes
several set-asides. There is a 4 percent administrative set-aside.
No money has been used from this set-aside due to the state match
requirement. He anticipated that some general fund dollars will be
replaced in the next year.
Representative Mulder referred to the Tentative Use Plan.
Mr. Kelton discussed the Village Safe Water Program. He referred
to the project summary (copy on file). He observed that the Rural
Development Administration (RDA) has $7,505 million dollars
available for state projects. The money is not received or
expended by the state. The money is only available if the state
provides a match. The money goes directly to the communities.
Water, waste water and solid waste projects can be funded. They
are limited to communities with an average family income of $42
thousand dollars.
Mr. Kelton observed that the Legislature challenged Senator Stevens
and the federal government to come up with matching dollars for
rural sanitation. Senator Stevens located $15 million federal
dollars for rural sanitation, which will be appropriated through
EPA. The projects are matched by $8 million general fund dollars
and $14.6 million dollars in AHFC dividends. The total
state/federal funding for Village Safe Water projects is $43
million dollars. All but one project is totally matched by federal
dollars. The Denali Borough's request cannot be funded through EPA
because the EPA cannot fund solid waste projects. The Denali
Borough's average family income is too high to qualify for RDA
funding.
In response to a question by Representative Martin, Mr. Kelton
explained that general funds in AHFC receipts can be used as the
state match.
Ms. McConnell clarified that projects were listed according to
their score. She added that the Administration considered other
uses of AHFC funds when deciding how much to put into the Village
Safe Water program. Funding was based on the ability to maximize
leverage of federal dollars. She noted that either general fund or
AHFC dollars could be used. She emphasized that AHFC dividend
dollars were used for projects that have a relationship to housing.
Representative Martin expressed concern with the appropriation of
AHFC dividend dollars. Ms. McConnell maintained that it is better
to address the highest priority projects. She asserted that the
Administration's plan has kept with the overall mission of AHFC,
while considering where dollars are most needed regardless of the
funding source.
Mr. Kelton clarified that projects are listed according to score
and ranking. Feasibility studies and engineering analyses are not
scored. These are funded to generate a more specific project scope
and cost summary for future work. These appropriations are small.
He explained that the Department solicits projects from non-
profits, communities, IRA councils, service districts and others.
Projects are ranked new annually. He observed that there is no
federal match requirement. He stressed that this is the first time
that almost all the projects have had a federal match.
In response to a question by Co-Chair Hanley, Mr. Kelton explained
that EPA has made available funding for a demonstration project
administered by the Alaska Native Health Board. The project
evaluates alternative methods of improving the capacity of small
communities to provide operation and maintenance. This is the
third year that this funding has been available. The past two
years no state match was required. This year a $500 thousand
dollar state match is required. This is the last year for the
project.
Ms. McConnell pointed out that there has been concern with the
ability of small communities to maintain investments of state and
federal dollars. She reiterated that operation and maintenance is
a factor in the ranking process. She clarified that the Alaska
Native Health Board is a private non-profit.
Co-Chair Hanley asked for more information regarding this
appropriation.
In response to a question by Representative Mulder, Mr. Kelton
clarified that this is the second year that funding has come from
AHFC dividends. General funds were used in prior years. The total
state participation has remained steady for the past 6 years.
Representative Mulder expressed concern that the use of AHFC
dividends is in conflict with the Majority's spending plan. Ms.
McConnell reiterated the importance of funding the highest priority
projects. She maintained that it is healthy to look at all funding
sources in order to decide the best mix and to maximize federal
funding.
HB 165 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:15 p.m.
**FIN104PM
| Document Name | Date/Time | Subjects |
|---|