Legislature(1997 - 1998)

04/18/1998 09:08 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
MINUTES                                                                        
SENATE FINANCE COMMITTEE                                                       
18 April 1998                                                                  
9:08 a.m.                                                                      
                                                                               
                                                                               
TAPES                                                                          
                                                                               
SFC-98, #126, Sides A and B                                                    
                                                                               
                                                                               
CALL TO ORDER                                                                  
                                                                               
Senator Drue Pearce, Co-chair, convened the meeting at                         
approximately 9:08 a.m.                                                        
                                                                               
                                                                               
PRESENT                                                                        
                                                                               
In addition to Co-chair Pearce, Senators Sharp, Torgerson,                     
Parnell and Adams were present when the meeting was                            
convened.  Senators Phillips and Donley arrived shortly                        
thereafter.                                                                    
                                                                               
                                                                               
Also Attending:  SENATOR ROBIN TAYLOR; DAVE KOIVUNIEMI,                        
Deputy Commissioner, Department of Administration; SHARON                      
BARTON, Director, Division of Administrative Services,                         
Department of Administration;  DOUG HOLT, Administrator,                       
Juneau Pioneer Home, Department of Administration; DUGAN                       
PETTY, Director, Central Office, Division of General                           
Services, Department of Administration; TIM LAWSON,                            
Director, Division of Administrative Services, Department of                   
Commerce and Economic Development; BARBARA BRINK, Director,                    
Central Office, Public Defender Agency, Department of                          
Administration; DWAYNE PEOPLES, Department of Corrections;                     
REMOND HENDERSON, Director, Division of Administrative                         
Services, Department of Community and Regional Affairs;                        
TRACI CARPENTER, Budget Analyst, Department of Community and                   
Regional Affairs; KIM METCALFE-HELMAR, Special Assistant,                      
Office of the Commissioner, Department of Community and                        
Regional Affairs; NICO BUS, Budget Coordinator, Department                     
of Natural Resources and Department of Military and Veterans                   
Affairs; KAREN REHFELD, Director, Education Support                            
Services, Department of Education; KEVIN BROOKS, Director,                     
Division of Administrative Services, Department of Fish and                    
Game; JANET KOWALSKI, Director, Division of Habitat and                        
Restoration, Department of Fish and Game; JANET CLARKE,                        
Director, Division of Administrative Services, Department of                   
Health and Social Services; BOB LABBE, Director, Division of                   
Medical Assistance, Department of Health and Social                            
Services; ANNALEE MCCONNELL, Director, Office of Management                    
and Budget; Laura Baker, Budget Analyst, Office of                             
Management and Budget; BRENDA MARKEY, Director, Division of                    
Administrative Services, Department of Law; BARBARA RITCHIE,                   
Deputy Attorney General, Civil Division, Department of Law;                    
DEAN GUANELI, Chief Assistant Attorney General, Legal                          
Services Section-Juneau, Criminal Division, Department of                      
Law; TINA KOBAYASHI, Assistant Attorney General, Oil, Gas                      
and Mining Section, Department of Law; JAYNE ANDREEN,                          
Executive Director, Council on Domestic Violence and Sexual                    
Assault, Department of Public Safety; LAURIE PERKINS,                          
Director, Division of Administrative Services, Department of                   
Revenue; NANCY SLAGLE, Director, Division of Administrative                    
Services, Department of Transportation and Public                              
Facilities;  ROBERT DOLL, General manager, Ferry Operations,                   
Southeast Region, Department of Transportation and Public                      
Facilities; ARBE WILLIAMS, Director, Administrative                            
Services, Department of Labor; DWIGHT PERKINS, Legislative                     
Liaison, Office of the Commissioner, Department of Labor;                      
REBECCA GAMEZ, Director, Division of Employment Security,                      
Department of Labor;  WENDY REDMOND, University of Alaska;                     
JOHN BITNEY, Alaska Housing Finance Corporation; SUSAN                         
TAYLOR, Fiscal Analyst, Division of Legislative Finance;                       
fiscal analysts, Division of Legislative Finance; aides to                     
committee members and other members of the Legislature.                        
                                                                               
Via Teleconference:  JIM SANDERS, Supervisor, Southcentral                     
Regional Office, Division of Municipal and Regional                            
Assistance, Department of Community and Regional Affairs;                      
LAMAR COTTEN, Deputy Commissioner, Department of Community                     
and Regional Affairs; PAT POLAND, Director, Central Office,                    
Division of Municipal and Regional Assistance, Department of                   
Community and Regional Affairs; PERCY FRISBY, Director,                        
Division of Energy, Department of Community and Regional                       
Affairs; BRANT MCGEE, Public Advocate, Anchorage Office,                       
Office of Public Advocacy, Department of Administration;                       
COL. GARY PEDERSON, Director, Alaska National Guard Youth                      
Corps, Department of Military and Veterans Affairs; GEORGE                     
BUHITE, Director, McLaughlin Youth Center; MARLA GREENSTEIN,                   
Executive Director, Commission on Judicial Conduct; all                        
testified from Anchorage.                                                      
                                                                               
                                                                               
SUMMARY INFORMATION                                                            
                                                                               
                                                                               
Co-chair Pearce convened the meeting and explained the                         
schedule.  She said the committee would first hear HB 17.                      
                                                                               
                                                                               
 HOUSE BILL NO. 17                                                             
                                                                               
"An Act establishing the Department of Natural                                 
Resources as the platting authority in certain areas of                        
the state; relating to subdivisions and dedications;                           
and providing for an effective date."                                          
                                                                               
                                                                               
 CS FOR HOUSE BILL NO. 17(RES)                                                 
                                                                               
"An Act establishing the Department of Natural                                 
Resources as the platting authority in certain areas of                        
the state; relating to subdivisions and dedications;                           
and providing for an effective date."                                          
                                                                               
                                                                               
SENATE CS FOR CS FOR HOUSE BILL NO. 17(RES)                                    
"An Act establishing the Department of Natural                                 
Resources as the platting authority in certain areas of                        
the state; relating to subdivisions and dedications;                           
and providing for an effective date."                                          
                                                                               
Co-chair Pearce advised that there had been a previous                         
hearing on this bill and presently before the committee was                    
a Senate CS.                                                                   
                                                                               
Senator Torgerson indicated that he had asked HB 17 to be                      
held in committee pending title searches on all properties                     
brought to the Department of Natural Resources to be                           
platted.  After consultations with the State Assessor and                      
Legal Services it was decided that would be too cumbersome                     
to put in the bill and it was not his intent to continue to                    
slow this bill down.  The department advised him that they                     
would have title search incorporated into their regulations                    
and therefore he will not have any amendments.                                 
                                                                               
