Legislature(1995 - 1996)
02/23/1995 08:40 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
February 23, 1995
8:40 a.m.
TAPES
SFC-95, #5, Side 1 (403-end)
SFC-95, #5, Side 2 (575-000)
SFC-95, #7, Side 1 (000-end)
SFC-95, #7, Side 2 (575-032)
CALL TO ORDER
Senator Steve Frank, Co-chairman, convened the meeting at
approximately 8:40 a.m.
PRESENT
Co-chairman Frank and Senator Donley were in attendance when
the meeting convened. Senators Phillips, Sharp, and Zharoff
arrived soon after it began. Co-chairman Halford and
Senator Rieger arrived as it was in progress.
ALSO ATTENDING: Senator Green; Nancy Slagle, Director of
Budget Review, Office of Management and Budget; Karen
Rehfeld, Director of Administrative Services, Dept. of
Education; Duane Guiley, Director, School Finance, Dept. of
Education; Janet Clarke, Director, Division of
Administrative Services, Dept. of Health and Social
Services; Peter Nakumura, Director, Division of Public
Health, Dept. of Health and Social Services; Bob Dindinger,
Vice Chairman, Alaska Tourism Marketing Council; Jeff
Morrison, Director, Administrative & Support Services
Division; Dept. of Military and Veterans' Affairs; Bill
Andrews, Finance Services, Division of Support Services,
Dept. of Natural Resources; Ken Bischoff, Director, Division
of Administrative Services, Dept. of Public Safety; Ron
Lind, Director, Division of Administrative Services, Dept.
of Transportation and Public Facilities; Gary Hayden,
Director, Marine Highway System, Dept. of Transportation and
Public Facilities; Art Snowden, Administrative Director,
Alaska Court System; Fred Fisher, fiscal analyst,
Legislative Finance Division; and aides to committee members
and other members of the legislature.
SUMMARY INFORMATION
SB 47 - APUC EXTENSION AND REGULATORY COST CHARGE
Amendments 1 and 2 were offered by Senator Donley.
Both failed on a show of hands. SB 47 was
REPORTED OUT of committee with zero fiscal notes
from the Dept. of Administration and Dept. of
Revenue (Audits) as well as a note from the Dept.
of Revenue (APUC) showing $3,789.7 (the amount set
forth in the FY 96 operating budget plus an
additional $60.7 in contractual funds).
HB 178 - APPROP: SUPPLEMENTAL AND SPECIAL - FY 95
Review of Secs. 18 through 70 was conducted with
Nancy Slagle and representatives from the various
departments listed above.
HOUSE BILL NO. 178
An Act making supplemental and special appropriations
for the expenses of state government; making and
amending capital and operating appropriations; and
providing for an effective date.
Upon convening the meeting, Co-chairman Frank directed that
review of FY 95 supplemental funding continue. NANCY
SLAGLE, Director of Budget Review, Office of Management and
Budget, came before committee and commenced the following
review, beginning with Section 18:
Dept. of Education
Sec. 18 contains $2 million for foundation funding based on
Fall student counts. The number is expected to change once
February counts from districts are tabulated, in the next
week or two. It is hoped the amount will be reduced.
Sec. 19 funding of $615.7 for vocational education relates
to questioned allocation of federal grants. KAREN REHFELD,
Director of Administrative Services, Dept. of Education,
advised that the request is based on a determination by the
U.S. Department of Education regarding allocations of
federal vocational education grants in FY 90 and 91. The
department has appealed the determination, has filed a
motion for dismissal, and expects a ruling in the near
future. As a further explanation, Mrs. Rehfeld said federal
funds are allocated for specific programs. The state is
required to operate under an approved plan for allocation of
these moneys. In reviewing expenditures for FY 90 and 91,
the federal government questioned allocations within
categories of grant programs. The department believes that
once questions concerning how the money was spent are
answered, there will be no need for this cost. The
requested supplemental is based on the partial determination
notice. The department remains optimistic since the state
has not had problems with this program before.
Discussion followed regarding possible administrative action
should the motion to dismiss fail.
Sec. 20 funding of $22.2 through the Alaska Commission on
Postsecondary Education would assist in the cost of the
contract for students in the WAMI program at the University
of Washington. Underfunding for FY 95 totaled $55.0.
Funding from WICHE was transferred, but it did not
completely cover the amount needed to meet contractual
obligations. As further background information, Mrs. Slagle
said that the Governor's budget was underfunded with the
intent that the University of Washington would collect the
funds directly from participants. The University
subsequently declined to do that. In response to a question
concerning what would happen should the supplemental not be
funded, Mrs. Slagle said that moneys would have to be taken
from "the other general fund program where the moneys have
already been committed to individual participants," or the
cost would have to be carried forward into next year.
Responding to comments that the legislature attempted to
phase out the WAMI program, Mrs. Slagle acknowledged
discussion at conference committee but further noted that
moneys for first-year students were added back in the
reappropriation bill.
