Legislature(1997 - 1998)
03/19/1997 09:07 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE March 19, 1997 9:07 A.M. TAPES SFC-97, # 61, Sides 1 & 2 (000-589, 589-000) SFC-97, # 62, Side 1 (000-302) CALL TO ORDER Senator Bert Sharp, Cochair, Senate Finance Committee, convened the meeting at approximately 9:07 A.M. PRESENT In addition to COCHAIR SHARP, SENATORS DONLEY, PHILLIPS, TORGERSON, and PARNELL were present when the meeting was convened. COCHAIR PEARCE and SENATOR ADAMS arrived as the meeting was in progress. Also Attending: SENATOR LYDA GREEN; SENATOR JERRY MACKIE; ANNALEE MCCONNELL, Director, Office of Management and Budget; SHARON BARTON, Director, Administrative Services, Department of Administration; DUGAN PETTY, Director, General Services; DOA; JAMES KOHN, Director, Longevity Bonus Programs, DOA; MARK BADGER, Director, Information Services, DOA; BEVERLY REAUME, Director, Personnel, DOA; DAVID ESSARY, Finance System Manager, Finance, DOA; GUY BELL, Director, Administrative Services, Department of Commerce and Economic Development; DEBBY SEDWICK, Assistant Commissioner, Division of Trade and Development, DCED; JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles, Department of Public Safety; REMOND HENDERSON, Director, Administrative Services, Department of Community and Regional Affairs; fiscal analysts and aides to committee members. SUMMARY INFORMATION SB 35 MANAGEMENT OF PARKS & RECREATIONAL AREAS COCHAIR SHARP noted a draft CS was before the committee. SENATOR PHILLIPS MOVED to ADOPT CSSB 35(FIN). Without objection, it was ADOPTED. SENATOR GREEN testified on behalf of the bill. After questions and discussion, COCHAIR PEARCE MOVED for adoption of a zero fiscal note to the CS. Without objection, it was ADOPTED. COCHAIR PEARCE MOVED CSSB 35(FIN) from committee with individual recommendations and a new zero fiscal note. Without objection, CSSB 35(FIN) was REPORTED OUT with a new zero fiscal note by the Senate Finance Committee, a previous fiscal note from Department of Natural Resources (1,100.0), a previous zero fiscal note from DNR, and two previous zero fiscal notes from Department of Fish and Game. SB 64 SHUYAK ISLAND STATE PARK SENATOR MACKIE testified on behalf of the bill. COCHAIR PEARCE MOVED Amendment #1. Without objection, Amendment #1 was ADOPTED. Amendments #2 and #3 were not offered. SENATOR PARNELL MOVED CSSB 64(FIN) from committee with individual recommendations and accompanying fiscal notes. Without objection, CSSB 64(FIN) was REPORTED OUT with a previous fiscal note (15.0) from Department of Natural Resources and a previous zero fiscal note from Department of Public Safety. SB 107 APPROPRIATIONS: CAPITAL & FUNDS COCHAIR SHARP gave an overview of the capital budget chronology and agenda. He took testimony on various capital projects in SB 107 submitted by the Departments of Administration, Commerce and Economic Development and Community and Regional Affairs. SB 107 was HELD for further hearings. SENATE BILL NO. 35 "An Act relating to management of state land, water, and land and water as part of a state park, recreational or special management area, or preserve; relating to reports to the legislature concerning prohibitions or restrictions of traditional means of access for traditional recreational uses within a park, recreational or special management area, or preserve; relating to Chilkat State Park." COCHAIR SHARP invited Senator Green to address the committee regarding the draft CS which was before them. SENATOR PHILLIPS MOVED to ADOPT CSSB 35(FIN) for the purpose of discussion. Without objection, it was ADOPTED. SENATOR LYDA GREEN, Sponsor, referred to last year's SB 30 which was in response to an attempted closure near Denali Park. There was concern among users with a variety of needs for access to state parks and lands that surround them. SB 30 was subsequently vetoed. Additional attempts at closures of land that were state parks or managed as state parks were made. SB 35 revisits the issue. SENATOR GREEN referenced a previous version that had an expanded definition to include parks, Board of Game and other entities. It was changed back to only parks, but retained the reporting requirement. SENATOR GREEN read page 4, lines 1-10, and spoke of the 90- day allowance, which would in most cases allow for emergency closures for safety or resource management. It gives the legislature the ability to have information so they don't have to react during the interim to closures that are not favored by constituents and that restrict their access to park lands that should be used. She noted that there was no process for public input or way to respond to the previous closures before they were announced. SB 35 addresses that issue. The presence of COCHAIR PEARCE was noted. SENATOR TORGERSON referred to language in a Department of Natural Resources memo dated March 12. SENATOR GREEN stated that the language in the last paragraph was removed from the bill. It left the focus of the bill on state parks. SENATOR PARNELL stated his understanding that closures for public safety were limited to ninety days without legislative approval. He asked why she chose to do that