Legislature(2001 - 2002)

12/05/2001 01:20 PM Senate BUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  ALASKA STATE LEGISLATURE                                                                                      
                      JOINT COMMITTEE                                                                                           
                LEGISLATIVE BUDGET AND AUDIT                                                                                    
                      December 5, 2001                                                                                          
                         1:20 P.M.                                                                                              
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gene Therriault, Chair                                                                                                  
Senator Randy Phillips                                                                                                          
Senator Gary Wilken (teleconferenced) (alternate)                                                                               
                                                                                                                                
Representative Hugh Fate, Vice Chair                                                                                            
Representative John Harris                                                                                                      
Representative Reggie Joule (teleconferenced)                                                                                   
Representative Ken Lancaster (teleconferenced)                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Dave Donley                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Jerry Ward                                                                                                              
                                                                                                                                
Representative John Davies                                                                                                      
Representative Eldon Mulder                                                                                                     
Representative Bill Williams (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
     APPROVAL OF COMMITTEE MINUTES                                                                                              
                    rd                                                                                                          
          October 23, 2001                                                                                                      
                                                                                                                                
     REVISED PROGRAMS (RPLs)                                                                                                    
          03-02-0613                                                                                                            
                                                                                                                                
     EXECUTIVE SESSION                                                                                                          
                                                                                                                                
     AUDIT REPORTS                                                                                                              
          Release of Preliminary Audits for Agency Response                                                                     
          Release of Final Audits to Public                                                                                     
                                                                                                                                
     OTHER COMMITTEE BUSINESS                                                                                                   
          Discussion with Commissioner Flanagan                                                                                 
               Department of Labor & Workforce Development                                                                      
          School Cost Study                                                                                                     
          Presentation by Adjutant General Phillip Oates                                                                        
               Executive Summary on Anti-Terrorism                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
HEATHER BRAKES, Legislative Assistant to                                                                                        
     Senator Gene Therriault                                                                                                    
Alaska State Legislature                                                                                                        
Capitol Building, Room 121                                                                                                      
Juneau, Alaska 99801-1182                                                                                                       
Telephone:     (907) 465-6590                                                                                                   
                                                                                                                                
DAVID TEAL, Director                                                                                                            
Legislative Finance Division                                                                                                    
Alaska State Legislature                                                                                                        
P.O. Box 113200                                                                                                                 
Juneau, Alaska  99811-3200                                                                                                      
Telephone:     (907) 465-3795                                                                                                   
POSITION STATEMENT:  Addressed the RPL                                                                                          
                                                                                                                                
PAT DAVIDSON, Director                                                                                                          
Legislative Audit Division                                                                                                      
Alaska State Legislature                                                                                                        
P.O. Box 113300                                                                                                                 
Juneau, Alaska  99811-3830                                                                                                      
Telephone:     (907) 465-3830                                                                                                   
POSITION STATEMENT:  Introduced the audit reports                                                                               
                                                                                                                                
ED SNIFFEN, Assistant Attorney General                                                                                          
Department of Law                                                                                                               
           th                                                                                                                   
1031 West 4 Avenue #200                                                                                                         
Anchorage, Alaska  99501                                                                                                        
Telephone:     (907) 269-5100                                                                                                   
POSITION STATEMENT:  Spoke to RPL #03-02-0163                                                                                   
                                                                                                                                
KATHRYN DAUGHETEE, Director                                                                                                     
(Testified via Teleconference)                                                                                                  
Department of Law                                                                                                               
Division of Administrative Services                                                                                             
P.O. Box 110300                                                                                                                 
Juneau, Alaska  99811-0300                                                                                                      
Telephone:     (907) 465-3673                                                                                                   
POSITION STATEMENT:  Spoke to RPL #03-02-0163                                                                                   
                                                                                                                                
MAJOR PHIL OATES, Adjutant General/Commissioner                                                                                 
Department of Military & Veterans Affairs                                                                                       
P.O. Box 5800                                                                                                                   
Fort Richardson, Alaska  99505-0800                                                                                             
Telephone:     (907) 428-6003                                                                                                   
POSITION STATEMENT:  Report on Terrorism                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE LBA 01-12, SIDE A                                                                                                        
                                                                                                                                
CHAIR  GENE   THERRIAULT  called   the  Joint  Committee   on                                                                   
Legislative Budget  and Audit meeting  to order at  1:20 P.M.                                                                   
on December  5, 2001.  Members  present at the call  to order                                                                   
were Senator Therriault and Representatives  Fate and Harris.                                                                   
Members present  on teleconferenced line were  Senator Wilken                                                                   
and Representatives Joule and Lancaster.                                                                                        
                                                                                                                                
APPROVAL OF THE MINUTES                                                                                                       
                                                                                                                                
CHAIR THERRIAULT  announced that the first order  of business                                                                   
                                                           rd                                                                   
would be  the approval of the  minutes from the  October 23,                                                                    
2001 Legislative Budget and Audit Committee meeting.                                                                            
                                                                                                                                
VICE CHAIR FATE  MOVED approval of the minutes  and asked for                                                                   
unanimous  consent.   There being NO  OBJECTION, the  minutes                                                                   
were approved and adopted.                                                                                                      
                                                                                                                                
REVISED PROGRAM RECEIPT                                                                                                       
                                                                                                                                
RPL Number:    03-02-0163                                                                                                     
                                                                                                                                
Department of Law                                                                                                               
Consumer Protection                                                                                                             
                                                                                                                                
$20,000 SDPR/Operating Budget                                                                                                 
                                                                                                                                
VICE CHAIR FATE MOVED that the  Committee approve RPL No. 03-                                                                   
02-0163.                                                                                                                        
                                                                                                                                
