Legislature(2011 - 2012)HOUSE FINANCE 519
01/24/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Budget Overview: Department of Natural Resources | |
| Budget Overview: Department of Administration | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
January 24, 2011
1:39 p.m.
1:39:40 PM
CALL TO ORDER
Co-Chair Thomas called the House Finance Committee meeting
to order at approximately 1:38 p.m. [NOTE: The first minute
or so of the meeting was not recorded on BASIS; the Co-
Chair noted who was present and the first testifier
introduced himself.]
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative David Guttenberg
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
Representative Les Gara
Representative Reggie Joule
ALSO PRESENT
Representative Mike Chenault; Representative Dan Saddler;
Daniel S. Sullivan, Commissioner, Department of Natural
Resources; Jeanmarie Davis, Director, Division of Support
Services, Department of Natural Resources; Becky Hultberg,
Commissioner, Department of Administration.
SUMMARY
BUDGET OVERVIEWS:
Department of Natural Resources
Department of Administration
^BUDGET OVERVIEW: DEPARTMENT OF NATURAL RESOURCES
1:39:40 PM
[NOTE: The first few minutes of the meeting were not
recorded, during which the commissioner introduced himself
and said the following.]
DANIEL S. SULLIVAN, COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, provided a PowerPoint presentation, "Alaska
Department of Natural Resources, House Finance FY12
Overview" (copy on file). He noted that the Department of
Natural Resources (DNR) was a large agency and he was
committed to learning the details of its functioning. In
addition, he emphasized the critical importance of the
agency's relationship with the legislature. He knew there
would not always be agreement on policy issues, but stated
his commitment to making the process work.
1:39:40 PM
Commissioner Sullivan began with the first slide, "Who We
Are and What We Do":
· Article 8, Section 1 of the Alaska Constitution
provides that "it is the policy of the State to
encourage the settlement of its land and the
development of its resources by making them available
for maximum use consistent with the public interest."
· Article 8, Section 2 provides that the "legislature
shall provide for the utilization, development, and
conservation of all natural resources belonging to the
State, including land and waters, for the maximum
benefit of its people."
Commissioner Sullivan continued that the department's
mission was taken from the constitution: Develop, conserve,
and enhance natural resources for present and future
Alaskans. He pointed to a map of Alaska with different
colors showing federal, Native, and state lands. He
emphasized the enormity of the amount of land under state
control. He listed other important functions of DNR ("What
We Do"):
· DNR manages (1) the state's land - approximately 100
million acres of uplands, 60 million acres of
tidelands, shore lands, and submerged lands, and
40,000 miles of coastline - and (2) the state's vast
energy and natural resources
· State land use and the natural resources developed
from state land are the primary source of state
revenue
· DNR also manages state parklands; conducts wildland
fire suppression; and supports the agriculture and
timber industries in Alaska
· Another important function of DNR is obtaining and
providing the geologic, hydrologic, land records, and
other information needed to manage and utilize the
state's natural resources
Commissioner Sullivan turned to a slide with statistics
about "Employees and Budget":
· DNR currently employs about 1,100 Alaskans in full-
time and seasonal positions, with main offices in
Anchorage, Juneau, Fairbanks, and Palmer, and regional
offices throughout the state.
· Our FY11 operating budget is $152.5 million, which
includes funding for AGIA implementation
· Our FY12 operating budget request is $153.7 million,
made up of:
o 48% Unrestricted General Fund
o 17% Designated General Fund
o 23% Other funds including industry receipts
o 12% Federal
Commissioner Sullivan noted that the FY 12 budget was
approximately $1 million greater than the year before.
Commissioner Sullivan directed attention to a slide
depicting an organizational chart of the agencies in DNR.
1:42:54 PM
Representative Guttenberg noted that the Alaska Gasline
Inducement Act (AGIA) Coordinator's Office position was
vacant on the flow chart and asked whether the department
was interviewing applicants in order to fill it.
Commissioner Sullivan replied that the department was
actively looking and wanted an energetic, knowledgeable,
and qualified candidate for the position.
Commissioner Sullivan reported his intent to give an
overview of each division within the department along with
a sense of each division's mission.
Division of Oil and Gas:
· Kevin Banks, Director
· 105 full and part time budgeted positions
· 10.82% of DNR's FY12 Operating Budget Request
· $16,624.5 budget request (all sources)
Commissioner Sullivan detailed that the oil and gas
division was one of the most important, and that it held
annual oil and gas lease sales, managed exploration and
development activities on state lands, conducted resource
evaluations, and promoted Alaska oil and gas. In addition,
the division assured appropriate oversight and maintenance
of oil and gas infrastructure and facilities.
Division of Mining, Land and Water
Commissioner Sullivan described the divisino as the "heart
and soul" of DNR.