and if Perseverance Trail would be included. SENATOR GREEN believed the trail was a state right-of-way but was unsure if it would be included. SENATOR PARNELL was troubled by the public safety aspect and questioned why it would not be a departmental call. SENATOR GREEN responded that closures for public safety and resource management were legitimate reasons for them to come up for approval by the legislature. SENATOR TORGERSON brought up concerns expressed in a letter regarding the Kenai River Special Management Area for the record. One concern related to limits of boat motor horsepower. He asked if there was any conflict regarding authority to control that. SENATOR GREEN didn't see that SB 35 addressed that issue at all. SENATOR TORGERSON discussed another concern. The Board of Fish gave the local biologists authority to close stream banks to fishing for habitat protection. He thought SB 35 would affect that only if it were being done on a permanent basis. He questioned how many years a ninety-day limit could be imposed or whether it was a one time thing. SENATOR GREEN stated closures were limited to ninety days in a calendar year and there could be repeated closures if not disapproved. SENATOR PARNELL referred to the language on page 4, line 4, "submitted to the legislature for approval" and questioned what kind of approval was anticipated. He also questioned why she liked the affirmative mechanism as opposed to a failure to disapprove as mentioned in the March 12 memo. He could foresee a list of closures being stalled in a committee and never taken up. SENATOR GREEN responded that if the legislature disapproved by passing legislation supported by both bodies, and it was vetoed by the governor, the process would be stopped for another cycle. She felt it was difficult for those not affected by park closures to understand what happens when the changes go out to the constituent base for reasons not cited as public safety or resource management. It restricts multiple-use access. SENATOR PARNELL stated for clarification that even those areas the department closes for public safety reasons have to come before the legislature if they are longer than ninety days. He asked if there was a concern with the department using resource protection as an excuse for closing something or if she just wanted legislative review of everything the department does in the area. SENATOR GREEN responded that public safety and resource protection is such a broad waiver or exception that conceivably anything could fall into that. SENATOR PARNELL was still troubled by the public safety aspect. He didn't believe the department should have to come to the legislature with a long list of public safety closures for approval. He cited Perseverance Trail as an example. SENATOR GREEN reminded him that the bill refers to those areas being managed as state parks, not anything over 640 acres. They are the smaller parcels of DOT property that abut or access a state park. She added that staff informed her there was a list in committee packets of what the bill refers to. SENATOR GREEN briefly discussed the broad window between a closure and eventual approval or disapproval by the legislature, depending on the timing. COCHAIR PEARCE MOVED for adoption of a zero fiscal note to the CS. Without objection, it was ADOPTED. COCHAIR PEARCE MOVED CSSB 35(FIN) from committee with individual recommendations and a new zero fiscal note. Without objection, CSSB 35(FIN) was REPORTED OUT with a new zero fiscal note by the Senate Finance Committee, a previous fiscal note from Department of Natural Resources (1,100.0), a previous zero fiscal note from DNR, and two previous zero fiscal notes from Department of Fish and Game. SENATE BILL NO. 64 "An Act relating to the Shuyak Island State Park." SENATOR JERRY MACKIE, Sponsor, read his sponsor statement to the committee (Copy on file). He advised the committee of changes made in the Resources Committee regarding public access, continued ability for hunting, fishing, trapping and other recreational uses that the lands have traditionally offered for years. He referred to a proposed amendment to Section 2, page 4, lines 2-7, relating to closures for a biological emergency and read additional language for consideration. "This subsection does not restrict the authority of the Board of Fisheries and the Board of Game to engage in the normal process of regulating hunting, fishing and trapping within the park." He acknowledged Amendment #1 offers language to replace that section. COCHAIR SHARP stated Amendment #1 did not have the language Senator Mackie just read. SENATOR MACKIE indicated he had no objection to Amendment #1. COCHAIR PEARCE MOVED to ADOPT Amendment #1. COCHAIR SHARP explained that it adds more definition to how long a biological emergency closure could exist without reevaluation and reestablishment as the basis for a closure. There being no objection, Amendment #1 was ADOPTED. COCHAIR SHARP brought Amendment #2 before the committee. It would repeal the McNeil River State Game Refuge passed in 1992 on the precept of the Paint River project which was going to install a fish ladder to establish