ED SNIFFEN,  Assistant Attorney  General, Department  of Law,                                                                   
explained that the Legislature  appropriated $180,000 dollars                                                                   
in statutory  designated program  receipts (SDPR) in  FY00 to                                                                   
enhance consumer protection efforts  within the Department of                                                                   
Law using  monies the State  receives from the  settlement of                                                                   
consumer protection  and antitrust cases.  Those  funds cover                                                                   
the budgeted  costs for an  attorney and half-time  paralegal                                                                   
position.   Typically,  the Department  does not have  enough                                                                   
funds  in their  budget to  pay for  significant direct  case                                                                   
costs for  pursuing specific cases.   In such  instances, the                                                                   
Department  often  seeks  supplemental   funding.    In  this                                                                   
situation, the  amount of funds  available to the State  as a                                                                   
result  of  settlements  and  awards  is  in  excess  of  the                                                                   
budgeted authority and should be used to fund the request.                                                                      
                                                                                                                                
Mr. Sniffen continued,  the request would be used  to pay for                                                                   
costs  associated  with  an  investigation  regarding  a  car                                                                   
rental  company  in  Anchorage.    The  project  is  document                                                                   
intensive.   The requested  funds  would be  used to pay  for                                                                   
photocopying costs  associated with the case.   He offered to                                                                   
answer questions of the Committee.                                                                                              
                                                                                                                                
CHAIR THERRIAULT asked the amount  of money currently resting                                                                   
in that account and the expected  additional monies that will                                                                   
be moving into that account.                                                                                                    
                                                                                                                                
KATHRYN  DAUGHETEE,  Director,   Division  of  Administrative                                                                   
Services, Department of Law, [Testified  via Teleconference],                                                                   
explained that  currently, the  collections in the  statutory                                                                   
designated  program receipts  (SDPR)  category  for the  Fair                                                                   
Business  Practices   Section  is  $343,000  dollars.     The                                                                   
Department of Law  has a number of anticipated  items between                                                                   
now and  the end  of the fiscal  year totaling  approximately                                                                   
$650,000 dollars.   That  number would  bring the total  FY02                                                                   
collections to about $1 million  dollars.  She added that the                                                                   
Department's spending authority is $182,800 dollars.                                                                            
                                                                                                                                
DAVID   TEAL,   Director,   Legislative   Finance   Division,                                                                   
commented that the Division's  cash receipts from prior cases                                                                   
exceed  authority to  spend those receipts.   The  Department                                                                   
would  like  to  spend  some of  the  "surplus"  receipts  on                                                                   
preparation for  another case.   The issue is  the authority,                                                                   
which  is  $182,800  dollars,  and the  amount  of  available                                                                   
funds.  The Committee will need  to determine if they want to                                                                   
grant that authority for spending the extra cash.                                                                               
                                                                                                                                
CHAIR THERRIAULT  understood that the money  coming into that                                                                   
account is not the same each year.   He acknowledged that the                                                                   
Legislature is  required to budget  for basic  functions each                                                                   
year.   He reiterated that there  are funds moving  into that                                                                   
account.  He  asked the level of discussion  which took place                                                                   
during the "building" of the current year's budget.                                                                             
                                                                                                                                
KATHRYN  DAUGHETEE   responded  that  when  the   amount  was                                                                   
originally appropriated,  the Department had been  looking at                                                                   
past years of collection.   They agreed that it  needed to be                                                                   
phased in.   She noted that  the $180,000 dollars  figure had                                                                   
been chosen  because it  would fund one  attorney and  a half                                                                   
time paralegal.   Ms. Daughetee  suggested that was  the best                                                                   
option  for getting  the  program off  to  an initial  start.                                                                   
Over time, it became more clear  to the Department that there                                                                   
are  many more  consumer  protection  issues,  many of  which                                                                   
focus on older  Alaskans, than could be covered  with current                                                                   
staff.                                                                                                                          
                                                                                                                                
Ms. Daughetee clarified that the  Department started with the                                                                   
$180,000 dollar  figure.   The program is  now in  its' third                                                                   
year of appropriation.   She added that the  largest increase                                                                   
for   FY02  results   largely   from  the   Bridgefelt   fire                                                                   
settlement.                                                                                                                     
                                                                                                                                
CHAIR THERRIAULT asked what number  had been submitted by the                                                                   
Governor last year.                                                                                                             
                                                                                                                                
KATHRYN DAUGHETEE  responded that  last year, the  Governor's                                                                   
budget was  for $180,000 dollars.   The Department  typically                                                                   
does not  request for unanticipated  costs within  the cases.                                                                   
Most often funding is sought through  the supplemental budget                                                                   
process.   She stressed that  the reason that  the Department                                                                   
of Law  was before  the Committee  at this  time was  because                                                                   
there  is an imminent  need within  the agency  and that  the                                                                   
Legislative  Budget and  Audit  Committee  has the  authority                                                                   
outside the supplemental process to appropriate SDPR.                                                                           
                                                                                                                                
CHAIR THERRIAULT  voiced caution  when using the  LBA process                                                                   
to "go  around" a decision  specifically made by  the Finance                                                                   
Committees.   He inquired  the timing  issue associated  with                                                                   
the request.                                                                                                                    
                                                                                                                                
ED SNIFFEN explained  that the investigation  requiring these                                                                   
funds was started in March 2001.   The case is now at a point                                                                   
where  the  document  photocopying   is  very  apparent.    A                                                                   
subpoena was issued  for that information.   The subpoena was                                                                   
disclosed by  the entity that  is being investigated.   There                                                                   
were hearings at  the end of November involving  the Superior                                                                   
Court.   The Court has ordered  that the requested  documents                                                                   
be turned  over to  the Department  of Law.   The  Department                                                                   
will have  fourteen days to  copy those documents  and return                                                                   
them back to that  company.  He added that  the fourteen days                                                                   
                          th                                                                                                    
will  expire  December  12,   2001.   The  funds  are  needed                                                                   
immediately if the case is to move forward.                                                                                     
                                                                                                                                
