Legislature(2009 - 2010)
04/16/2009 05:11 PM House FIN
| Audio | Topic |
|---|---|
| SB1 | |
| HB88 | |
| HB151 | |
| SB57 | |
| SB96 | |
| SB170 | |
| SB114 | |
| SB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 16, 2009
5:11 p.m.
5:11:35 PM
CALL TO ORDER
Co-Chair Hawker called the House Finance Committee meeting
to order at 5:11 p.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas, Jr., Vice-Chair
Representative Allan Austerman
Representative Harry Crawford
Representative Anna Fairclough
Representative Richard Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
None.
ALSO PRESENT
Representative Jay Ramras; Representative Bob Lynn;
Representative Kurt Olson; Representative Mike Chenault;
Marie Darlin, AARP; Jane Pierson, Staff, Representative Jay
Ramras, Sponsor; Pat Davidson, Legislative Auditor,
Legislative Audit Division, Legislative Affairs Agency;
James Ellis, Staff, Representative Mark Neuman; James King,
Director, Division of Parks and Outdoor Recreation,
Department of Natural Resources; Michael Fokerts,
Recreational Boating Safety Specialist, U.S. Coast Guard;
Senator Joe Thomas; Eddy Jeans, Director, School Finances
and Facilities, Department of Education and Early
Development; Senator Charlie Huggins; Linda Zog, Staff,
Senator Bettye Davis; Ginger Blaisdell, Director, Division
of Administrative Services, Department of Revenue; Peter
Putzier, Senior Assistant Attorney General, Department of
Law; Robert W. Loescher, Tribal Judiciary Committee Member,
Central Council Tlingit & Haida Indian Tribes of Alaska; Max
Hensley, Staff, Senator Johnny Ellis; Guy Bell, Assistant
Commissioner and Director, Division of Administrative
Services, Department of Labor and Workforce Development;
Jake Hamburg, Staff, Senator Joe Paskvan; Lynn Smith,
Division of Corporation Licensing; James Armstrong, Staff,
Co-Chair Stoltze; Karen Rehfeld, Director, Office of
Management and Budget, Office of the Governor; Larry
Persily, Staff, Co-Chair Hawker; Joe Balash, Inter-
Governmental Coordinator, Department of Natural Resources;
John Bitney, Staff, Speaker John Harris
PRESENT VIA TELECONFERENCE
Dale Fox, President, CHARR, Anchorage; Robert McCormick,
Financial Manager, Glacier Brew House, Anchorage; Bill
Bubbel, Pump House Restaurant, Fairbanks; Jack Amon, Owner,
Marx Brothers Café, Fairbanks; Bruce Burnett, Self; Fred
Rosenberg, Owner, Red Robin, Anchorage; Bob Winn, CHARR,
Anchorage; Trina Johnson, Owner, LaMex, Anchorage; Deborah
O'Regan, Alaska Bar Association; Todd Hindman, Teacher,
Anvil City Academy, Nome; Ray DePriest, Director of
Technical Education, MatSu Schools; Kiki Abrahamson,
President, Alaska Charter School Association
SUMMARY
CSSB 1(FIN) "An Act increasing the minimum hourly wage;
and providing for an effective date."
CSSB 1 (FIN) was REPORTED out of Committee
with zero fiscal note and the recommendations
of individual members.
HB 50 "An Act relating to limitations on mandatory
overtime for registered nurses and licensed
practical nurses in health care facilities;
and providing for an effective date."
HB 50 was HEARD and placed in a Subcommittee
chaired by Representative Stoltze, with
members Hawker, Fairclough, Joule, Foster,
and Gara.
HB 88 "An Act extending the termination date of the
Board of Governors of the Alaska Bar
Association; and providing for an effective
date."
CSHB 88 (FIN) was REPORTED out of Committee
with the attached zero fiscal note the
recommendations of individual members.
HB 151 "An Act repealing the termination date of the
statewide boating safety and education
program; providing for an effective date by
repealing the effective dates of secs. 3,5,
7, 9, 11, 14, 16,18, 20, 23, 26, and 27, ch.
28, SLA 2000, and sec. 3, ch. 119, SLA 2003;
and providing for an effective date."
CSHB 151 (FIN) was REPORTED out of Committee
with a "do pass" recommendation and with a
new fiscal note by the Department of Natural
Resources.
CSSB 57(FIN) "An Act relating to charter and alternative
school funding."
CSSB 57 (FIN) was REPORTED out of Committee
with a "do pass" recommendation and with
fiscal note #2 by the Department of Education
and Early Development.
CSSB 96(FIN) "An Act relating to nonpayment of child
support, to the definition of the term
"state" for the purposes of the Uniform
Interstate Family Support Act, to certain
judicial and administrative orders for
medical support of a child, to periodic
review and adjustment of child support
orders, to relief from administrative child
support orders, to child support arrearages,
and to medical support of a child and the
Alaska Native family assistance program;
amending Rule 90.3, Alaska Rules of Civil
Procedure; and providing for an effective
date."
HCS CSSB 96 (FIN) was REPORTED out of
Committee with a "do pass" recommendation and
with zero fiscal note #1 by the Department of
Revenue.
CSSB 170(FIN) "An Act modifying the Alaska unemployment
insurance statutes by redefining the base
period for determining eligibility for
unemployment benefits; relating to
contributions, interest, penalties, and
payments under the Alaska Employment Security
Act; and providing for an effective date."
CSSB 170 (FIN) was REPORTED out of Committee
with a "do pass" recommendation and with a
new zero fiscal note by the Department of
Labor and Workforce Development.
CSSB 114(L&C) "An Act extending the termination date of the
State Board of Registration for Architects,
Engineers, and Land Surveyors; extending the
term of a temporary member of the State Board
of Registration for Architects, Engineers,
and Land Surveyors; and providing for an
effective date."
CSSB 114 (L&C) was REPORTED out of Committee
with a "do pass" recommendation and with and
with fiscal note #1 by the Department of
Commerce, Community and Economic Development.
CSSB 75(FIN) "An Act making and amending appropriations,
including capital appropriations,
supplemental appropriations, and
appropriations to capitalize funds; and
providing for an effective date."
CSSB 75 (FIN) was HEARD and HELD in Committee
for further consideration.
5:14:14 PM
CS FOR SENATE BILL NO. 1(FIN)
"An Act increasing the minimum hourly wage; and
providing for an effective date."
Co-Chair Hawker announced that public testimony for SB 1
would commence. He felt that the proposed tip credit
amendment was appropriate for the legislation.
MARIE DARLIN, AMERICAN ASSOCIATION OF RETIRED PERSONS (AARP)
CAPITAL CITY TASK FORCE, testified in favor of SB 1. She
highlighted points from the letter submitted by AARP (copy
on file). She expressed concern for older Alaskans working
part-time at the minimum wage. She articulated the
importance of a living wage for elderly Alaskans. She
pointed out to the committee that the number of elderly
workers earning the minimum wage was growing in size, and
that policies should be implemented to insure that elderly
employees are earning enough to cover essential living
expenses.
5:18:27 PM
DALE FOX, PRESIDENT, ALASKA CABARET, HOTEL, RESTAURANT AND
RETAILERS ASSOCIATION (CHARR), ANCHORAGE testified via
teleconference. He stated that CHARR supports the minimum
wage increase, provided the legislation includes a
comprehensive tip credit proposal. He detailed several ways
in which the tip credit would help employers. He explained
that the proposed tip credit would provide incentives to
businesses that provide an environment for highly
compensated tipped employees. He stressed that the tip
credit proposal that CHARR suggests differs from similarly
titled laws in other states. For example, the tip credit
proposed by CHARR would not reduce the tipped employee's
wage of $7.25. The tipped employee would need to make at
least $14.50 per hour in order for the employer to qualify
for the credit.
Co-Chair Hawker commented that the legislature was not
prepared to move forward on the CHARR tip proposal
legislation.