· Wyn Menefee, Acting Director
· 207 full and part time budgeted positions
· 15.27% of DNR's FY12 Operating Budget Request
· $23,481.2 budget request (all sources)
Commissioner Sullivan detailed that the work done by the
division touched on all aspects of DNR's work, from
acquiring land from the federal government and for public
purposes to defending state ownership interests, including
navigable waters and easements. The division also
authorized commercial and recreational use of state lands,
sold state land to individuals, and managed water sources
and water rights.
1:45:26 PM
Co-Chair Stoltze asked for details regarding the management
of state park lands. He queried the acreage of park lands
and the definition of "park lands." He wanted a
philosophical discussion in relation to the divisions.
Commissioner Sullivan replied that the goal was to make
Alaska's parks the pride of all Alaskans, which he did not
think was currently the case. He offered to provide numbers
related to the amount of park lands, noting that Alaska had
more park lands than any other state in the country.
Co-Chair Stoltze referenced historical aversion to
designated use of parks and described a desire for a
multiple-use approach.
Representative Doogan asked what the empty boxes on the
organizational chart represented. Commissioner Sullivan
replied that the white boxes designated subdivisions within
each division and did not represent position vacancies.
1:49:31 PM
Representative Wilson queried potential lawsuits related to
claiming navigable waters on Bureau of Land Management
(BLM) land. She noted constituent concerns in the Mosquito
Fork area. Commissioner Sullivan offered to get more
information. He added that the issue had been carefully
considered when he worked as the Attorney General for the
Department of Law (DOL). He referred to a legal strategy
related to navigable waters, including a petition to the
U.S. Secretary of the Interior to rescind regulations that
DOL felt violated the Alaska National Interest Lands
Conservation Act (ANILCA) with regard to U.S. National Park
Service regulations and the authority by which actions were
conducted on Alaska's navigable waters. He assured the
committee that DNR would continue to be vigilant about the
issue.
Representative Wilson asked whether the funds would come
out of the DNR budget if the state had to go to court.
Commissioner Sullivan replied that the funding would most
likely be a combination of both DOL and DNR funding for
DOL.
Vice-chair Fairclough hoped navigable waters referred to
larger waterways. She commented on Co-Chair Stoltze's
reference to the accessibility of parks specific to
District 17, where the park land was in a valley with the
water draining towards the valley. Under past leadership,
residents who had developed property above the park land
were not allowed access or improvements. The park had been
non-receptive to the municipalities.
Commissioner Sullivan commented that he had been listening
to Alaskans regarding DNR issues, and that the subject of
access had come up frequently.
Vice-chair Fairclough wanted discussion about more access
to parks, including where horses could be taken.
1:53:52 PM
Representative Costello referred to a DNR increment to fill
five positions in the Division of Mining, Land and Water to
address the 2,376 permit backlog. She referred to
discussion with constituents regarding the length of time
permits were taking. She asked whether the new positions
would be able to take care of the backlog and queried the
timeline. Commissioner Sullivan acknowledged the issue of
"permitting efficiencies," including both timeliness and
certainty in terms of permitting decisions. He stated that
he had asked his team to look at issues such as overlap and
redundancy related to federal and state permitting,
regulatory issues that did not make sense, as well as
statutory mandates that might need to be reviewed. He
referred to an experienced deputy who was leading the
effort. He believed the budget increment requested would be
helpful, but he also believed the problem was not only
about personnel. He thought the department should take a
step back and determine whether the process was working as
well as it could, including whether information technology
(IT) upgrades were needed.
Representative Guttenberg referred to a bill that he was
sponsoring that would address the management of parks and
provide opportunity to discuss the philosophy of park
management. He referred to China's control of its rare
earth elements and queried potential initiatives from the
administration to develop and mine Alaska's rare earth
elements. Commissioner Sullivan replied in the affirmative.
He noted that the governor had highlighted the issue in his
State of the State address. He referred to an increment
request and noted that his team was working intently on the
issue. He stated that his philosophy was to go "on offense"
related to resource development, and he wanted Alaska to be
in the forefront of the rare earth elements issue.
1:59:37 PM
Vice-chair Fairclough referred to a story of a family that
had relocated out of Alaska due to permitting problems. She
asked whether the permitting process could be streamlined
when federal land was involved. Commissioner Sullivan
replied that he wanted to review specific examples of
experiences in Alaska. He noted that DNR was looking into
state and federal overlap. He thought improvements should
be made in situations where the federal government and the
state required identical permitting.
Vice-chair Fairclough asked whether state property had
different regulations than federal property. Commissioner
Sullivan replied that he would get the answer.
Division of Forestry
· Chris Maisch, Director
· 280 full and part time budgeted positions (does not
include the hundreds of fire season crews)
· 25.38% of DNR's FY12 Operating Budget Request
· $38,988.6 budget request (all sources)
Commissioner Sullivan detailed that the division comprised
a large part of the DNR budget and that the division's two
key functions were fire-protection services and managing
three state forests. He referred to successes in supporting
timber harvesting and processing, including the wood-pellet
mill in Fairbanks, harvesting in Tok, and a bio-mass
facility that had recently opened in the state.