Senator Torgerson MOVED SCS CSHB 17(RES) and WITHOUT                           
OBJECTION it was REPORTED OUT with individual                                  
recommendations and accompanying fiscal note from Department                   
of Natural Resources, Land Development in the amount of                        
$71.3.                                                                         
                                                                               
                                                                               
 SENATE BILL NO. 346                                                           
                                                                               
"An Act relating to competition in the provision of                            
local exchange telephone service; and providing for an                         
effective date."                                                               
                                                                               
                                                                               
CS FOR SENATE BILL NO. 346(L&C)                                                
                                                                               
"An Act relating to competition in the provision of                            
local exchange telephone service; and providing for an                         
effective date."                                                               
                                                                               
Co-chair Sharp announced that he was referring SB 356 to the                   
Telecommunications Subcommittee, chaired by Senator Parnell.                   
                                                                               
                                                                               
 SENATE BILL NO. 292                                                           
                                                                               
"An Act making supplemental appropriations; making,                            
amending, and repealing capital or other                                       
appropriations; making appropriations to capitalize                            
funds; and providing for an effective date."                                   
                                                                               
Co-chair Pearce called SB 292.  She referred to a memo from                    
Susan Taylor, Fiscal Analyst, Division of Legislative                          
Finance, which included a spreadsheet of SB 292 by section.                    
The committee would use this as direct reference to get                        
through each department.  She asked department heads to be                     
prepared to outline their priority requests as they were                       
called before the committee.  She noted an error in the                        
spread sheet, section 10(c), line 52, page 6 and noted it                      
should correctly read $300.0 GF and $300.0 total, rather                       
than the other funds of $320.8.                                                
                                                                               
JIM SANDERS, Supervisor, Southcentral Regional Office,                         
Division of Municipal and Regional Assistance, Department of                   
Community and Regional Affairs testified via teleconference                    
from Anchorage.  He said the Governor declared the Bristol                     
Bay disaster last 18 July.  At that time there were no                         
resources to begin to assist the impacted regions.  They                       
looked to two funding sources for assistance and U.S.                          
Senator Stevens was able to get $7 million appropriated for                    
the disaster last October.  It is necessary for Alaska to                      
match that at twenty-five percent, which equals $2.33                          
million.  Part of that is being made up of in-kind matches                     
from local communities and the department.  Approximately                      
$1.7 million is needed to complete the match.  He explained                    
three different components:  one, a loan program being run                     
through the Division of Investments; two, community                            
projects; and three, fisheries research and education.  He                     
said there were already grant applications from communities                    
and they were working with them in anticipation of funding                     
being approved.  Most communities should begin their                           
projects after this coming fishing season.                                     
                                                                               
Senator Phillips asked why this disaster was so different                      
from the economic disaster along the rail belt, 1985 - 1989?                   
Mr. Sanders said there was such a tremendous drop in income                    
to the region.  The Bristol Bay disaster impacts the                           
fishermen's ability to return to the fishery this year.  He                    
explained that it took approximately $10,000 to $20,000 for                    
start up for the fishing season.  In some areas it is just                     
plain a matter of survival.  Senator Phillips reiterated                       
concern over the economic disaster and the fact that the                       
Governor did not assist them during that time.  He asked                       
specifically what criteria were used.                                          
                                                                               
LAMAR COTTEN, Deputy Commissioner, Department of Community                     
and Regional Affairs testified via teleconference from                         
Anchorage.  He said he appreciated the comments from Senator                   
Phillips, however he could not sit and debate what was done                    
previously.  At this time they were considering what was in                    
front of them and that was a series of communities that did                    
not have alternative work.  There are no other opportunities                   
for the fishing vessels to work other than fishing in the                      
Bristol Bay area.  These individuals are not looking for a                     
handout or for a welfare program.  However, the fishermen                      
and the communities are in a very tough spot.                                  
                                                                               
Senator Sharp asked what the annual income of fishermen was.                   
Mr. Sanders responded that on the Kuskokwim they make                          
approximately $6,000 to $10,000/year.  They also do other                      
part-time work in the community during the winter.  Bristol                    
Bay fishermen make approximately $40,000/year after having                     
paid off all their expenses.  Senator Sharp indicated that                     
was higher than the family income of people he represented                     
in his district.  He asked Mr. Cotten what the cut-off date                    
on the loan application portion of the proposal was and how                    
many applications did they receive for the $1,000 loan.  Mr.                   
Cotten said they received approximately 500 applications.                      
He explained that any remaining balance would be applied                       
toward community projects.  Senator Sharp asked how much was                   
earmarked for commercial fisheries?  Mr. Cotten indicated                      
there was approximately $300,000 to be spent mainly in the                     
Kuskokwim for fisheries research.  They were working with                      
the Department of Fish and Game to develop the project.                        
Senator Sharp asked for the breakdown of the funding source.                   
Mr. Cotten explained that for every dollar the State spends                    
on fisheries research the Federal grant would match that                       
with three.                                                                    
                                                                               
Senator Torgerson asked if the State of Alaska was a party                     
to the lawsuit regarding price fixing in Bristol Bay and                       
would they receive any money?  Second, would the fish tax be                   
at least three percent?  Mr. Cotten said they were not                         
participants in the lawsuit.  It was a class action suit by                    
a series of fishermen who have permits in Bristol Bay.  He                     
did not know if the State or local raw fish tax would apply                    
to any settlement.  He guessed it would not as it is a legal                   
matter between the companies and fishermen.  He will check                     
with the Department of Law and advise the committee.                           
                                                                               
Co-chair Pearce said the Department of Labor's $3 million                      
was embodied in another bill so the committee would continue                   
on with the Department of Administration, line 17, Longevity                   
Bonus.                                                                         
                                                                               
SHARON BARTON, Director, Division of Administrative                            
Services, Department of Administration was invited to join                     
the committee.  The following requests were made by the                        
Department of Administration:                                                  
                                                                               
CENTRAL DUPLICATION:  She explained the request in the                         
amount of $260,000 for Central Duplication.  The decision                      
was made after noting a downward trend for several years to                    
close Central Duplication.  The downward trend was the                         
result of changing times.  The three big factors were:  one,                   
legislation requiring the use of private printers whenever                     
that was cost effective; two, legislation reducing the                         
number of reports agencies were required to do; and three,                     
increased use by departments of high-speed copy machines and                   
the transfer of reports to Internet rather than printing                       
copies.  This cost of shutting down was $260,000.                              
                                                                               
OFFICE OF PUBLIC ADVOCACY:  This request was in the amount                     
of $265.4 for the Office of Public Advocacy.  She noted the                    
shortfall projection had been reduced from $441,000 to the                     
requested amount of $265.4.                                                    
                                                                               