5:21:49 PM
ROBERT MCCORMICK, FINANCIAL MANAGER, GLACIER BREW HOUSE/ORSO
RESTORANTE, ANCHORAGE, testified via teleconference. He
stated that the majority of his employees make the minimum
wage. In addition to paid wages, the employees also earn
tips. In 2008, tipped employees averaged as much as $13.99
per hour in tips. When added to the average hourly wage of
$7.83, the total hourly wage was 21.83. He stated that only
the highest paid restaurant workers would benefit from the
legislation. He explained that the tip credit proposed by
CHARR would affect only persons making $7.25 per hour or
more in tip income. He opined that the restaurant industry
has been burdened by challenges brought on by the current
economic crisis. He stressed that if the minimum wage
increase is to be considered it must include a tip credit
amendment.
5:24:57 PM
Representative Gara shared that he understood the
difficulties faced by the restaurant industry. He reasoned
that it made sense to adjust the minimum wage to reflect the
rising cost of living. He noted that the prices on
restaurant menus have risen while the wage paid to servers
has not.
Mr. McCormick contended that the average percentage tipped
employees receive for their service is based on sales, and
therefore, rises with inflation. He felt that because of
this, the raising of the hourly wage would be unnecessary.
Representative Gara asked if Mr. McCormick's employees were
currently making the same wage of $7.15 per hour now, as in
2006. Mr. McCormick said that was correct.
5:27:51 PM
BILL BUBBEL, OWNER, PUMP HOUSE RESTAURANT, FAIRBANKS
testified via teleconference. He inquired about the proposed
amount of the minimum wage increase. Co-Chair Hawker
replied that the legislation would raise the minimum wage by
$.50 after January 1, 2010. Mr. Bubbel felt that the amount
was acceptable. He stressed that Department of Labor and
Workforce Development (DOL) statistics, which state that 22
thousand Alaskans are currently earning minimum wage, do not
take into account tipped employees. He felt that the
statistics on restaurant employee earnings were flawed in
various ways. He explained that restaurant employers pay a
10 percent tax on employee tips. For example; when his
employees earn a total of $400,000 a year in tips, he is
responsible for paying $40,000 in taxes on those tips. This
is comparable to a yearly wage that he was unable to pay to
another employee. The tip credit is a way to mitigate the
extra expense to employers. He expressed concern for the
possibility of a financially unsuccessful tourist season. He
reiterated Mr. McCormick's rhetoric about the rise of tip
percentage with inflation.
5:32:40 PM
JACK AMON, OWNER, MARX BROTHERS CAFÉ, ANCHORAGE testified
via teleconference. He stressed that most restaurant
employees already make well over the minimum wage. He added
that for all financial purposes, tipped earnings are wages.
He shared that he average earnings for tipped employees in
the restaurant industry are $25,000 to $40,000 per year. He
stated that the structure of minimum wage laws in the state
unfairly restrict the restaurant industry from receiving
compensation for tipped employees. He felt that the intent
of the bill was unfair and contrary to law.
5:34:42 PM
Representative Gara pointed out that the minimum wage has
not gone up in six years. Mr. Amon questioned the logic of
forcing the restaurant industry to pay a higher minimum
wage. Representative Gara countered that only the tip
portion of the employee salary has risen with inflation.
5:36:07 PM
BRUCE BURNETT, OWNER, TGIFRIDAYS, ANCHORAGE, testified via
teleconference. He stated that none of his employees make
less than $9.00 per hour. He said that the bartenders and
waiters that work for him make $30.00 to $40.00 per hour,
including tips. He felt the tip credit was necessary to
balance a raise in the minimum wage.
5:39:24 PM
Representative Kelly summarized that Mr. Burnett didn't want
the government controlling employer ability to set pay
scales for their establishments. Mr. Burnett felt that he
amount employers would be asked to spend on the raises could
be excessive.
5:40:57 PM
FRED ROSENBERG, OWNER, RED ROBIN, ANCHORAGE testified via
teleconference. He echoed the previous testimony. He spoke
in support of raising the minimum wage, but emphasized the
need for a tip credit. He said that the federal government
recognizes all wages as income. Waiters in his restaurant
average $22 per hour in reported tip income, in addition to
the hourly wage. The tip credit is recognized in forty-three
states across the country as way to balance the wages of all
restaurant employees. It provides the employers with a way
to pay non tipped employees a comparable wage.
5:44:12 PM
BOB WINN, CHARR, ANCHORAGE testified via teleconference,
agreed with the previous testimony. He felt that the tip
credit was crucial to ensure the survival of small
businesses in the current economic climate.
Representative Gara commented that as a restaurant owner, he
is aware that restaurant profit margins are not large;
however, as a policy maker, he is advocating for the
employee.
5:47:45 PM
TRINA JOHNSON, OWNER, LAMEX, ANCHORAGE testified via
teleconference. She agreed with the previous testifiers.
She shared her experience in the restaurant industry. She
said that the minimum wage increase of five years ago forced
her to close one of her restaurants. She referred to a
letter she submitted to the committee (copy of file). She
related that she no longer is able to provide any benefits
to her employees. She testified strongly in support of the
addition of a tip credit to the legislation.
5:51:23 PM
Co-Chair Hawker solicited further public testimony. There
being none, public testimony was closed.
Representative Gara shared his decision not to offer
Amendment 2, which had been handed out to the committee for
discussion. He referred to the Legislative Research Report
on the deletion of the inflation proofing provision on the
minimum wage (copy on file). He explained that under the
Murkowski administration the inflation proofing provision
was deleted from the minimum wage, stalling the minimum wage
at $7.15 per hour. Had the provision remained and the
minimum wage kept up with inflation it would now be $8.50
per hour. He maintained that there would be no significant
employee impact if wages were raised a maximum of 10 per
cent a year. He spoke in favor of raising the minimum wage
to make up for the inflation losses that workers have
incurred since 2003. The amendment would have increased the
minimum wage by 70 cents per year for the next 2 years. He
pointed out that 10,000 people earn less than $8 per hour in
the state. He thought fair pay for hard work was important.
He related that the wage increase was necessary for
employees that might not be courageous enough to demand wage
increases, which are necessary to offset the rise in the
cost of living.
5:54:51 PM
Representative Fairclough voiced support for the minimum
wage increase. She requested an expansion of the
conversation to include global business issues. She informed
the committee that the United States is currently indebted
to China for $3 trillion. She asserted that people in
America can't afford to buy American made products. She
stressed that increasing labor costs would force companies
to raise prices on goods and services. She emphasized the
importance of supporting a tip credit in order to save
American jobs. She felt the minimum wage increase, without
the tip credit, was inappropriate given the current economic
climate.
5:58:24 PM
Vice-Chair Thomas spoke of his experience as a commercial
fisherman. He felt with the current price of fish being low,
an increase in the minimum wage could harm the commercial
fishing industry. He expressed alarm that 10,000 people in
the state were making less than minimum wage. He asserted
that DOL distributes a substantial amount of money to train
Alaskans for jobs that pay above the minimum wage and
wondered why there were so many low paid residents
throughout the state.
6:00:25 PM
Representative Crawford commented that the proposed $.50
rise of the minimum wage was inadequate. He felt that the
lack of benefits and low wages presented to the workforce
were appalling. He spoke against the tip credit and stressed
that the minimum wage should be higher. He also stressed the
need for employees to receive health care benefits from
their employers. He expressed frustration with the
legislation.
6:03:43 PM
Co-Chair Hawker referred to a document distributed to the
committee by Representative Gara's office entitled,
"Estimate Alaska 2007 Employment by Industry and Below
Certain Wages" (copy on file). The numbers, provided by DOL,
show that approximately 9,000 workers in the state earn
$7.75 per hour. About 22,000 earn less than $8.75 per hour.
Representative Gara commented that Alaska used to have the
highest minimum wage in the country, and now has the lowest
minimum wage on the West Coast.
Vice-Chair Thomas requested that DOL provide a report on how
many of Alaska's unemployed workers have been offered job
training.
6:05:23 PM
Co-Chair Hawker noted the zero fiscal note represented the
impact to the State of Alaska as an entity, but not to
private employers.
6:05:31 PM
Representative Kelly expressed disappointed that there had
not been more support for including the tip credit in the
legislation.
Vice-Chair Thomas MOVED to report CSSB 1 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
CSSB 1 (FIN) was REPORTED out of Committee with the attached
zero fiscal note and the recommendations of individual
members.
6:07:36 PM
HOUSE BILL NO. 88
"An Act extending the termination date of the Board of
Governors of the Alaska Bar Association; and providing
for an effective date."