Sec. 21 funding of $2,197.0 relates to settlement stemming
from the Toksook Bay fuel spill. (See Attachment A to these
minutes.) Payments to plaintiffs total $1,800.0. The
remaining $397.0 is for cleanup. The department is working
with DEC to determine whether that portion could come from
the prevention account in the oil and hazardous response
fund. DUANE GUILEY, Director, School Finance, Dept. of
Education, described the circumstances leading up to the
spill. In 1990, a rupture occurred in the oil line
transferring fuel from large bulk tanks to small day tanks
at the generator facility. Oil leached through the ground
and contaminated an aquifer. Oil was then pumped through a
well into the water system in the community. That brought
oil into individual homes and disrupted the water supply.
Suit was brought on behalf of 500 residents, the
municipality, and village council. A settlement was
negotiated between the state and all parties in exchange for
a release.
End: SFC-95, #5, Side 1
Begin: SFC-95, #5, Side 2
In further discussions, Mr. Guiley advised that the city was
notified of the leak and possible contamination of the water
supply. The main water supply was frozen, and the city
chose to operate the backup well, after notification of
potential contamination.
Mr. Guiley advised of plans to clean up the spill during the
coming summer. The requested $397.0 will not clean up all
the oil, but the proposed cleanup plan meets DEC
requirements.
Dept. of Health and Social Services
Sec. 22 funding of $871.7 in new general fund program
receipts relates to underestimation of the amount needed to
match federal participation in the pharmaceutical drug
rebate program. JANET CLARKE, Director, Division of
Administrative Services, Dept. of Health & Social Services,
explained that the department entered the program
approximately three years ago. Congress earlier determined
that pharmaceutical companies were charging higher prices to
Medicaid programs, nationwide. An invoice based on state
expenditure for pharmaceuticals is sent to drug companies,
and a rebate is paid to the state. The FY 96 budget
contains an estimate of approximately $2 million from the
rebate to offset Medicaid expenditures. This revenue has
been identified as a source of funding for an error in the
EPSDT program which was budgeted at 75%. A federal auditor
reviewed the program and allowed only a 50% match. The
program thus has a shortfall of $871.1.
In response to a question from Co-chairman Halford, Ms.
Clarke acknowledged that there is no relationship between
the shortfunded program and the potential source of program
receipt revenues.
Sec. 23 funding of $4 million in federal receipts for Indian
Health Services reflects an increase in Medicaid activity.
Ms. Clarke noted that the $20 million program is 100%
federally funded. As a further explanation, she voiced her
understanding that as Indian Health Service and BIA funds
are constrained and capped, regional health corporations
have actively pursued Medicaid eligibility for their
clients.
Sec. 24 funding of $966.0 (half general funds and half
federal receipts) is for restoration of seven options
previously cut by the legislature. Janet Clarke
acknowledged that the request reflects a policy shift by
Governor Knowles to restore options eliminated during the
current fiscal year. Services include: chiropractic,
advance nurse practitioners, adult dental, emergency
hospital, speech, hearing, and language, optometrists, etc.
Senator Rieger asked if the department made use of the
statutory change which allows case managers to override the
priority list. Ms. Clarke said that the division of medical
assistance has actively reviewed case management efforts and
is particularly interested in mental health case management.
However, a program has not been developed to
administratively reorder priorities in the option list.
Senator Zharoff referenced backup material indicating that
loss of services impacted over 16,000 adult Medicaid
recipients. He then inquired concerning the age of the
recipients. Ms. Clarke replied that the age group varies.
Service is mandatory for those under 21. Senator Zharoff
referenced concern from senior citizens. Mrs. Slagle
advised that the Governor feels strongly about the
importance of services to that group. Senator Sharp
inquired regarding offsets to other senior programs such as
the longevity bonus. Mrs. Slagle noted that the longevity
bonus is in the phase-out process. The FY 96 budget shows
reductions based on reduced amounts for which individuals
qualify and a decrease in the roll. Senator Sharp voiced
his belief that "a large majority of these 16,000 people are
eligible and receiving the longevity bonus . . . ."
Sec. 25 funding of $392.9 to the division of family and
youth services for child protection in high priority cases
includes $310.6 in federal receipts. Mrs. Slagle voiced her
understanding that funding reflects a one-time federal
receipt for back payment of claims. Funding will be used to
support social workers. As a further explanation, Ms.
Clarke said that funding represents carryover moneys. The
normal share is approximately 15%. Co-chairman Halford
asked if the federal moneys would be available without the
general funds. Ms. Clarke responded, "$300.0 are the one-
time funds, and, yes, they would be available without the
general fund, that's correct." The Co-chairman voiced his
understanding that the department could go to the
Legislative Budget and Audit Committee and "put the $300.0
in without the supplemental." Ms. Clarke concurred.
Sec. 26 funding of $580.0 to the division of family and
youth services is to maintain staffing levels at McLaughlin
Youth Center. The center has been over capacity most of the
year. In order to provide a safe environment, much overtime
has been incurred. In response to a question from Co-
chairman Frank, Ms. Clarke advised of 124 authorized
positions at McLaughlin. She further referenced the
department's attempt to make overall changes in youth
correctional services to avoid need for a supplemental.