a sockeye salmon fishery in the upper lakes. The justification was that when the facility became operational it would attract some of the bears from McNeil River and they would not be protected. The fact is that the Paint River was already in the sanctuary that protected the McNeil River bear population. The refuge expanded by 141,000 acres in spite of the fact that the state didn't have ownership of it. There was strict legislative direction in statute that, except for biological emergency, they could not restrict bear hunting but the Game Board prohibited bear hunting a couple years ago. Several environmental groups sued the state to disallow the Paint River project to open after it was built. There has been a judgement forbidding the opening. The result being that the whole justification for the addition of the refuge has been blown apart. The Paint River is still in sanctuary, there has not been any new salmon fishery to lure the bears outside the refuge and there are still 141,000 acres locked up and not in multiple-use. He felt that some had bitter feelings over how it all materialized. COCHAIR SHARP did not offer Amendment #2 but would hold it for a floor vote. SENATOR MACKIE expressed appreciation for the cochair's concerns and the fact that he did not offer the amendment. He added that the language in SB 64 was carefully crafted so that the only closure for hunting, fishing or trapping would have to be a biological emergency. SENATOR TORGERSON asked for clarification of language inserted by the Resources Committee on page 1, lines 7-8, relating to covenants and deed restrictions set by the Kodiak Island Borough. SENATOR MACKIE responded that it was part of the purchase agreement negotiated between the Exxon Valdez Oil Spill Trustee Council and the Kodiak Island Borough. SENATOR TORGERSON asked if the covenants could be changed at the whim of the Kodiak Island Borough. SENATOR MACKIE said they could not, that they were signed off as part of the purchase agreement and it became property of the state. COCHAIR SHARP brought attention to a court decree which he read from, pointing out that the decree already restricts the use of the state public lands. COCHAIR SHARP did not offer Amendment #3. He asked the committee's pleasure regarding SB 64. SENATOR PARNELL MOVED CSSB 64(FIN) from committee with individual recommendations and accompanying fiscal notes. There were no objections, and so CSSB 64(FIN) was REPORTED OUT with a previous fiscal note (15.0) from Department of Natural Resources and a previous zero fiscal note from Department of Public Safety. SENATE BILL NO. 107 "An Act making and amending capital and other appropriations and to capitalize funds; and providing for an effective date." COCHAIR SHARP announced the overview of the capital budget chronology and agenda. Following are an outline and excerpts: I. Chronology of the governor's FY 98 Capital Budget Submission A. On December 16, 1996, the governor released his FY 98 budget plan reflecting a $100 million general fund cap for capital projects and a $16 million AIDEA dividend to the General Fund. The governor did not submit a capital budget bill at that time as required by statute. B. On March 6, 1997 AHFC announced a $27.6 million one-time windfall from the state Mortgage Insurance Fund resulting from the refunding of $434 million of AHFC bonds. On the same day, the House and Senate Finance Cochairs announced their intentions to use the windfall to reduce the FY 98 fiscal gap and draw on the CBRF. C. On February 27, six weeks after the beginning of the legislative session and two and one-half months after the statutory deadline for submitting a capital budget bill, the governor released his capital budget. As submitted, it would: a. spend $113.3 million from the general fund, or $13.3 million more than the December 16 cap; b. spend $16.8 million from AIDEA directly on capital projects; c. spend $53 million from AHFC on capital projects, leaving only $50 million to help close the fiscal gap, whereas the majority's strategy would use $70 million from AHFC to close the gap and spend $33 million for capital projects; and d. as a result, increase the fiscal gap by $50.1 million. D. On March 13, the 60th day of the legislature and the statutory deadline for submitting operating and capital budget amendments, the OMB send the Cochairs a memo a) requesting an operating budget front section amendment to delete the $16 million AIDEA dividend appropriation to the general fund; and b) advising of OMB's intent to submit further capital budget amendments at a later date. E. On March 18, 65 days into the 120-day legislative session, OMB submitted a request for CIP budget amendments, replacing $5.4 million in general funds with a $5.4 million of the AHFC one-time windfall from the state Mortgage Insurance Fund. This use of AHFC funds is at odds with the Cochairs' intent to use the windfall to close the gap rather than increase spending. II. Magnitude of the Task Before the Committee A. Given the differences between the majority's budget strategy and the governor's latest budget proposal, the Senate Finance Committee will have to reduce the