Vice-Chair Thomas MOVED to adopt CS for HB 88, 26-LS410\R as
a working document. There being NO OBJECTION, it was so
ordered.
6:08:37 PM
JANE PIERSON, STAFF, REPRESENTATIVE JAY RAMRAS, SPONSOR,
explained that the bill would extend the termination date of
the Board of Governors of the Alaska Bar Association to June
30, 2013. She informed the committee that the Alaska Bar
Association was established in 1955. The two primary
functions of the association are to screen applicants for
admission, and to provide discipline by investigating
grievances against members of the bar. The association also
provides classes for continuing legal education, lawyer
referral service, pro-bono services, and lawyer fee
arbitration. The board consists of 12 members; nine are
attorney members, elected by the active membership of the
Bar Association, three are non-attorney public members,
elected by the governor and confirmed by the legislature.
The Division of Legislative Budget & Audit (LB&A) concluded
in a November 4, 2008 report that the board, through the
Alaska Supreme Court, protects the public by insuring
persons licensed to practice law are qualified, and provides
for the investigation of complaints. The division
recommended the termination of the board be extended to June
30, 2017. The board is scheduled to terminate on June 30,
2009. Upon termination, the board would have one year to
conclude its administrative operations.
6:10:51 PM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, LEGISLATIVE AFFAIRS AGENCY, explained the
extension audit was conducted as required by statute. The
division recommended that the board be extended for the next
eight years. Since the audit, conducted two years ago, the
bar dues have been reduced from $550.00 to $410.00. The
audit recommended mandatory continuing legal education for
members. Another prior recommendation included improving the
association's website to make discipline information
regarding attorneys available to the general public. The
division also recommended amending the bar bylaws to meet
public notice requirements.
6:12:47 PM
Co-Chair Hawker opened public testimony.
DEBORAH O'REGAN, ALASKA BAR ASSOCIATION testified via
teleconference. She offered to stay online to be available
to answer questions.
Co-Chair Hawker closed public testimony.
6:14:02 PM
Co-Chair Hawker addressed the zero fiscal note.
Representative Foster referred to page 3 of the Alaska Bar
Association 2007 Annual Report (copy on file). He asked how
many lawyers were members of the Alaska Bar Association. Co-
Chair Hawker understood that Anchorage had the highest
number of lawyers per capita of any city in America.
Ms. O'Regan reported that there are 38,000 members of Alaska
Bar Association. Of those, 1000 are either inactive or
outside the state. This brings the total of in-state members
to 28,000.
6:15:39 PM
Vice-Chair Thomas MOVED to report CSHB 88, 26-LS0410\R (FIN)
out of Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 88 (FIN) was REPORTED out of Committee with the
attached zero fiscal note the recommendations of individual
members.
6:16:21 PM
HOUSE BILL NO. 151
"An Act repealing the termination date of the statewide
boating safety and education program; providing for an
effective date by repealing the effective dates of
secs. 3, 5, 7, 9, 11, 14, 16, 18, 20, 23, 26, and 27,
ch. 28, SLA 2000, and sec. 3, ch. 119, SLA 2003; and
providing for an effective date."
JAMES ELLIS, STAFF, REPRESENTATIVE MARK NEUMAN, explained
that the bill would extend the sunset date of the Statewide
Boating Safety and Education Program. The program has
reduced boating related deaths in the state by 20 percent
since 2000. Timely expedition of the legislation would allow
the state to receive federal funding.
6:17:46 PM
Co-Chair Hawker noted that the original bill had asked for
the sunset date to be extended through 2018. The potential
CS for HB 151 provides a one-year extension, with the
intention of revisiting the issue during the 2010 session.
He wondered if the sponsor was comfortable with the
compromise. Mr. Ellis replied in the affirmative.
6:18:38 PM
JAMES KING, DIRECTOR, DIVISION OF PARKS AND OUTDOOR
RECREATION, DEPARTMENT OF NATURAL RESOURCES, highlighted the
importance of the Kids Don't Float program. He shared that
the Boating Safety and Education program has been a major
contributor to the 514 life-jacket loaner boards, in 153
communities, throughout the state. The Kids Don't Float
program has provided education to over 63,000 people in
communities all across the state. Mr. King detailed other
educational programs that benefit under the Boating Safety
and Education Program. He stated that since the program
began, recreational boating fatalities have declined by 20
percent. He emphasized his support for the one year
extension.
6:21:02 PM
Co-Chair Stoltze moved to adopt the CS for HB 151 26-
LSO422\P as a working document. There being NO OBJECTION,
it was so ordered.
6:21:35 PM
MICHAEL FOKERTS, RECREATIONAL BOATING SAFETY SPECIALIST,
U.S. COAST GUARD, read from the White Paper (copy on file).
He testified that the Coast Guard, through the Secretary of
Homeland Security, is directed to carry out a national
recreational boating safety program under chapter 131 of
title 46 of the United States Code. The goal of the program
is to encourage states to assume the role in assisting and
enforcing the carrying out of boating safety education and
activities. Under this program the Coast Guard allocates and
distributes funds to eligible states to assist in developing
and implementing boating safety programs. Federal financial
assistance is provided through the Boating Safety account of
the Aquatic Resources Trust Fund, also known as the Sport
Fish Restoration and Boating Trust Fund. Alaska met the
eligibility requirements to receive the funds in 2000 with
the passing of HB 108, the Alaska Boating Safety Act. The
Alaska Boating and Safety Program is funded almost entirely
by the federal grant. The program has now been in place for
nearly ten years. Under the program recreational boaters are
safer and more educated and boating fatalities have
declined. He relayed that the Coast Guard will continue to
maintain a working relationship with the state.
Co-Chair Hawker solicited further testimony.
JEFF JOHNSON, BOATING LAW ADMINISTRATOR, DEPARTMENT OF
NATURAL RESOURCES (DNR), was available, via teleconference,
for questions.
Representative Foster commended DNR for their good work.
Co-Chair Hawker closed public testimony.
6:25:19 PM
Representative Joule spoke in support of the bill. He hoped
the program would help provide closure for mourning families
by aiding in the quick recovery of drowning victims.
Vice-Chair Thomas remarked that he had seen the Kid's Don't
Float program working in action. He asserted there should be
a similar program for adults.
Co-Chair Hawker noted the one year sunset from June 30, 2010
to June 30, 2011. He pointed out to the committee the fiscal
note showing an additional expenditure needed in 2010. He
asked if the fiscal note was in the 2010 budget or if it was
an incremental. Mr. King replied that the fiscal note
reflected boat registration fees. He said that those fees
would be for 2010. Co-Chair Hawker asked if the
appropriations and capital expenditures were already in the
2010 budget. He added that the note reflected inter-agency
receipts being spent for personal services. He wondered if
the expenditures were already in the 2010 budget. Mr. King
replied in the affirmative. Co-Chair Hawker clarified that
it was not an incremental fiscal note. He asked if the
capital expenditure was already in the 2010 budget. Mr. King
replied that the division receives a federal grant and that
the receipt authority for that grant is in the 2010 budget.
Co-Chair Hawker summarized that the division has the amounts
already in the budget and that the fiscal note was presented
for information purposes only. He asked the committee to
forward the bill with the zero fiscal note to prevent the
duplication of authority. Mr. King requested confirmation
from Mr. Johnson.
Mr. Johnson stated that it was a continuation of the budget
that has always existed. He said that it varies from year to
year, but that the department was in the capital budget for
the specified amount.
6:29:30 PM
Co-Chair Hawker MOVED to change the fiscal note to show a
zero appropriation in FY 2010, leaving in what the
department already has budgeted. There being NO OBJECTION,
it was so ordered.
Co-Chair Stoltze commented on the dissimilarities between
the federal and state fiscal year, and recognized this could
pose a problem when applying for federal grants. He said
that he had drafted the CS for the one year sunset extension
with the intention of examining the complexities of the
program. He mentioned his concerns with the regulation of
responsible adults and DNR bureaucrats and hoped that the
bill would reflect the ways in which Alaskans could benefit
from their own natural resources.
Co-Chair Stoltze MOVED to report CSHB 151 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 151 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new fiscal note by the
Department of Natural Resources.