However, population increases, particularly at McLaughlin,
are over 16%. Most of the request relates to overtime
costs. Discussion followed between Ms. Clarke and Senator
Phillips regarding common "threads" involved in the
population increase. Ms. Clarke attested to the fact that
the violent nature of juvenile crime has increased. Senator
Donley acknowledged that, because of over crowding, there is
often no where for police to take juveniles arrested for
crime in Anchorage. Ms. Clarke advised that moneys derived
from reduction of services at Nome were transferred to four
facilities in Anchorage, Fairbanks, Bethel, and Juneau. The
problem is statewide.
Sec. 27 funding of $342.0 reflects public health funding
needed to control an outbreak of TB. In response to
questions from Senator Phillips, DR. PETER NAKUMURA,
Director, Division of Public Health, Dept. of Health and
Social Services, came before committee. He explained that
at one time TB infected 650 people out of 100,000 in Alaska,
and the death rate was up to 50%. In 1969 the rate was 50
per 100,000. At one time, it was as low as 9 per 100,000,
but it has now increased to 12. The national average is 10.
In 1986, the Center for Disease Control evaluated Alaska and
found that, due to success of the program, the state could
begin to downsize. At one point, Alaska expended
approximately $850.0 for TB alone. The total epidemiology
budget five years ago was $2.7 million. That has now
decreased to $1.7 million. The amount expended for TB
ranges from $600.0 in 1991 to $404.0 this year. Federal
support in the early years through Indian Health Service
hospitals, experts, and budgets has disappeared. Three
years ago the state received $60.0 in federal funds to
assist in this effort. This year it will receive $138.0.
Available resources for TB control total $540.0.
Dr. Nakumura next described efforts involved in annual skin
testing for children in rural areas. He attested to recent
efforts in Savoonga and Gambell and support efforts involved
in delivering services to people. The cost of treatment and
surveillance is approximately $123.0 for the 1,200
population in the above-noted communities. The minimal cost
of treating a single case of resistent TB, should it occur,
would be approximately $180.0. Ms. Clarke further explained
that the epidemiology team has visited eight villages and
serviced 5,400 people. She then cited statistics for
various tests and medical services provided. The department
has absorbed some of the cost for these services.
In response to a question from Co-chairman Halford, Dr.
Nakumura explained that the primary focus of tribal
corporation health service is treatment. The state performs
the initial work. While positive testing shows up
throughout Alaska, the highest concentration is along
western coastal areas and southeast. Alaska has
historically experienced high levels of TB. Once an
individual has the infection, the organism may remain for
years, even after treatment. As the body weakens, the
infection may be reactivated. The state has a high-risk
population.
Senator Rieger inquired concerning the $123.0 grant. Dr.
Nakumura explained that the highest outbreak was in the
Norton Sound area. Health services there have no capacity
for "staying on top of the problem, much less the ability to
intercede and take care of the problem."
Responding to a question from Senator Phillips concerning
transmission of the disease from Russia, Dr. Nakumura
explained that a study of the organism indicates that it is
internal within the state.
Co-chairman Halford questioned need for funding within the
supplemental as opposed to inclusion within the FY 96
budget. Dr. Nakumura attested to need for a sustained
effort to "get on top of" the problem.
Sec. 28 (a) funding of $164.9 in general funds for API
reflects a fund source change relating to downsizing of the
hospital and loss of third-party receipts and policy changes
by groups reimbursing API. In response to questions from
members asking how downsizing could increase costs, Ms.
Slagle pointed to need to cover fixed costs regardless of
the size of the population. Loss of third-party recovery
and Medicaid payments have reduced revenues. When revenues
are down, the state must cover more of the fixed costs from
general funds. Ms. Clarke added that, in response to budget
reductions, API was downsized to 80 beds. The adolescent
unit was reduced from 22 to 12 beds in order to restrict
staffing needs. That is a prime population for Medicaid
eligibility. Restriction of adolescent care reduces ability
to collect third-party revenue. Downsizing eliminated 47
positions. Admissions have remained stable, but the length
of stay has been reduced. That is how the facility has
lived within its bed allotment. Further, the veterans'
administration previously provided over $1 million per year.
Policy changes have reduced collections to an estimated
$100.0 this fiscal year. That is a drastic decline in
program receipts.
Senator Rieger suggested that a 20% decline in population
should reduce rather than increase costs. In response to
further comments, Ms. Clarke said that the FY 94 actual for
API was $16.9 million. Current year authorized is $16.2
million. The facility is attempting to deal with the
overall reduction. Senator Rieger asked if the facility
received supplemental funding last year, and Ms. Clarke
responded affirmatively.
