Legislature(1999 - 2000)
02/09/2000 09:05 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S): OVERVIEW:
PRESENTATION BY PUBLIC MEMBERS
OF THE COMMISSION ON PRIVATIZATION AND
DELIVERY OF GOVERNMENTAL SERVICES
The following overview was taken in log note format. Tapes and
handouts will be on file with the House Finance Committee through the
21st Legislative Session, contact 465-2156. After the 21st Legislative
Session they will be available through the Legislative Library at 465-
3808.
Time Meeting Convened: 9:05 a.m.
Tape(s): HFC 00 - 29, Side 1
HFC 00 - 29, Side 2
PRESENT:
Absent
Co-Chair Therriault
X
Co-Chair Torgerson
Absent
Co-Chair Mulder
X
Co-Chair Parnell
X
Vice Chair Bunde
X
Senator Adams
Absent
Representative Austerman
X
Senator Donley
X
Representative J. Davies
X
Senator Green
X
Representative G. Davis
X
Senator P. Kelly
Absent
Representative Foster
X
Senator Leman
X
Representative Grussendorf
Absent
Senator Phillips
X
Representative Moses
X
Senator Wilken
X
Representative Phillips
X
Representative Williams
ALSO PRESENT: SENATOR WARD; REPRESENTATIVE JOHN COWDERY; KATHRYN
THOMAS, COMMISSION MEMBER, COMMISSION ON PRIVATIZATION AND DELIVERY
OF GOVERNMENT SERVICES; MARCO PIGNALBERI, STAFF, REPRESENTATIVE JOHN
COWDERY; DON VALEKSO, COMMISSION MEMBER, COMMISSION ON PRIVATIZATION
AND DELIVERY OF GOVERNMENT SERVICES.
TESTIFIED VIA TELECONFERENCE: BILL ALLEN, COMMISSION MEMBER,
COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES;
GEORGE WEURCH, COMMISSION MEMBER, COMMISSION ON PRIVATIZATION AND
DELIVERY OF GOVERNMENT SERVICES; TOM FINK, COMMISSION MEMBER,
COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES.
LOG
SPEAKER
DISCUSSION
TAPE HFC 00 - 29
SIDE 1
000
CO-CHAIR TORGERSON
Co-Chair Torgerson convened the Joint
House & Senate Finance Committee meeting
at 9:05 a.m. He voiced appreciation for
the work done on privatization by the
Commission. The final report was
distributed to Committee members. [Copy
on File]. He noted that there would be
four presenters on teleconference.
025
REPRESENTATIVE
COWDERY
Introduced his staff and voiced his
appreciation for the work done by all
Commission members.
035
MARCO PIGNALBERI,
STAFF,
REPRESENTATIVE JOHN
COWDERY
Pointed out the outstanding volunteer
effort. Mr. Pignalberi noted that the
volume of work represented by the
subcommittee reports was extraordinary.
We have never seen such a prolific
contribution by Alaskan citizens to their
state government. Mr. Pignalberi
commented that the State of Alaska needs
a better budget format. If there is a
consistent theme that resounded from
nearly every subcommittee, it is this:
state budget documents are frustrating
and incomprehensible to the citizens of
the state. Subcommittee members and
Commissioners wanted to discover what
costs accompany specific activities
performed by state government. They could
not. The budget does not reveal the cost
of performing state services. The
services themselves are not well defined
and the cost of carrying them out is no
where to be found. It was frustrating for
subcommittee members. He suggested that
the budget structure and format do not
serve the public and should be changed or
supplemented to accommodate public
interest.
100
MR. PIGNALBERI
Continued, a review of privatization
commission work in other states indicates
that this is a widespread and fundamental
problem. It is fundamental because we
always want to know if a privatization
proposal will save money. Without the
ability to match costs to services
performed, there will be many cases in
which where we will not know if a saving
will accrue. One of the recommendations,
number 9, passed by the Commission, in
Table #5, deals with the issue. Its
supporting rationale is in Attachment #1.
It is provided as a handout. [Copy on
File]. He invited members attention to
one comparison of that task
Based Budget with the current budget.
(Table, Page 2)
He asked that members compare that
information with the table, Page #3.
131
MR. PIGNALBERI
Mr. Pignalberi commented that
privatization is a smart idea anywhere
but especially in Alaska. After the
federal government, State government is
the largest owner of Alaska's land and
resource wealth. Additionally, the State
owns the $28 billion Permanent Fund, the
Alaska Railroad, the most extensive ferry
system in the U.S., all airport gateways
into the state, more than 250 rural
airports, a fleet of aircraft, fish
hatcheries, major roads within local
government jurisdictions, a variety of
laboratories, most docks and harbors, a
rocket launch facility, a dairy and more.
Additionally, the state owns every major
hydro-electric dam, the main electrical
transmission grid, one eighth of the oil
flowing through the oil pipeline and is
the major financier for residential
housing and development financing within
Alaska. This unique preponderance of
government ownership and control
inevitably leads to government growth,
often at the expense of private sector
growth.