6:35:01 PM
Representative Foster wondered about school involvement in
the Kid's Don't Float program. Mr. King replied that the
program was taught in schools throughout the state. He
stressed that the effort to educate children is an absolute
priority.
CS FOR SENATE BILL NO. 57(FIN)
"An Act relating to charter and alternative school
funding."
6:36:20 PM
SENATOR JOE THOMAS, SPONSOR, read from the Sponsor Statement
(Copy on File). He explained that the legislation was about
supporting school choice by extinguishing the charter school
penalty. He shared that charter schools are public schools,
open to all children free of charge. Charter Schools must
comply with state laws and employ state certified teachers,
who are employees of their local school district. The
schools are managed by a parent- teacher board of directors,
which determine school curriculum and teaching methods,
within the guidelines of state statute. Current law results
in carter schools with fewer than 150 students receiving 30
to 45 percent less state funding than neighborhood schools
of comparable size. He referred to the chart, "Adjusted
Student Count for Charter Schools vs. Neighborhood Schools"
(copy on file). He stated that the legislation would provide
charter schools, with fewer than 150 students, a student
count adjustment equal to that of neighborhood schools with
400 students. The bill would also address the problem
created for school districts when charter and alternative
schools unexpectedly enroll fewer students than is required
by the state to fund them as separate schools. Presently,
the number of students a charter school must have enrolled
in order to be funded as a school is 150, an alternative
school must have 200. When these schools fall one student
below the threshold, the state cuts funding by $500,000 to
$700,000. This is detrimental not only to the school but to
the district as well. CS for SB 57 contains a one year "hold
harmless" provision for schools that unexpectedly fall below
the threshold in their first year of operation, or were
above the threshold the previous year and then fell below.
For one year the schools would receive 95 percent of the per
student rate that they would have received at the threshold.
During the "hold harmless" year the school would be required
to submit a budget to their local school board laying out
the plan for the following year if their enrollment does not
rise. Finally, the CS lowers the separate schools threshold
for alternative schools from 200 to 175 students. He shared
that Alaska has a serious problem with school achievement
and high school graduation, and that what works well for one
student may not work best for all students. Charter schools
and alternative schools offer parents choice within the
public school system. The legislation has been shown strong
support by school districts throughout the state. He
expressed concern that the school funding system has limited
communities in their ability to create and sustain
innovative programs and urged committee support for the
bill.
6:40:35 PM
Representative Gara wondered if the legislation would affect
the funding of traditional schools. Senator Thomas answered
no.
EDDY JEANS, DIRECTOR, SCHOOL FINANCES AND FACILITIES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, introduced
himself.
Representative Gara reiterated his concerns that the
legislation could negatively impact funding for traditional
K-12 schools. Mr. Jeans replied that, provided the fiscal
note was passed along with the bill, the funding of other
schools in the state would not be affected.
SENATOR CHARLIE HUGGINS, WASILLA, shared that he assisted in
opening the first two charter schools in Mat-Su. He
discussed the commonalities between charter schools and
alternative schools, which at one time had the same minimum
student count. He explained that when a charter school drops
from 150 to 149; alternative school 200 to 199, the school
incurs a loss of $500,000 to $700,000. Both are schools of
choice. The difference between the two programs is stark.
Charter schools traditionally have a strong support system,
alternative schools do not. For many, alternative schools
are usually the last stop before dropping out of school. He
stated that charter and alternative school programs
throughout the state face multiple challenges.
6:45:23 PM
Senator Huggins described agreement worked out between
proponents of alternative schools and proponents of charter
schools. He stated that he thought the measure was rational
and urged the committee to support the legislation.
Vice-Chair Thomas asked how many charter schools were in the
Haines district. Mr. Jeans replied that there were none.
Vice-Chair Thomas wondered if passing the measure would
encourage all schools to expect more money. Mr. Jeans
replied that he could not make the assurance that schools
would not ask for increased funding in the future. He
believed that the legislation addresses the problem by
allowing schools that are on the verge of losing funding to
transition to a new funding level should their enrollment
decrease, instead of being forced to shut down.
6:49:28 PM
Senator Huggins noted that the number of students required
for adequate funding in neighborhood schools is dramatically
different than charter or alternative schools.
Vice-Chair Thomas reiterated concerns about increased
expectations for funding from traditional schools.
Senator Thomas referred to the chart, "Adjusted Student
Count for Charter Schools vs. Neighborhood Schools"(copy on
file). He shared that the traditional schools have less
participation in enrollment.
Representative Gara wondered what the student count for
traditional school funding was based on. Mr. Jeans explained
the Rule of 10. He said that traditional schools do not lose
funding at 10 students, but the funding is substantially
reduced. He pointed out that that policy was put in place by
the legislature in 1998, to encourage small schools in the
state to close. Representative Gara stated that he supported
the legislation.
6:51:57 PM
Co-Chair Hawker opened public testimony.
6:52:09 PM
TODD HINDMAN, TEACHER, ANVIL CITY SCIENCE ACADEMY, NOME,
testified via teleconference, related that small charter
schools are vital in order to provide specific educational
needs in both rural and urban communities in the state. The
small size of charter schools allows for flexibility to
provide unique educational opportunities for students.
Teachers are able to develop and implement lessons in which
students can use the community and their environment as
educational resources. He furthered that the small school
size creates a culture around family values, ensuring
student success through daily engagement of parents. He
concluded that charter schools are identifying and meeting
specific needs within Alaskan communities.
6:53:56 PM
RAY DEPRIEST, DIRECTOR OF CARREER TECHNICAL EDUCATION, MATSU
SCHOOL DISTRICT, testified via teleconference, in support of
the bill. He stated that there are four charter schools and
three alternative schools within the district, which enroll
1500 students. He believed that the bill would correct the
funding problem in an impartial and fiscally dependable
manner. He relayed that in 2008, the district suffered a
loss of $780,000, when the enrollment numbers of one
alternative school in the district unexpectedly dropped from
200 to 194. He spoke in strong support of the "hold
harmless" provision contained in the legislation.
KIKI ABRAHAMSON, PRESIDENT, ALASKA CHARTER SCHOOL
ASSOCIATION testified via teleconference, She spoke in favor
of the legislation. She pointed out that innovation;
alternatives and accountability were necessities in
education, to meet the changing needs of the workforce,
financial situations, and communities. She strongly urged
committee support for the bill.
6:58:05 PM
Co-Chair Hawker closed public testimony.
6:58:15 PM
Mr. Jeans detailed the fiscal notes. The second page of the
fiscal notes highlights the impact of the funding changes
for carter school with less than 150 students. The third
page illustrates the impact of the "hold harmless" provision
on the Mid-Valley Alternative High School in Mat-Su.
6:58:43 PM
Co-Chair Stoltze clarified for the committee that charter
schools are public schools.
6:59:20 PM
Co-Chair Stoltze MOVED to report CSSB 57 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 57 (FIN) was REPORTED out of Committee with a "do pass"
recommendation and with fiscal note #2 by the Department of
Education and Early Development.
7:01:00 PM
CS FOR SENATE BILL NO. 96(FIN)
"An Act relating to nonpayment of child support, to the
definition of the term "state" for the purposes of the
Uniform Interstate Family Support Act, to certain
judicial and administrative orders for medical support
of a child, to periodic review and adjustment of child
support orders, to relief from administrative child
support orders, to child support arrearages, and to
medical support of a child and the Alaska Native family
assistance program; amending Rule 90.3, Alaska Rules of
Civil Procedure; and providing for an effective date."
LINDA ZOG, STAFF, SENATOR BETTYE DAVIS, introduced the bill
and read from the Sponsor Statement (copy on file). Senate
Bill 96 brings the state into compliance with the federal
government regulations adopted in July 2008, which requires
states to have guidelines addressing how either or both
parents will provide for a child's health care needs. If a
parent is ordered to pay for health care including cost
medical support, the Child Support Services Division (CSSD)
must enforce the ongoing medical support obligation as well
as collect any cash medical support arrears. Failure to
satisfy these mandated requirements jeopardizes $85 million
in federal funding for both the Alaska Child Support Program
and Temporary Assistance for Needy Families (TANF). The bill
adds an "Indian tribe" and the "United States Virgin
Islands" to the definition of state. The bill adds to
existing law the authority for a tribunal to order either or
both parents to pay cash medical support, if warranted. In
addition, the bill directs CSSD to review child support
orders for modification on a federally mandated three-year
cycle. The bill adds "cash medical support" to the
definition of arrears, and to the definition of support
order, enabling Child Support Enforcement to use existing
enforcement tools to collect a cash medical support
obligation on behalf of the child. Finally, the bill removes
the language of who may request the correction of a clerical
mistake in an administrative order, or request the vacation
of an administrative order based on defaulted information.
