Legislature(2001 - 2002)
01/15/2002 01:56 PM 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
HOUSE FINANCE COMMITTEE
January 15, 2002
1:56 PM
TAPE HFC 02 - 1, Side A
TAPE HFC 02 - 1, Side B
TAPE HFC 02 - 2, Side A
TAPE HFC 02 - 2, Side B
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 1:56 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
Representative Carl Moses
ALSO PRESENT
Representative John Coghill; Adjutant General BG Phil Oates,
Commissioner, Department of Military and Veterans Affairs;
Jim Duncan, Commissioner, Department of Administration; Pat
Pourchot, Commissioner, Department of Natural Resources;
Alison Elgee, Deputy Commissioner, Department of
Administration; Dan Spencer, Director, Division of
Administrative Services, Department of Administration; Mark
Myers, Director, Division of Oil and Gas, Department of
Natural Resources.
PRESENT VIA TELECONFERENCE
There were no teleconference participants.
GENERAL SUBJECT(S):
Mission and Measures reports:
Military and Veterans Affairs
Department of Natural Resources
Department of Natural Resources
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 22nd Legislative Session, contact 465-
2156. After the 22nd Legislative Session they will be
available through the Legislative Library at 465-3808.
LOG SPEAKER DISCUSSION
TAPE HFC 02 - 1 MILITARY AND VETERANS AFFAIRS
SIDE A
000 CO-CHAIR MULDER Welcomed members and observed that the
purpose of the meeting was to review the
performance of the agencies over the past
year and to see how state resources
appropriated by the Legislature were
used.
178 ADJUTANT GENERAL BG Thanked the Committee and Co-Chair Mulder
PHIL OATES, for their support of the 24-hour a day
COMMISSIONER, State Emergency Coordination Center. The
DEPARTMENT OF resources into the facility helped to
MILITARY AND protect the lives, health and safety of
VETERANS AFFAIRS Alaskans.
268 Commissioner Oates He reviewed the department's mission
statement. He noted that the mission is
to respond to emergencies, provide
homeland security, be prepared for war,
and work with disadvantage youth through
the youth challenge program. The state
has built a successful model for the
nation.
397 Commissioner Oates Provided members with a summary of the
Military and Veterans Affairs'
performance measures (copy on file). He
reviewed the National Guard's military
efficiency and readiness. Discussed the
efforts of the National Guard on 9/11/01.
He concluded that they were efficient and
ready for the emergency. All missions and
deployments were accomplished with no
loss of life.
618 Commissioner Oates Reviewed the second measure: adequacy of
response time for each emergency.
Concluded that the response time has been
good and lives have been saved. Short
response is 30 minutes, the medium
response is 1 hour and 45 minutes and the
long response is 3 hours and 30 minutes
from notification. There were 51 search
and research missions. They performed 289
rescues and saved 100 lives.
670 Commissioner Oates Discussed measure 3: number of persons
assisted during actual events. He noted
that the National Guard assists all
Alaskans in terms of: air sovereignty and
defense, counter drug operation, and the
Youth Corps.
Commissioner Oates Recruitment and retention goals were meet
and exceeded. There is renewed interest
in joining the Guard. They are trying to
restore membership in rural Alaska. Nome
and Kotzebue are on the list to receive
Junior Army ROTC.
775 Commissioner Oates Gave examples of new missions. Discussed
space surveillance and security at the
Clear Air Station and the Alaska North
American Aerospace Defense Command. The
strategic airlift mission is
questionable. Discussion is occurring
regarding whether it would be active
guard.
958 Commissioner Oates He noted that there were no days lost due
to facility related injuries at the
Alaska National Guard. The facility cost
per square foot dropped from $3.21 to
$2.31 dollars. The cost per person also
dropped from $5.87 to $3.83 dollars.
There was a savings of 18 percent in fuel
costs.
1014 Commissioner Oates Discussed educational benefits. He noted
that 132 guard and naval militia received
tuition assistance from the state. Over
the past two years 324 guard members have
attended the university.
