Legislature(1999 - 2000)
01/21/1999 09:01 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
GENERAL SUBJECT: Overview of Governor's Proposed FY00 Operating Budget
Annalee McConnell, Director, Office of Management
and Budget
The following overview was taken in log note format. Tapes and
handouts will be on file with the Senate Finance Committee through the
21st Legislative Session, contact 465-2618. After the 21st
Legislative session they will be available through the Legislative
Library at 465-3808.
Time Meeting Convened: 9:01 AM
Tape(s): SFC-99 # 2, Side A & B
SFC-99 # 3, Side A
PRESENT:
x
Senator Parnell
x
Senator P. Kelly
x
Senator Torgerson
x
Senator Leman
x
Senator Phillips
x
Senator Green
x
Senator Donley
x
Senator Adams
x
Senator Wilken
ALSO PRESENT:
Annalee McConnell, Director, Office Of Management And Budget;
Dan Spencer, Chief Budget Analyst, Office Of Management And Budget;
David Teal, Director, Division Of Legislative Finance;
Phil Okeson, Ginger Blaisdell, Fiscal Analysts, Division Of
Legislative Finance;
LOG
SPEAKER
DISCUSSION
TAPE SFC-99 #2,
SIDE A
0
CO-CHAIR SEAN
PARNELL
Call to order and Introduction
22
ANNALEE MCCONNELL
Referred to Governor's State of the State
address
Budget cut to general fund since FY95:
$247million
All agree should be more.
However, demands have gone up
Noted areas where increases have not been
made for many years
Cut for FY00 GOV is $13.5 million
Referred to handout: Balancing the FY00
Budget
80
ANNALEE MCCONNELL
Still $13 million less than last year
Proposed cuts to child support enforcement
Proposed increase to University of Alaska
of 5.6 million
Lost fed. Funds to child care enforcement
due to success in welfare reform
Lead with AHFC for bonds - flag that this
was not converted to general funds
111
ANNALEE MCCONNELL
Two areas of funds not GENERAL FUND -
proposing new names of funds: fed matching
funds ( motor fuel tax)
Funding source could be created as non-
general fund and still be non-
constitutionally directed funds
Cigarette tax and motor fuel tax
133
ANNALEE MCCONNELL
Refer to 2nd page chart: Investing Alaska's
Tobacco Settlement
Sustainable revenue source - predictable -
not likely to change
GOV proposed to use for child support
programs
And child protection
155
ANNALEE MCCONNELL
Fortunate to have tobacco settlement
Plan to use for child protection and for
smoking deterrent programs.
163
ANNALEE MCCONNELL
Area of reductions - debt service
Will have an increase in year 2001
173
ANNALEE MCCONNELL
These are tough times - need to figure out
long term plan
We hope to take full advantage of
transportation dollars
Will see increased in fed funds for
programs like village safe water
Sen. Stevens successful in giving more fed
dollars for fewer state dollars
189
ANNALEE MCCONNELL
Personnel count - numbers of positions
Important to keep in mind some positions
funded with other sources - fed, airport.
202
ANNALEE MCCONNELL
Youth Corp program several staff went from
temp. to permanent
Nursing Asst. staff in pioneers homes
Plan to use those from housing receipts
Asking residents to pay more of their share
of the costs
212
ANNALEE MCCONNELL
Higher level of care needed - most patients
are Alzheimer's**** patients
223
ANNALEE MCCONNELL
Department of Community and Regional
Affairs 8 new full time positions because
of new functions
230
ANNALEE MCCONNELL
Department of Corrections increase in
prison population
Department of Education some positions non-
general fund positions - now will be shown
as general fund
240
ANNALEE MCCONNELL
Department of Health and Social Services -
do have some new positions - part of plan
from several years ago
40 new positions for youth facilities
28 new child protection positions to reach
0 tolerance
Positions for Malaspina - new positions
Recorders Office - new positions
255
ANNALEE MCCONNELL
Summarize new positions
265
ANNALEE MCCONNELL
Department budgets - half are now in
electronic format
Interdepartmental working groups for many
cross-department programs
Offer to work with committee to show what
they are doing
295
ANNALEE MCCONNELL
$700million limit on CBR
303
CO-CHAIR SEAN
PARNELL
When will supplemental be to us?
ANNALEE MCCONNELL
Not due until Feb. we could meet to work on
timing
313
ANNALEE MCCONNELL
Will only have half-dozen items needing
immediate attention
319
SENATOR GARY WILKEN
How to read handout? Looking for summary
ANNALEE MCCONNELL
That is part of back-up material
SENATOR GARY WILKEN
Is there a sheet that will show 25?