The bill assures $85 million to the state for child support
enforcement and TANF.
7:04:48 PM
GINGER BLAISDELL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, presented a list of people
available to answer specific questions regarding the bill.
Co-Chair Hawker asked if the department and the governor
support the bill. Ms. Blaisdell reported that they do.
7:05:59 PM
Vice-Chair Thomas MOVED to adopt Amendment 2:
Page 2, line 8, following "order.":
Delete "In adopting UIFSA conforming amendments, the
legislature does not intend to grant or restrict tribal
jurisdiction to enter, modify, or enforce child support
orders, and the amendments are not intended, either
directly or impliedly, to acknowledge, expand, or
restrict tribal jurisdiction."
Insert "In adopting UIFSA conforming amendments, the
legislative intent is:
(1) to remain neutral on the issue of the underlying
child support jurisdiction, if any, for the
entities listed in the amended definition of
"state."
(2) not expand or restrict the child support
jurisdiction, if any, of the listed "state"
entities in the amended definition; and
(3) not to assume or express any opinion about whether
those entities have child support jurisdiction
either in fact or in law."
Renumber accordingly.
Co-Chair Hawker OBJECTED for discussion.
7:06:30 PM
PETER PUTZIER, SENIOR ASSISTANT ATTORNEY GENERAL, DEPARTMENT
OF LAW, explained that Amendment 2 relates to the
legislative intent language. The legislative intent language
applies only to the Uniform Interstate Family Support Act
(UIFSA) portion of the legislation and is related to State
of Alaska Statute 25.25. The intent was to specify, with the
writing of the amendment, that the department was not
reshaping or restructuring state tribal governmental
relationships, or making a broad jurisdictional statement.
Rather, the intent was to make a technical amendment to
unify Alaska with the rest of the nation and with the
federal act.
Co-Chair Hawker WITHDREW his objection. There being NO
OBJECTION, Amendment 2 was ADOPTED.
7:09:37 PM
Co-Chair Hawker requested that legislative legal be allowed
to make technical changes to the amendment. Mr. Putzier
pointed out that many parties had negotiated in determining
the final language of the amendment. He requested that it go
forward as written.
Co-Chair Hawker withdrew his request to grant authority to
legislative legal to make technical changes to the
amendment. He requested that the amendment be drafted as
written.
7:11:56 PM
Representative Foster asked Mr. Robert Loescher to discuss
the amendment.
ROBERT W. LOESCHER, TRIBAL JUDICIARY COMMITTEE MEMBER,
CENTRAL COUNCIL TLINGIT & HAIDA INDIAN TRIBES OF ALASKA,
shared that the amendment being offered was satisfactory to
the council and urged committee support.
7:13:17 PM
Co-Chair Hawker opened public testimony, none being offered,
public testimony was closed.
7:15:09 PM
Representative Gara asked if it would be possible to work
with the bill's sponsors and the chairs of both finance
committees, to incorporate foster care reform legislation
into the bill. Co-Chair Hawker was hesitant to hold the bill
in committee. Representative Gara said that he would speak
to the necessary channels before the bill was heard on the
House floor.
Co-Chair Hawker noted the zero fiscal note.
Ms. Blaisdell pointed out that the passing of the
legislation would be of no additional cost to the
department. She warned that there was a chance that the
state could lose up to $85 million if the legislation did
not pass.
7:17:38 PM
Vice-Chair Thomas MOVED to report HCS CSSB 96 (FIN), as
amended, out of Committee with individual recommendations
and the accompanying fiscal note. There being NO OBJECTION,
it was so ordered.
HCS CSSB 96 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with zero fiscal note #1 by the
Department of Revenue.
7:19:02 PM
CS FOR SENATE BILL NO. 170(FIN)
"An Act modifying the Alaska unemployment insurance
statutes by redefining the base period for determining
eligibility for unemployment benefits; relating to
contributions, interest, penalties, and payments under
the Alaska Employment Security Act; and providing for
an effective date."
MAX HENSLEY, STAFF, SENATOR JOHNNY ELLIS, explained that SB
170 would make two minor amendments to the unemployment
insurance statutes. The first change, found in sections 13
and 20, would update eligibility standards for unemployed
workers receiving benefits front the Unemployment Insurance
Trust Fund. Current eligibility is based on employers
meeting a minimum earnings standard in the first four of the
previous five calendar quarters. The change would allow
workers failing to meet the standard to recalculate their
eligibility using the last four completed quarters. This
would expedite the receiving of unemployment benefits. The
change would make the state eligible for $15.6 million in
federal stimulus funding to the trust fund, and $1.1 million
in administrative costs. He stressed that, as long as a
portion of the federal stimulus dollars were deposited into
the trust fund, there would be no increase in the
unemployment insurance taxes paid by businesses and workers
that support the fund. Any additional funds would be spent
on targeted job training. He referred to letters of support
for the bill in committee members' packets (copy on file).
The second change is the addition of federally recognized
tribes to the list of reimbursable employers. Alaska has
been out of compliance with federal law since 2002. The
language would require the state to treat tribes like non-
profit employers and municipalities, and would allow tribal
entities to reimburse the unemployment trust fund for the
benefits drawn by employees, after the funds are drawn,
rather than before. He referred to the letter from the State
of Alaska Department of Labor (DOL) to the federal DOL (copy
on file). The letter notes that most tribal entities will
not take advantage of the change, but must be offered the
option to do so, in order for the state to be in compliance
with federal law. He cited a list of tribal entities that
would be affected by the legislation (copy on file).
7:23:34 PM
GUY BELL, ASSISTANT COMMISSIONER AND DIRECTOR, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, reported that the administration was neutral on
the bill, but the preference of the administration was that
the two sections be separated.
Co-Chair Hawker asked if the administration had a position
on either section. Mr. Bell related that the governor
sponsored the Native Entity Compliance component of the
legislation. He added that the state would be subject to
federal sanctions, if the provision was not adopted.
Co-Chair Hawker wondered why the other portion of the
legislation had not been endorsed by the administration.
Mr. Bell referred to the administrations belief that there
were strings attached to the federal stimulus dollars.
7:25:55 PM
Co-Chair Hawker asked what the attached strings might be.
Mr. Bell thought there was a required statutory change that
would have an impact on the systems liability. Co-Chair
Hawker wondered what the benefit to the state would be if
the statutory changes were made. Mr. Bell reported that the
state would be eligible to apply for and receive $15.6
million in the Unemployment Insurance Trust Fund.
7:27:00 PM
Representative Gara asked how much of the federal funds
would be available for the general fund in FY 2010 and FY
2011. Mr. Bell explained that the money would go
automatically into the Unemployment Insurance Trust Fund. He
stated that there were over $1 million general fund dollars
being invested in the trust fund. A future legislature could
make the determination to exchange some of the $15.6 million
in federal funds for the $1 million general fund dollars.
7:28:37 PM
Mr. Hensley added that the stimulus dollars were available
for a limited time, but once procured, could be spent at any
time going forward. He noted that it was Senator Ellis'
intent that employees and employers be held harmless on the
increased liability.
Representative Gara wondered if there would be enough in the
$15.6 million to replace $1 million of the general fund in
other areas. Mr. Bell concluded that he did not know.
Co-Chair Hawker ruminated that the actuarial calculation was
fairly sophisticated.
7:31:08 PM
Co-Chair Hawker opened public testimony, none being offered,
public testimony was closed.
7:33:24 PM
Co-Chair Hawker commented that there was a zero fiscal note.
7:33:48 PM
Vice-Chair Thomas MOVED to report CSSB 170 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 170 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new zero fiscal note by the
Department of Labor and Workforce Development.