CHAIR THERRIAULT asked if there  was a reason why some of the                                                                   
budgeted $180,000  dollars was  not being  used to  cover the                                                                   
copying costs.   He thought that the funds  could be restored                                                                   
through the regular supplemental process.                                                                                       
                                                                                                                                
KATHRYN   DAUGHETEE  agreed   that  was   an  option.     The                                                                   
difficultly for the agency is  that those funds are earmarked                                                                   
to  pay  for  staff  salaries.   She  pointed  out  that  the                                                                   
supplemental  process  often gets  "down  to  the wire"  with                                                                   
funding,  which   could  prove  to  be  too   risky  for  the                                                                   
Department.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JOULE  asked how  important  it  was for  the                                                                   
Committee to come through and  provide the requested funding.                                                                   
                                                                                                                                
CHAIR  THERRIAULT  commented  that  he expected  if  the  LBA                                                                   
Committee  did  not take  action  on  the request,  that  the                                                                   
Department would  come through and expend the  funds from the                                                                   
current  budget.     Then  they   would  take  it   into  the                                                                   
supplemental  request process.   He understood  that  was not                                                                   
the Department's preferred way to handle the situation.                                                                         
                                                                                                                                
REPRESENTATIVE  HARRIS  discussed  that  current  funding  is                                                                   
designated for salaries.                                                                                                        
                                                                                                                                
KATHRYN DAUGHETEE acknowledged that was correct.                                                                                
                                                                                                                                
REPRESENTATIVE  HARRIS  asked  if the  budget  contained  any                                                                   
funds for other expenses associated with the program.                                                                           
                                                                                                                                
KATHRYN  DAUGHETEE explained  that  the  Department does  not                                                                   
have  any  contingency  funds  for direct  cases  within  the                                                                   
Department of  Law.   Most often, the  Department will  go to                                                                   
the client  agencies to see if  they have the funds  to cover                                                                   
the costs  or the  agency will  attempt to seek  supplemental                                                                   
funding.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  HARRIS questioned  how  the Department  would                                                                   
come  up  with  the  funds  if  the  LBA  Committee  did  not                                                                   
authorize the $20,000 dollars.                                                                                                  
                                                                                                                                
KATHRYN DAUGHETEE  advised that  the funds  would have  to be                                                                   
taken  from  another funding  source.    At that  point,  the                                                                   
Department  would   have  to  "hope"  that   the  funds  were                                                                   
refurbished through  the supplemental appropriation  process.                                                                   
She reiterated that  there are no other places  to charge the                                                                   
costs to.                                                                                                                       
                                                                                                                                
REPRESENTATIVE HARRIS  stated that "one way  or another", the                                                                   
Department would do the photocopying.                                                                                           
                                                                                                                                
KATHRYN DAUGHETEE  commented that she could  ask the Attorney                                                                   
General to "drop"  the request.  She did not have  a sense of                                                                   
what his response  to that would be.  She agreed  that if the                                                                   
LBA  Committee  did not  provide  the funding,  action  would                                                                   
still continue to move forward.                                                                                                 
                                                                                                                                
CHAIR THERRIAULT  asked again  if there  was no other  avenue                                                                   
available,  outside  of  using   the  existing  authorization                                                                   
through the  Department, to cover  the need.  He  inquired if                                                                   
there  were  any  administrative   accounts  which  had  been                                                                   
established that could be drawn against.                                                                                        
                                                                                                                                
KATHRYN DAUGHETEE  clarified that the Department  of Law does                                                                   
not have such funds or accounts.                                                                                                
                                                                                                                                
SENATOR  WILKEN   noted  that  he  was  the   Chair  of  that                                                                   
Subcommittee.   He claimed that  this year, the  supplemental                                                                   
would be heavily  scrutinized.  He advised that  this case is                                                                   
being  pursued and  that  the copies  need  to be  made.   He                                                                   
supported  the   Department's  request  in  order   that  the                                                                   
Legislature  would not  have to  deal  with the  supplemental                                                                   
request.                                                                                                                        
                                                                                                                                
CHAIR  THERRIAULT inquired  what  had been  requested in  the                                                                   
Governor's FY03 budget.                                                                                                         
                                                                                                                                
KATHRYN  DAUGHETEE  responded  that  the FY03  budget  was  a                                                                   
"status quo" budget.                                                                                                            
                                                                                                                                
CHAIR THERRIAULT  asked if that  meant that the  only request                                                                   
for that component was $180,000 dollars.                                                                                        
                                                                                                                                
KATHRYN DAUGHETEE stated that was correct.                                                                                      
                                                                                                                                
ED SNIFFEN  added that  the designated  program receipts  are                                                                   
funds  that  the  Department   has  collected  from  pursuant                                                                   
collection efforts  and he understood  that those  funds were                                                                   
set aside just for this kind of  need.  He did not understand                                                                   
the present predicament  or discussion.  He  pointed out that                                                                   
account  was expected  to have  close to  $1 million  dollars                                                                   
before the end of the fiscal year.   The purpose of the funds                                                                   
are for direct consumer related expenses.                                                                                       
                                                                                                                                
CHAIR THERRIAULT  claimed that  the Legislature had  set that                                                                   
aside as a type  of accounting mechanism.  He  inquired if it                                                                   
could be established as a general fund function.                                                                                
                                                                                                                                
DAVID  TEAL  advised  that  this  year,  the  SDPR  would  be                                                                   
considered  as  receipts  to  the  Department  and  would  be                                                                   
limited.  If  they were not spent, then those  receipts would                                                                   
lapse into  the general fund.   They are essentially  general                                                                   
fund  program receipts.   If  the Department  does not  spend                                                                   
them, they become available for any purpose in FY03.                                                                            
                                                                                                                                
