Legislature(2009 - 2010)
03/24/2010 03:00 PM House FIN
| Audio | Topic |
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| Start | |
| 326 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 24, 2010
3:00 p.m.
3:00:07 PM
CALL TO ORDER
Co-Chair Hawker called the House Finance Committee meeting
to order at 3:00 p.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Allan Austerman
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
MEMBERS ABSENT
Representative Woodie Salmon
ALSO PRESENT
Leta Simons, Director, Division of Support Services,
Department of Natural Resources; David Blaisdell, Director,
Administrative Services Division, Department of Law; Guy
Bell, Assistant Commissioner and Director, Division of
Administrative Services, Department of Labor and Workforce
Development; Alison Elgee, Assistant Commissioner, Finance
and Management Services, Department of Health and Social
Services; Patricia Walker, Staff, Senator Lyman Hoffman;
PRESENT VIA TELECONFERENCE
SUMMARY
HB 326 SUPPLEMENTAL/CAPITAL/OTHER APPROPRIATIONS
HB 326 was HEARD and HELD in Committee for
further consideration.
#326
HOUSE BILL NO. 326
"An Act making supplemental appropriations, capital
appropriations, and other appropriations; amending
appropriations; repealing appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
3:07:42 PM
Co-Chair Hawker introduced a new CS for HB 326. He informed
the committee that the Committee Substitute (CS) contains
only the operating budget items in the supplemental; the
capital items will be considered separately in the capital
budget. He noted that the Transaction Reports (copy on
file) from the Legislative Finance Division (LFD) depicted
a decrease of $ 4.5 million from the Governor's proposed
supplemental request.
Co-Chair Hawker reported that the bill does not fund
everything the governor requested. He noted that drafting
the CS was a joint effort that involved the House and
Senate Finance Co-Chairs and their staff, the Office of
Management and Budget (OMB), and LFD.
3:13:20 PM
Co-Chair Hawker mentioned items that were specifically not
addressed in the CS: the Carlson case, reclamation bond
interest on the foreclosure of an exploration project in
the Cook Inlet area, and a Department of Natural Resources
request for additional gas pipeline implementation funding
for $537 thousand.
Co-Chair Hawker summarized the highlights of the CS. He
reported that K-12 education received forward funding in
the amount of $ 1,000,100,000. The CS included the FY 10
and FY 11 Corrections Officers arbitration award and
capitalization of the disaster relief fund for $5,000,000.
He noted the increasing incidents of criminal cases being
prosecuted that lead to the increases in the Office of
Public Advocacy and the Public Defender Agency. The
Department of Corrections fuel shortage was addressed by
additional funding of $2,000,000 as well as the inmate
healthcare shortfall of $4,600,000. He reported that the
estimates for the Department of Health and Social Services
children's Medicaid Services were much higher than in the
Governor's request; in excess of $2,000,000. The state's
Judgment and Claims issues increased from $28,000 to
$1,400,000. The largest increment was the recent Bethel
court decision on multi-lingual voting requirements for
approximately $1,000,000. He mentioned that another large
increase occurred in the area of fire suppression activity
for $35,000,000. Finally, he alluded to increases for the
Department of Transportation and Public Facilities in legal
defense costs to challenge violations [of the Clean Water
Act] imposed by the Environmental Protection Agency (EPA).
Representative Gara asked if all of the changes reflected
in the CS were depicted in the spreadsheet (FY10
Supplemental Bill-HB 326 3/23/2010, copy on file) prepared
by LFD. Co-Chair Hawker affirmed. He announced that all
ensuing discussion on HB 326 was to be referenced from the
spreadsheet.
Representative Gara cited item 376, page 6, of the
spreadsheet in the amount of $537,600., Gas Pipeline
Implementation per the Governor's request for the
Department of Natural Resources and asked why the amount
was not funded.