Co-Chair Thomas queried the severity of forest fires in the
state during the prior year. Commissioner Sullivan offered
to get more information. He noted that the increment
requested in the supplemental had been high and that there
had been extensive activity in the Interior.
Representative Guttenberg commended the work of the fire
crews.
2:04:46 PM
Representative Wilson noted the status of the Fairbanks
North Star Borough relative to the Environmental Protection
Agency (EPA) and queried air-quality problems. Commissioner
Sullivan responded that Alaska had a strong and cooperative
relationship with the federal government related to
firefighting. He acknowledged the importance of the
partnership.
Representative Guttenberg recalled an initiative related to
health issues because of smoke created by fires. The
measure would change the status of a fire from "let burn"
to "attack" to assure the issue was addressed. He asked for
more information. Commissioner Sullivan asked whether the
issue was that fires closer to communities should have
statutory priority.
Representative Guttenberg clarified that the issue related
to the health effects of the smoke.
2:07:39 PM
Division of Geological and Geophysical Surveys
· Bob Swenson, Director
· 48 full and part time budgeted positions
· 5.85% of DNR's FY12 Operating Budget Request
· $8,983.2 budget request (all sources)
Commissioner Sullivan detailed that the division had done
outstanding work mapping the location of minerals and
getting them online. He noted that the information was
important for industry when working on investment issues in
the state.
Division of Coastal and Ocean Management
· Randy Bates, Director
· 33 full time budgeted positions
· 3.05% of DNR's FY12 Operating Budget Request
· $4.691.7 budget request (all sources)
Commissioner Sullivan detailed that the division
administered the Alaska Coastal Management Program and
oversaw Alaska's participation in the Coastal Impact
Assistance Program, which distributed funds to outer
continental shelf (OCS) states to help mitigate impacts of
OCS oil and gas activities.
Representative Neuman referenced proposals put together by
division director Randy Bates to make the coastal
management division more efficient and more responsive to
communities. He asked whether the proposals would be
implemented and referred to frustrations expressed in
communities. Commissioner Sullivan responded that the issue
of coastal zone management had been contentious during the
previous year. He had not seen the proposals by Mr. Bates,
but he stressed that the administration wanted to extend
the program. He referred to discussion in Barrow about the
program.
2:12:14 PM
Division of Agriculture
· Franci Havemeister, Director
· 46 full and part time budgeted positions
· 4.74% of DNR's FY12 Operating Budget Request
· $7,282.4 budget request (all sources)
Co-Chair Stoltze referenced bond packages and a greenhouse
item and stressed the importance of agricultural studies in
Alaska.
Division of Parks and Outdoor Recreation
· Ben Ellis, Director
· 185 full and part time budgeted positions
· 10.09% of DNR's FY12 Operating Budget Request
· $15,495.5 budget request (all sources)
Commissioner Sullivan pointed out that in FY 10, Alaska
state parks were visited by 5.39 million people, 72 percent
of whom were Alaska residents.
Division of Support Services
· Jean Davis, Director
· 130 full and part time budgeted positions
· 8.48% of DNR's FY12 Operating Budget Request
· $12,113.4 budget request (all sources)
Commissioner Sullivan informed the committee that there
were offices in the department as well.
State Pipeline Coordinator's Office
· Mike Thompson, State Pipeline Coordinator
· 31 full and part time budgeted positions
· 5.07% of DNR's FY12 Operating Budget Request
· $7,789.2 budget request (all sources)
Commissioner Sullivan commended work done by the office on
the recent pipeline shutdown and restart and referenced
"troubling" EPA issues.
Office of Project Management and Permitting
· Tom Crafford, Director
· 12 full time budgeted positions
· 2.75% of DNR's FY12 Operating Budget Request
· $4,223.9 budget request (all sources)
Commissioner Sullivan detailed that the office coordinated
the permitting for large projects.
Office of the AGIA Coordinator's Office
Commissioner Sullivan reviewed the Office of the AGIA
Coordinator's Office, which focused on the permitting for
the Alaska natural gas pipeline under AGIA:
· 9 full and part time budgeted positions
· 2.32% of DNR's FY12 Operating Budget Request
· $3,563.3 budget request (all sources)
Office of Mental Health Trust Lands
· Greg Jones, Executive Director
· 16 full and part time budgeted positions
· 1.88% of DNR's FY12 Operating Budget Request
· $2,892.7 budget request (all sources)
Commissioner Sullivan noted that the office focuses on
management of the real estate assets of the Mental Health
Land Trust.
2:15:47 PM
Co-Chair Thomas asked whether DNR also managed for timber
sales. Commissioner Sullivan believed that it did. Co-Chair
Thomas referred to letters he had received requesting more
timber sales in smaller communities.