169
MR. PIGNALBERI
Privatization cannot be accomplished by
occasional foray. It is clear that some
longer-term mechanism should be put in
place to carry on the work begun here.
? The first step is to begin immediate
consideration of the 20
recommendations adopted by the
commission.
? The second step is to enact some
version of the proposed legislation
requiring the Executive Branch to
identify activities that are
inherently non-governmental and to
provide for privatizing those that are
not.
184
MR. PIGNALBERI
FAIRA requires the agency to make the
list public after consultation with the
Office of Management and Budget. Then,
whenever a non-inherently governmental
activity is proposed for outsourcing, the
federal agency must use a competitive
procurement process that allows the
federal work force to compete with the
private sector.
FAIRA does not mandate privatization. Its
importance is that it provides a process
to:
? Identify government activities that
are not inherently governmental in
nature; and
? flush out full costs for performance
of certain tasks by government
220
MR. PIGNALBERI
Mr. Pignalberi noted that the jury is
still out about Alaska's involvement in
privatization. Legislation like FAIRA
will provide the basis for long term,
consistent effort toward privatization.
At Representative Cowdery's request,
FAIRA has been given a sister for
Alaska's statutes, named SAIRA, the State
Activities Inventory Reform Act.
230
KATHRYN THOMAS,
COMMISSION MEMBER,
COMMISSION ON
PRIVATIZATION AND
DELIVERY OF
GOVERNMENT SERVICES,
& THE ALASKA STATE
CHAMBER OF COMMERCE,
HOMER
Noted how important the Commission has
been to the Alaska State Chamber of
Commerce. She spoke to the work of the
Subcommittee. To seriously consider
privatization in the State, there must be
a mechanism available with a set of goals
to identify different functions of the
government, and to analyze how best save
money.
253
MS. THOMAS
Would to see the Commission charged with
developing a budget process so that
everyone in the State would become
accountable for the budget. Each person
would have the responsibility how the
money in the State is spent. She
suggested that there could also be an
Audit Committee to help the original
Committee provide the evaluation.
268
DON VALESKO,
COMMISSION MEMBER,
COMMISSION ON
PRIVATION AND
DELIVERY OF
GOVERNMENT SERVICES
Noted that he had distributed a handout.
[Copy on File]. He commented that
serving on the Commission was an exercise
in frustration. He stated that the
Commission had an impossible mission
which was evidenced by the final report.
The Commission staff performed admirably
under a tremendous workload and a very
short time frame. He commented that the
loyal staff did everything they could to
insure their superiors' wishes were
carried out.
301
MR. VALESKO
Suggested that the Commission staff
process of the subcommittees was
deplorable. The focus they were given
was very near-sighted and the time in
which they were expected to make informed
decisions was woefully inadequate. The
subcommittee selection process was done
entirely by the Co-Chairman and staff.
Partisan politics appeared to have played
a major role in the selection of the
subcommittee members. Definite patterns
of significant conflicts of interest
appeared in almost every subcommittee.
328
MR. VALESKO
Noted that the research and review of
each department was superficial at best.
With the inadequate amount of time
subcommittees were allotted, it was
impossible to educate and inform the
members. The commission did not require
the subcommittee to require a
cost/benefit analysis of their
recommendations. Consequently, all the
recommendations did not have any
information regarding the cost
effectiveness of each recommendation. He
added that a conflict of interest
prevailed in each of the subcommittees.
There were many private industries that
sat on the subcommittee and continued to
represent only their personal interest.
He suggested that the State is often
doing the work cheaper than the private
sector can.
354
MR. VALESKO
Listed the problems occurring within the
commission:
? Time constraints flawed Commission's
ability to deliver a realistic
product;
? Cursory contact with affected public
and affected employees;
? Appalling press relations; and
? No cost/benefit analysis.
377
MR. VALESKO
Concluded that after hearing the
abbreviated presentation of each of the
subcommittees, the full commission
decided to forego a formal process of
reviewing each subcommittee's
recommendations. Instead, each
commissioner put together his/her own
list of recommendations.
385
BILL ALLEN,
COMMISSION MEMBER,
COMMISSION ON
PRIVATIZATION AND
DELIVERY OF
GOVERNMENT SERVICES,
FAIRBANKS,
(TESTIFIED VIA
TELECONFERENCE)
Noted that the work requested by the
Commission was very broad. He stressed
that the size of the job with regard to
the time that it was allocated was a
large undertaking. He urged that members
study the proposed plan. Mr. Allen
suggested that the plan could contain the
first step, which should show
opportunities for bettering the State
services. He recommended that the
Commission's work time be extended in
order to provide better details and
further backup, stressing the necessity
of that action in order to address the
true oversight of the Commission's work
for the Legislature's consideration. He
concluded, noting that the work had been
a good service for the State.
419
GEORGE WEURCH,
COMMISSION MEMBER,
COMMISSION ON
PRIVATIZATION AND
DELIVERY OF
GOVERNMENT SERVICES,
FAIRBANKS,
(TESTIFIED VIA
TELECONFERENCE)
Voiced his appreciation for being asked
to serve on this Commission. He
acknowledged that when combining such a
group, there is bound to be advocates for
various viewpoints and interests. Mr.