Sec. 28 (b) funding of $164.9 covers a similar fund source
need at Harborview. The facility is also showing a decrease
in overall dollars as a result of release of individuals
into the community. The release was so successful "that
more people wanted to leave," and an additional six
individuals were released. In response to a question from
Senator Rieger, Ms. Clarke advised that the current
population is 44. Four of the additional six who wish to
leave remain at the facility but are expected to be
discharged before the end of June. Discharge has led to a
reduction of Medicaid revenues. That has caused a funding
problem. The FY 95 budget for Harborview is over $6.8
million, including $3.3 million in general funds.
In response to a question from Co-chairman Halford, Ms.
Clarke explained that last year the department requested
$400.0 to establish a correctional unit. That increment was
not approved by conference committee, but the legislature
took funds from the base and moved them into a separate
component. When those who could move into the facility were
analyzed, it was determined that a "very small percentage"
were Medicaid eligible (2 out of 50). The department
subsequently determined that it did not have sufficient
resources to staff another unit, and there was not a
sufficient number of Medicaid eligible prisoners to fill the
unit. The department was thus not able to expand
Harborview. Funding for the new unit was then moved back
into the base budget. Discussion of legislative intent and
department action followed between Ms. Clarke and Co-
chairman Halford.
Responding to a question from Senator Zharoff, Ms. Clarke
explained that when a person becomes Medicaid eligible, the
state can claim 50% of the cost of care from the federal
government.
Sec. 29 funding of $410.2 would pay judgments and claims in
Greenfield v. State, a discrimination case. Ms. Clarke
advised that a $160.0 punitive damage award is under appeal
at this time. The case relates to a filing under the
"whistle blower act" and claims of sexual harassment.
End: SFC-95, #5, Side 2
Begin: SFC-95, #7, Side 1
Dept. of Labor
Sec. 30 funding of $55.6 to the Dept. of Labor would
reestablish the state data center. Alaska is currently the
only state without a program that acquires, analyzes, and
disseminates census information used by state agencies to
determine population-based federal grants and local
government planning. Co-chairman Frank voiced his
understanding that the program was cut by the legislature.
Ms. Slagle concurred. The decision to reinstate the program
was made by Governor Knowles.
Dept. of Commerce and Economic Development
Sec. 31 funding of $2,500.0 to the Dept. of Commerce &
Economic Development for the Alaska Tourism Marketing
Council consists of $1,875.0 in general funds and industry
contributions of $625.0. Funding would be used for national
advertising. BOB DINDINGER, Vice Chairman, Alaska Tourism
Marketing Council, came before committee and distributed an
informational "white paper" (Attachment B). He said that
the issue is Alaska jobs. Requested funding was cut in the
Hickel budget a year ago, reinstated by the legislature, and
then a portion of the reinstatement was vetoed by the
Governor. The Alaska tourism program contains a small
television program--approximately $81 million impressions.
The intent is to increase that to a billion impressions.
Approximately 15% of those who see these commercials come to
Alaska in the next year, and 25% come over a three-year
period. The marketing effort consists of two programs: The
print media attempts to reach those interested in traveling
to Alaska while television generates new interest in those
not previously interested in Alaska travel. Budget cuts
eliminated ability to generate new interest. The $2.5
million will enhance that ability.
The 1990 budget contained approximately $8 million in
general funds. With addition of the proposed request, only
$5 million in general funds will flow to the marketing
council this year.
In response to a question concerning timing, Mr. Dindinger
advised that the commercials "are in the can." Requested
funding would provide air time. He advised that of those
traveling to Alaska during the coming year, 40% will make
that decision between March and May. Approximately 64% will
make bookings and reservations during that period. This is
the time of year when people are thinking about vacations to
"the North Country." Mr. Dindinger stressed that television
advertising has a long life. Sometimes it takes a number of
years before individuals commit to Alaska travel.
Dept. of Military and Veterans' Affairs
Sec. 32 funding of $900.0 for the Dept. of Military &
Veterans Affairs is based on a five-year average of disaster
relief needs for spring flood activity. The present balance
of the disaster relief fund is $400.0. Co-chairman Halford
inquired regarding timing of the request in relation to when
flooding occurs. JEFF MORRISON, Director, Administrative &
Support Services, Dept. of Military and Veterans Affairs,
advised of flooding in May and receipt of billings that come
in over the summer. He stressed the importance of timely
response. Co-chairman Halford voiced need to budget for
expenditures in the year in which they occur.
Senator Sharp referenced backup information indicating that
flood activity over the last two years has been zero. The
request is based on a five-year average with a high year in
1992. Mr. Morrison attested to need to respond to disasters
other than floods.
Co-chairman Halford asked if the department would fail to
respond because of a lack of disaster relief funding. Mr.
Morrison answered negatively, citing legislative policy that
"money will always be there for disasters." The Alaska
Disaster Act has specific procedures if there are
insufficient funds for the Governor to obtain the moneys he
needs to respond to a disaster.
Dept. of Natural Resources
Sec. 33 funding of $1,660.0 to the Dept. of Natural
Resources would cover the cost of FY 94 fire fighting
activity. The supplemental request for FY 94 was reduced.