Office of the Commissioner:
· Dan Sullivan, Commissioner
· 9 full time budgeted positions
· 0.79% of DNR's FY12 Operating Budget Request
· $1,221.1 budget request (all sources)
Commissioner Sullivan referred to the Boards and
Commissions associated with DNR:
· Natural Resource Conservation & Development Board
(NRCDB)
· Citizen's Advisory Commission on Federal Areas (CACFA)
· Board of Agriculture and Conservation
· Board of Forestry
· Alaska Historical Commission
· Alaska Royalty Oil and Gas Development Board
· Seismic Hazards Safety Commission
· Outdoor Recreation Trails Advisory Board
Representative Neuman stated his opinion that Alaska was a
resource extraction state rather than a resource
development state. He wondered what direction the
departments were being given to use Alaska's resources to
create jobs for Alaskans. He felt a great deal of money was
used to transport resources out of the state so that others
could make money from developing them.
Commissioner Sullivan summarized what he had heard, seen,
and learned during his "engagement tour" of the state. He
thought there were challenges, but believed that the
opportunities were greater. He emphasized the importance of
the issue of partnership. He listed a summary of the main
challenges he had garnered after dozens of meeting with
people throughout the state:
· TAPS throughput
· Aging infrastructure
· High energy costs throughout the state
· Gas pipeline
· Cook Inlet energy
· Permitting efficiencies
Commissioner Sullivan provided data regarding the Trans-
Alaska Pipeline System (TAPS) throughput because he thought
the issue was enormous and needed to be addressed:
· In 2006, output was approximately 840,000 barrels per
day
· In 2007, output was approximately 734,000 barrels per
day
· In 2009, output was approximately 640,000 barrels per
day
· Overall loss: 200,000 barrels per day
Commissioner Sullivan emphasized that the loss summed up
what the state was facing. He pointed to a list of specific
DNR-related challenges:
· Permitting efficiencies & workload
· Federal land conveyance
· Litigation -defending permitting process
· Forest management
· Unlocking resources
· Publicizing resources
· Management challenges
· Retention / Recruitment
Commissioner Sullivan thought the issues could be addressed
at the subcommittee level because most of them were already
addressed by elements within the governor's budget request.
Vice-chair Fairclough noted that there were quite a few
positions in the department that have been unfunded in the
past, but that DNR was now recommending funding for
existing positions. She thought money had been moved from
the positions by the department and asked where the funding
had gone. Commissioner Sullivan did not know the answer. He
believed some of the funding was federal. He pointed out
that there were about 128 vacant positions; part of what
was requested in the governor's budget was funding to fill
the positions. He stressed the importance of filling the
positions, particularly those related to permitting.
2:22:17 PM
Vice-chair Fairclough reiterated her desire to know where
the funding for the positions had gone. She hoped the
subcommittee would look closely at the positions that were
federally funded. She thought money had been removed from
key positions for other reasons.
Co-Chair Thomas pointed out that the department had been
asked whether increments received the year prior had been
spent to hire the positions the legislature had given the
department authority to hire.
JEANMARIE DAVIS, DIRECTOR, DIVISION OF SUPPORT SERVICES,
DEPARTMENT OF NATURAL RESOURCES, explained that the
department had received some additional increments the
previous year involving positions, particularly within the
Division of Agriculture. She referred to funding for a
plant health and phytosanitary certification position and
reported that the department was conducting interviews and
expected the position to be hired by February 4. Other
funding for the Division of Agriculture related to the Farm
to School Program; a development specialist had been hired
and had started December 28 and had held the first Farm to
School Summit. She added that a second position would be
filled for the program.
Ms. Davis continued that there had been some additional
funding in the area of oil and gas for arbitration related
to oil and gas royalty issues; DNR was involved in an
arbitration process with BP and ConocoPhillips.
Ms. Davis added that funding had also been received for the
Office of Project Management and Permitting for work on OCS
planning and the environmental impact statement (EIS)
process. A state team had been developed that had been
tracking OCS efforts, particularly Shell's offshore
exploration and drilling in the Beaufort Sea.
Representative Costello asked for comment regarding how
appropriations to the department did not necessarily match
its division structure. She wondered how the budget could
be clearer so that the public could understand it. Ms.
Davis agreed that the budget could be clearer and that the
department was restructuring it.
2:27:01 PM
Representative Doogan calculated that DNR was requesting
approximately $1.2 million more for FY 12 than it had
received for FY 11. He wondered whether the request was
concentrated in any particular area or whether it was
spread throughout the budget. Commissioner Sullivan
believed the increased amount was spread out, though there
was some concentration related to permitting efficiencies,
both for filling positions and capital requests related to
permitting IT needs.
