Legislature(1997 - 1998)

03/19/1997 09:07 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    SENATE FINANCE COMMITTEE                                   
                         March 19, 1997                                        
                            9:07 A.M.                                          
  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.                              
  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:                                                              
  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.                 
       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                 
       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                 
  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                 
  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                 
  COCHAIR SHARP announced  the overview of the  capital budget                 
  chronology  and  agenda.    Following  are  an  outline  and                 
  I.    Chronology  of the  governor's  FY  98  Capital Budget                 
       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                 
       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                 
       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                 
  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                 
       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                 
       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                 
  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                 
  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                 
  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                 
  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                 
  The meeting was adjourned at approximately 11:04 A.M.                        

Document Name Date/Time Subjects