1028 Commissioner Oates Discussed the Alaska Military Youth
Academy. He noted that the cadets are
doing well and their achievements are
better than the national average.
1143 Commissioner Oates Discussed veterans' benefits. He noted
that the state's contribution of $540
thousand dollars resulted in $29.8
million dollars in increased benefits to
Alaskan veterans. He observed that
veterans are contacting the Veterans'
Services and are being served in rural
areas.
1225 Commissioner Oates Discussed disaster planning and control.
He noted that every incident resulted in
an after action report which improved
their ability to communicate and operate.
All the existing disasters will be closed
out in the current fiscal year unless
something unforeseen occurs.
1265 Commissioner Oates Reviewed the number of persons assisted
during national events. There were 64,348
Alaskans directly assisted. He noted that
1,103,338 other Alaskans were assisted
during non-disaster events.
1292 Commissioner Oates He reviewed updates to the state
emergency plan. The plan is consistent
with Federal Emergency Management Agency
(FEMA) requirements.
1315 REPRESENTATIVE CROFT Questioned if the intent is to have
frequent updates.
1332 Commissioner Oates Responded that the plan needs to be
updated to respond to the changing
climate after 9/11/01.
1353Commissioner Oates Discussed reporting requirements and the
` costs per department. Total expenditures
were $2,795,720 million dollars excluding
disaster relief. No late penalties were
assessed and the average vendor time was
20 days. There were no audit exceptions.
1399 Commissioner Oates Discussed deferred maintenance. There was
a net reduction of 2.6 percent. However,
there is a backlog of $21.8 million
dollars. Without additional funding there
will not be a 5 percent reduction in the
backlog.
1436 Commissioner Oates Concluded that the department has done a
good job.
1447 Representative Complimented the Commissioner and asked
Hudson for him to repeat the number of persons
assisted.
1501 Commissioner Oates Explained that the number of persons
assisted during actual events were
64,348. He noted that assistance was also
provided during 9 significant events
including the Special Olympics and the
mock preparation of weapons of mass
destruction attacks. The total number of
persons that participated during these
events was 1,103,438.
1514 Vice-Chair Bunde Noted that approximately 10 percent of
the population was assisted directly by
the National Guard. He questioned how
this compared to other states.
1583 Commissioner Oates Noted that Alaska is prone to emergency
situations. He observed that the 24-hour
a day emergency coordination center was
vital to the department's ability to get
out of the blocks.
1658 Vice-Chair Bunde Acknowledged that Alaskan lifestyle and
geography offer lots of opportunities for
their expertise. He noted that this
accounts for some of the difference in
the per capita state between Alaska and
other states. He questioned the coverage
available to the state.
1724 Commissioner Oates Acknowledged that it is stretched with
resources that have been deployed in
response to 9/11/01. He observed that the
National Guard has become more
professional, but emphasized that they
are doing more.
1805 Commissioner Oates Noted that new full time jobs are being
created. The National Guard has taken up
more duties, which has freed active duty
forces.
1846 Vice-Chair Bunde Questioned if rescued missions can be
covered with the current call up.
1867 Commissioner Oates Affirmed that emergency search and rescue
missions can be covered under the current
call up.
1888 Vice-Chair Bunde Asked for information regarding where the
work is being focused.
1908 Commissioner Oates Noted that increased security has
resulted in an increase in drug seizures
at airports. The National Guard provides
resources for agencies working with drug
enforcement. He stated that he would
provide geographical background.
1957 Representative Questioned if the Guard is having
Foster difficulty filling their recruitment.
1985 Commissioner Oates Responded that they have not had
difficulty filling spots. They try to
locate guardsmen in their home areas.
2016 Commissioner Oates Discussed housing for guardsmen.
2036 Commissioner Oates Noted that the federal government is
currently paying guardsmen as a result of
9/11/01 call-ups. He observed that
additional training has been necessary
for work in public buildings.
2110 Commissioner Oates Discussed the scout group. They are a
model for homeland security. He
recommended that federal funding be
available for future national concerns
with identification of areas of coverage.
2201 Representative John Questioned what are the key elements of
Davies homeland security.