Ms. Davis added that the difference was between the FY 11
management-plan numbers (the amount DNR had to operate with
for FY 11) and the amount requested for FY 12. She noted
that the budget was structured to have an FY 12 adjusted
base. In the adjusted base, each of the items included in
the FY 11 management plan that were one-time appropriations
or multi-year appropriations got backed out of the number.
The department then started from an adjusted base number
going forward; that number calculated by the Legislative
Finance Division was about $7.2 million less than the FY 12
request. The department actually had about $7.2 million of
money throughout the budget, some of it to continue one-
time items that the legislature had funded the prior year,
and some for the new issues.
Representative Doogan asked whether the $1.2 million amount
was in one segment of the budget or spread throughout. Ms.
Davis responded that the bulk of the amount was in the
Mining, Land and Water Division, with some amounts in other
divisions. She emphasized the difficulty of explaining
because of the way the numbers were compared.
Representative Doogan noted that people from the
departments often had a difficult time explaining exactly
where money was going. He wanted to be able to make
comparisons.
Representative Guttenberg pointed out that the Legislative
Finance Division had gone through the budget book and
highlighted questioned areas. He wanted the questions to be
answered in the Finance Committee subcommittee.
Representative Dan Saddler queried funding sources for
increased staff to meet permitting needs. Commissioner
Sullivan replied that DNR was requesting funds for the
Division of Mining, Land and Water, plus additional
requests for litigation issues (approximately $0.5 million
between DNR and DOL) related to permitting. He referred to
on-going litigation related to the Pebble Beach case and
the broader issue of authority being addressed in
litigation between environmental groups and the state.
2:32:56 PM
Vice-chair Fairclough returned to the issue of position
vacancies. She relayed that some years ago, there had been
a re-organization to central hiring. She wondered whether
the policy had created barriers to hiring qualified people.
Commissioner Sullivan did not know the answer related to
the centralized hiring process. He believed recruitment and
retention were important issues and had to be addressed
aggressively. He referred to past experience.
Vice-chair Fairclough noted that since centralized hiring
had been implemented, departments had expressed concerns
regarding lag time, which could be substantial enough that
qualified applicants found other employment while they were
waiting to hear back. She questioned whether the approach
saved money. She suggested that the subcommittee review the
issue.
Co-Chair Thomas requested a summary of the amounts budgeted
and how the funds would be spent. He hoped that other
departments would provide similar summaries.
Commissioner Sullivan emphasized that Alaska's
opportunities, especially in resource development, far
outweighed the challenges. He directed attention to
"Opportunities - Alaska as a Storehouse":
· North Slope: world class energy basin
· Massive mineral deposits
· Vast amounts of renewable resources
· New players looking to unlock our resource potential
· Ongoing innovation
Commissioner Sullivan stated that the North Slope
hydrocarbon basin was still a world-class basin by any
measure, especially when including the OCS areas. He
pointed to a list of the state's specific resources, noting
that if Alaska were a country, it would rate in the top ten
in the world:
· Oil: 43 billion barrels of undiscovered, technically
recovery reserves; this does not include massive
quantities of unconventionals (shale, heavy oil, etc.)
· Gas: 236 trillion cubic feet of undiscovered,
technically recoverable reserves
· Coal: 17% of the world's coal resources; 2nd most in
the world
· Copper: 6% of the world's copper resources; 3rd most
in the world
· Lead: 2% of the world's lead resources; 6th most in
the world
· Gold: 3% of the world's gold resources; 7th most in
the world
· Zinc: 3% of the world's zinc resources; 8th most in
the world
· Silver: 2% of the world's silver resources; 8th most
in the world
· Rare earth elements: Alaska has over 150 occurrences,
and one of N. America's most significant deposits
· Timber: Alaska has 17% of the nation's forestland
2:38:58 PM
Commissioner Sullivan stressed the importance of
partnership:
· Stakeholders eager to form alliances
· Partnership moves projects forward
· Missing one key partner…
Commissioner Sullivan stated that the federal government
was the key missing partner. He listed the results of
federal obstruction:
· Projects delayed or derailed
· Opportunities foreclosed
· Jobs lost and investment climate chilled
· But we will redouble cooperation efforts
Commissioner Sullivan referred to examples of federal
obstruction. He thought developing Alaskan resources would
be good for the country as well as the state. He questioned
whether the federal government was abiding by law in
certain circumstances, including ANILCA, the organic act
establishing the National Petroleum Reserve-Alaska (NPR-A),
and the OCS Lands Act. He argued that the federal laws
listed discussed the primary importance of developing
resources in Alaska or not continuing to designate
wilderness areas.
Commissioner Sullivan stated that DNR would increase
efforts to get cooperation with the federal government. He
thought all Alaskans could work together to get the
partnership. He referred to an op-ed article by Tara
Sweeney from the Arctic Slope Regional Corporation (ASRC),
which he felt articulated the frustrations many Alaskans
felt.