7:35:16 PM
CS FOR SENATE BILL NO. 114(L&C)
"An Act extending the termination date of the State
Board of Registration for Architects, Engineers, and
Land Surveyors; extending the term of a temporary
member of the State Board of Registration for
Architects, Engineers, and Land Surveyors; and
providing for an effective date."
Co-Chair Hawker detailed the life of the bill as it had
traveled through different committees. He believed that the
bill before the committee was the same version the committee
had heard prior.
JAKE HAMBURG, STAFF, SENATOR JOE PASKVAN, agreed.
7:35:58 PM
Representative Foster pointed out that the 10 members of The
State Board of Registration for Architects, Engineers and
Land Surveyors, and their staff, meet four times per year.
He wondered how travel expenses were funded, and what kind
of work was being done.
7:36:30 PM
LYNN SMITH, DIVISION OF CORPORATIONS, BUSINESS AND
PROFESSIONAL LICENSING, replied that at the meetings the
board reviews license applications and certifications.
7:37:18 PM
Representative Gara understood that the $454,000 in travel
expenses comes from license fees collected from architects
and engineers, and was of no cost to the state. Ms. Smith
reported that the board is self-supporting.
7:38:05 PM
Co-Chair Hawker opened public testimony, none being offered,
public testimony was closed.
Co-Chair Hawker commented on the fiscal note.
7:38:53 PM
Co-Chair Stoltze MOVED to report CSSB 114 (L&C) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 114 (L&C) was REPORTED out of Committee with a "do
pass" recommendation and with and with fiscal note #1 by the
Department of Commerce, Community and Economic Development.
7:40:01 PM
Co-Chair Stoltze assumed the gavel.
AT-EASE: 7:41:54 PM
RECONVENED: 8:13:57 PM
CS FOR SENATE BILL NO. 75(FIN)
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and appropriations to capitalize funds; and providing
for an effective date."
Co-Chair Hawker MOVED to adopt HCS CSSB 75 (FIN) as a
working document before the committee. There being NO
OBJECTION, it was so ordered.
8:14:42 PM
JAMES ARMSTRONG, STAFF, CO-CHAIR STOLTZE, reported that
there were three additional legislative finance reports;
numbers and language differences only, numbers and language
differences statewide, and numbers and language detailed by
agency.
8:17:05 PM
Mr. Armstrong listed the changes to the bill. Page 2, Line
13, adds the appropriation mechanism of $2,500,000, for the
Enterprise Security Projects.
Representative Gara asked for clarification on the first
change. Mr. Armstrong replied that in the previous draft the
Senate added the funding for the Enterprise technology in
the language section, but due to a technical error, the
actual funding allocation mechanism allowing the agency to
spend the money, was omitted. The change adds that allowance
language back in.
Mr. Armstrong continued. Page 2, Line 27, adds $4.5 million
in general funds match to Alaska Energy Authority-Renewable
Energy Projects. It also adds $1 million in Statutory
Designated Program Receipts and Inter Agency Receipts. Page
3, Line 17, adds intent language to the $10 million
appropriation to the Port of Anchorage. The appropriation is
contingent upon the municipality assembly adopting a
resolution identifying the specific ferry landing location
for M/V Susitna. Line 22, requests that the Municipality of
Anchorage assist the Mat-Su borough in grant applications
for port projects to the United States Department of
Transportation.
8:18:23 PM
Representative Gara wondered where the corresponding change
could be found in the numbers and language section of the
bill. Mr. Armstrong replied that the language had been added
to the general fund portion of the ports appropriation. He
added that he would point out intent language in the bill as
it came up.
8:19:11 PM
Mr. Armstrong continued to Line 27, the Kenai River Bluff
Project. The project was not in the original bill. The Corps
of Engineers has $13 million slated for the project. The
Kenai borough has added $2 million to the project, which the
state has matched. Language has been added to specify that
the appropriation is contingent upon the fund from the Corps
of Engineers. Mr. Armstrong noted that the bonds had been
approved, but not issued, in anticipation of the $13
million.
Vice-Chair Thomas asked when an answer from the Corps of
Engineers could be expected. Mr. Armstrong said that the
corps was still in deliberation.
Co-Chair Stoltze pointed out that the project had been
introduced by the administration.
8:20:06 PM
Mr. Armstrong continued to Page 19, Line 19, which adds 40
percent of the deferred maintenance funds requested by
Alaska Housing Finance Corporation (AHFC) for the AHFC
Building System Replacement Program. Page 19, Line 33, adds
$1,380,000 to AHFC Fire Protection Systems, also 40 percent
of the deferred maintenance receipts requested by the
corporation.
8:21:03 PM
Mr. Armstrong explained that AHFC had bonded for deferred
maintenance receipts in the past. The bonding has run out
and regular program receipts are now being requested.
Representative Kelly asked if the administration had made
the request on behalf of the corporation. Mr. Armstrong
replied that it had.
8:21:59 PM
Mr. Armstrong continued to page 20, Line 15. He stated that
$3.5 million had been added to the third phase of the AHFC
Loussac Manor renovation and replacement in Anchorage. Line
18 notes a third of the deferred maintenance for AHFC
Security Systems Replacement/Upgrades for public housing.
Congress has given AHFC $600,000 for the Weatherization
Program, as noted on Page 20, Line 32.
8:22:45 PM
Mr. Armstrong informed the committee that $400,000 for the
Alaska Aviation Safety Program had been added on Page 21,
Line 10. Those funds have been matched by the Federal
Aviation Administration and The Medallion Foundation.
8:23:22 PM
Mr. Armstrong relayed that Page 21, Lines 20, 21 and 22
notes the administrative intent language for the Alaska
Marine Highway System. Page 21, Line 31 notes the 60 percent
of the funding for the Harbor Program Development was
restored at the request of the administration. This project
had been overlooked, but will be moved in 2010 to the
operating budget.
Representative Foster pointed out that in the past the
administration had vetoed capital projects. Mr. Armstrong
assumed that the administration would not veto its own
request.
8:24:50 PM
Representative Gara asked if all the changes mentioned were
governor's requests. Mr. Armstrong reported that after the
Senate version of the bill had passed, projects that could
capture a match had been identified. He said that some of
the matches would not flow through the appropriation
process. Co-Chair Stoltze added that a list of projects had
been presented that had match funds, but through errors,
some projects had not made the list.
Representative Gara restated his question. Mr. Armstrong
explained that the back-up had been reviewed twice. He
elaborated that some of the back-up did not illustrate
whether there had been an accompanying federal match.
Representative Gara asked if the items had been in the
governor's original budget.
8:26:57 PM
Mr. Armstrong pointed out that Page 34, Line 14 and Page 36,
Line 9, were both oversights in the amendment process
between the Department of Transportation stimulus
legislation and the original capital budget. The line
changes restore funding for FY 2009 projects that were
already on the STIP in the original capital budget.
8:28:22 PM
Mr. Armstrong turned to Section 4, Page 44, Line 10. The
title for the appropriation has been changed from Egan
Center Upgrades to Passenger Staging Upgrades.
Representative Gara returned to the Egan Center
appropriation. He wondered if the money would come from
cruise ship funds. Mr. Armstrong said yes. All of Section 4
pertains to cruise ship funds.
Mr. Armstrong continued reading from the bill. Page 45, Line
9 is related to the Baranof Park Project in Kodiak, which
was in the original CS from the senate, and was not a
qualifying project. Another project is slated for $1.3
million, making the addition a net zero addition.
8:30:54 PM
Mr. Armstrong continued to Page 45, Lines 19 and 20, which
are a title change. The words "and Construction" have been
added. Page 46, Line 22, title change inserts the work
"passenger" between "marine" and "service". Page 46, Line
29, is the Fort Abercrombie Tourist Bus Parking, which is
the $1.3 million project previously mentioned. If you add
the appropriation on Page 45, Line 9 to Page, 46, Line 29,
and take out the Baranof Park Project, the addition is net
zero.
8:32:46 PM
Mr. Armstrong informed the committee that the $6 million in
allocations from the original bill sent by the Senate have
been collapsed into one separate appropriation, and intent
language has been added to the top of page 47.
Vice-Chair Thomas wondered how the numbers of people who
utilize parks were accounted for. Mr. Armstrong deferred to
the administration.