OFFICE OF THE PUBLIC DEFENDER:  This request was in the                        
amount of $351,000.  An original shortfall projection had                      
been in the amount of $650,000.  Despite an 3.5 percent                        
increase in caseload the Public Defender kept four positions                   
vacant and carefully scrutinized other expenditures.                           
                                                                               
LEASE COSTS:  Ms. Barton noted the request was for $383.6.                     
In response to a query from Co-chair Pearce, Ms. Barton                        
advised the number was a valid one.                                            
                                                                               
In response to a question from Senator Phillips, Ms. Barton                    
said any monies left over from the Longevity Bonus Program                     
would lapse to the general fund.                                               
                                                                               
EPORS:  She said there had been two new retirees in FY 98                      
and some additional health insurance costs.  The department                    
has need for $59.7 in order to pay full costs for EPORS.                       
                                                                               
Senator Sharp asked if the figure included any individuals                     
that were not running for reelection but were running for a                    
different office?  Ms. Barton said it did not.  She advised                    
that the two individuals were Jay Kerttula and Chancy Croft.                   
                                                                               
PIONEER HOMES:  She said this was a request for a fund                         
source change from $250,000 general fund program receipts to                   
$250,000 straight general fund.  This was necessary due to a                   
shortfall in revenues in the pioneer homes.  The amount                        
could not be made up partly because of additional expenses                     
in having to set up the in-house pharmacy and also due to                      
the fact that this program has wrung every dime out of                         
potential efficiencies.  The revenue shortfall was further                     
due to the inability of some residents to pay, and the new                     
revenue unit set up this year was not up and running until                     
about mid-year.                                                                
                                                                               
DOUGLAS HOLT, Administrator, Juneau Pioneer Homes,                             
Department of Administration was invited to join the                           
committee.  In response to a query from Senator Sharp he                       
said they expected to collect about $1.4 million from                          
residents.  Currently bills were being sent out to residents                   
and there was a follow-up on those that were not paid.  That                   
shortfall projection has been shrunk from $700,000 to                          
$250,000.  They feel that next year they will be better set                    
up in both billing and collections.  He said the revised                       
budget would add $1.4 million.                                                 
                                                                               
Senator Phillips asked if they were on a five-year or seven-                   
year plan?  Mr. Holt indicated they were on year three of a                    
seven-year plan.  Senator Phillips asked if they were                          
getting volumes of complaints?  Mr. Holt said there had been                   
a number of complaints and they had listened to them all                       
carefully.  It was noted that most people did not realize                      
how much was being subsidized by the State.  One lady, he                      
said, asked that he convey her thanks to the Legislature for                   
the assistance they were giving the elders.  Senator                           
Phillips asked at what percent the State was subsidizing                       
this program.  Mr. Holt said in FY 98 the State subsidized                     
the program about two-thirds with residents paying about                       
one-third.  In FY 99 that will change to approximately                         
thirty-eight and a half percent from the residents and the                     
balance will come from the State.  He indicated that at the                    
end of the seven-year plan the residents will pay $14                          
million of the $30 million program.                                            
                                                                               
Ms. Barton continued with the following:                                       
                                                                               
SENIOR EMPLOYMENT SERVICES:  She said under older rules this                   
request would have been dealt with through Legislative                         
Budget and Audit.  It is just a request for additional                         
authorization to receive a higher Federal grant and to be                      
able to expend the funds.                                                      
                                                                               
Ms. Barton advised Co-chair Pearce there were still two                        
other sections for the department and asked they be picked                     
up at this point.  She referred to a 17 April memo, which                      
was an amendment to section 2.  Co-chair Pearce advised that                   
these two requests were just received and had not been                         
incorporated into the spreadsheet provided by Susan Taylor.                    
                                                                               
LONGEVITY BONUS:  Ms. Barton said there was an anticipation                    
of $2.2 million being available in addition to what was                        
taken out of the Governor's budget.  She said both Longevity                   
Bonus and APOC were increments in the Governor's budget for                    
FY 99 and the Senate Subcommittee has now closed out funding                   
these two increments.  They are not in the House Finance                       
budget at this time.  These are one-time items and should be                   
dealt with in the supplemental budget with an extended lapse                   
date.  Both are critical items.  $310 was for labor contract                   
negotiations beginning in FY 99 for eleven contracts that                      
are expiring.  They have reduced the staff by five positions                   
with the strategy in mind that they did not need negotiators                   
on staff when they were not negotiating and they would just                    
be added in those years when negotiations were in progress.                    
However, they do not care if it is funded in the operating                     
budget, in conference committee deliberations or whether it                    
is funded as a supplemental one-time item.                                     
                                                                               
APOC:  This request is for one-time costs related to an                        
election year.  Senator Phillips indicated that they just                      
received money.  However, Ms. Barton clarified that the                        
House opted not to fund the request through the operating                      
budget, but rather through a supplemental.  It was not                         
double dipping.                                                                
                                                                               
(pause on record)                                                              
                                                                               
STALE DATED WARRANTS:  She said these warrants were                            
collected from all agencies and then they were presented                       
each year to the Division of Finance for payment.  In                          
response to a query from Senator Phillips, she will check if                   
there is a statute of limitations on stale dated warrants.                     
                                                                               
RECORDS STORAGE LEASE:  It was explained that the lease                        
budget for archiving had been shut down.  Now agencies would                   
be paying the archives bill direct and the department would                    
distribute the proper funds to all agencies that were having                   
to cover the new costs.  This was a deletion from leasing of                   
$120.0, which has been redistributed to all agencies.  In                      
response to a question from Senator Sharp she indicated the                    
deletion of $120.0 was an agreement between all agencies to                    
distribute said amount.                                                        
                                                                               
(Tape #126, Side A switched to Side B.)                                        
                                                                               
TOM LAWSON, Director, Division of Administrative Services,                     
Department of Commerce and Economic Development was invited                    
to join the committee.                                                         
                                                                               
HEARING OFFICERS:  He explained the request was for funding                    
of hearing officers, which were incorrectly charged to                         
occupational licensing.  He said in FY 97 occupational                         
licensing absorbed about $50.3 in hearing examiner costs                       
that should have been paid by banking, as well as insurance.                   
This was caught by a legislative audit last fall and the                       
department was advised they should take action.  Since the                     
years fiscal transactions for 1996-1997 have been closed                       
that was the basis for this request.  If the Legislature                       
signs off on this, Banking and Insurance would RSA the funds                   
to Occupational Licensing to right this wrong.  Methods have                   
been set in place to enable the hearing officer to make the                    
right charges to the appropriate division.                                     
                                                                               
Senator Sharp asked if the credit should not be returned to                    
the general fund?  Mr. Lawson said that occupational                           
licensing operates on fees.  The auditor was very sensitive                    
to the fact that fees had been gathered from the licensees                     
and that money should not lapse into the general funds and                     
they should get credited back for the funds that were not                      
properly expended.                                                             
                                                                               