The current request reflects the shortage that occurred as a
result. BILL ANDREWS, Finance Services, Division of Support
Services, Dept. of Natural Resources, explained that the
fires occurred within areas to which the department
responds. He cited a fire in the Delta area as an example.
He added that the state experiences an average of $2.7
million in spring fire activity.
Sec. 34 funding of $7,195.0 covers fire suppression activity
for FY 95, fixed costs, increased fire fighting activity
last summer, and projected costs of fighting spring fires
this year. Mr. Andrews said that activity for the past two
summers averaged $9.2 million. For '91 the total was
"around $20 million." In response to questions from Co-
chairman Halford, Mr. Andrews explained that fixed costs
amount to approximately $4 million. The Co-chairman
suggested that the state is spending $4 million "to be
ready." Mr. Andrews said that fixed costs include aircraft
contracts, contracts with BLM for smoke jumpers, weather
detection, aircraft pilots, mess hall staff, accounting
positions, etc. Those activities are financed from the
department's general fund appropriation.
Senator Zharoff inquired concerning federal dollars. Mr.
Andrews advised of $5 million in reimbursement for fires
fought on federal lands. The state also reimburses the
federal government for use of BLM personnel called upon to
fight fires on state lands.
Sec. 35 contains a lapse date extension for FY 95 Exxon
Valdez Trustee Council restoration projects approved through
the RPL process by the Legislative Budget and Audit
Committee.
Dept. of Public Safety
Sec. 36 funding of $682.4 to the Dept. of Public Safety
would cover increased costs for community jails to bring
them in line with standards recommended by the Governor's
task force.
Sec. 37 funding of $200.0 to the Dept. of Public Safety
covers an arbitrator's award relating to the state trooper
termination settlement. KEN BISCHOFF, Director, Division of
Administrative Services, Dept. of Public Safety, explained
that the substance of the case is confidential. The
troopers dismissed an employee for misconduct. The union
and employee filed a grievance, and the arbitrator found in
their favor. Co-chairman Halford inquired concerning the
effect of not paying the award. Co-chairman Frank voiced
need to seek an opinion from an attorney. He also asked
that the department provide all available materials as well
as information on what material is confidential and why.
Senator Rieger questioned why documents would be considered
confidential and asked if a change of policy was involved.
Mr. Bischoff said there was no intent to change policy. He
then apologized for the lack of backup information and
advised that he would provide greater detail.
Sec. 38 funding of $156.0 for operating costs of the civil
air patrol covers FY 95 underfunding. Ms. Slagle attested
to increased maintenance, operating, insurance, and audit
costs. Co-chairman Halford voiced his understanding that
the requested supplemental would become part of the base for
next year. Mr. Bischoff said, "I believe the expectation of
the civil air patrol would be to carry forward the
supplemental." Mrs. Slagle advised that she would provide
information on historical funding.
Sec. 39 funding of $186.5 to the Dept. of Public Safety
represents a funding source change for costs relating to
implementation of concealed weapon legislation. The amount
of anticipated program receipts was not generated due to a
lesser number of people requesting permits. To a statement
from Co-chairman Frank suggesting that the cost of permits
should cover the cost of the program, Mr. Bischoff noted
that of the $122 fee, the state troopers receive $59 for
processing. The fingerprinting check costs $35, and $24
flows to the FBI. The supplemental request is based on 40
applications a day. The last two weeks have averaged less
than 30. The troopers hired six of an estimated twelve
positions, and records and identification hired two of five.
The program is new and has no basis for more accurate
estimates. The original fiscal note for the bill was based
on experience in the state of Washington. Co-chairman Frank
reiterated that permit fees should cover the cost of the
program. Mr. Bischoff attested to start-up costs as well as
those associated with development of regulations, computer
time, public notices and meetings, etc. Discussion of the
fiscal note followed. Mr. Bischoff advised of an original
request for $1 million and subsequent funding of $676.0 (all
program receipts). Co-chairman Frank voiced need to further
research the issue to determine if general funds were
involved.
Sec. 40 funding of $115.0 to the Dept. of Public Safety
reflects a funding source change for the narcotics task
force from program receipts to general fund as a result of
uncollectibility of seized assets. Co-chairman Frank asked
if program receipt authority was increased in last year's
budget. Mr. Bischoff explained that program receipts are
"drying up," primarily as a result of a court decision that
"precludes us from using the same process." One of the
sources was providing the general fund match for the 75%
federal contribution for the task force.
Dept. of Transportation and Public Facilities
Secs. 41, 42, and 43, provide funding to the Dept. of
Transportation and Public Facilities for snow removal. Mrs.
Slagle advised of need for the following changes in amounts:
Sec. 41 - Highways and Aviation - Snow Removal
change $2,340.0 to $2,170.0
Sec. 42 - Statewide Facilities M & O - Snow Removal
change $60.0 to $49.8
Sec. 43 - Anchorage Int. Airport - Snow Removal
change $250.0 to $350.0.