8:33:39 PM
Representative Crawford asked about the funding source for
line 32, page 46, State Parks Deferred Maintenance and
Emergency. Mr. Armstrong related that when the bill was
first released by the governor, projects in the section were
to be funded, within the fast track supplemental, using
cruise ship gambling proceeds. However, the administration,
upon consultation with the legislature, decided to classify
the gambling funds as general funds. As a result, $6 million
of the cruise ship head tax dollars have been allocated for
statewide deferred maintenance projects.
8:34:44 PM
Co-Chair Hawker clarified that the head tax has very
specific legal requirements as to how it can be spent. The
Office of Management and Budget (OMB) and the state had
originally thought of the gambling tax as a new and separate
fund source. Upon reflection, it was understood that the
gambling tax was just like all other taxes and was meant to
feed the general fund. He made clear that where the tax was
indicated on earlier spreadsheets was to be treated as an
anachronism, and will always be treated as general funds
going forward.
8:35:42 PM
Mr. Armstrong continued to read from the bill. On Page 53,
Lines 15 and 17, corrections have been made to rectify the
incorrect House District numbers. Page 63, Lines 1 through
28, are intent language that covers an appropriation in the
language section. Co-Chair Stoltze recommended deferring
those line budget items to Co-Chair Hawker at a later time.
Mr. Armstrong continued to Page 67, Line 23.
8:37:13 PM
Co-Chair Hawker reported that there are three sections in
the bill that could arguably be called operating
appropriation for the year. The sections are; Section 21,
Page 67, Section 20, Page 67, and associated intent language
on Page 63. There has been ongoing discussion in the
legislature concerning state investment in in-state gas
development, while attempting to reconcile development of a
gas line with high fuel costs. Section 20 appropriated an
additional general fund appropriation into the Department of
Health and Social Services (DHSS) to continue to build the
Low Income Home Energy Assistance Program fund (LIHEAP). The
funds augment the federal Alaska Heating Assistance Program.
8:39:17 PM
Co-Chair Hawker stressed that money for in-state gas
development was the top budgetary priority for the governor.
He gave that $9 million in general funds have been added to
Office of the Governor for gasline development. He read
from the legislative intent language in Section 13, Page 63,
Lines 3-6. He emphasized that the project is not related to
Alaska Gasline Inducement Act (AGIA), but to continue to
work to develop in-state gas for in-state use. It is meant
expedite the efforts needed for private enterprise to
complete the project. The money was appropriated to the
Office of the Governor to ensure the governor the latitude
to distribute the funds where she deemed most appropriate.
8:42:11 PM
Representative Crawford inquired the funds could be used for
the Alaska Natural Gas Development Authority (ANGDA). Co-
Chair Hawker reported that it could be used for ANGDA.
Representative Kelly understood that the funds could be used
at the governor's discretion. Co-Chair Hawker clarified it
the intent to make the money available to the governor to
utilize, within parameters, as she deemed fit.
8:43:44 PM
Representative Gara asked how the decision to appropriate
the $9 million was made. Co-Chair Hawker reported that the
governor had requested $9.3 million. The LIHEAP
appropriation was already benchmarked at $9 million, which
aided in the decision. Representative Gara wondered when the
discussion on the amount of the appropriation had taken
place. Co-Chair Hawker believed the discussion had taken
place within the sphere of the administrations specialized
knowledge. Representative Gara requested discussion from the
administration as to what the state would receive for $9
million, and why that specific amount was requested.
8:45:05 PM
Representative Gara voiced concern about the language on
page 63, Line 15. He felt it would allow the administration
to spend state money as a subsidy to a private entity. Co-
Chair Hawker explained that intent is to provide funds to
facilitate progress on in-state gas development.
8:46:40 PM
Representative Gara hoped that there would be more
discussion on the matter. Co-Chair Hawker pointed out that
every year funds are added to departments in the pursuit of
in-state gas development, regardless of progress. He termed
it a policy call. Co-Chair Stoltze added that it was a
pronounced request from the administration.
Co-Chair Hawker pointed out that there are laws to prevent
the administration from giving away assets.
8:47:57 PM
Vice-Chair Thomas requested an audit of ANGDA. Co-Chair
Hawker replied that that was possible. He recommended that
the request be directed to Legislative Budget and Auditing
(LB&A). Vice-Chair Thomas suggested that the audit be done
before the money is given to ANGDA. Co-Chair Hawker noted
the funding is provided directly to the governor's office.
In recognition of the concerns about ANGDA, he reported that
the funds under discussion are entrusted specifically to the
governor. He thought the governor's office would use the
money wisely.
8:50:06 PM
Representative Gara felt that the appropriation was a huge
policy call, with no limitations, and unenforceable intent
language. He thought it should be reconsidered in an open
committee process. He strongly questioned its transparency.
Co-Chair Hawker understood that the governor had stated that
the intent for the $9 million was that it be invested in in-
state gas development.
8:51:32 PM
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, informed the committee that this
item has been a priority for the governor and has been
discussed in various committees.
LARRY PERSILY, STAFF, CO-CHAIR HAWKER, explained that Harry
Noah, an executive branch employee, has been designated the
governor's in-state gas line coordinator and has been
discussing the issue with as many legislators as possible.
He has presented suggestions as to the best way an in-state
gasline could be developed; discussing timelines, necessary
funds and the right of way permits that would be required.
Representative Gara wondered which legislators Mr. Noah had
spoken to. He understood that the governor presented bills
to the legislature, and that those bills had parameters as
to how the money would be spent. He maintained that the
bills had not passed. He voiced concern that the $9 million
was just an award to the governor's office. He alleged that
full disclosure for use of the funds had not been discussed
with the entire committee before the intent language was
written into the bill.
Ms. Rehfeld reported that Mr. Noah has spent time in the
building talking to lawmakers, and those lawmakers have
confidence in the design and detail that was presented to
them. Co-Chair Hawker added that there had been many
discussions on the issue.
8:55:54 PM
Representative Austerman reported that the administration
had not sent a representative to his office to discuss the
issue. He expressed regret that he had not been better
informed.
Co-Chair Stoltze recalled that Mr. Noah had contacted his
office to discuss the issue.
Co-Chair Hawker communicated his frustration with the
governor's current lack of connection with the legislature.
He felt that she gave the appearance that she was more
concerned with her national ambitions than with what was
transpiring in her home state. He expounded that it was
insulting, personally, and to the people of the state, that
the administration had not followed up with leadership
throughout the building on the issue.
Vice-Chair Thomas stated for the record that no one had
contacted him.
JOE BALASH, INTER-GOVERNMENTAL COORDINATOR, DEPARTMENT OF
NATURAL RESOURCES, reported that the work plan had been
presented in a public manner in the governor's conference
room, as well as broadcast on Gavel to Gavel in early March.
Since that time, Mr. Noah has held several meetings with a
legislative working group, coordinated through the presiding
officers in both bodies. Various documents were distributed
at the meetings, which detailed the work plan by date,
schedule, activity, and approximate budget for each step. He
offered to provide copies of the documents at a later date.
8:59:13 PM
Representative Gara emphasized that while working together
to make the gasline a reality, it was important that the
administration keep the committee informed. He revealed that
he had not heard of the legislative working group mentioned
by Mr. Balash. He wondered if the group had a title. Mr.
Balash replied it had been labeled the "working group" at
administrative meetings. He recalled that, at the meetings
he participated in, there had been legislative
representatives present. He said that he could provide a
list of those present.
Representative Gara requested written documentation of the
administration's plan for the funds, and for a commitment
that the funds would be spent according to the plan. Mr.
Balash related that meetings on the issue had occurred in
early March. At that point, Mr. Noah was introduced by the
governor as her project director. A three part approach was
then laid out; funding had been identified, legislation on
right of way and pipeline acts had been introduced, and
legislation broadening the purpose of the Alaska Natural Gas
Authority. He believed that the administration had been
responsive to points of inquiry.
9:02:05 PM
Representative Gara stated that he had seen Mr. Noah in the
building, but had not spoken to him. He maintained that
there has not been deliberative discussion with all
legislators regarding the plan.
Representative Austerman stated it would have been
appropriate for a representative of the administration to
have briefed committee members on Section 13 of the bill.