LAMAR COTTON, Deputy Commissioner, Department of Community                     
and Regional Affairs again testified via teleconference from                   
Anchorage.  He introduced PERCY FRISBY, Director, Division                     
of Energy, Department of Community and Regional Affairs also                   
on teleconference.                                                             
                                                                               
POWER COST EQUALIZATION:  Mr. Frisby explained the                             
supplemental request needed for this year.  It was in the                      
amount of $1,700.0.  This would leave them the ability to                      
fund PCE at its full demand level next year.  Co-chair                         
Pearce asked if this was for FY 98?  Mr. Frisby said it was.                   
Senator Sharp voiced concern that this might be a stretch of                   
what the Federal government allows them to use.  The past                      
three years AHFC has been saying that the funds could only                     
be used for weatherization and energy efficiency.  This will                   
have to be checked out.  Mr. Frisby advised that the funds                     
could be applied or used for PCE.  Co-chair Pearce said she                    
thought PCE was funded at eighty-five percent last year.                       
Mr. Frisby concurred.                                                          
                                                                               
(10:05 a.m. at ease - 10:08 a.m. back to order)                                
                                                                               
Co-chair Pearce said PCE was funded at $17 million last                        
year, which was the Governor's request.  That was not                          
eighty-five percent, rather a continuation from the previous                   
year.                                                                          
                                                                               
                                                                               
SUSAN TAYLOR, fiscal analyst, Division of Legislative                          
Finance explained how PCE was funded.  She said it was                         
unlikely it was funded at eight-five percent.                                  
                                                                               
Co-chair Pearce asked Mr. Frisby if $1.7 million bring them                    
to the eighty-five percent level?  He indicated that it                        
would.  She further indicated that there was already                           
adequate description of what record storage costs were.                        
                                                                               
Mr. Cotten indicated there was nothing in the latest memo                      
that came from OMB relating to the department.                                 
                                                                               
TRACI CARPENTER, Budget Analyst, Department of Community and                   
Regional Affairs was invited to join the committee.  She                       
explained these were two small over-expenditures.  Her                         
research showed that these were most likely accounting                         
errors that occurred at the time of conversion.  The $12,000                   
one was again an accounting error.   These were funds that                     
were applied to the 1989 RSA when they should have been                        
applied to the 1988 RSA. She advised that the Division of                      
Finance could fix this.                                                        
                                                                               
Co-chair Pearce asked that a memo be provided for the                          
committee's back up regarding this request.                                    
                                                                               
DWAYNE PEOPLES,  Department of Corrections was invited to                      
join the committee.                                                            
                                                                               
PAROLE BOARD:  He explained this was a request for $50,000                     
general funds as operational expenses for the parole board                     
to address the incarcerated population both in-State and                       
out-of-State.  This would include costs for travel, per-diem                   
and stipends for the parole board members in dealing with a                    
backlog of approximately two hundred parole requests.                          
                                                                               
ADMINISTRATION AND OPERATIONS:  This was in the amount of                      
$721.0 general funds to be spread across the State's twelve                    
institutions because of abnormally high populations in the                     
institutions this year.  This additional support would be                      
applied to maintenance of the institutions, including                          
personal services and overtime.                                                
                                                                               
INMATE HEALTH CARE:  This was a $1.650 million general fund                    
request for inmate health care services.  He said this was a                   
reduction from the original $2.5 million.  He believed this                    
can be reduced down another $50,000 to $75,000 based on                        
their most recent analysis.  He will communicate the exact                     
figure to the committee next week.                                             
                                                                               
PRISONER TRANSPORTATION:  This was a $230,000 general fund                     
request for the cost of prisoner transportation both in-                       
State and out-of-State.  This includes travel and staff                        
time.                                                                          
                                                                               
NICO BUS, Budget Coordinator, Department of Natural                            
Resources and Department of Military and Veterans Affairs                      
was invited to join the committee.                                             
                                                                               
DISASTER RELIEF:  Mr. Bus explained this was a request for                     
$2.6 million to capitalize the disaster relief fund.  Over                     
the last number of years the department has tried to close                     
out all the old disasters.  In order to meet their                             
obligations they are requesting a total amount of $2.6                         
million.  This request included a Department of                                
Transportation emergency relief in the amount of $620,000                      
for flooding in the eastern Tanana/northern Copper River                       
valleys last summer.                                                           
                                                                               
Mr. Bus further explained the request for $40,000 Federal                      
receipts as the Federal government requires they attend some                   
of their emergency training.  This is an authorization to                      
receive an expended Federal receipt on the State books.                        
                                                                               
He noted the next item was similar in that when the National                   
Guard goes out on medivac or special mission some of the                       
expenses are reimbursable by regional health corporations,                     
specifically for the members of the flag crew that are State                   
active duty.  The requested $11,000 would put the expended                     
monies back into the National Guard budget by allowing                         
accountability as statutory designated program receipts.                       
                                                                               
(Co-chair Pearce requested an at ease at approximately 10:23                   
a.m. to see if Col. Pederson was on line.)                                     
                                                                               
Co-chair Pearce identified the next item to be taken up was                    
the Youth Corps Challenge Program.                                             
                                                                               
Nico Bus asked permission of Co-chair Pearce to explain the                    
budget point of view for the committee.                                        
                                                                               
ALASKA NATIONAL GUARD/YOUTH CORPS:  Mr. Bus said at the time                   
of the budget they were not sure of the Federal funding.  He                   
said they reduced the Federal funding in the Governor's FY                     
'99 budget to $1.4 million in Federal funds and $600,000 in                    
general funds.  In December the Federal funds were increased                   
to $2.1 million.  They approached the Governor and asked for                   
the supplemental to go in two parts; the first part the                        
Legislature earlier funded in the fast track supplemental in                   
the amount of $608,000 which would get the Youth Corps                         
program from February to 30 June 1998.  They are requesting                    
the additional supplemental funding that would make the 1999                   
budget to $2.1 million.  The general fund portion would get                    
the Youth Corps funding from $600,000 to approximately $1.3                    
million.  Together they make for a $3.4 million, which would                   
fund two classes with a targeted graduation level of eighty                    
students.  The initial intent was to make sure there was                       
funding to finish the class they just started from February                    
through September.  He realizes this is confusing but hopes                    
the committee understands.                                                     
                                                                               
Co-chair Pearce asked Senator Phillips if the money he had                     
in the operating budget for the Youth Corps was enough to                      
finish the two classes started now and slated to finish                        
September 1998.  She also asked if there was additional                        
general fund money for a 1999 class?  Senator Phillips                         
indicated there was enough money for one class.                                
                                                                               
She then asked Col. Pederson how the class was going.                          
                                                                               