CHAIR THERRIAULT  reminded  members that  there was  a motion                                                                   
before  the Committee  to  approve  RPL #03-02-0163.    There                                                                   
being NO OBJECTION, the RPL was approved.                                                                                       
                                                                                                                                
EXECUTIVE SESSION                                                                                                             
                                                                                                                                
VICE CHAIR  FATE made a motion,  in accordance with  Title 24                                                                   
and 44,  to MOVE into  Executive Session  for the  purpose of                                                                   
discussing  confidential items  and  personnel matters  under                                                                   
Uniform  Rule  No. 22  and  for  the purposes  of  discussing                                                                   
confidential audit  reports under Alaska  Statutes 24.20.301.                                                                   
There being NO  OBJECTION, the Committee went  into Executive                                                                   
Session at 1:42 P.M.                                                                                                            
                                                                                                                                
CHAIR  THERRIAULT requested  that  Commissioner Ed  Flanagan,                                                                   
Department   of  Labor   and   Workforce  Development,   Dave                                                                   
Quisenbury,  Department of Natural  Resources, Pat  Davidson,                                                                   
Legislative  Auditor,  her  staff,  the  Legislative  Finance                                                                   
Staff and Committee Staff, Heather  Brakes be present for the                                                                   
Executive Session.                                                                                                              
                                                                                                                                
The Committee resumed Open Session at 3:15 P.M.                                                                                 
                                                                                                                                
AUDIT REPORTS                                                                                                                 
                                                                                                                                
VICE CHAIR  FATE MOVED to  release the following  preliminary                                                                   
audits to the agencies for response:                                                                                            
                                                                                                                                
     ·    DPS/King Air Aircraft                                                                                                 
     ·    DCED/Regulatory Commission of Alaska                                                                                  
     ·    DPS/Council on Domestic Violence & Sexual Assault                                                                     
     ·    DCED/Board of Dispensing Opticians                                                                                    
     ·    ACS/Alaska Bar Association                                                                                            
                                                                                                                                
There being NO OBJECTION, the  preliminary audit reports were                                                                   
released for agency response.                                                                                                   
                                                                                                                                
VICE CHAIR FATE  MOVED to release the final  audit reports as                                                                   
public:                                                                                                                         
                                                                                                                                
     ·    DCED/Board of Chiropractic Examiners                                                                                  
     ·    DCED/Board of Examiners in Optometry                                                                                  
     ·    DCED/Board of Professional Counselors                                                                                 
     ·    DOA/Division of Senior Services-Assisted Living                                                                       
     ·    DFG/Hunter Information and Training                                                                                   
                                                                                                                                
There  being  NO  OBJECTION, the  audits  were  released  for                                                                   
public response.                                                                                                                
                                                                                                                                
VICE  CHAIR  FATE  MOVED  that   the  Committee  approve  the                                                                   
following audit requests:                                                                                                       
                                                                                                                                
    ·    DHSS/Division of Medical Assistance & Medicaid                                                                         
     ·    DNR/Division of Agriculture Revolving Loan Fund                                                                       
                                                                                                                                
CHAIR  THERRIAULT   noted  that   Legislative  Auditor,   Pat                                                                   
Davidson,  had worked with  the requestors.   He pointed  out                                                                   
that Senator Lyda Green had submitted  the first request with                                                                   
regard  to  the  Department  of  Health  &  Social  Services,                                                                   
Division of Medicaid Assistance.                                                                                                
                                                                                                                                
There being  NO questions  or OBJECTIONS,  the audit  request                                                                   
was approved.                                                                                                                   
                                                                                                                                
CHAIR THERRIAULT  advised  that the second  request  had been                                                                   
submitted by Senator Lyda Green  and Representative Jeannette                                                                   
James  in regard  to  the  Department of  Natural  Resources,                                                                   
Division  of  Agriculture,  the  agriculture  revolving  loan                                                                   
fund.                                                                                                                           
                                                                                                                                
PAT DAVIDSON noted that she had  worked with Senator Green on                                                                   
that request.                                                                                                                   
                                                                                                                                
There being NO OBJECTION, the audit request was approved.                                                                       
                                                                                                                                
VICE  CHAIR  FATE  MOVED  to  WITHDRAW  the  following  audit                                                                   
request:                                                                                                                        
                                                                                                                                
     ·    DHSS/Mat-Su Youth Facility                                                                                            
                                                                                                                                
PAT  DAVIDSON noted  that in  January  2000, information  was                                                                   
presented  to   the  Committee  following   discussions  with                                                                   
employees  at  the Department  of  Health &  Social  Services                                                                   
about  the  lack  of  a  good  working  relationship  between                                                                   
Department   of  Transportation   &  Public  Facilities   and                                                                   
Department  of Health &  Social Services  with regard  to one                                                                   
construction  project.   It appeared  that there were  issues                                                                   
for audit, however, it has been  noted that the Department of                                                                   
Law has  engaged a consultant to  come in to address  some of                                                                   
those allegations.                                                                                                              
                                                                                                                                
Legislative Audit informed the  LBA Committee that they would                                                                   
"stay  on top"  of that  and if  the  Committee wished,  they                                                                   
could approve an audit.  The Committee did so.                                                                                  
                                                                                                                                
Ms.  Davidson advised  that  Legislative  Audit has  followed                                                                   
what the Department of Law consultant  did and that the final                                                                   
report has  been reviewed.   Legislative Audit did  conduct a                                                                   
preliminary review  into facility construction  management in                                                                   
general   and  specifically   the   Mat-Su   facility.     No                                                                   
significant construction management problems were found.                                                                        
                                                                                                                                
There being NO OBJECTION, the audit request was withdrawn.                                                                      
                                                                                                                                