2:42:14 PM
Commissioner Sullivan concluded with a broader vision and
how some issues of sequencing and opportunity over the next
ten years could mean a bright future for Alaska ("State at
a Crossroads: Bright Future"):
· TAPS decline arrested
· OCS's elephant fields placed on-line
· ANWR and NPR-A open for development
· Innovation leads to unconventional and heavy oil
production
· North Slope gas brought on-line
· Mining production throughout the state
· Cook Inlet resurgence
· Renewable resources meet state's growing energy needs
· Rural Alaska: jobs up & energy costs down
· New markets for our resources
· Value added industries
Commissioner Sullivan stressed that good policies could
create the bright future for both urban and rural Alaskans.
However, there could be an alternate future which he hoped
could be avoided through partnership ("State at a
Crossroads: Bleak Future"):
· TAPS throughput decline accelerates
· Aging infrastructure failures hamper operations
· Major energy companies leave the state
· No gas pipeline
· Existing mines exhausted and no new mines brought on-
line
· Crushing energy costs
· Importation of LNG to meet Railbelt energy needs
· Federal overreach transforms state into a national
park
· State population declines
2:44:05 PM
Representative Edgmon addressed the issue of partnerships
and queried ways to work with federal government, including
educating federal agencies about Alaskan experience.
Commissioner Sullivan agreed that litigation was not the
preferred way to deal with the federal government. The
agency had been exploring other ways. He provided the
example of establishing an endangered species taskforce
among state attorneys general. He noted frustrations in
working with the federal government on Endangered Species
Act (ESA) issues, including a lack of opportunity for
input. For example, the state had had only 24-hour notice
regarding the critical habitat designation for the polar
bear. He reported that he had gone to federal officials and
that he had not been satisfied with the results. For
example, he met with a federal official regarding the Wild
Lands designation in attempt to establish a partnership,
but came away without real results for Alaska.
2:48:11 PM
AT EASE
2:56:04 PM
RECONVENED
^BUDGET OVERVIEW: DEPARTMENT OF ADMINISTRATION
2:56:04 PM
BECKY HULTBERG, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
provided an overview of the department's budget. She
explained that she had been commissioner for three weeks,
although she was familiar with the functioning of state
government. She described the Department of Administration
(DOA) as an agency that served as a support function for
state government as well as provided direct services to
Alaskans.
Commissioner Hultberg indicated a handout to the committee,
"DOA Challenges and Initiatives FY2011/FY2012" (copy on
file), which detailed information about the department by
division. She summarized that overall DOA had nearly 1,100
employees and an overall budget of around $308 million.
Co-Chair Stoltze requested that future handouts to the
Finance Committee be presented on department letterhead.
Public Defender Agency
Commissioner Hultberg began her review with the Public
Defender agency. The core services of the agency were to
(1) communicate legal rights, legal process, charges, and
evidence; (2) investigate allegations and viable case
strategies; and (3) represent clients in court proceedings.
She added that the public defender agency maintained 13
offices statewide; in FY 10, it experienced significant
statewide caseload growth of approximately 10 percent
overall, with significant growth in the Northern and
Northwest areas.
Commissioner Hultberg continued that the number of conflict
cases had climbed steadily following the implementation of
the agency's paralegal program; conflict cases must go to
the Office of Public Advocacy. In FY 10, the conflict cases
comprised just over 15 percent of the caseload. In order to
reduce the number of conflict cases, one of the major
initiatives the public defender agency undertook was
defining and implementing a new conflict procedure that
would hopefully reduce the number of cases.
Commissioner Hultberg detailed that the paralegal program
has been successful and had allowed the agency to complete
lower-level tasks using paralegals at a lower cost,
resulting in absorbing more caseload.
Office of Public Advocacy
Commissioner Hultberg reported that the Office of Public
Advocacy (OPA) provided legal, guardian ad litem, and
public guardian representation. In addition, OPA
represented individuals in conflict cases from the public
defender agency. Caseload growth has been an issue for OPA,
especially conflict cases. She stated that caseload growth
in mandatory case assignments increased by 20 percent in FY
10 and that criminal cases increased by 35 percent.
Commissioner Hultberg continued that the number of cases
open in January 2011 was 21 percent higher than in January
2010. Public guardian functions had increased as well.
Commissioner Hultberg outlined initiatives taken by OPA:
· The Y-K Delta Court Appointed Special Advocate (CASA)
program was established and the first CASA class
graduated in Bethel in November, 2010.
· In October 2010, the first ever biennial joint
Department of Law, Department of Administration
(Office of Public Advocacy & Public Defender Agency)
and Judiciary Conference was held.
Office of Administrative Hearings
Commissioner Hultberg described the core services of the
Office of Administrative Hearings (OAH) as conducting
hearings and alternative dispute resolution processes to
resolve administrative cases (appeals and original
actions). She noted that variable caseloads were the most
significant challenge for OAH because the issue has caused
difficulty in the collection of interagency receipts.