Weurch advised that the fact that there
were different points of view should not
invalidate the submitted study. There
are common themes reoccurring throughout
the material with the search for
efficiency and common services for
residents of the State.
430
MR. WEURCH
Pointed out that local governments are
striving to deal with reduced revenue
streams. He hoped that would be
addressed through private sector
activities. He commented that "being a
owner State" should not be confused with
"being an operating State". He pointed
out that many people are more than happy
being employed in the private sector and
that it does not necessarily spell "doom
and disaster". Mr. Weurch addressed the
fact that the government needs to be
addressing the missions, goals and
objectives when determining
privatization.
465
TOM FINK, COMMISSION
MEMBER, COMMISSION
ON PRIVATIZATION AND
DELIVERY OF
GOVERNMENT SERVICES,
ANCHORAGE,
(TESTIFIED VIA
TELECONFERENCE)
Advised that the Commission had provided
the legislature with a source book. He
applauded that work undertaken by
Committee. He believed that substantial
amounts of money that could be saved
through extending the propositions
itemized through the work of the
Commission.
477
SENATOR JERRY WARD
Commented that each aspect had not been
thoroughly detailed. He suggested that
was work would be best done in the House
and Senate Finance Committees. He
explained that the consideration of the
Commission was if the work currently done
could be done at the same level of
adequacy, service and cost as performed
by the State. He urged that the Finance
Committee's consider these facts.
495
SENATOR AL ADAMS
Noted that he also worked with the
Commission. He applauded the work of all
the volunteers, while acknowledging that
some of the volunteers did have a
conflict of interest. Senator Adams
agreed that the time frame given to
perform the work was too short. He
stressed that the work of privatization
is a major consideration and that the
State must develop methods for the
transition. He acknowledged that there
are many prospects for being privatized,
and equally important there are many
concepts that should not be considered
for the health, welfare and safety of
Alaskans. He pointed out the work of the
Department of Corrections and prisons.
He urged that such considerations be
scrutinized closely.
515
SENATOR ADAMS
Reiterated the need for qualify of
service as currently being received by
the Alaska State residents. Another
consideration is the benefit package that
the employees receive and how that can be
met. A cost savings will exist which
should be considered.
525
CO-CHAIR PARNELL
Advised that he had requested that all
subcommittee chairs review the proposals
of the Commission so that every
recommendation would be considered within
the appropriate subcommittee and
discussed at the level. He acknowledged
that there are numerous avenues in which
the work could be incorporated. He
agreed that it should be brought before
the full Finance Committees for approval.
SENATOR ADAMS
Reiterated that it is essential that
guaranteed cost savings be considered.
541
REPRESENTATIVE J.
DAVIES
Added his concern that the time period
undertaken to do the study was too short.
He added that he was concerned that the
mission, which had been directed, was
toward privatization. He asked that both
avenues should be considered.
549
REPRESENTATIVE J.
DAVIES
Referenced the detail books and the
amount of information included in each
consideration. He requested that Mr.
Valesko respond to the recommendations.
556
MR. VALESKO
Responded that there were over 400
different subcommittee recommendations
made. He pointed out that in the final
process, only information was taken from
the member commissioners. The final list
of recommendations contained only 200 or
+ of the material initially presented.
567
SENATOR ADAMS
Countered that all members were given
opportunity to provide recommendations.
He commented that everyone played with
the same rules and that each item was
voted upon.
579
CO-CHAIR TORGERSON
Pointed out that there are statutory
requirements in law, which must be
addressed in order to implement these
concerns. What has been presented are
only recommendations for the Legislature
to consider.
589
SENATOR LEMAN
Agreed that this report is a good start
in the consideration on privatization. He
reiterated that there are many good ideas
contained in the report. He agreed that
not all the recommendations would save
money and he recommended that the process
continue to stay active. He asked if
impediments had been identified that
would not improve the delivery of
services and additionally, how these
concerns would be paid for.
TAPE CHANGE 00 - 29
SIDE 2
584
SENATOR LEMAN
Questioned if items had been considered
which keep the State from making progress
toward the goal.
580
MR. PIGNALBERI
Of the 408 recommendations advanced by
the subcommittees and commissioners, the
assembled commission considered 26.
Twenty were adopted and 5 failed. One was
adopted and rescinded.
The full reports, with all their
attachments have been submitted to:
? the Governor,
? the Senate President, and
? the Speaker of the House
564
SENATOR LEMAN
Applauded the process made to allow the
considerations to become simpler. He
recommended that considerations from this
study be closely scrutinized.
555
MR. PIGNALBERI
In response to Representative J. Davies,
Mr. Pignalberi pointed out that the
detail budget book does contain current
information but the current budget does
not relate those expenses to the work
performed. The Commission is speaking to
relating the costs identified with the
work product.
550
CO-CHAIR TORGERSON
ADJOURNMENT
The meeting adjourned at 9:59 A.M.
JOINT HOUSE & SENATE FINANCE COMMITTEE
LOG NOTES
February 9, 2000
H.F.C. & S.F.C. 9 2/09/00
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