OTHER COMMITTEE BUSINESS                                                                                                      
                                                                                                                                
CHAIR  THERRIAULT  advised  members   that  the  end  of  the                                                                   
                                              th                                                                                
calendar  year was  approaching.   December 15   is the  date                                                                   
that the legislative agencies  start to close out their books                                                                   
for  the calendar  year.   For  any members  who have  travel                                                                   
reimbursement  requests  to be  carried  forward must  submit                                                                   
them for processing.                                                                                                            
                                                                                                                                
School Cost Study                                                                                                             
                                                                                                                                
CHAIR THERRIAULT  explained that  the school cost  study that                                                                   
is currently under  the purview of the LBA  Committee has met                                                                   
with  the  Association  of  Business   Officers  from  school                                                                   
districts.  From that association,  based on a recommendation                                                                   
from the  Department of Education  & Early Development,  Eddy                                                                   
Jeans,  and approval  by the LBA  Chair, a  working group  of                                                                   
district  business officers  has been  established to  advise                                                                   
the  consultants  as  they  proceed   with  the  study.    In                                                                   
addition, there is an oversight  committee, which consists of                                                                   
members  Vice Chair  Fate, Pat  Davidson,  Eddy Jeans,  David                                                                   
Teal and Chair Therriault.                                                                                                      
                                                                                                                                
He  advised that  the oversight  committee had  met with  the                                                                   
consultants in order to address  expressed concerns regarding                                                                   
the manner  in which  the study was  conducted.   He expected                                                                   
that  would   be  continued  with   the  work  done   by  the                                                                   
consultants, leading up to the report.                                                                                          
                                                                                                                                
Anti-Terrorism Presentation                                                                                                   
     by Adjutant General Phil Oates                                                                                           
                                                                                                                                
SENATOR  PHILLIPS   commented   that  during  the   up-coming                                                                   
legislative  year, it  would be  his  personal commitment  to                                                                   
address anti-terrorism  for the health and safety  of all the                                                                   
people of Alaska.                                                                                                               
                                                                                                                                
ADJUTANT GENERAL  BG PHIL OATES, Commissioner,  Department of                                                                   
Military and  Veterans Affairs,  voiced his appreciation  for                                                                   
Senator  Phillip's long-standing  support  for the  military.                                                                   
He  referenced the  handout  in Committee  member's  packets:                                                                   
[Copy on File].                                                                                                                 
                                                                                                                                
     "Executive Overview & Summary -                                                                                            
          Alaska's Terrorism Disaster Policy Cabinet"                                                                           
                                                                                                                                
Major  General Oates  noted that  he would  "set the  stage".                                                                   
He acknowledged that it was was  an unusual situation for the                                                                   
Governor  to propose  a bill  requesting  eighteen months  of                                                                   
spending and  that the  eighteen months  were connected.   He                                                                   
emphasized  that the  terrorists  are not  on  a fiscal  year                                                                   
planning basis, thus meriting the urgency of the request.                                                                       
                                                                                                                                
                                                th                                                                              
Major General Oates stated that  on September 11,  there were                                                                   
more  American  deaths  than on  D-Day  and/or  Pearl  Harbor                                                                   
combined.  He pointed out that  there is a tendency to devote                                                                   
government money  and resources on all levels,  to situations                                                                   
that occur  frequently.  He  acknowledged that the  chance of                                                                   
weapons of  mass destruction and  attack on Alaska  are slim.                                                                   
However, if it  does happen, the effects from  that incidence                                                                   
within Alaska could be bigger  than the cumulative affects of                                                                   
every disaster in Alaska including the 1964 earthquake.                                                                         
                                                                                                                                
There are  targets in  Alaska of  symbolic and  international                                                                   
significance with  the oil infrastructure  and pipeline.    A                                                                   
disaster could  cause environmental  damage or economic  loss                                                                   
for the  nation.  There are  scenarios in which  Alaska could                                                                   
lose the oil infrastructure for long periods of time.                                                                           
                                                                                                                                
He  continued, there  are  large groupings  of  international                                                                   
people in  the State with the  number of tourists  and cruise                                                                   
ships  that  pass  through  each  summer.    Alaska  is  also                                                                   
strategically located  in the Pacific  Rim and is out  on the                                                                   
"front-lines"  as  far as  the  United States  is  concerned.                                                                   
Additionally,   Alaska  has  a   large  transit   of  foreign                                                                   
carriers.                                                                                                                       
                                                                                                                                
He emphasized that there is a  threat to the State of Alaska.                                                                   
He requested that the Legislature  sit with the Department of                                                                   
Military  &  Veterans  Affairs   and  the  Governor  to  help                                                                   
determine what  risk the State  is willing to assume.   There                                                                   
would  never be  enough wealth  in  Alaska or  any state,  to                                                                   
provide 100%  protection at every  location.  However,  it is                                                                   
the responsibility of each member  of the Legislative Body to                                                                   
access  what risk  should  be  taken and  where  and how  our                                                                   
precious resources are spread.                                                                                                  
                                                                                                                                
Major General Oates pointed out  that the report generated by                                                                   
the Disaster Policy Cabinet covered five major areas:                                                                           
                                                                                                                                
     ·    Overall    security,    including    transportation                                                                   
          security                                                                                                              
     ·    Energy security                                                                                                       
     ·    Information security                                                                                                  
     ·    Consequence management                                                                                                
                                                                                                                                
Major  General Oates  acknowledged  that  a biological  agent                                                                   
like small  pox attack  could come  from outside the  Alaskan                                                                   
border  or there  could be  an  Anthrax contamination  attack                                                                   
through the mail.  He admitted  that the possibility was slim                                                                   
at this  point.   Terrorism, at  one time was  a means  to an                                                                   
end.  At this time in history,  terrorism is an end in and of                                                                   
itself.                                                                                                                         
                                                                                                                                
Major General Oates continued  that a reasonable approach has                                                                   
been taken by the Administration  to strengthen programs that                                                                   
already exist.                                                                                                                  
                                                                                                                                