2213 Commissioner Oates Stressed the need for systems to be in
place for reaction such as better
intelligence apparatus and linkage with
FBI and federal entities. He noted the
importance of the ability to communicate.
It is important to have strong public
health and safety coverage, which are the
first responders. Police and firemen are
often the first on site.
2300 Commissioner Oates Referred to the Office of Homeland
Security and stressed that they must have
the ability to work with federal
government for funding.
2321 Commissioner Oates Noted that they are working for changes
that will make them more capable of
responding. He noted that there is not
much time to react to a terrorist attack.
The biggest shortfall is in public health
TAPE HFC 02 - 1, Side B
030 Commissioner Oates He asked the Committee to imagine an
emergency situation where there were not
sufficient resources to treat all of the
injured.
085 Representative John Asked what other kinds of threats are
Davies waiting and if we are ready.
121 Commissioner Oates Emphasized that the Guard is the best
place for homeland security. He stressed
that the Guard needs to move away from a
cold war formation of large armored
actions to lighter, smaller units. The
Guard's mission to protect critical
sites. The State needs to look over key
utilities and assets such as the Valdez
terminal to determine responsibility for
response and determine availability for
assistance. Contingency plans have been
developed in relation to the Trans Alaska
Pipeline and the terminal at Valdez, but
there needs to be an operation plan for
all key assets, which identifies the
threat level and response.
410 Commissioner Oates Observed that the challenge is to protect
resources. Most of the legislation
introduced by the Governor deals with the
ability to respond to increased threats
and to provide penalties for hoaxes or
other things that require response.
559 Representative Asked if there is overlap or duplication
Lancaster of services.
611 Commissioner Oates Responded that duplication is needed in
terms of communication. He felt that the
department is on target. He pointed out
that the department brings in funds.
685 Representative Noted that he worked with search and
Hudson rescue. He questioned if the missions and
measures need to be reviewed in response
to changes toward homeland security. He
noted that the boating safety legislation
envisioned that the National Guard would
work with the Coast Guard.
767 Commissioner Oates Stressed that he is a champion of
increases in Coast Guard budget. He
pointed out that homeland security needs
to operate on an interagency fashion.
DEPARTMENT OF ADMINISTRATION
904 JIM DUNCAN, Reviewed the department's mission. He
COMMISSIONER, noted that the department touches all
DEPARTMENT OF Alaskans through its four divisions.
ADMINISTRATION
1026 Commissioner Duncan HB 250 contains 59 measurements for the
Department of Administration. He
highlighted their performance measures
and noted that the department is working
to improve their performance measures.
1109 Commissioner Duncan Reviewed successes and stressed that the
intent is to provide better services. He
noted that the Information Technology
Group (ITG) downtime for the mainframe
computer system was less than 1 percent.
He explained that downtime for
telecommunications is harder to measure
since there are many different
telecommunication systems.
1171 Commissioner Duncan Discussed state partnership with the
private sector. The state signed a five-
year partnership with Alaska
Communications Services Group (ACS). ACS
will invest $29 million dollars at no
additional cost to the state. He pointed
out that Alaska is the only state in a
partnership agreement with a private
vendor. He thought that ACS would develop
innovative ways to reduce downtime for
communities that rely on public
television and radio services.
1414 Commissioner Duncan Reviewed measures for the Division of
Personnel. He noted that disputes are
inherent in any large organization. Their
goal is to reduce grievances to 50
percent.
1637 Commissioner Duncan Discussed measured for the Division of
Finance. The Division's mission is to
provide accountability. The department
implemented the "One Card Alaska"
program. The state entered into a long-
term contract with the First National
Bank of Alaska to provide credit card
services to consolidate purchasing of
state agencies.
1717 Commissioner Duncan There are separate contracts for
purchasing cards and travel cards. Those
are not with Alaska institutions. The
program provides flexibility for agency
needs. Conversion begins in March. It has
served the agencies well.
1755 Representative Asked if the state would receive the
Hudson mileage.