Co-chairman Halford inquired concerning projections for snow
removal for the remainder of the winter. Mrs. Slagle said
that the foregoing changes reflect recalculation of need.
The department continues to monitor this situation.
Senator Phillips stressed the importance of highway
maintenance and asked if the department was shortchanging
the effort. RON LIND, Director, Division of Administrative
Services, Dept. of Transportation and Public Facilities,
explained that the above adjustments result from lowered
assumptions in Southcentral, Interior, and Southeast, offset
by the fact that assumptions for the Central region were not
sufficient.
Co-chairman Franks asked what percentage of the budget
generally remains and is utilized for spring maintenance.
Mr. Lind said he would provide the information.
Secs. 44, 45, 46, and 47 deal with emergency repairs. The
department was not provided adequate funding for these types
of problems and was asked to return to the legislature and
make specific requests. Ron Lind explained that the
department typically received $1 to $1.5 million, for
emergency repairs, in the capital budget. Last year, the
decision was made not to fund these capital items in
advance. The department was then to bring forward
individual maintenance requests.
Discussion of need for culvert replacement at Birchwood Loop
and Rabbit Creek roads followed. Mr. Lind said that basic
salary and equipment costs for the first 37.5 hours of crew
work on emergency repair projects listed in Secs. 44, 46,
and 47 are not included in the requests. Supplemental
funding relates to overtime, special contracts, and special
equipment rental. The department actually spent
approximately $600.0 on Dalton Highway repairs, $300.0 of
which came from the maintenance budget.
Sec. 46 funding of $750.0 to the Dept. of Transportation and
Public Facilities would cover spring upkeep and repairs to
maintain safety on road systems. Mr. Lind acknowledged that
the department does not normally receive a supplemental for
this purpose. When Governor Knowles took office, he queried
departments concerning budgetary problem areas. DOTPF
identified approximately $150.0 for each of the five
districts.
Discussion followed regarding meetings with the Canadian
government regarding the Skagway Road.
Secs. 49 and 50 deal with payments to Dept. of Law for
services relating to Copper River Highway litigation and
right-of-way activity on Native allotments. Speaking to the
$230.0 for the Copper River Highway, Mr. Lind advised that
while the majority covers attorney fees, it also includes
specialized engineering expert witnesses.
Co-chairman Frank voiced his understanding that need for the
funding relates to prior budget years. Mr. Lind concurred.
He noted that bills for the Copper River Highway date from
1994. He mentioned that bills received from the Dept. of
Law for the present year date only through September. Work
on the matter continues.
Sec. 51 funding of $145.0 from the Anchorage International
Airport fund would cover court-ordered personnel costs. Mr.
Lind explained that the request relates to claims by two
security guards who worked at the Anchorage airport for
approximately 12 years. In 1989, when the legislature
changed the law and placed guards under the police standards
council, the individuals could not distinguish colors well
enough to pass the visual acuity test and meet certification
requirements. They were subsequently laid off. A suit was
filed, the guards won, and they have since been rehired.
End: SFC-95, #7, Side 1
Begin: SFC-95, #7, Side 2
Sec. 52 funding of $739.8 would respond to prior policy
decisions regarding expansion of existing schedules. GARY
HAYDEN, Director, Alaska Marine Highway System, Dept. of
Transportation and Public Facilities, explained that review
of the system budget, seven months into the present fiscal
year, indicates that the division would deficit spend $1.6
million. Reasons for the projected deficit result from
decisions made by the previous administration and those made
since the current administration commenced. Revenues are
down approximately $400.0 from last year due to additional
service provided by the LaCONTI in November and December, a
19% decrease in passenger traffic, and an 11% decrease in
vehicles. Policy decisions made by the present
administration to prevent the system from going "further in
the hole" were to lay up the COLUMBIA and shift vessels
around to cover the Bellingham run. The COLUMBIA was
scheduled to come on line March 31, 1995. That has been
moved back to May 5. Mr. Hayden said he had also taken
steps to generate additional winter revenues through March
and April promotions. He advised that he was also working
with system managers to reduce spending.
In response to a question from Senator Phillips concerning
decreased traffic, Mr. Hayden said that some results from
discontinuance of the senior citizen discount, revision of
the age limit for youth fares, elimination of the driver-
rides-free program, and the 10% rate increase. Any one of
those measures would have been acceptable, but the
accumulation of a number of policy changes at one time was
difficult. The department also failed to reduce higher
summer rates and provide lower rates for winter travel by
resident Alaskans. That, in combination with low air fares,
took a toll on ferry traffic.
Mr. Hayden said he originally requested that the
supplemental include interest earned by the Alaska Marine
Highway System fund. At this point, the fund has earned in
excess of $1 million in interest which has been deposited in
the general fund.
In response to a question from Senator Rieger, Mr. Hayden
explained that in light of a reduced number of riders and
rate increases, revenue collections remain about the same as
last year. Earnings last year were down by approximately
$400.0. That amount was not collected this year either.