Commissioner Hultberg reported that OAH has taken
initiative in alternative dispute resolution. Mediation in
particular has been a successful tactic. She added that OAH
has been a "victim of its own success" in that the
situation has contributed to the difficulty in collection
of interagency receipts because the cases have been
resolved more efficiently and effectively.
Alaska Public Offices Commission (APOC)
Commissioner Hultberg highlighted a significant challenge
for APOC, the Insight project to allow electronic filing
for disclosure reports. She maintained that the project had
been difficult to implement. The lobbyist model was
complete; lobbyists and their employees could file online.
However, the campaign and public official financial
disclosure modules still needed to be developed. The
problem was caused by cost overruns and missed deadlines in
the original procurement.
3:02:14 PM
Co-Chair Thomas communicated concerns about "rude"
responses by the agency to requests from legislative staff
for a summary report of regulations. Commissioner Hultberg
reported similar concerns and referred to a meeting in
December 2010 where a decision was made not to allow for a
public workshop. There was another meeting in January 2011
and the commission decided to move forward with a public
workshop. She stated that there would be more information
available about the regulatory process.
Co-Chair Stoltze referred to similar inquiries.
Alaska Oil and Gas Conservation Commission (AOGCC)
Commissioner Hultberg directed attention to the description
of the oil and gas commission's responsibilities in the
handout. She highlighted that in light of the recent
disaster in the Gulf of Mexico, AOGCC was conducting a
thorough review to identify any necessary changes or
additions to their regulations to improve oversight
capabilities and ensure safety in Alaska. One result was
recognition of the need to hire an additional petroleum
engineer and a petroleum inspector.
Enterprise Technology Services (ETS)
Commissioner Hultberg highlighted challenges for ETS. The
lease expires on the Anchorage Data Center facility at the
end of 2011 and alternate space had not yet been
identified. The department needed to deal with the physical
plant, and at the same time technology was changing; there
was opportunity to virtualize a significant portion of
servers.
Commissioner Hultberg continued that another challenge for
ETS was addressing deferred maintenance needs for the State
of Alaska Telecommunications System (microwave) (SATS). She
detailed that the department was currently in year two of a
five-year plan to update the system, at the cost of $3
million each year.
3:05:04 PM
Representative Guttenberg thought the department's
statement (in the handout) that bandwidth need increased 10
percent each year minimized the actual demand for increased
bandwidth. He stated that the need for bandwidth technology
was exponential. He pointed out that the U.S. was lagging
behind the rest of the industrial world and Alaska was
lagging considerably behind that. He referred to discussion
with Commissioner Bell (Department of Commerce, Community
and Economic Development) and urged DOA to work with her to
expand capabilities across the state. He emphasized that
the ability of small businesses to function in parts of the
state that were not on the main lines was a major problem.
He noted that the state was located close to 90 percent of
the industrial world, which had the potential of making
Alaska a good place to do business. Commissioner Hultberg
responded that DOA was working with DCCED to deal with
bandwidth and was working on regulations as well. She
agreed that all areas of the state should have access to
high-speed connections.
Division of Retirement and Benefits
Commissioner Hultberg highlighted significant challenges
for the Division of Retirement and Benefits. She emphasized
the need to improve the service center and remediate or
replace inadequate or obsolete data-processing systems. She
referred to efforts to address the problem, including:
· Core retirement system repair and stabilization,
· Core system security improvements,
· Core system back-up and disaster recovery capability,
· Peripheral system replacement or elimination, and
· Document imaging conversion from film to digital.
Commissioner Hultberg referred to the microfilm library
that was being converted to digital.
Representative Guttenberg stated that he had heard from a
significant number of retirees who were concerned that the
state was only bringing active employee plans into allowing
coverage of dependents up to age 26. He asked why the state
did not bring the retirees as well, as the cost would not
be significant. Commissioner Hultberg responded that the
federal legislation required that active employees be
brought in and did not address retired employees. The
department's plan for retirees had not changed; it was
adding dependants under 26 for active employees.
Representative Guttenberg queried the economic analysis
used when deciding to leave retirees out. Commissioner
Hultberg offered to get back with an answer.
Commissioner Hultberg continued with the Division of
Retirement and Benefits, opining that the increased cost of
healthcare for both active and retired members was a
significant burden on the state. She believed that the
unfunded liability was a significant concern, as well as
the coverage of dependants up to age 26.
3:09:29 PM
Co-Chair Thomas asked how the quality of Alaska's
healthcare ranked compared to other states in the country.
Commissioner Hultberg offered to get the information.
Division of Risk Management
Commissioner Hultberg described the core services of the
division as claims processing, litigation management,
contract review, insurance administration, and consulting.
She noted the challenge of new reporting requirements to
the Center for Medicare and Medicaid Services (CMS).