1767 Commissioner Duncan Replied that the state does not receive
mileage and pointed out that it was not
part of the requirement for that
proposal.
1793 Co-Chair Mulder Thought it would be a competitive
interest rate.
1804 Commissioner Duncan Stated that there was no cost to the
state and emphasized that it would employ
Alaskans.
1820 Commissioner Duncan Discussed measures for the Division of
Motor Vehicles and concluded that the
Division is doing a good job. The first
two performance measures are the number
of complaints versus the wait lines. Web-
cams have helped with these measures and
lines have been decreased.
1879 Commissioner Duncan He noted that there were 80,000 hits on
the website. Many people have
complimented the Division on the use of
the web cam. They also have an active
email site. Web mark site and personal
license sites are available. Wait time
has been reduced.
1927 Commissioner Duncan Observed that customers have positively
received the new Benson Office. There are
no lines in the Benson office. People can
sit down and wait for their numbers to be
called and the office is well staffed.
2003 Representative John Referred to the joint trainings in the
Davies Division of Personnel. He stressed that
training is an on-going requirement.
2041 Commissioner Duncan Recognized the need to continue training.
There will be annual training.
2060 Mr. Spencer Explained that the training is a joint
interaction between state and union
employees.
2082 Commissioner Duncan Discussed the Procurement Certification
Program. More than 1,000 state employees
have attended procurement training over
the past year. He stressed that the
training would address violations of the
Procurement Code.
2136 Commissioner Duncan Noted that legislation was passed in the
previous session to establish the Public
Building Fund. The Division took over the
operation and maintenance of 8 state-
owned office buildings.
2160 Commissioner Duncan Explained that the Department of
Administration can charge building costs
to the appropriated department. He
pointed out that it is important to do
the day-to-day maintenance. There
continues to be a large backlog of
deferred maintenance.
2224 Commissioner Duncan There is only one agency charged with
helping state programs to find building
space. He noted that all tenants pay
leasing costs. This allows the state to
charge non-general fund programs to their
share of building maintenance costs.
2236 Commissioner Duncan Discussed performance measures for the
Pioneers' Home. He emphasized that the
homes provide direct public services. He
referred to a New York times articles
(copy on file) noting how Alaska protects
its elderly through its pioneer homes.
2292 Commissioner Duncan He observed that the medication error
rates are much lower than national
average. There are 85 - 88 vacancies in
the homes. The average age resident is
over 87.
2324 Commissioner Duncan He observed that there is a proposal to
recognize veterans and to give them
preference in the homes.
2351 Representative Croft Referred to the 2 - 6 percent injury
rate.
TAPE HFC 02 - 2, Side A
012 DAN SPENCER, Explained that the rate is in
DIRECTOR, DIVISION relationship to injuries in facilities.
OF ADMINISTRATIVE It is on the high end of an acceptable
SERVICES, DEPARTMENT rate.
OF ADMINISTRATION
082 Representative Referred to Alaska hire. He questioned if
Hudson the Department of Administration is the
agency to address Alaska hire.
131 ALISON ELGEE, DEPUTY Pointed out that the Department of
COMMISSIONER, Community and Economic Development
DEPARTMENT OF administers the Buy Alaska Program and
ADMINISTRATION noted that the Department of Labor and
Workforce Development monitors Alaska
hire.
270 Commissioner Duncan Pointed out that Workplace Alaska
specifies which jobs are open to non-
residents.
311 Ms. Elgee Observed that state rules are clear that
there is an in-state hiring preference.
There is no ability to influence Alaska
hire in the private sector.
417 Commissioner Duncan In response to a question by
Representative Lancaster, discussed
efficiencies in the telecommunications
partnership with the private sector.
518 Co-Chair Mulder Questioned how ACS would affect public
radio.
568 Commissioner Duncan Explained that ACS will be responsible
for maintaining the 270 earth stations
around the state.
593 Mr. Spencer Clarified that most rural areas do not
have other radio contact.
DEPARTMENT OF NATURAL RESOURCES
648 PAT POURCHOT, Reviewed the mission for the Department
COMMISSIONER, of Natural Resources and concluded that
DEPARTMENT OF they have meet targets for most of their
NATURAL RESOURCES 44 measures.