9:03:41 PM
Co-Chair Hawker related that the bill is a legislative
budget. The administration did not know this section would
be included. The issue has been in discussion among the Co-
Chairs of both House and Senate Finance and the
administration. Ultimately, the governor's desire prevailed
and the request was included in the budget. He clarified
that the addition of Section 13 was made by the legislature
and not Mr. Balash. Representative Austerman expressed
frustration that the issue had not come up in minority
caucus meetings. Co-Chair Hawker argued that he would not
discuss caucus matters on the table. He voiced his amazement
with the administration's lack of communication with the
other members of the committee.
9:05:50 PM
Ms. Rehfeld communicated that the administration has had the
appropriation in its budget since December 2008. A request
for $5 million was put in specifically for ANGDA in
December. It was then increased to $8 million in the amended
budget. She felt that as the approach to the plan evolved,
the administration had maintained clear communication with
the committee. She added that the governor has been
consistent in her dialogue on in-state gas.
Representative Kelly pointed out that Mr. Noah had spoken to
him about the project. He confirmed that he has also had
discussions with Ms. Rehfeld about the request for ANGDA and
was familiar with the section.
9:07:58 PM
Representative Gara remarked that the earlier request for $5
million for ANGDA, to follow a statutory purpose, had not
caused him alarm. He emphasized that the change grants $9
million to the governor to spend without a statutorily
authorized purpose.
9:09:17 PM
Mr. Balash explained the work plan entails, as a first step,
an alternatives analysis to identify the cost of
transportation and the various routes. In June, information
would be gathered for applying for major permits, including
rights of way. In parallel, the deliverability and reserve
life in Cook Inlet would be evaluated. Ways to make
reserves last longer and the possibility of stop-gap
importation, in order to bridge any gap until natural gas
can be delivered, will also be examined. More funds will
likely be requested in 2010 as the customers and potential
suppliers of gas are identified. The goal is to be in a
position by 2011; to take the collection of major permits
and regulatory approvals, and the identified suppliers and
customers, and present the information to a private party,
who will than construct the gasline. In return, the private
party would reimburse the state for the costs incurred by
the state for the package of permits and regulatory
authorizations.
9:12:56 PM
Representative Austerman pointed out that the change in the
budget would need to be reviewed by the Senate Finance
Committee. He wondered if the section had been discussed in
that body.
Co-Chair Stoltze thought that the Senate leadership would
embrace the idea in order to move forward on in-state gas.
Representative Crawford expressed concern with the switch in
priority from ANGDA based spur line to ENSTAR bullet line.
9:14:05 PM
Mr. Persily pointed out that ANGDA's operating budget is
still funded from previous appropriations and can continue
to operate fully. He shared his understanding that the
additional funding was to ensure, should gas availability
become scarce, that the state will have access to in-state
gas.
Co-Chair Stoltze suggested Mr. Balash talk to any committee
members he may have missed in his first round of meeting on
the issue.
Representative Gara requested binding representation that
legislative approval would be required for any project from
the governor's office concerning the issue.
Mr. Balash asked for clarification as to what kind of
representation would be satisfactory. Representative Gara
suggested a letter from governor ensuring that the state
would get full value for work done on the project, upon
approval of legislature. Mr. Balash agreed to do that. He
perceived that a pipeline would not be built for $9 million.
Co-Chair Hawker related that the legislature has sole
appropriation power.
9:17:37 PM
Representative Foster stated that he had not been invited to
the meetings on the subject. He remarked that many House
members are tied up in committee during the day. He felt and
that the best way to be sure each member has the appropriate
information on a bill was for department heads to go office
to office. He felt that the committee had been caught off
guard by the section.
9:18:40 PM
Representative Kelly felt that the intent language could be
more specific.
9:19:49 PM
Mr. Armstrong returned to explaining changes in the bill.
On Page 79, Line 6 to Page 80, Line 17 there are structural
changes to the legislature's lapsing funds. The
reappropriations are for legislative audit, legislative
council and the legislative operating budget. Limitations
were placed in Section C, Line 24, appropriations for 50th
statehood; display of historical art and artifacts. An
appropriation for statewide energy plans were removed and
put into Section D, which begins on Line 29 of Page 79. He
said that the bill matches the Senate version except the
Senate had some funds going to LBA that are now going to
Legislative Council.
9:21:48 PM
Representative Foster commented on Lines 26 and 27 regarding
Legislative Council. He wondered if it would be possible to
make the work of Legislative Council more accessible to
communities outside of Juneau. Mr. Armstrong suggested
bringing it to the attention of the Legislative Council
chair when they next meet.
Vice-Chair Thomas asked about a statewide energy plan. Mr.
Armstrong said that in the version of the bill sent out by
the other body, there had been $300,000 lined out for a
statewide comprehensive energy plan, to be conducted by
LB&A. The plan was removed, and the funds were rolled back
into section D of the appropriation. Co-Chair Stoltze added
that the item is in the legislative branch and open for
discussion. Vice-Chair Thomas stated that he would rather
hire a state employee for the job, rather than an out-of-
state consultant.
9:23:54 PM
Representative Crawford questioned the language on page 80,
Lines 2 and 3, "for necessary legislative capital projects".
Mr. Armstrong explained that Legislative Council has control
of the building operations during the interim. He added
that it must be an agenda item to expend funds.
Representative Crawford asked for an estimated amount. Mr.
Armstrong said $2 million.
Representative Gara thought that the reapproprations from
LB&A to Legislative Council were excessive. Mr. Armstrong
replied that most of the funds had been expended for the
projects listed in Section 40.
9:27:17 PM
Mr. Armstrong continued to Page 81, Line 25, which lists the
appropriation set out for federal stimulus funds for DHSS
health care services, for a statewide electronic health
information exchange system. The contingent language on Page
84, Line 20, states that SB 133 needs to pass for the
mechanism in Section 43 to be funded.
Mr. Armstrong continued with the final changes to the bill
in Sections 22-39, which correct a series of technical
typos.
Mr. Armstrong explained that additional appropriations had
come in after the March 25, 2009 deadline, and were added to
the bill. He listed reappropriations by district.
9:30:05 PM
Mr. Armstrong noted that the change from Senate to House
Finance funds is outlined on the bottom right hand corner of
Page 2 of the Legislative Finance report.
9:31:05 PM
Representative Salmon asked for clarification on the
appropriation amount listed on Page 67, Lines 5 to 11.
JOHN BITNEY, STAFF, SPEAKER JOHN HARRIS, explained that the
reappropriation request for that district. The original
appropriation to the city of Delta Junction of $1.2 million
was to pay a litigation settlement in a lawsuit with a
private prison developer. Per the appropriation in 2000, the
city was required to pay 50,000 each year out of the city's
revenue sharing. Currently there is an unpaid balance of $1
million on the loan. The original language contained the
contingency that the loan would be forgiven if the community
incorporated as a borough. The new language removes the
contingency.
9:34:33 PM
Representative Kelly asked if the language on Line 28 on
Page 67, extends the LIHEAP general fund increase for two
more years. Co-Chair Hawker replied that it is a single $9
million appropriation to DHSSto be spent between June 30,
2009 and June 30, 2010. Representative Kelly asked it was
in addition to funds given during the 2008 session. Co-Chair
Hawker replied yes.
9:35:59 PM
Mr. Armstrong reported that the Constitutional Budget
Reserve management fees had been removed from the bill and
could be found in the operating budget.
Representative Gara asked if all projects in the bill were
reinstatements of the governor's requests. Mr. Armstrong
said that was correct, except for the cruise ship items.
Representative Gara wondered about Page 63 of the bill,
which details legislative intent on gas line money. He
understood that the funds could be used only for a private
sector project and that the project would go from The North
Slope to Fairbanks and down to the Kenai Peninsula. He
remarked that the project sounded like the ENSTAR project.
Co-Chair Hawker disagreed. He contended that this was the
generic investigation of a bullet line and that many
companies have discussed the possibility of involvement in
the project. He said the funds were to facilitate private
sector construction, ownership and management, and that all
interested in the project are welcome into the discussion.
Representative Gara relayed that he was not interested in a
project headed by ENSTAR.
9:39:12 PM
Representative Fairclough shared that ENSTAR had not talked
to her office.
Mr. Armstrong said that the legislative finance reports will
not show $9 million as those are considered operating
expenditures.
CSSB 75 (FIN) was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 9:40 PM.
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