Reduction
330
ANNALEE MCCONNELL
We could prepare separate sheet showing
332
SENATOR GARY WILKEN
334
ANNALEE MCCONNELL
Note longevity bonus proposal to limit
allowed income
338
CO-CHAIR SEAN
PARNELL
Is there legislation for this?
ANNALEE MCCONNELL
In next couple days - we've submitted
before and Legislature has not adopted
346
SENATOR DAVE DONLEY
Other than longevity, proposing any other
reductions or program elimination's
ANNALEE MCCONNELL
Number of areas talked about
Will probably need to propose other
reductions as we go along
362
SENATOR DAVE DONLEY
Want examples of reductions
365
ANNALEE MCCONNELL
Some on statutes but may be no longer
necessary and we'll propose to eliminate
the statute requirements
List other potential areas - scaling down
operations in some departments - might be
services we'll no longer deliver
People say they want budget cuts but also
want increased services
379
SENATOR DAVE DONLEY
Today any examples?
381
ANNALEE MCCONNELL
Plan to consolidate with some departments
SENATOR DAVE DONLEY
SENATOR PETE KELLY
Northstar Borough takeover by the state
395
ANNALEE MCCONNELL
Would not increase state funding
requirements - only fed fund directions
SENATOR PETE KELLY
Position changes from last year reflected
in fiscal notes?
ANNALEE MCCONNELL
Malaspina authorized by Legislature
415
SENATOR PETE KELLY
Further
419
ANNALEE MCCONNELL
Child protection positions - no surprise -
we knew increased services
SENATOR PETE KELLY
Further comments on new positions and
fiscal notes
ANNALEE MCCONNELL
439
SENATOR PETE KELLY
If you took out everything - what would
general fund be?
443
ANNALEE MCCONNELL
New Certified Nurses Aides for pioneers
homes needed
Won't worsen the budget gap situation
Residents know of impending raises in fees
Could use those funds to replenish general
fund - have to ask if that is right thing
to do
457
ANNALEE MCCONNELL
Recorder's Office overwhelmed with activity
- low interest rates
They more than pay for operations with
their revenues
Want to speed up level of activity to
generate more revenue
465
SENATOR PETE KELLY
Not disputing addition of positions covered
program receipts.
472
ANNALEE MCCONNELL
We're working on identifying those areas
477
DAN SPENCER
Could have left pioneers home positions out
of budget and included in fiscal notes
483
SENATOR JOHN
TORGERSON
Return to Senator Dave Donley's question -
will we have a timeline for getting info
from Gov.'s speech?
488
ANNALEE MCCONNELL
GOV has asked dept.'s for further areas of
cuts
Would like to work with Legislature early
on to find areas
Haven't set a specific timeline
Want to look at a blend of approaches
508
SENATOR JOHN
TORGERSON
Without timeline means nothing - understand
we will work together but need dealing
515
SENATOR JOHN
TORGERSON
Does budget reflect any increased labor
costs - union negotiations
ANNALEE MCCONNELL
Vague answer - reflect PERS increases.
Nothing currently in budget for labor
increases except University of Alaska
SENATOR JOHN
TORGERSON
Leadership letter to GOV suggesting hiring
freeze. Have you looked at?
530
ANNALEE MCCONNELL
We are discussing
Some departments keep positions open even
when funded to cover other costs
CSED did hiring freeze because of reduced
federal funding - has put them in a pinch
Not on a formal basis, some depts. have
done to meet budget cuts
We've told dept. to make all efforts
possible
Some areas unavoidable - disasters
547
ANNALEE MCCONNELL
Other cost increases - told dept. to come
to us with a plan
550
SENATOR JOHN
TORGERSON
Plan to continue to fund PCE
552
ANNALEE MCCONNELL
SENATOR JOHN
TORGERSON
Does your budget fund?
ANNALEE MCCONNELL
SENATOR JOHN
TORGERSON
Around 10 million?
SENATOR AL ADAMS
Should be around **
SENATOR JOHN
TORGERSON
New proposed highway tax - would that match
entire highway funds? Or just increase AK
plans to receive?