LETA SIMONS, DIRECTOR, DIVISION OF SUPPORT SERVICES,
DEPARTMENT OF NATURAL RESOURCES, explained that the
supplemental request was to cover the cost of the AGIA
(Alaska Gasline Inducement Act) coordinator's office and
fully fund four positions. The remaining portion of
$315,000 was to fund a competitive benchmark study before
FY 11 to examine the economic effects of non-conventional
gas sources on the AGIA project.
3:22:08 PM
Representative Gara referenced the same item on the
spreadsheet. He noted that extra costs have been incurred
due to an accelerated pace of the project prompted by
negotiations between TransCanada, Exxon, and AGIA. He
wondered what part of the process has been accelerated. Ms.
Simons answered that the overall pace of the project is
moving faster than anticipated. Therefore, increased travel
and project review have resulted.
Co-Chair Hawker warned that the governor's management of
funds within the existing authorization for AGIA warranted
further scrutiny by the Legislature.
Representative Gara asked what will happen to the project
without the funding request appropriated. Ms. Simons stated
that the state's response time and monitoring of the
project will slow down. In addition, short funding the
positions will leave them vacant. Representative Gara asked
for details about the short funded positions. Ms. Simons
responded that there were currently four positions in the
gas pipeline implementation funding allocation (AGIA
Coordinator's office). The Governor's office transferred
$390,000 last year to the Department of Natural Resources
for the positions; $100,000 was deleted in the transfer.
She furthered that a higher level of expertise was needed
therefore, two of the positions were upgraded and the AGIA
Coordinators' salary was higher than anticipated.
Representative Fairclough MOVED to ADOPT CS HB 326(FIN)
(26-GH2827\S, Kane, 3/23/10) as a working document. There
being NO OBJECTION, it was so ordered.
3:26:28 PM
Representative Austerman asked who shorted the transfer of
funds by $100,000 from the Governor's Office to DNR. Ms.
Simons was not certain. She remarked that happened during
the legislative budget process last year.
Co-Chair Hawker questioned whether it was an executive
decision or part of the legislative budget process.
Representative Doogan asked for the cost of the competitive
benchmark study. Ms. Simons replied that the amount
requested was $315,000. Representative Doogan queried about
the balance of the request and how it relates to the
shortfall of funds. Ms. Simons reported that $117,600
represents a shortfall in personal services and an
additional $90,000 for travel expenses and the balance for
office furnishings and equipment.
3:31:29 PM
Representative Gara cited another AGIA related expenditure
on the spreadsheet, page 6, item 375, for the Department of
Law, a decrement in the amount of $884,000 re-appropriated
from a $1,600,000 lapsing balance. He asked if the
administration was in agreement.
DAVID BLAISDELL, DIRECTOR, ADMINISTRATIVE SERVICES
DIVISION, DEPARTMENT OF LAW, explained that the $884,000
represents the current year's oil and gas contract funding
that was appropriated last year that does not relate to
AGIA. The excess funding was caused by legal cases
proceeding slower than expected. He noted that the
governor's requested amount of $964,200 was the projection
of need by the department for cases that are reflected in
item 374 that the legislature appropriated $884,000 for. He
added that the oil and gas cases are picking up and some of
the lapsing funds might still be needed. Representative
Gara asked if the remainder of the lapsed balance was
appropriate. Mr. Blaisdell responded that the funds are
used for contract legal counsel.
Co-Chair Hawker clarified that the unused portion of the
lapsed balance is still available to the department.
3:35:36 PM
Representative Gara identified page 12, item 428,
Department of Labor and Workforce Development, $85,000
reduction from an earlier supplemental proposal to be re-
appropriated[unexpended/unobligated balance from the Branch
Wide Oil and Gas Development appropriated to the Workforce
Investment Board]. He asked for the department's position.
GUY BELL, ASSISTANT COMMISSIONER AND DIRECTOR, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, stated that the department was in agreement
with the re-appropriation.