     ·    Emergency management                                                                                                  
     ·    Public safety                                                                                                         
     ·    Public health capability                                                                                              
     ·    Medical capability                                                                                                    
     ·    Ability to communicate                                                                                                
                                                                                                                                
The legislative  intent would be  to establish an  office for                                                                   
eighteen-months to  intensely work on  the effort.   He noted                                                                   
the sunset clause.  The results  could be interlaced with the                                                                   
current emergency management process.                                                                                           
                                                                                                                                
Major General  Oates explained  that the  intent would  be to                                                                   
"hit this  hard" during the first  two weeks of  the Session.                                                                   
Hopefully, to speed the process,  the initial briefings could                                                                   
be  devoted   to  a   combined  House   and  Senate   session                                                                   
presentation   for  establishing   the   report  and   issues                                                                   
associated with it.                                                                                                             
                                                                                                                                
He added  that Representative  Mulder had indicated  that the                                                                   
House  Finance Committee  would begin  budget overviews  with                                                                   
the Department of Military & Veterans Affairs.                                                                                  
                                                                                                                                
Major General  Oates stated that  the Department  expected to                                                                   
be challenged on what was essential.   He advised, currently,                                                                   
the State  of Alaska  does not  have suitable protection  for                                                                   
the first  responders.  The State  does not have  the ability                                                                   
to   go  in   and  be   protected.     There   is  no   basic                                                                   
decontamination  table.    There   is  a  Level  A  hazardous                                                                   
material   (HAZMAT)   capability,   which  exists   only   in                                                                   
Anchorage, Fairbanks and in the  National Guard.  He stressed                                                                   
that the State needs more than  the ability to deploy.  Given                                                                   
the size of Alaska much more is needed.                                                                                         
                                                                                                                                
Major General  Oates pointed out  that it is not  only money,                                                                   
which is  being requested, but  also additionally  changes to                                                                   
guarantee that the legislation  fits the aspect of terrorism.                                                                   
There  will be  a  legislative  change package  provided  for                                                                   
consideration.    It  is  intended   that  the  Alaska  State                                                                   
Legislature maintain a "strong"  voice and go to the national                                                                   
level for changes  which would affect the nation  as a whole.                                                                   
One important  aspect of  that would be  to have  more access                                                                   
for use  of the National  Guard, similar to airport  security                                                                   
now in tact.                                                                                                                    
                                                                                                                                
He pointed out  that the airport security package  had been a                                                                   
change  of  events.    He  recommended  that  same  model  be                                                                   
followed,  having  a budget  and  legislation  in place  that                                                                   
would allow  for quick access.   In a free and  open society,                                                                   
the  way to  deal with  terrorism  is to  have an  efficient,                                                                   
effective, and  timely intelligence so that  you can increase                                                                   
the level of protection where it is needed.                                                                                     
                                                                                                                                
Major  General Oates  commented  that many  of the  financial                                                                   
requests  are   driven  by   federal  requirements   such  as                                                                   
increased airport and railroad  security.  Some of that would                                                                   
be  achieved with  federal  monies.   The  airports could  be                                                                   
closed  if the  State does  not fund  that.   He stated  that                                                                   
everyone must work diligently on these considerations.                                                                          
                                                                                                                                
Major General Oates noted that  he has established principles                                                                   
to guide these efforts:                                                                                                         
                                                                                                                                
     ·    To strengthen  existing programs,  especially those                                                                   
          that protect and save lives;                                                                                          
     ·    Prove   capabilities    for   responding   to   all                                                                   
          emergencies;                                                                                                          
     ·    Identify   and  protect  assets  of   national  and                                                                   
          statewide importance;                                                                                                 
     ·    Maintain  the continuity  of government  operations                                                                   
          at all levels;                                                                                                        
     ·    Reinforce first responder capabilities;                                                                               
     ·    Use  and  pool  resources  to  augment  areas  with                                                                   
          inadequate capabilities;                                                                                              
     ·    Maintain  an appropriate  balance between  security                                                                   
          and individual freedom;                                                                                               
     ·    Maintain  the ability to  communicate at  all times                                                                   
          because the ability to manage a crisis depends on                                                                     
          that ability;                                                                                                         
     ·    Maximize   the  use  of  existing   or  anticipated                                                                   
          federal funding programs or grants; and                                                                               
     ·    Share costs at levels  with the public and private.                                                                   
                                                                                                                                
Major  General  Oates  added  that there  is  also  a  larger                                                                   
report,  which is not  available for  public distribution  at                                                                   
this time.   He stated  he would provide  that report  to the                                                                   
Legislature.     He  offered  to  answer  questions   of  the                                                                   
Committee.                                                                                                                      
                                                                                                                                
CHAIR THERRIAULT  noted that he  had requested  Major General                                                                   
Oates  to  check  on previous  LBA  action  with  regards  to                                                                   
requests  that came  through for  $1.8 million  dollars.   He                                                                   
added  that  $642  thousand dollars  had  been  approved  for                                                                   
equipment  which  federal funds  are  expected  to come  for.                                                                   
There was  an additional  request for  $1.2 million  dollars,                                                                   
which  the  Committee  tentatively   approved,  in  case  the                                                                   
federal  funds  did not  come  through.    No money  has  yet                                                                   
materialized.                                                                                                                   
                                                                                                                                