governor's capital budget submission of $183.1 million by $50.1 million (General Fund <13.3>, AIDEA <16.8>, AHFC <20.0>). III. Approach to Resolving the Governor's Capital Budget Problems A. On March 21, the committee is scheduled to hear SB 136, a bill that clarifies the governor's responsibility to submit the proposed capital budget bill on December 15 with the rest of the proposed budget. B. Request OMB to provide no later than 24 hours before the next capital budget hearing: 1. an update to the governor's comprehensive FY 98 spending plan reflecting a) the capital budget bill as submitted, plus requested amendments; b) operating budget bills as submitted, plus requested amendments; c) the net budget impact of governor's bills as a separate line item; and d) a projection of the total FY 98 general fund revised programs expected to be submitted to the Budget and Audit Committee next fiscal year. 2. a list of projects retained in the capital budget that used a) no AIDEA corporate receipts; b) only $33 million in AHFC corporate receipts; and c) $100 in general funds. COCHAIR SHARP concluded his summary and asked Ms. McConnell to address the committee. ANNALEE MCCONNELL, Director, Office of Management and Budget, acknowledged the challenge ahead. One of the reasons was that they were in the fourth consecutive year of an extremely reduced general fund capital budget proposal. Contributors to the pressure include federal opportunities that need to be taken advantage of, such as increased share in transportation projects and funds for urban and rural water and sewer projects. There are also new federal requirements relating to welfare reform and emergency communications which require significant investments in computer systems. Concerning the AIDEA dividend, MS. MCCONNELL acknowledged the requested amendment to the operating budget to transfer the dividend to capital projects instead of the general fund. They decided that it would be appropriate to suggest the $16 million AIDEA dividend be used for economic development. She acknowledged the legitimate question of what effect it has on the fiscal gap. They took into account the fact that there is a better revenue picture now from oil development, not just for the current fiscal year, but also in the longer term. Next, MS. MCCONNELL brought up the long range plans and six-year capital plan offered last year. There was a proposal to have the AIDEA dividend remain at $50 million and the capital projects at $53 million. Last year, there was a good partnership to make many water/sewer projects possible through AHFC. MS. MCCONNELL mentioned two items excluded from the House Finance CS for the FY 97 Supplemental. They were of highest priority, needed to be moved ahead on the schedule and must not "fall through the cracks." The items are the McLaughlin Youth Center security needs, the emergency communications in DH&SS, and the Police Training Academy. A large remaining issue was school construction and major maintenance and their budget did not go far enough to make a dent. The same holds true for prisons and deferred maintenance. The governor requested Speaker Phillips to include in the task force on deferred maintenance a broad look at capital needs. She noted an updated six-year plan was currently being printed and suggested the task force take six-year capital planning as part of their charge over the interim. It could set the stage for a resolution next year recommending a six- year plan for capital investments for the state, similar to what communities presently do. MS. MCCONNELL continued her presentation with a summary of the front section of SB 107. She mentioned Section 3 previously, regarding the AIDEA dividend and added that they had conferred with AIDEA to insure that their bond situation would not be jeopardized by the proposal. It would be consistent with the parameters passed in statute last year. Section 4 was maintained at the $15 million level that was in the budget last year. They continue to propose that level of funding in their six-year plan. Many communities rely on that for projects they determine themselves and it has been successful. Two of their proposed amendments relate to Capital Matching Grant titles. There will also be requests from communities for changes in project titles or shifts in amounts of money. It has been the practice to take those up to the last minute, but they have tried to get communities to firm it up so there are fewer amendments at the last minute. They will continue to coordinate with both the Cochairs' offices as well as the appropriate legislators with copies of the amended requests. She did not expect too many. Section 5, Federal or Other Program Receipts, relates to other issues that have come up in the context of RPL's. They received one recently from EVOSS and Representative Hanley suggested it be brought up and perhaps included in the supplemental bill. MS. MCCONNELL closed her comments and deferred to the individual departments for the remainder of the bill. SHARON BARTON, Director, Administrative Services, Department of Administration; addressed the committee next. She referenced Section 