768 Commissioner Noted that the department has continued
Pourchot to expand the use of technology.
818 Commissioner Observed that the department still has
Pourchot some challenges in meeting some of the
measures, especially in attracting and
retaining personnel. They are undertaking
classification studies. He noted that
some successes have become challenges.
Increased oil and gas activities have led
to new backlogs in processing and
regulating of the high volume of leases
and permits. Increased park visitations
has created management and deferred
maintenance problems.
953 Commissioner Discussed the average time to respond to
Pourchot appeals and reconsiderations. He noted
that the average time was 29.2 days.
1015 Commissioner Reviewed the measure of compliance with
Pourchot area wide licensing. The department met
the measure with four area wide lease
sales. In addition, the department is in
final considerations of 2 exploration
licenses. There were 104 shallow gas
leases awarded.
1070 Commissioner Discussed the North Slope Foot Hills
Pourchot sale. It was the largest acreage sale
leased to date. There has been a dramatic
increase in lease sales.
1118 Commissioner Reviewed seismic Data status. There has
Pourchot been dramatic progress in acquiring 2D
line miles and 3D square miles.
1194 Commissioner Title work delays have been problematic.
Pourchot The department has a target of four
months for title work.
1249 Co-Chair Mulder Asked if there is a measurement on the
time.
1282 Commissioner Responded that there is currently no
Pourchot legislative measure.
1288 Co-Chair Mulder Pointed out that lease transfers are time
consuming. He stressed that they
anticipate that the increased licensing
and title workload will continue.
1328 Commissioner In response to a question by
Pourchot Representative Whitaker, explained that
title delays result in a loss to the
state in deferment of bonus bids and
rental fees. There was a $10 million
dollar loss in potential resulting from
delayed titles. The state only operates
on state lands and the work is done in
house.
1411 Co-Chair Mulder Questioned what can be done to address
the delay.
1466 Commissioner Last year the department had a backlog on
Pourchot title assignments. The new backlog is in
response to a renewed interest in
leasing.
1494 Commissioner Oil and gas revenues were increased by 10
Pourchot percent. He acknowledged that the price
of oil accounted for much of the increase
but noted that skilled staff assisted in
this increase. A TAPS difference of .05
cents could result in a $4 million dollar
increase.
1585 Commissioner Discussed new and assigned gas rights.
Pourchot There were 1,356 assignments processed in
FY01. He noted that there is increasing
satellite development, meeting declines
in other fields. An expanded Point
Thompson unit was approved. The state's
royalty share was increased and the gas
field is on tract for development. He
explained that Exxon has a 30 percent
share.
1714 Representative Croft Questioned benchmarks to indicate
exploration is proceeding.
1764 Mark Myers, Explained that exploration drilling will
Director, Division take place in the Point Thompson unit; an
of Oil and Gas, exploratory well must take place in one
Department of year. They must initiate drilling by 2006
Natural Resources and have 8 wells by 2008. There is an
aggressive one-year plan for development.
There are penalties if they do not
proceed. The royalty percentage was
increased from 16 to 20 percent.
1880 Representative Noted that there are significant specific
Whitaker penalties if benchmarks are not met.
1915 Mr. Myers Explained that there is a $27.5 million
dollar penalty if the development
drilling is not done. The work commitment
was given a high value. The intent was to
have firm commitments in order to avoid
litigation if the work commitment is not
met.
1953 Representative Felt that the Division did a good job in
Whitaker its negotiations.
1966 Representative John Referred to BP's declining role in the
Davies North Slope. He questioned if there are
things to be done to encourage
explorations by others.
2008 Commissioner Expressed the hope that tracts that are
Pourchot not being explored would come back to the
state or be leased to other players. He
observed that there are commercially
viable tracts that are not being
developed.
2094 Representative John Questioned if there are sufficient
Davies incentives to attract exploration.