MAJOR  GENERAL OATES  pointed out  that it  was "hoped"  that                                                                   
some  of  the  $40 billion  federal  dollars  would  come  to                                                                   
Alaska.  At this  time, some funds have flowed  to the State,                                                                   
primarily  paid  allowances  for the  National  Guard,  which                                                                   
comes into the  military pay system.  He added  that there is                                                                   
a  U.S. Department  of Justice  grant  for a  total of  $1.09                                                                   
million  dollars.   The assessment  for that  grant has  just                                                                   
been completed.   The limits indicate that the  money must be                                                                   
used for equipment  to protect first responders.   Therefore,                                                                   
the recommendation in the report  is to use that equipment to                                                                   
establish  another level  A  HAZMAT capability  in  Southeast                                                                   
Alaska.   The  Southeast region  does  not have  one at  this                                                                   
time.    Additionally,   those  funds  would   provide  basic                                                                   
protection  capability for  public safety  officials if  they                                                                   
need to go into  a hazardous environment.  At  this time, the                                                                   
only requirement which the Department  of Military & Veterans                                                                   
Affairs has identified is the  federal money in the amount of                                                                   
$1.09 million  dollars.  He emphasized  that would be  a one-                                                                   
time grant.  There should be more funds in the future.                                                                          
                                                                                                                                
CHAIR  THERRIAULT believed  that  would fall  under the  $642                                                                   
thousand  dollars authorized.   He  added that  no money  has                                                                   
come forward for the $1.2 million dollars at this time.                                                                         
                                                                                                                                
VICE CHAIR  FATE asked if the  $1.2 million dollars  did come                                                                   
through, would it be used for the Southeast HAZMAT.                                                                             
                                                                                                                                
MAJOR GENERAL  OATES noted that  the State would  receive the                                                                   
$1.09   million   dollars.       He   reiterated   that   the                                                                   
recommendation would  be to use  it for the Southeast  HAZMAT                                                                   
capability.   Southeast is not  covered at this time.   After                                                                   
both Southeast  and Valdez  are covered,  then the  remaining                                                                   
funds  would be  used  for police  to  buy proper  protective                                                                   
equipment when moving into hazardous  situations.  He pointed                                                                   
out that  there have  been in excess  of one hundred  Anthrax                                                                   
situations within  the State of  Alaska.  He did  not believe                                                                   
that it would be  okay if a first responder were  put at risk                                                                   
during an assessment.                                                                                                           
                                                                                                                                
VICE  CHAIR FATE  asked  if the  capability  in the  pipeline                                                                   
areas was being worked.                                                                                                         
                                                                                                                                
MAJOR GENERAL OATES stated it  was and that the Department is                                                                   
working  diligently  with  the  Alyeska  Pipeline  and  their                                                                   
security.                                                                                                                       
                                                                                                                                
CHAIR  THERRIAULT   referenced  the  $1.09   million  dollars                                                                   
equipment grant.                                                                                                                
                                                                                                                                
MAJOR  GENERAL  OATES  acknowledged   that  was  the  correct                                                                   
amount.                                                                                                                         
                                                                                                                                
CHAIR THERRIAULT  noted that the  LBA Committee  had provided                                                                   
authorization  for $642 thousand  dollars.   He asked  if the                                                                   
additional  money  would be  rolled  into next  years  budget                                                                   
request.                                                                                                                        
                                                                                                                                
MAJOR GENERAL OATES understood  that the funding would all be                                                                   
made available as soon as the report was submitted.                                                                             
                                                                                                                                
                                                                                                                                
TAPE LBA 01-12, SIDE B                                                                                                        
                                                                                                                                
                                                                                                                                
MAJOR GENERAL OATES commented  that a contractor had assisted                                                                   
the   Department,   providing   a   comprehensive   statewide                                                                   
assessment.   The  $1.09  million dollars  will  come to  the                                                                   
State as  soon as  the assessment is  submitted.   That money                                                                   
will  come  out   of  the  requirements  identified   in  the                                                                   
terrorism  report.    The  money is  identified  as  a  State                                                                   
general  fund  requirement.    Since  it  is  listed  in  the                                                                   
priority  recommendations, it  would reduce  the burden.   He                                                                   
suggested that it could lower  some of the State requirement.                                                                   
More  details  would  be  provided   during  the  Legislative                                                                   
Session.   The Department  needs the  authority to  spend the                                                                   
federal dollars this budget year.                                                                                               
                                                                                                                                
CHAIR THERRIAULT  asked  if the $1.09  million dollars  would                                                                   
include previous authorization.                                                                                                 
                                                                                                                                
MAJOR GENERAL  OATES explained that the Department  must move                                                                   
from the  $642 thousand dollars  to the $1.09  million dollar                                                                   
allocation  in order to  receive authority  to spend  federal                                                                   
monies.                                                                                                                         
                                                                                                                                
CHAIR  THERRIAULT   asked  if   the  Department   anticipated                                                                   
utilizing part of the tentative authorization.                                                                                  
                                                                                                                                
MAJOR GENERAL  OATES replied only  if it was authorized.   As                                                                   
soon as  the federal funds  become available,  the Department                                                                   
will let the Committee know.                                                                                                    
                                                                                                                                
SENATOR  PHILLIPS inquired  if the  process being  referenced                                                                   
was the one which had been identified a couple months ago.                                                                      
                                                                                                                                
CHAIR  THERRIAULT noted  that  there were  some questions  if                                                                   
that  action   would  be   overstepping  the   administrative                                                                   
function  of the  Committee.   He  thought that  it could  be                                                                   
workable  and   that  the  Committee's  action   could  be  a                                                                   
tentative hold.                                                                                                                 
                                                                                                                                
MAJOR GENERAL OATES commented  that at the last presentation,                                                                   
the  Department  did  not have  enough  information  for  the                                                                   
Committee to  determine the way  in which the money  would be                                                                   
used.                                                                                                                           
                                                                                                                                
CHAIR  THERRIAULT   spoke  to  the  contractual   versus  the                                                                   
tentative approval  role of the Legislative Budget  and Audit                                                                   
Committee.                                                                                                                      
                                                                                                                                
SENATOR PHILLIPS recommended that  the language of the report                                                                   
should  be  more  straightforward.    He  stressed  that  the                                                                   
language should  indicate that what happened  was a terrorist                                                                   
attack.     He  feared  that  as time  passes,  people  would                                                                   
minimize the actuality of the  attack if that language is not                                                                   
clearly defined.                                                                                                                
                                                                                                                                