7, which reappropriates $25.2 thousand, and would be addressed by Dugan Petty. DUGAN PETTY, Director, General Services; DOA; explained that the figure was the balance that remained from a completed CIP project. They were requesting authorization to reappropriate it for office consolidation support for space planning and to look at reconsolidation of offices as a way to reduce the leasing budget. COCHAIR SHARP asked if it would be contracted out. If it were done with in-house personnel, he questioned why additional funds would be needed for a study. MR. PETTY responded that the expenditures would acquire contractual services such as planning and consulting services necessary to facilitate consolidation, and pay moving costs. MS. BARTON pointed to the next section affecting general services on page 5, line 24, regarding the Juneau subport facility replacement planning request for $100 thousand. MR. PETTY added that the request is to bring on a consultant to help plan for the replacement of the subport occupants. The property was transferred to the Mental Health Land Trust by lease, expiring 6/30/99, which obligates relocation. The location consists of warehouse space used by the Departments of Fish and Game, Natural Resources, Administration, and the Legislature. They need to look at the alternatives available to move the occupants into minimum space requirements. The money would enable planning funds for the task. The next project, an Automated Purchasing System for $225 thousand, was on line 26. MR. DUGAN explained it was to bring on an electronic commerce package as a different way of conducting procurement business. They want to tie it into their access system, to have the ability to know the funds are there and also to route it to make payment. They also want the system to use electronic commerce with web- based technology that would allow them to put out their bid and quote solicitations for vendors to access either through fax-back or web-based browser systems. Ideally, the vendor could electronically submit their information to the state, and the notice of award could be done electronically with a parallel fax-back system. It would likely reduce transaction costs for procurement across the system. Looking at the private sector, it is the wave of the future in the avenue of electronic commerce, one solution being the internet, the other being an electronic data interchange where business transactions are reduced to data transaction sets which are shorthand for many of the written documents. The federal government has moved to that type of transaction for procurement under $100 thousand. The same theory applies, by conducting business in an electronic commerce setting, costs of operation and transactions can be reduced for both the state and the vendor. They favored an internet-based approach rather than a full "EDI" approach as a cost-saving opportunity. MS. BARTON next directed attention to page 5, line 8, with a request of $700 thousand for Pioneer Homes Renovations, Repairs and Maintenance. JAMES KOHN, Director, Longevity Bonus Programs, DOA, testified that his capital budget request was divided into three categories. One was correction of fire, life, and safety code violations. The Fairbanks home had electrical code compliance of $142 thousand and the Anchorage ventilation system compliance of $177 thousand. Of the hundreds of these types of violations over the years, they were the two they felt needed addressed at this time. The next category was structural repair and maintenance to two homes. The Anchorage home has water leakage damage, the parking lot is buckled and dangerous to walk across. The Juneau home is ten years old and the exterior walls need to be maintained. The third main area was energy efficiency modifications to the home in Palmer which uses a lot of heating energy. They want to replace windows in the resident and other areas which leak much of the heat. It is difficult to keep the rooms warm in the winter. MR. KOHN noted there may be other projects that may come up that could take precedence over the energy efficiency modification because there are problems with the buildings, things fall apart unexpectedly and need immediate attention. In response to a question by SENATOR PHILLIPS, MR. KOHN stated the hot water section of the Anchorage home was built in 1982 and had been patched four times. MS. BARTON continued down the list, the next four projects had to do with Information Services. MARK BADGER, Director, Information Services, DOA, approached the committee. The first item he described on page 5, line 10, was $2.1 million from the internal service fund. They are in the fourth year of charge back with the state in information services and part of that mechanism is the depreciation of equipment. When it is in need of replacement or repair, it comes from the rates that are charged to the agencies, so the individual departments or his division did not have to approach the legislature yearly for broken equipment replacement. It authorizes a number of items including a small printer, tape library, disk space, software and hardware replacement and improvement, upgrades. The