COL. GARY PEDERSON, Director, Alaska National Guard Youth                      
Corps, Department of Military and Veterans Affairs testified                   
via teleconference from Anchorage.  He said they currently                     
had one hundred three cadets in the program to graduate 14                     
August 1998.  Co-chair Pearce asked the Federal funding                        
available for fiscal year '99 and continuation of those                        
funds?  Col. Pederson explained the result of the meeting                      
between General Lestenkof and U.S. Senator Ted Stevens.                        
Senator Stevens advised that he would do his best to ensure                    
full funding was available.  Even though there is a shortage                   
of funding he has great expectations this will be rectified.                   
                                                                               
Senator Adams asked how many teachers there were within the                    
present program?  Col. Pederson said they currently had                        
thirty instructors on staff; five teachers and twenty-five                     
vocational instructors.   He explained that the ratio of 3                     
students to 1 teacher was high because they had to cover the                   
young folks twenty-four hours every day on a shift basis.                      
                                                                               
Mr. Bus continued for the Department of Natural Resources.                     
                                                                               
FIRE SUPPRESSION:  This was a request in the amount of $13                     
million.  He explained they started the year with $3.3                         
million, however due to disaster received another $6.6                         
million.   In order to finish this fiscal year they feel                       
they need this requested amount.  It would include monies                      
for a spring fire activity.  All indications include a heavy                   
fire season, specifically they are worried about the Kenai                     
Peninsula.                                                                     
                                                                               
Senator Torgerson asked if any of the monies included fire                     
prevention?  Mr. Bus advised that it was all fire                              
suppression.  Some was for aviation contracts and the                          
largest amount for personal services was to hire fire                          
fighters when the fire starts.  He said fire prevention was                    
funded in the Forest Management component.                                     
                                                                               
Senator Sharp asked the amount they started with and Mr. Bus                   
reiterated the $3.3 million was correct.  He further                           
explained that the $6.6 million was part of the $13.                           
million.  That was approximately at total of $16 million.                      
Mr. Bus said that was correct.                                                 
                                                                               
Senator Phillips asked if any of the money was used in                         
Southwest Alaska, Red Devil.  Mr. Bus responded that it                        
included Red Devil, Stony River, etc.                                          
                                                                               
RECORDERS OFFICE:  Since things are going well and there is                    
a request for more mail-outs, postage and courier they have                    
requested authorization to accommodate this increased work                     
load.  Customers pay for the service through program                           
receipts.  This request would allow them to keep up with                       
their services.                                                                
                                                                               
Senator Adams said he thought the fees being collected would                   
take care of the over-load?  Mr. Bus explained that it did.                    
The request was for $100,000 in program receipts and the                       
remaining $250,000 was deposited to the treasury.                              
                                                                               
                                                                               
Senator Parnell asked about the equipment upgrade.  Mr. Bus                    
explained that one thing that was a real problem in the                        
Recorders' office was that the office still has nineteenth                     
century technology even though we were now living in the                       
twentieth century.  Part of the money would be used to                         
upgrade terminals and PC's so the workload could be                            
processed faster.  Senator Parnell asked if this was part of                   
their capital budget request and Mr. Bus indicated this                        
portion was not.                                                               
                                                                               
OLD EAGLE SCHOOL:  Mr. Bus explained this project.  There                      
was a Court order to move the buildings and then once                          
removed the department would have to clean the contaminated                    
site.  A contractor was hired last year with the funds that                    
were appropriated.  Rather than haul the material to                           
Fairbanks for proper disposal he burned them on site.  There                   
was asbestos in the material and this caused grave concern                     
for OSHA.  Department of Environmental Conservation fronted                    
the Department of Natural Resources to properly clean up the                   
site and the total bill came to $155,000.  Mr. Bus advised                     
the work has been completed and the funds are to reimburse                     
the Department of Environmental Conservation.                                  
                                                                               
Senator Phillips said the contractor should have taken the                     
asbestos across the border to the asbestos mine, which is                      
only about thirty to forty miles away.                                         
                                                                               
GEOLOGICAL MATERIALS CENTER:  He explained this request was                    
in the amount of $85,000 for storage for core sampling plus                    
another increase in the 1999 budget bringing the total of                      
the project to $1.1 million in order to restart the project.                   
                                                                               
AG. REVOLVING LOAN FUND:  The 1999 operating budget                            
drastically reduced the budget for the Division of                             
Agriculture.  With the requested funds they feel they can                      
finish the fiscal year.  There are two large amounts of                        
money relating to two farms having environmental problems.                     
One is a lagoon that needs to be pumped; the other is a well                   
that needs to be drilled.  He noted the audit report will                      
recommend the amount be paid for the protection of                             
collateral for loans.                                                          
                                                                               
Senator Sharp requested backup regarding the loans and Mr.                     
Bus said he would provide that to the committee.                               
                                                                               
PARKS MANAGEMENT:  He briefly explained this item and asked                    
the line item be approved.  He said that the budget                            
reduction allowed for fewer fee collectors and therefore the                   
compliance dropped from ninety-five percent of people paying                   
to sixty percent; lack of maintenance; the bottom line is                      
that they are not meeting their program receipt budget.  If                    
the funding source is not switched then the Division of                        
Parks may have to look at opening parks later, thus                            
complicating the problem even further.                                         
                                                                               
Senator Phillips asked about the compliance reduction.  Mr.                    
Bus explained that if there is no campground host then                         
people just camp.  He explained that even with budget                          
reductions they can not lay off their Rangers.  So the first                   
positions to be cut are the campground hosts.  Senator                         
Phillips asked about the campground hosts.  Mr. Bus                            
explained that even though they are volunteers they receive                    
a stipend and may receive a little money.                                      
                                                                               
(Tape #126, Side B switched to Tape #127, Side A.)                             
                                                                               
Senator Sharp asked about the program receipts and if they                     
were not there how could they be transferred?  Co-chair                        
Pearce explained they had previously budgeted for $150,000.                    
Senator Parnell said these funds would then be transferred                     
from program receipts to general funds.                                        
                                                                               
Co-chair Pearce advised the meeting would recess to the                        
floor and then return to Senate Finance Committee at 1:00                      
p.m.  She said she hoped to finish the supplemental requests                   
today.                                                                         
                                                                               
Co-chair Pearce reconvened the Senate Finance Committee at                     
approximately 1:15 a.m.  She noted those present as Co-chair                   
PEARCE, Senators SHARP, TORGERSON, PARNELL and PHILLIPS.                       
She noted the committee had completed Department of Military                   
and Veterans Affairs and Department of Natural Resources and                   
they would commence with the Department of Education.                          
                                                                               
KAREN REHFELD, Director, Education Support Services,                           
Department of Education was invited to join the committee.                     
She explained the following:                                                   
                                                                               