MAJOR GENERAL OATES  added that he has been  participating in                                                                   
a national  level seminar  at Harvard.   He claimed  that the                                                                   
             th                                                                                                                 
September  11  situation  would define  the military  forever                                                                   
more.  Winning the ground battle  in Afghanistan will not end                                                                   
terrorism, and in fact could make  it worse.  Weapons of mass                                                                   
destruction are available to terrorist.   Major General Oates                                                                   
commented that he  did not want to over-state  the situation,                                                                   
however,  there  has  been a  terrorist  attack  against  our                                                                   
country, which killed, many.                                                                                                    
                                                                                                                                
SENATOR  PHILLIPS reminded  members that  a terrorist  attack                                                                   
has not occurred  in the United States since  1812 during the                                                                   
British invasion.                                                                                                               
                                                                                                                                
MAJOR GENERAL OATES read from a handout:                                                                                        
                                                                                                                                
     "The domestic  preparedness equipment grant  is designed                                                                   
     specifically   and  exclusively   for  first   responder                                                                   
     equipment.  Therefore, funding  from this grant can only                                                                   
     be  allocated  within  the  State's  list  of  equipment                                                                   
     priorities.     Given  that   as  the  case,   to  stage                                                                   
     priorities for this grant,  would be to equip Juneau and                                                                   
     Valdez   with  level  A   hazmat  team  and   individual                                                                   
     protective  equipment   for  law  enforcement   officers                                                                   
     statewide.   If  grants become  available  in FY02,  the                                                                   
     State would use them for decontamination."                                                                                 
                                                                                                                                
Major General  Oates reiterated  that was  the intent  of the                                                                   
Department,  and  that it  was  consistent with  the  highest                                                                   
recommendations.                                                                                                                
                                                                                                                                
SENATOR PHILLIPS  asked if Major General Oates  was confident                                                                   
that there could  be an effective coordination  regardless of                                                                   
the weapons used.                                                                                                               
                                                                                                                                
MAJOR GENERAL OATES replied that  the State does have a "good                                                                   
start" on the process.  The requested  funds will provide the                                                                   
office  with an  eighteen-month  period to  lock  in some  of                                                                   
those   procedures.     That  office   will  sunset   and  be                                                                   
assimilated into the emergency  management process.  The idea                                                                   
is to  have the experts from  the other supporting  groups to                                                                   
work full  time on  the concern  of dealing  with weapons  of                                                                   
mass  destruction.    The  biggest  shortfall  rests  in  the                                                                   
medical and  public health capability,  which is  true across                                                                   
the nation.                                                                                                                     
                                                                                                                                
Major  General Oates  voiced  appreciation  to the  Committee                                                                   
members for  their consideration  of the  request.   He added                                                                   
that  the Department  and  the Governor  would  like to  fast                                                                   
track the request.   The Legislature needs to  help determine                                                                   
how  much  risk  they  are willing  to  assume  and  how  the                                                                   
resources are to be distributed.                                                                                                
                                                                                                                                
VICE  CHAIR  FATE  asked  if  it  was  anticipated  that  the                                                                   
Department would submit a supplemental request.                                                                                 
                                                                                                                                
MAJOR  GENERAL OATES  acknowledged  that  the Department  has                                                                   
already spent  Department funds to provide the  checkpoint on                                                                   
the  pipeline road.    State funds  have  also  been used  to                                                                   
assist  in some  of  the actions  taken as  a  result of  the                                                                   
                                 th                                                                                             
terrorist attack on September 11.                                                                                               
                                                                                                                                
Major  General  Oates pointed  out  that the  State  receives                                                                   
nearly  $3 million  dollars a  day  from activity  associated                                                                   
with the  pipeline.   He asked if  members could  imagine the                                                                   
effect on  the State's economy  if that was interrupted.   It                                                                   
is prudent to  spend State dollars to protect  that resource.                                                                   
There  is 800-miles  of pipeline.   Risks are  taken for  the                                                                   
protection of the  line.  Those risks are taken  in the areas                                                                   
that  can  be  repaired.   The  defense  also  rests  in  the                                                                   
intelligence that  is required, and  at this point,  there is                                                                   
not  enough   intelligence  integration  within   the  State.                                                                   
Alaska needs to be able to use more National Guard members.                                                                     
                                                                                                                                
VICE  CHAIR FATE  inquired if  the Department  of Military  &                                                                   
Veterans Affairs  had been in  discussion with  Department of                                                                   
Transportation & Public Facilities.                                                                                             
                                                                                                                                
MAJOR GENERAL OATES replied that they absolutely had.                                                                           
                                                                                                                                
VICE CHAIR  FATE voiced concern  about certain key  points on                                                                   
the pipeline road.                                                                                                              
                                                                                                                                
MAJOR GENERAL  OATES stated  that there  are some key  points                                                                   
where the repair  equipment is no longer  being manufactured.                                                                   
He added that there  are some points where, that  if a person                                                                   
knew the  location, could  put the  pipeline out of  business                                                                   
for a long  period of time.   If the pipeline were  to be put                                                                   
into a non working order during  the wintertime over a 60-day                                                                   
period,  the  State   would  be  in  danger   of  loosing  it                                                                   
permanently.    He  pointed out  that someone  could make  an                                                                   
attack in Valdez, as it is an easy site to attack.                                                                              
                                                                                                                                
Major General  Oates reiterated  that the entire  Legislative                                                                   
body needs to help the Administration  address where the risk                                                                   
points  should  be.   He  voiced  his  appreciation  for  the                                                                   
opportunity to hold the briefing before the LBA Committee.                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
CHAIR THERRIAULT  adjourned the Legislative Budget  and Audit                                                                   
Committee at 3:50 P.M.                                                                                                          
                                                                                                                                

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