charge-back works well in that it allows an auditable trail for agency use and tracking rates against the national average. MR. BADGER, brought up the next project on page 5, line 12. A request of $400 thousand for the Satellite Interconnect Project rounds out a $2 million project underway for three years. This last piece makes the digitization of the Alaska Rural Communication Service Emergency Alert compliant by allowing activation of emergency notification to individual communities when an emergency is imminent. If a tsunami warning is required on the southwest coast of Alaska, an emergency alert could be issued to the specific communities so that the entire state would not be illuminated with emergency notification of a tsunami. The third project for MR. BADGER'S division on page 5, line 14, was the Metropolitan Area Network which provides high speed connectivity between downtown Juneau and state agencies out the road for $200 thousand. MR. BADGER concluded his presentation with the last project on page 5, line 16, a $500 thousand request for FCC-mandated digital technology for the Emergency Radio System. They must convert all current radios from analog to digital because of the pressures on spectrum band space, an ongoing project for the next four to five years for several agencies. It was a $1 million project which they hoped they could partner with others. MS. BARTON brought up the next project on page 5, line 18. Human Resource Systems Computerization was the department's first priority project and critical to successfully implementing the re-engineering of the personnel processes. She asked Ms. Reaume to provide details to the committee. BEVERLY REAUME, Director, Personnel, DOA; testified that two weeks ago they started a pilot project for a new state hiring process. It is an internet/online-based system. The request is what it will take to implement the project statewide. A critical piece is the scanning of applications for hard copies. There is a need to work on archiving, retrieval, recording and fine tuning. MS. BARTON noted another important project to the department on page 5, line 20, Internet Access for Driver Licenses and Vehicle Titling, and asked Mr. Essary to provide information. DAVID ESSARY, Finance System Manager, Finance, DOA; described their goal to make the DMV more efficient, reduce customer lines and improve service. They have four focuses in that area. One is to replace routine tasks by the purchase of adhesive tab printers to streamline the method of issuing license plate tabs. Another is to provide internet access as an "alternate highway" to the DMV in addition to the two existing ones, those being mail or visiting the office. They are in a pilot project with two dealers for registration and titling functions. Another focus is paper reduction by installing user friendly computer terminals for direct data entry. The last area provides public education for people waiting in line via videos, posters and signs and employee training regarding new programs and laws. MS. BARTON explained the next project on page 5, line 22, requesting $100 thousand for Public Radio and Television Technology Improvement Grants. The appropriation will enable the commission to meet and prioritize $3.8 million in grant requests from the stations. The last project for the Department of Administration was a request of $350 thousand for the newest division, Motor Vehicles, for FY 98 license plates. JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles, Department of Public Safety, detailed that the fiscal request was to purchase the required license plates that have to be issued on a yearly basis. The funding is for inventory of the basic blue/gold design, not the new gold rush plate passed last year. To fully fund that program would require $142 thousand. SENATOR DONLEY inquired if the plates were traditionally a capital budget item. MS. HENSLEY responded that it has been for a number of years. It used to be in the operating budget, but when line item reductions occurred, they ran out of plates one year, so the decision was made to move it to the capital budget several years ago. SENATOR DONLEY felt it should be reflected as a cost of running the division. MS. MCCONNELL interjected that they had proposed moving it to the operating budget last year. End SFC-97 #61, Side 2 Begin SFC-97 #62, Side 1 COCHAIR SHARP brought up the capital budget requests for the Department of Commerce and Economic Development. GUY BELL, Director, Administrative Services, Department of Commerce and Economic Development, first brought up page 6, line 5, requesting $350 thousand for the Economic Development Matching Grants program. DEBBY SEDWICK, Assistant Commissioner, Division of Trade and Development, DCED, described the next project on line 6, which provides financial incentive of $500 thousand for direct air service between Japan and Alaska for a minimum of two years. There are currently about 20 thousand Japanese tourists that come to Alaska per year, many in the winter. It is estimated there would be an additional 20 thousand passengers per year bringing in about $46 million of revenue to the