AVTEC:  This is a request for $75,000 in Federal                               
authorization.  It relates to their recently received                          
certification from U.S. Department of Education to                             
participate in the PELL grant program.  Approximately                          
twenty-two students have applied and received notification                     
of their eligibility.                                                          
                                                                               
STALE DATED WARRANTS:  There are three items under this                        
miscellaneous claim and they are all prior year billings.                      
                                                                               
OVEREXPENDITURES:  She said these were ratifications of                        
overexpenditures.  Both items relate to the Division of                        
Vocational Rehabilitation under the small business                             
enterprise program.  This is being done as a clean up of                       
prior year accounts.                                                           
                                                                               
RECORDS STORAGE:  She noted that part of the funding would                     
allow the department to maintain their records management                      
responsibility.                                                                
                                                                               
Co-chair Pearce asked if the department had any projects in                    
the memo that was received last night.  Ms. Rehfeld                            
indicated they did not.                                                        
                                                                               
KEVIN BROOKS, Director, Division of Administrative Services,                   
Department of Fish and Game was invited to join the                            
committee.                                                                     
                                                                               
SITUSUILAQ HATCHERY:  The request represents lease costs to                    
the land owner wherein the department operated the hatchery                    
north of Kotzebue for approximately fifteen years.  The                        
hatchery was closed in June 1995.  There was some diesel oil                   
spilled at the site and in conjunction with the Department                     
of Environmental Conservation they have been using oil                         
response funds to clean up the site.  The supplemental                         
request represents payment to the land owner.                                  
                                                                               
Co-chair Pearce referred to a request made to Senator Adams                    
that a letter be received from the land owner indicating                       
receipt of the lease payments through September.  That would                   
preclude any further suits against the State.  She wanted to                   
know if the department had done this.  Mr. Brooks said that                    
any payment would be part of a written settlement that would                   
address just this issue.  The department will not make the                     
payment without a written agreement.                                           
                                                                               
SUBSISTENCE:  This was a request in the amount of $56,000 to                   
help the division due to a reduction in the amount of                          
$160,000.  He said even though the began the year with every                   
intention of living within their budget, several things came                   
up that required additional work and effort by the                             
department that they could not stop doing.  This was                           
basically working with the Federal subsistence board process                   
and the task force.   The effort expended by the division                      
included working with the Division of Wildlife in                              
representing the department at the Federal subsistence board                   
and protecting the State's rights, trying to keep hunts open                   
for both general and subsistence and challenging proposals                     
in the Federal arena to make sure they were getting the best                   
presentation.                                                                  
                                                                               
(The presence of Senator Adams is noted.)                                      
                                                                               
Senator Sharp asked that if this was worked out with the                       
Division of Wildlife why didn't they agree to RSA monies                       
over?  Mr. Brooks said they had tried to limit the RSA's to                    
specific harvest surveys and different big game surveys.                       
This project as explained was a more broader item.                             
                                                                               
HARBOR SEAL STUDY:  This was $80,000 of EVOS funds for                         
continuation of the harbor seal study in Prince William                        
Sound.  There was not a meeting early enough to submit the                     
request to Legislative Budget and Audit.  The project will                     
be continued on into 1999 and has been included in the                         
department's 1999 budget as well.                                              
                                                                               
U.S./RUSSIA - BERING SEA:  This was a request for $25,000 in                   
Federal funds for the Commissioner's Office received from                      
the National Marine Service to provide for travel costs in                     
dealing with the Bering Sea fisheries and boundary issues.                     
                                                                               
Senator Sharp asked if this was for the individuals in the                     
Commissioner's Office that were normally responsible for the                   
North Pacific Fisheries?  Mr. Brooks said this involved                        
specific travel to Russia by David Bevin along with                            
fisheries scientists.                                                          
                                                                               
Senator Phillips asked the status of the talks.  Mr. Brooks                    
said these were government to government talks and he would                    
have to get back to the committee for any further specific                     
details.                                                                       
                                                                               
DESIGNATED PROGRAM RECEIPTS:  This was submitted to the                        
committee on 9 April with several other items.  The request                    
is for a number of projects being done by groups in the                        
private sector and represented specific costs.                                 
                                                                               
STALE DATED WARRANTS:  These were invoices being submitted                     
now over two years old.                                                        
                                                                               
OVEREXPENDITURES:  This was an amount of $200 to ratify an                     
old expenditure and RSA.  This is a clean up item.                             
                                                                               
RECORDS STORAGE:  This is the departments share of the                         
larger transfer regarding storage.                                             
                                                                               
JANET KOWALSKI, Director, Division of Habitat and                              
Restoration, Department of Fish and Game was invited to join                   
the committee.  She gave a brief description of the                            
following:                                                                     
                                                                               
KATCHAMAK BAY:  She said $85,000 was included in the Habitat                   
budget in order to receive a Federal grant through DGC.                        
When DGC received their entire NOAA coastal zone                               
appropriation it was larger than originally anticipated.                       
This also would have been an LB&A request if they would have                   
been meeting.                                                                  
                                                                               
Co-chair Pearce moved on to the Department of Health and                       
Social Services.                                                               
                                                                               
JANET CLARKE, Director, Division of Administrative Services,                   
Department of Health and Social Services was invited to join                   
the committee.                                                                 
                                                                               
ALASKA TEMPORARY ASSISTANCE PROGRAM:  She explained this was                   
a reduction in the amount of $1.5 million in general funds.                    
This has to do with reduced welfare caseload during the                        
current fiscal year.                                                           
                                                                               
In response to Co-chair Pearce, Ms. Clarke explained that                      
item #42 was being withdrawn.                                                  
                                                                               
PUBLIC HEALTH LAB, ANCHORAGE:  This is a request for                           
statutorily designated receipts related to the public health                   
lab being built in Anchorage.  The receipts come from                          
certificates of participation that have already been sold                      
and will go the Department of Transportation and Public                        
Facilities for work they are doing on the new facility.                        
                                                                               
GENERAL RELIEF MEDICAL:  She explained that in FY 98 there                     
had been a spike in general relief medical eligible clients                    
who have come to the program.  In looking at the numbers she                   
said they have seen that many of the individuals that                          
previously qualified for the Medicaid program are now                          
showing up in the General Relief Medical program.                              
This was due to some of the Congressional changes in                           
eligibility for SSI and Medicaid and they are now not                          
eligible for Medicaid.                                                         
                                                                               
(The presence of Senator Donley is noted.)                                     
                                                                               
Ms. Clarke advised the committee that this program actually                    
ran out of funds in February.  Temporarily they have                           
transferred funds from the Medicaid program to keep the                        
bills being paid while the Legislature considered this                         
supplemental.                                                                  
                                                                               