Co-chairman Frank asked if anyone was laid off due to a 20%
reduction in riders. Mr. Hayden said the only way the
system could respond to the reduction was by "laying a ship
up, which I've done." To a suggestion that ferry personnel
could be adjusted to coincide with the number of riders, Mr.
Hayden explained that manning levels are set forth in
contracts with various unions. Staffing is not based upon
how many people the vessel carries on a particular sailing.
Mr. Hayden further attested to need to meet Coast Guard crew
requirements.
Discussion followed among committee members and Mr. Hayden
regarding system operating plans and strategies. Mr. Hayden
said that if the system does not receive the requested
supplemental, he would have to "drastically cut back on the
number of weeks of operation next year."
Senator Rieger inquired regarding short notice pricing
flexibility. Mr. Hayden said he would be happy to discuss
rates, interest in the system, and ridership in the course
of transportation subcommittee meetings.
Discussion followed between Senator Zharoff and Mr. Hayden
concerning operation of the TUSTUMENA. Mr. Hayden advised
that it is scheduled for a new engine next year and would be
off line for five winter months.
Senator Zharoff attested to complaints by constituents in
Southeast the they are unable to get vehicles on ferries
through the end of the summer. Mr. Hayden explained that
the system takes in approximately 72% of its revenues during
the summer season. Those revenues allow the system to
provide service during the winter. Winter travelers are
thus the ones who will most feel the impact of reduced
service.
SENATE BILL NO. 47
Act relating to the extent to which the Alaska Public
Utilities Commission may exercise its powers when
regulating utilities; establishing a regulatory cost
charge on public utilities and pipeline carriers;
relating to the allocation of costs in hearings before
the Alaska Public Utilities Commission; relating to the
method by which utilities are exempted from and made
subject to regulation by the Alaska Public Utilities
Commission; relating to the monetary threshold for
regulation of certain kinds of utilities by the Alaska
Public Utilities Commission; extending the Alaska
Public Utilities Commission; relating to staggered
terms for members of the Alaska Public Utilities
Commission; and providing for an effective date."
At this point in the meeting, Co-chairman Frank directed
that review of supplemental funding be interrupted for
consideration of SB 47. Co-chairman Halford acknowledged
proposed amendments by Senator Donley. Senator Donley
explained that Amendment No. 1 would "turn the bill into . .
. a one-year extension of the existing status quo."
Amendment No. 2 would change the extension portion of the
existing bill to a one-year extension. The Senator then
MOVED for adoption of Amendment No. 1 (90LS0340\C.2, Cramer,
2/22/95). Senator Zharoff asked if the effect would be a
two-year extension--an extension of one-year with a one-year
wind down. Co-chairman Halford concurred in that
understanding. Senator Phillips inquired concerning the
rationale behind the amendment. Senator Donley voiced need
to first solve the threat of dissolution of the APUC. The
legislature could then review technical changes in the bill
with greater deliberation.
Co-chairman Halford called for a show of hands on adoption
of Amendment No. 1. The motion FAILED on a vote of 2 to 5.
(Senators Donley and Zharoff voted in support. All other
members were opposed.)
Senator Donley next MOVED for adoption of Amendment No. 2,
which he explained would retain all existing provisions of
the bill with the exception of extension of sunset to 1996
rather than 1999. Senator Sharp quoted from a legislative
audit report recommending a ten-year extension to June 30,
2003. The proposed bill provides extension for five years,
a partial compromise. Co-chairman Halford noted that
original sunset law provided a four-year cycle. Senator
Zharoff voiced concern over extension to the year 2000
because of serious changes within the legislation that could
impact larger municipalities. He suggested that those
changes be reviewed over the next year or two. Senator
Rieger advised that he would be more comfortable with a two
rather than five-year extension. He referenced substantial
technological changes within public utilities.
Co-chairman Halford called for a show of hands on adoption
of Amendment No. 2. The motion FAILED on a vote of 3 to 4.
(Senators Donley, Rieger, and Zharoff were in support. All
other members were opposed.)
Senator Sharp renewed his earlier MOTION for passage of SB
47 with individual recommendations and accompanying fiscal
notes. No objection having been raised, SB 47 was REPORTED
OUT of committee with zero fiscal notes from the Dept. of
Revenue and Dept. of Administration and an informational
note from the Dept. of Commerce and Economic Development
showing funding for APUC contained within the Governor's FY
96 budget plus an additional $60.7 in contractual. Co-
chairmen Frank and Halford and Senators Phillips and Sharp
signed the committee report with a "do pass" recommendation.
Senator Rieger signed "no recommendation." Senator Zharoff
signed "no recommendation (too long), and Senator Donley
indicated need for amendment.
HOUSE BILL NO. 178
An Act making supplemental and special appropriations
for the expenses of state government; making and
amending capital and operating appropriations; and
providing for an effective date
At this point in the meeting, Co-chairman Frank directed
that the committee revert to continued review of FY 95
supplemental funding.