Commissioner Hultberg stated that the department was
excited about an initiative called the Return to Work
Program; Risk Management has been working with the Division
of Personnel and the Division of Retirement and Benefits on
the program.
Vice-chair Fairclough returned to the subject of updating
data processing and asked whether the administration was
reviewing the state's procurement system and process.
Commissioner Hultberg responded that she did not know but
offered to get more information.
Commissioner Hultberg returned to the Return to Work
Program and detailed that there was only a 50 percent
chance that an injured employee would return to work after
a six-month absence; after six months, there was less
chance that the worker would return. The program would try
to get injured workers back to work quickly.
Representative Neuman asked whether the program was for all
employees in Alaska. Commissioner Hultberg responded that
the program was for state employees.
Representative Neuman queried the process for retraining
older people who have been injured. He questioned the
expense of retraining older employees. Commissioner
Hultberg responded that the program was built around the
fact that an injured worker was being paid to remain home,
which was not optimal for the state or for the long-term
career prospects of the worker. She offered to get more
information.
3:14:06 PM
Vice-chair Fairclough asked whether there would be an
overview of how the changes in the federal healthcare law
would affect Alaska. She referred to high Medicaid costs
that could increase because of new reporting requirements
to the federal government connected with workmen's
compensation claims and torte settlements.
Representative Guttenberg questioned different reporting
requirements in different municipalities in the state
related to Medicaid and Medicare. Commissioner Hultberg
offered to get more information. She noted that the item
listed was specific to workers compensation and other
claims, and was fairly narrow.
Division of Motor Vehicles (DMV)
Commissioner Hultberg noted that one significant initiative
by the DMV was a program initiated in January to enable
people to renew licenses and identification cards online.
The service would especially benefit individuals that did
not have a DMV office in their community.
Representative Costello questioned the ability to purchase
or renew fishing licenses through the DMV. Commissioner
Hultberg responded that the department was willing to look
into the idea.
Co-Chair Thomas thought the idea could create income for
the state.
Co-Chair Stoltze commented that the DMV ran better when
employees were excited to be there. He referred to past
division directors. He thought the DMV was the most
improved aspect of visible local government and thought it
was a good template for other divisions.
Vice-chair Fairclough returned to the question of fishing
license renewal as well as the ability to renew concealed
weapon permits and marriage licenses. She commented that
people needed a centralized place to renew licenses, access
state services, or at least get the forms to fill out and
submit. Commissioner Hultberg stated that the department
would take a serious look at the issue.
3:19:39 PM
Co-Chair Stoltze commented that it was difficult to wait in
line for government services and requested that the
department prioritize the needs of the customer.
Division of Finance
Commissioner Hultberg noted that the services of the
division affected mainly state functioning. The core
services include accounting, payroll processing, and
centralized travel. She pointed to the division initiative
of automation of travel approvals and reimbursement. The
initiative was in the final stages and would further
improve efficiency related to state travel.
Commissioner Hultberg continued that the time and
attendance project (Alaska Statewide System for Employee
Time, or ASSET) would impact most employees and was moving
from paper to online entry or time clocks to streamline the
practice throughout the system.
Commissioner Hultberg described the Statewide
Administrative Systems Replacement project to replace
current systems (ASSET was part of this larger process).
She stated that the department was using Best Value
methodology from Arizona State University to procure a
system. Implementation efforts were expected to begin in
July of 2011 and would take a number of years.
Division of Personnel
Commissioner Hultberg explained that the division performed
many of the human-resources functions of state government.
She highlighted the division's initiative related to the
classification system. The current job classification
system would be replaced with a point-factor method, which
would reduce subjectivity in the classifications. She noted
that the ASSET project in the finance division was a key
partner in the initiative.
Alaska Public Broadcasting
Commissioner Hultberg noted that Alaska Public Broadcasting
was administratively housed in DOA. She highlighted
workforce challenges, including new standards for emergency
alerts and the need to control costs and raise revenue to
sustain current levels of service.
3:23:39 PM
Commissioner Hultberg pointed out that the FY 11 increments
were not summarized on one piece of paper, but stated that
she would get the information to the committee.
Co-Chair Thomas commented that he had received complaints
related to Alaska Public Broadcasting about the poor
response time when the system stopped functioning in rural
Alaska. He noted that he supported public radio and had
helped start KHNS in Haines.
Representative Doogan requested totals for the current
year's operating budget and total increments requested in
next year's budget. Commissioner Hultberg replied that DOA
was requesting $308 million in operating funds. The
increment requested for the upcoming fiscal year was $1.6
million; the majority was federal or other funds and there
was a small amount of general funds.
ADJOURNMENT
The meeting was adjourned at 3:26 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOA Budget Overview FY2011-FY2012.doc |
HFIN 1/24/2011 1:30:00 PM |
|
| HFC DNR FY12 Overview for 1-24-2011 (2).pdf |
HFIN 1/24/2011 1:30:00 PM |