ANNALEE MCCONNELL
Propose to increase to total $50 million to
secure all fed funds
Still getting info re federal matches
570
ANNALEE MCCONNELL
Already special highway account in general
fund - appropriate to put tax fund in that
account to be used to match fed funds
574
SENATOR JOHN
TORGERSON
Not really reduction - just reappropriation
of ISTEA funds
579
ANNALEE MCCONNELL
In the end still a reduction
We will not have a capital budget to match
what done last year
Legislature last year
585
SENATOR RANDY
PHILLIPS
Reason why motor fuel tax not stipulated in
constitution to guarantee funds used for
highway?
TAPE SFC-99 #2 SIDE
B
9:49 AM
587
ANNALEE MCCONNELL
SENATOR RANDY
PHILLIPS
Special election
ANNALEE MCCONNELL
Can't to constitutional amendment in a
special election
Other areas where legislature not chosen to
do constitutional amendment
569
SENATOR SEAN
PARNELL
Total funds from FY99 to FY00?
567
ANNALEE MCCONNELL
$6.5 in 00 and $6.* in FY99 - detailed
CO-CHAIR SEAN
PARNELL
About $300 million total?
ANNALEE MCCONNELL
Yes also included permanent fund
557
ANNALEE MCCONNELL
Assumption that as budget goes up
everything is expanding
555
CO-CHAIR SEAN
PARNELL
Reclassification from other sources to
general fund
Motor fuel, pioneers homes, tobacco
settlement
Request go through why not treated as
general fund
547
ANNALEE MCCONNELL
Pioneers homes - new bill
CO-CHAIR SEAN
PARNELL
Ask clarification
ANNALEE MCCONNELL
Treat as apple to apples comparison
If approved, entire pioneers home receipts
would be in this category - like the
University of Alaska
537
CO-CHAIR SEAN
PARNELL
Base is treated as general fund and
increase treated as other - if legislation
passed all would be treated as other
ANNALEE MCCONNELL
Would treat as separate receipts and growth
would be adjusted accordingly
CO-CHAIR SEAN
PARNELL
Motor tax
ANNALEE MCCONNELL
Would be treated as a match revenue and
expenditure - we propose to treat as non
general fund category
CO-CHAIR SEAN
PARNELL
Collecting motor fuel tax now and deposit
into general fund
Can have policy argument later - want to
understand know
ANNALEE MCCONNELL
AK Public Utilities Commission example
Detailed discussion
487
CO-CHAIR SEAN
PARNELL
Bill introduced yet on motor fuel increase?
ANNALEE MCCONNELL
Not yet - soon
CO-CHAIR SEAN
PARNELL
Tobacco settlement?
ANNALEE MCCONNELL
Don't think has to be legislation -
settlement still in court
CO-CHAIR SEAN
PARNELL
Question of clarification on last page of
handout - compare budget increases for all
states - is this just AK general funds?
ANNALEE MCCONNELL
Information is supposed to be general funds
462
DAN SPENCER
Usually compared equally
458
CO-CHAIR SEAN
PARNELL
Proposed $15million reduction - where do
you plan to make reductions?
ANNALEE MCCONNELL
Working on - can't tell you know
Told departments they would have to absorb
all cost increases
Formula programs
Can't do cost comparison on K-12 under
current set-up
CO-CHAIR SEAN
PARNELL
So you figure enough room to realize
$15million savings?
ANNALEE MCCONNELL
No. there is no fluff - need to re-do how
we do certain services
428
ANNALEE MCCONNELL
Some can be very controversial
We'll go back and do another round of
looking at cuts
Nickel and dime cutting doesn't work
Not a six billion dollar budget - explain
When you focus on where cuts can be taken
it is a whole lot smaller
405
SENATOR LOREN LEMAN
Longevity bonus $8million reduction in your
earlier proposal included in your $15?
ANNALEE MCCONNELL
No - in addition
SENATOR LOREN LEMAN
Consolidations - Is that really going on?
ANNALEE MCCONNELL
Yes - not prepared to go into here
SENATOR LOREN LEMAN
Request come back to go into detail
388
SENATOR GARY WILKEN
When do you think we will have breakdown
info on employee contracts and fed
transportation grants
ANNALEE MCCONNELL
Personnel count hopefully early next week
SENATOR GARY WILKEN
Fed transportation numbers?
ANNALEE MCCONNELL
SENATOR GARY WILKEN
How will that be effected by increased
motor fuel tax?