Dept. of Community and Regional Affairs
Sec. 53 seeks the traditional lapse date extension on rural
development grants. Nancy Slagle explained that these are
construction-type projects. Due to delays in award and
problems associated with the construction season, they often
extend beyond the end of the fiscal year.
Sec. 54 funding of $50.0 would provide the statutory first-
year organizational grant for the City of Egegik. It is
anticipated the second-year, $25.0 grant, will also be
requested. Co-chairman Frank asked that Ms. Slagle advised
of the date of organization.
Dept. of Corrections
Sec. 55 seeks a funding source change from $200.0 in program
receipts to general funds. This change relates to the Cook
Inlet Correctional Center. When the budget was originally
passed, it anticipated installation of a new phone system
to allow for the billing of phone calls for prisoners. That
system has not yet been established. The change covers the
shortfall in receipts.
Sec. 56 contains a $39.3 request to assist the Dept. of
Corrections in implementation of transfer of the community
jails program from the Dept. of Public Safety.
Sec. 57 seeks $1,611.5 in contempt of court fines imposed
upon the Dept. of Corrections in September. The
administration is "still in the process of trying to find
out where those moneys are going to go" in terms of whether
they will flow to the general fund or a prisoner trust. Ms.
Slagle acknowledged that court fines generally accrue to the
general fund. In this instance, however, because of the
nature of the fines, a question has been raised. Co-
chairman Halford asked if the question would be settled
prior to dealing with the court system budget for next year.
Ms. Slagle responded that she was unsure of the timing. The
issue is being handled by the office of the attorney
general. Senator Sharp voiced need to know how the money
will be used prior to taking action on the appropriation.
Sec. 58 seeks $457.0 for pending personnel actions. This
portion was removed from the $550.0 in the fast-track
supplemental and inserted here because exact amounts have
not yet been settled. Mrs. Slagle acknowledged that numbers
are not final. The administration will be providing
additional information as it becomes available.
University of Alaska
Sec. 59 would provide $130.1 to the University of Alaska for
snow and ice removal at Anchorage and Prince William Sound
campuses.
Alaska Court System
Sec. 60 provides $106.9 to the Court System for the pending
North Slope royalty case coming to trial in April. The
request relates to the actual cost of holding a trial.
These costs were not anticipated in the FY 95 budget. Co-
chairman Frank asked why costs were unanticipated. ART
SNOWDEN, Administrative Director, Alaska Court System,
explained that in November, the attorney general notified
the court system that the case would not settle and would go
to trial. The court system has historically requested
supplementals when dealing with large, complex cases.
Funding will be segregated, and if there is no trial, the
moneys will return to the legislature. The case will entail
removing a judge from his normal duties for six months. A
temporary judge will thus be hired to cover the ongoing
caseload.
Sec. 61 contains $51.7 for retroactive magistrate pay for
prior years. Mr. Snowden explained that the supreme court
froze magistrate salaries. As of July 1, the new salary
schedule will not fluctuate based on caseload. These moneys
are due and owing to magistrates. The court system does not
presently have the legal right to make the needed payment.
If not appropriated, a lawsuit will likely be filed and
easily won, plus attorney fees.
All Departments
Sec. 62 deals with miscellaneous claims and stale dated
warrants. All are over two years old. The state has a
statutory obligation to pay these costs.
Capital Requests
Secs. 63 and 64 reflect capital requests from the Dept. of
Revenue for AHFC. The first seeks $258.8 for low income
weatherization following Kobuk River flooding. Some of the
cost will be covered by the Dept. of Military and Veterans
Affairs. Funding will be covered 100% by the federal
government. Mrs. Slagle further advised, "They've asked to
reduce this to at least $149.0." OMB continues to talk with
AHFC to determine if it can be eliminated entirely.
The $1.8 million requested for matching funds for the
supplemental housing program for ongoing construction
represents corporate receipts. Senator Rieger asked if the
AHFC percentage is fixed. Mrs. Slagle said she did not
know. She added that the level provided in the FY 95 budget
was inadequate to meet the match for federal dollars.
Senator Sharp inquired concerning which projects would be
covered by the funding. Mrs. Slagle advised that she would
provide a list of specific projects.
Sec. 65 seeks $41.6 to the Dept. of Public Safety for roof
repairs at the Civil Air Patrol hangar at Merrill Field.
Sec. 66 provides $41.6 for code upgrades at the Homer jail.
Sec. 67 funding of $100.0 would improve access at the North
Slope Borough jail.
Secs. 68 and 69 provide respective funding of $153.0 and
$1,326.0 for the Butrovich Building at the University of
Alaska at Fairbanks. Funding relates to structural problems
associated with panel removal and replacement. It cost
$153.0 to remove the eroding panels. The University has
received approximately $1 million in settlements from
contractors and hopes for additional settlement receipts.
The cost of replacement is $2,326.0. The issue is expected
to go to trial next fall.
Brief discussion followed regarding use of the Butrovich
Building.
ADJOURNMENT
The meeting was adjourned at approximately 11:07 a.m.
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