state, adding about $251 thousand to airport landing fees and creating approximately 500 jobs. The money is from AIDEA and matched by the Anchorage Convention and Visitors Bureau ($500 thousand per year for two years) and Fairbanks Convention and Visitors Bureau ($150 thousand per year for two years). COCHAIR SHARP inquired if this was different from the governor's announced bonus to the first airline to provide passenger service. MS. SEDWICK responded that it was the same which evolved into a two year program to involve the private sector. In response to a question by COCHAIR SHARP, MR. BELL confirmed that the Kodiak Launch Complex on page 6, line 7, had been moved to the supplemental appropriations bill (SB 83) and withdrawn from the capital budget. MR. BELL next addressed the final project for his department. It was a $250 thousand request for AIDEA funds for Visitor Statistics, something they try to do every four years to get basic information on who's coming to the state, how they get here, how much they spend and what their impressions are of the state. It is fundamental research for marketing and product decision for the industry. The program was downsized from $800 thousand in the past. The information would be available to the public. COCHAIR SHARP invited testimony from representatives of the Department of Community and Regional Affairs on their portion of the budget. REMOND HENDERSON, Director, Administrative Services, Department of Community and Regional Affairs, briefly reviewed their items contained in the capital budget. The first was $50 thousand for Organizational Grants on page 6, line 10. On the next line, Rural Development Grants, MR. HENDERSON referenced an amendment to decrease the federal portion of Mini-Grants from $480 thousand to $166 thousand. Line 11, the Alaska Yukon Kuskokwim Salmon Marketing grant, was a $250 thousand project designed to develop a salmon marked for that area. SENATOR ADAMS suggested reducing the ASMI budget by that same amount. Line 14, the Head Start Repairs, was for upgrade and repair to various facilities across the state. Line 15, the Delta Junction Economic Recovery project for $675 thousand, was for a study of the reuse of the base, $500 thousand of which would come from federal funds. COCHAIR PEARCE brought up a question concerning grantee responsibility for Head Start facility repairs. MR. HENDERSON explained there was a low profit margin and the money provides assistance. The grant recipients prioritize their projects, decide where funds should go and the department makes awards based on those recommendations. MS. MCCONNELL added that there were some situations with safety and fire code violations in community based facilities last year that this money would go to. COCHAIR PEARCE was supportive of Head Start but questioned whether it made sense to "be in the repair business to grantees" because that is not done for child care or day care facilities. MR. HENDERSON brought up page 6, line 15 next. The Native Heritage Center was a project located in northeast Anchorage along Muldoon Road and the Glenn Highway. A 26,000 square foot welcome house includes exhibit and demonstration areas for theatre, cafe, gift shop, gathering hall, tourist information, and an outdoor demonstration circle. It is anticipated to bring in about $15 million to the local economy with construction and contracts to Native and other Alaskan ventures, and to provide ten full-time year-round jobs and about 150 part-time summer jobs. SENATOR PHILLIPS noted the next item on line 17 and questioned the label, suggesting it should read "Artic Winter Games-Team Alaska." MR. HENDERSON agreed to check on the wording. He explained the request was primarily for traveling expenses of the team to travel to the Northwest Territories '98 competition. Line 18 listed Community Block Grants comprised of the Community Services Block Grant and the Community Development Block Grant. The Services grant goes primarily to RuralCAP, the one designated CAP agency for the state, designed to assist development in poverty-stricken families. The Development grant provides assistance for basic infrastructure needs such as construction, economic development activities, roads, etc. MR. HENDERSON brought up the next item, Federal Energy Projects, on line 19, a request to receive authorization for $10 million from the federal government energy division. They are attempting to find alternative means of energy, alternative sources of funding for fuel projects, rural power system upgrades, and other energy-related items. They have been successful receiving these funds in the past. Concluding his overview, MR. HENDERSON explained that the next item on line 20, Rural Power Systems Upgrades, was in the Energy Division and was for generators, distribution lines, and other power structures. The last item was the Southeast Economic Revitalization Initiative on line 21, a result of the mill closure in Ketchikan. COCHAIR SHARP asked if there were questions. There being none, he concluded the testimony and HELD SB 107 for further consideration. ADJOURNMENT The meeting was adjourned at approximately 11:04 A.M.