Representative Gara inquired about the Department of
Natural Resources item 456, page 14 [$175,000 Cook Inlet
Reclamation Bond]. Co-Chair Hawker restated that was the
reclamation bond item he described earlier. He declared
that it is an open item that must be resolved before the
end of session. He explained that DNR had ceded the bond
through the demise of the purchaser. A new, interest
earning bond was in place. The legislature did not have a
place to appropriate the interest due to restrictions on
the bonds use.
Representative Gara asked for an explanation from the
Department of Health and Social Services for items 357 -
358 on page 4 [item 357; reduction of the governor's
request from $700,000 to $350,000 for Admin Support
Services and item 358; reduction of $1,050,000 to $525,000
for Information Technology Services].
3:39:37 PM
ALISON ELGEE, ASSISTANT COMMISSIONER, FINANCE AND
MANAGEMENT SERVICES, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, voiced concern about the appropriation
reductions. She explained that the original appropriation
request was for a fund source change to existing
appropriations because the federal funds appropriated were
not being realized. She stressed that no additional money
was requested. The department would not be able to
accommodate the proposed reductions through program changes
this late in the fiscal year.
Representative Gara asked if general funds were replacing
federal dollars. Ms. Elgee affirmed. She stated that
federal funds for support services are appropriated through
an indirect cost allocation methodology that has been
poorly understood and implemented by the department.
Therefore, much of the federal funding utilized by the
department was not real. She summarized that the original
request was for general funds to replace the federal funds.
Representative Gara voiced his concern about item 358. He
worried that the reductions would result in the
displacement of program services or staff. Ms. Elgee
agreed. She related that in order to accommodate the
reductions this late in the fiscal year the department
would have to layoff sixty five employees. She noted that
the department has the expenditure authorization but that
approach would result in over-expenditures.
Co-Chair Hawker asserted that the department has had huge,
very embarrassing, and problematic breakdowns in their
accounting controls and accounting management practices. He
noted that the legislature has backfilled almost every
request without questions. He felt the department should
accommodate the reductions within their existing resources.
3:44:30 PM
Representative Gara argued that the department has done a
very good job of containing the costs within their control.
He expressed concern about the program or staff reduction
needed to accommodate the decrease. He noted that the
department's funding request this year is between two and
three percent lower than last year.
Representative Austerman wondered about the reduction of
$260,000 for the Department of Environmental Conservation
on page 2, line 337 for laboratory services. He stated that
the amount was approved in the Finance Subcommittee.
Co-Chair Hawker offered that the department determined that
the funds were not needed.
Representative Austerman inquired about a grant to the
Department of Commerce, Community and Economic Development
on page 11, line 409 to the World Trade Center for
$250,000. Co-Chair Hawker indicated that it was an
operating grant to a named recipient. It was brought to his
office by Senator Hoffman to include in the supplemental.
3:48:34 PM
PATRICIA WALKER, STAFF, SENATOR LYMAN HOFFMAN, stated that
the grant is for an exposition that begins in May of this
year. Co-Chair Hawker expounded that the exposition is in
China, commences in May and ends in October. He added that
the item was requested by Representative Olsen and Senator
Menard. The event is an Asian expo on international trade.
The state's interest was in seafood marketing and has
historically participated. The item was added to the
supplemental to expedite the funding.
Representative Gara thought that the amount was excessive.
Co-Chair Hawker furthered that the funds were used to
maintain a booth for the months of May through September.
Representative Gara reported that during a Department of
Environmental Conservation Finance subcommittee meeting
there was testimony regarding the food safety inspection
program. He related that testifiers felt the program was
understaffed and unreliable which posed a danger to the
public. In subsequent contact with the Commissioner, he
relayed that the department would need an extra $3 million
for the staffing to comply with federal law. Rep. Gara
stated that no additional funding request was submitted by
the department. Rep. Gara questioned whether the public was
adequately protected.
HB 326 was HEARD and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 3:56 PM
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