2107 Mr. Myers Responded that the tremendous potential
of Alaska is the first key. The increase
of 3D sizing has helped. Reasonable
access is needed. Access will also be a
huge issue with a potential gas line. The
department has strived to work with new
companies to educate them in how to
obtain leases, etc. He cautioned that in
regards to financial incentives that good
wells get drilled and bad wells get
subsidies.
2269 Commissioner Noted that there is a tie in with federal
Pourchot programs. Tariff structures can be in
trust. He did not have any specific
legislative recommendations to encourage
development.
2342 Mr. Myers In response to a question by
Representative John Davies, stressed that
infrastructure facilities are not
regulated. Facilities can be made into a
profit center in relation to competition
with competitors.
TAPE HFC 02 - 2, Side B
013 Commissioner Discussed page 20 of summary: conveyance
Pourchot of land to municipalities. He noted that
the department transferred 16,677 acres.
The annual target is 12,000 acres. There
are 600,000 acres of municipal
entitlement remaining.
174 Representative John Noted that municipalities are not always
Davies in a hurry to receive their entitlements.
246 Commissioner Observed that communities that have the
Pourchot majority of their entitlements may want
to proceed slowly in order to assess
their needs and opportunities.
351 Representative Questioned if municipal entitlements
Lancaster would exacerbate the title difficulties.
397 Commissioner Acknowledged that there would be some
Pourchot affect on title work, though it rests
with land and water.
439 Commissioner Reviewed the number of acres sold and
Pourchot revenue generated. There will be 25,000
subdivision tracts offered in FY02 and
300 remote cabin sites. This is a 1,000
percent increase from FY01. There has
been a significant increase in acres of
land available for sale. The state will
have "run the course" for a lot of the
re-offers of older tracts defaulted to
the state or not sold by FY03.
563 Co-Chair Mulder Felt that it was a good program.
615 Commissioner The current land disposal program
Pourchot generated $2.8 million dollars back into
the land disposal income account. The
fund balance exceeds the prediction of
two years ago.
640 Commissioner Discussed the number of water right
Pourchot applications processed. He noted that
this item was a problem in the previous
fiscal year. He noted that a court
decision threaten the viability of the
temporary water permits. The department
offered suggestions for improvements,
which were adopted by the previous
legislature. Statutory changes to clarify
the temporary water permit authority and
to authorize a fee system were adopted
with a one-year sunset. Regulations for
streamlining are out for public review.
They hope to meet the target of 60 days
for water rights and 20 days for
temporary water rights.
822 Commissioner Reviewed visits to the park system. He
Pourchot concluded that visits are up and the
department resources are stretched.
878 Representative Croft Questioned if park visits will continue
to increase in the light of 9/11/01.
900 Commissioner Pointed out that 80 percent of the visits
Pourchot are from in state residents. He noted
that national parks visitation is up
after 9/11/01.
962 Representative Questioned if a head tax should be
Hudson implemented.
988 Commissioner Clarified that there are several fees in
Pourchot place.
1141 Commissioner In response to a question by Co-Chair
Pourchot Williams, Commissioner Pourchot observed
that the state tries not to compete with
the private sector.
1244 Commissioner Reviewed the level of deferred
Pourchot maintenance in park sites. He noted that
the state is falling behind in addressing
deferred maintenance needs. Deferred
maintenance needs are currently at $42
million dollars. The existing personnel
are thin and unable to keep up with
maintenance.
1349 Commissioner Noted that the funding system was changed
Pourchot on the Recorder's Office, which has been
successful. The documentation is coming
in at record rates. They are still having
problems in Anchorage, which has high
volume.
1413 Commissioner Referred to their web site. He noted that
Pourchot there is more website usage.
1437 Commissioner Reviewed missions for the Airborne
Pourchot Geophysical Surveys program. The
department missed the FY01 cycle for lack
of funding. They attempted to do two
years worth of work but costs have
increased. They were unable to achieve as
much as they hoped. He noted that 630
miles of coverage were completed. The
lack of progress is purely a result of
funding. They have targeted high
potential areas.
ADJOURNMENT The meeting was adjourned at 4:42 p.m.
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