Senator Phillips asked how many individuals were they                          
talking about?  Ms. Clarke said it was her understanding                       
they were seeing about three hundred more individuals under                    
general relief.                                                                
                                                                               
In response to a query from Senator Parnell, Ms. Clarke said                   
there was a bill passed last year with reference to a                          
savings in the Adult Public Assistance Program and the                         
Medicaid Program.  At that time they could not estimate how                    
many would apply for general relief medical.  They did note                    
in their fiscal note that perhaps as much as $1 million                        
worth of expenses could come to this program.                                  
                                                                               
Senator Sharp asked if the individuals now ineligible under                    
Medicare and Medicaid they automatically become eligible                       
under general relief?  Ms. Clarke indicated they do have to                    
apply and be eligible for general medical relief as well.                      
There are very strict conditions for application.                              
                                                                               
Senator Parnell indicated that even though the Legislature                     
did not act on that the catch was indicated in the                             
department's fiscal note.  He asked what the categories were                   
that got cut off for alcohol treatment.                                        
                                                                               
BOB LABBE, Director, Division of Medical Assistance,                           
Department of Health and Social Services was invited to join                   
the committee.  He explained the Federal policy, which                         
eliminated certain disabled children and substance abusing                     
individuals as the only basis for disability.  The Medicaid                    
eligibility basically follows the Federal SSI program for                      
cash for those groups.  They had estimated some individuals                    
because they knew they would no longer qualify for the                         
Federally matched program and would fall into the general                      
relief medical program.  He further indicated there were                       
legal alien issues that came up last wherein they were no                      
longer able to cover certain groups of legal aliens under                      
Medicaid but the State did cover them, if they qualified,                      
under general medical relief.                                                  
                                                                               
Senator Sharp asked if drug addicts could also apply under                     
general medical relief?  Ms. Clarke indicated there were                       
only approximately seventy-five drug and alcohol clients.                      
Mr. Labbe noted they had been seeing a decrease in                             
expenditures in general relief medical.  In the past in had                    
been a much larger program.                                                    
                                                                               
There followed general discussion of the committee members.                    
                                                                               
Ms. Clarke further explained that one had to have a monthly                    
income of less than $300, less than $500 in assets to                          
qualify for the general relief medical.  You can not qualify                   
for any other medical coverage.  The individual must have an                   
immediate need for medical care for a terminal illness,                        
chemotherapy treatment for cancer or a chronic condition.                      
                                                                               
In response to a query from Senator Torgerson, Ms. Clarke                      
explained the seventy-five individuals and that they were a                    
total increase of three hundred individuals to the program.                    
The requested amount under this program was to serve three                     
hundred additional individuals equaling about                                  
$5000/individual.                                                              
                                                                               
Senator Parnell said the back up did not correctly reflect                     
the number of individuals being served.  It should read that                   
1700 to 1800 were being served, including those qualifying                     
for abortions.  He felt this deception was outrageous.  Ms.                    
Clarke apologized and said there was no effort on her part                     
to deceive.                                                                    
                                                                               
Mr. Labbe commented on the conditions for qualifications and                   
the eligible planned group.  The abortion payments that are                    
made as State funded payments come out of the budget but                       
from a population that is eligible for Medicaid.  He                           
indicated that there was approximately $800,000 in FY 97 in                    
abortion-related costs out of the total budget.                                
                                                                               
Senator Parnell continued to voice his concern about the                       
lack of abortion individuals not showing up on the records.                    
He felt the department needed to show everyone that was                        
being funded.  Otherwise the calculation per person was                        
basically meaningless.                                                         
                                                                               
Mr. Labbe reiterated there was no intention to deceive.                        
They have always used the same eligibility formula for the                     
program.  He said the total dollars include the abortions                      
and therefore the distribution by category of service would                    
include those costs.  Senator Parnell said if that was the                     
case then the eligible clients should correctly reflect 1700                   
or 1800.  Mr. Labbe said the difference was one must also                      
look at the distribution of race, age and location.  That                      
only includes the 856.  Senator Parnell asked for a reprint                    
of the chart so the proper and complete information was                        
presented to the committee.                                                    
                                                                               
Ms. Clarke said they have tried to put together a more                         
complete picture as this program is debated in the                             
Legislature.                                                                   
                                                                               
Senator Sharp asked if the department was assuming the                         
Legislature was going to fund all requests?  Ms. Clarke said                   
that one thing the committee should know was that hospital                     
payments had been reduced to less than twenty-nine percent                     
of the costs.   Senator Sharp said the question was                            
regarding the priority list.  Mr. Labbe responded and said                     
all of the services on the list were not presently funded.                     
He said they were only part way down for their coverage                        
under general relief medical program.  He explained the                        
difficulties in using the lists were that they required                        
regulation changes.  Even though a problem is perceived it                     
takes a while to change it.  He said the priority list was                     
not a good option for daily management.                                        
                                                                               
Senator Parnell asked how this worked if they ran out of                       
money in February.  Were they funding right now from other                     
sources?  He asked directly if the list was meaningful at                      
all.  Mr. Labbe said the list was not terribly meaningful in                   
mid-year.  The problem lies in that if they make a decision                    
now for FY 99 they would notice to cut some services or                        
change some rates.  Typically, however, the clients that are                   
eligible go to a provider, the provider sees them and the                      
bill comes in.  There is a lag anywhere from one to five                       
months from the date the service is provided until a bill is                   
presented.  Therefore, the department incurs liabilities.                      
It is hard to turn this on a dime.  A regulation change                        
would have to be made in order to use the list.                                
                                                                               
In response to a query from Senator Phillips, the list as                      
defined by the Legislature and in statute is that the                          
department is to make an estimate of their ability, given                      
the appropriation, to manage that appropriation.  This                         
assessment would have to made at the first of the year                         
because there is always this delay, same as last year. The                     
reduction in Medicaid has also created them problems.  This                    
is why the list is not effective as a daily management tool.                   
                                                                               
Senator Torgerson asked about money being transferred out of                   
Medicaid or Medicare to cover the shortage.  Ms. Clarke said                   
through the Office of Management of Budget when they ran out                   
of funds in February monies were transferred from Medicaid                     
or Medicare.  The requested amount would cover monies to be                    
paid back.  She did not recall the exact amount but would                      
supply the information to the committee.                                       
                                                                               
MEDICAID PROGRAMS:  This was a request for $1.306.6 million                    
in Federal funds for school based claims that come into the                    
Department of Health and Social Services.  In the FY 98                        
budget the department estimated a total of $2 million would                    
come in from this program.  She briefly explained the                          
program.                                                                       
                                                                               
                                                                               
(Tape #127, Side A switched to Side B.)                                        
                                                                               