ANNALEE MCCONNELL
Varies
369
ANNALEE MCCONNELL
Are some areas in ISTEA
Rule of thumb is 9 to 1
SENATOR GARY WILKEN
Confirm 9-1
SENATOR RANDY
PHILLIPS
I just checked with DOT and GOV office and
got different figures - bring in a little
over $4.5 million
353
ANNALEE MCCONNELL
Clarify we have put in more money in fed
matching funds than motor tax
If new proposal - we would go into more
345
SENATOR AL ADAMS
Cuts not in my lingo
Think committee needs to come up with
number to work with - budget reductions
SENATOR AL ADAMS
Even with cuts doesn't solve the whole
picture of deficit
Want committee to have number for
subcommittee to work with
Want to debate issues
I won't vote for motor fuel tax unless
something for my constituents - saying
community paying over $1.79 is exempt.
316
SENATOR AL ADAMS
Willing to debate income tax
310
SENATOR AL ADAMS
I will look at approvals made by LB&A this
year to address
305
SENATOR JOHN
TORGERSON
Y2K - separate piece - legislation?
300
ANNALEE MCCONNELL
Good idea to have separate since even fast
track not very fast - will get to you this
week
SENATOR JOHN
TORGERSON
So this budget doesn't include Y2K?
292
ANNALEE MCCONNELL
Explain why separate - think good for you
to see all Y2K as one unit
282
SENATOR AL ADAMS
Supplemental Y2K and another supplemental
for deficit FY99 - another supplemental -
any others?
274
ANNALEE MCCONNELL
3 supplementals: Y2K, regular, and fast
track - explain
267
CO-CHAIR SEAN
PARNELL
One area close to my heart - performance
measures
Hours spent last year
GOV vetoed for constitutional reasons -
understand
What efforts have been made to comply by
depts?
253
ANNALEE MCCONNELL
Many measures in place already
0 tolerance - one example
All departments continued to be very
conscience
You'll see that in the budget documents
237
CO-CHAIR SEAN
PARNELL
Look forward to that in subcommittee -
opened good dialog
Reiterate Senator Pete Kelly concern -
total number of positions - we'll need
itemization of those
Department of Administration 110 new - 60
pioneers home - where are the others?
Give other examples
217
ANNALEE MCCONNELL
Have one in draft stage - working on to
make less technical
Many are already on payroll just listed
differently
202
CO-CHAIR SEAN
PARNELL
When will we have firm proposal from the
Gov.?
ANNALEE MCCONNELL
Happy to work with you
Working to have discs available - actual
program to be available
Some complicated drafting details to work
on
170
CO-CHAIR SEAN
PARNELL
Spreadsheet as I understand - when will
disk be ready?
ANNALEE MCCONNELL
Within a week
CO-CHAIR SEAN
PARNELL
OK when will the legislation be ready?
159
ANNALEE MCCONNELL
CAN'T say - spreadsheets available have
interactive model with Gov.'s proposal
150
CO-CHAIR SEAN
PARNELL
Important - we can't make assumption on
proposals we don't understand
Gov.'s speech some people exempt from
income tax - need to know numbers
136
ANNALEE MCCONNELL
Presentation does include a lot of
substance
Doing for House Finance - can do for SFC
also
Discs available after that
128
CO-CHAIR SEAN
PARNELL
ANNALEE MCCONNELL
Willing to give presentation
116
SENATOR JOHN
TORGERSON
Normally get a list of RIP - can we get a
list this year
110
ANNALEE MCCONNELL
Just done report for you
104
SENATOR JOHN
TORGERSON
Spending by state handout - would like to
see adjusted per capita
98
ANNALEE MCCONNELL
Could show some things differently however,
some areas not taken into account - AK no
counties for court systems, transportation,
prisons + education - AK spends more for
schools
78
SENATOR JOHN
TORGERSON
Realize - want breakdown by capita - you
can make adjustments for those areas
education etc.
Think this handout shows distortion also
63
ANNALEE MCCONNELL
Can try to do that - many distortions
elsewhere: per person tax very high because
included oil taxes
49
SENATOR JOHN
TORGERSON
Important to show Alaskans per capita
41
CO-CHAIR SEAN
PARNELL
Thank Annalee McConnell
Introduce Jayne Marie Severin, JD High
School Student doing intern work
Correct schedule - PFD meeting 4pm instead
of 4am
SENATOR AL ADAMS
12
SENATOR DAVE DONLEY
Comment on Administration presentation
Want further discussion - explain
10:36 AM - TAPE MALFUNCTION
SENATOR DAVE DONLEY
Ways and means to facilitate budget - want
committee to draft a constitutional
amendment to reflect
50
CO-CHAIR SEAN
PARNELL
Recess at 10:39 AM
SENATE FINANCE COMMITTEE
LOG NOTES
1/21/99
Page 10
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