                                                                               
Ms. Clarke continued.                                                          
                                                                               
INDIAN HEALTH SERVICE:  This is a request in the amount of                     
$1.3 million.  She said this is a repository for Federal                       
funds that the department processes.  She said the monies                      
are not only used in the Indian Health Service but also                        
moved around in the school districts.  Under the time study                    
program each school gets a grant.                                              
                                                                               
Senator Torgerson asked how much of the school district                        
claims were being paid under this program?  Ms. Clarke said                    
the Federal share of the claim was $4.6 million.  Senator                      
Torgerson further asked if the department was going to spend                   
$3 million on back case adoptions?  Ms. Clarke explained                       
that the agreement is that any money that comes to the State                   
from this program half is sent back to the school districts.                   
The other half is discretionary funds that the Legislature                     
can appropriate for many different purposes.  The Governor                     
has proposed the remainder of the monies be used for the                       
adoption backlog.  LB&A acted on part of that and there are                    
several other requests that will be before the Senate                          
Finance Committee at a later time.                                             
                                                                               
MEDICAID PROGRAM:  This is a request for Federal authority                     
for the Medicaid program for $12,018,400.  She explained the                   
department embarked on a fairly severe cost containment                        
effort in this program, which required a number of                             
regulatory changes to try and live within the general fund                     
budget.  These efforts have been successful because the                        
department is not requesting any general funds.  The Federal                   
authority request now before the committee will eliminate                      
the general fund request.                                                      
                                                                               
Senator Sharp asked if this was a "break even" on the                          
savings in general funds?  Ms. Clarke explained that the                       
request would go for three main items as listed in their                       
backup.                                                                        
                                                                               
MEDICAID SCHOOL-BASED CLAIM:  This is the second part of the                   
school based claim.  She noted that at the 12 December LB&A                    
meeting the department requested $1.3 million for dealing                      
with the adoption backlog of children they had identified as                   
having been in foster care for a number of months and years.                   
These children also had various barriers to being adopted.                     
The LB&A committee approved $433,000 and allowed the                           
department to go forward with one-third of the request so                      
they could get started right away on dealing with this                         
problem.  The department is requesting the remainder of the                    
funds so they can continue this program.  The department has                   
coordinated meetings with the Court system, Department of                      
Law, Public Defender and the Office of Public Advocacy in                      
order to allow many of these children to become legally free                   
for adoption.  Some four hundred children are eligible for                     
adoption.                                                                      
                                                                               
Co-chair Pearce asked what the results were from the monies                    
approved at the LB&A meeting.  Ms. Clarke responded that two                   
primary grants have been awarded to two individuals.  They                     
have agreed that they were going to target fifty adoptions                     
of special needs children.  So far the work for twenty-two                     
children has been completed with only final adoption                           
proceedings pending.                                                           
                                                                               
Senator Parnell indicated that he was very supportive of the                   
approach being taken by the department.  He said he was                        
concerned whether the department would be able to expend the                   
remaining requested funds and accomplish the task.  He felt                    
this request being built into the FY 98 budget was                             
excessive.  Ms. Clarke said the grants were not awarded                        
until early February due to negotiations.  There were start-                   
up costs, training sessions, home studies and coordination                     
costs with tribal partners.  She advised the reason the                        
request was in the supplemental request was because the                        
revenue was available in this current year.  The department                    
knows that they would not be able to spend the money this                      
year and therefore are requesting a lapse date through FY                      
99.  She explained the adoption program in the budget was                      
subsidy payments and not related to the backlog of children                    
identified.  This was a one-time request.                                      
                                                                               
Senator Phillips asked what the rush had been for the                          
request before LB&A back in December?  Ms. Clarke explained                    
that the department knew it was going to take awhile to                        
develop an RSP and a program with grantees.  They pushed to                    
get this accomplished so they could get the necessary work                     
done to develop a program and protocol for providing names                     
of the children and working out what results they wanted.                      
                                                                               
WIC PROGRAM:  She explained that this was a request for                        
$1,241.5 for the WIC program.  This is a one hundred percent                   
Federally funded program except for the statutory designated                   
receipts they get from formula rebates.  It provides                           
specific nutritious food, packages and nutrition education                     
for low-income, pregnant, at-risk women.  They have seen a                     
continuing growth in the program over the last several                         
years.  This request will allow the department to keep up                      
with the kind of growth they are seeing.                                       
                                                                               
MEDICAID FACILITIES AND NON-FACILITY:  This was a request                      
for $7,770.1 general funds.  She explained the request was                     
due to the Federal match rate not being as high as                             
originally anticipated.                                                        
                                                                               
DFYS/BLOCK GRANT:  This request was for $119.3 in general                      
funds.  The request was due to a reduction in Federal Title                    
XX block grants.  These monies were used to fund the Child                     
Protection workers.                                                            
                                                                               
YOUTH FACILITIES:  This was a request for $290.0 in general                    
funds to help alleviate overcrowding at the Johnson Center                     
in Juneau and the McLaughlin facility in Anchorage.                            
                                                                               
GEORGE BUHITE, Director, McLaughlin Youth Center testified                     
via teleconference from Anchorage.  In response to a                           
question from Senator Phillips he indicated that McLaughlin                    
presently house one hundred ninety-eight juveniles when they                   
were equipped for only one hundred fifty.  He also explained                   
that the Johnson Youth Center was only an eight-bed facility                   
but they were presently housing twenty-two to twenty-three                     
juveniles.  As a general rule all the facilities were                          
operating at approximately one hundred thirty-eight percent                    
of capacity.                                                                   
                                                                               
Senator Torgerson asked what the increase was over last                        
year.  Mr. Buhite explained that at McLaughlin they were                       
running approximately ten juveniles per day more than last                     
year and at Johnson they were up about four juveniles per                      
day.  The significant part, he noted, especially for                           
McLaughlin was that for approximately every eight to ten                       
juveniles per day in the facility they needed to add one                       
staff per shift to meet the safety and administrative code                     
requirements.                                                                  
                                                                               
FOSTER CARE:  Ms. Clarke called the committee's attention to                   
an amendment in the department's packet regarding this item.                   
She said the initial request had been in the amount of                         
$355.6 general funds.  The amendment requested the addition                    
of Federal funds in the amount of $404.2.  She noted a                         
significant increase in the number of foster care                              
augmentation requests.  She said this augmentation rate was                    
necessary to pay for a number of items that are above the                      
base foster care rate.  This may include transportation to                     
visit physicians, special foods, laundry, in-home                              
assistance, childcare and etc.  The department had seen an                     
increase in children with special needs over the past year.                    
                                                                               
Co-chair Pearce asked what the Federal receipts were.  Ms.                     
Clarke indicated they were Title IV (3) receipts and are                       
available for children who meet the eligibility criteria.                      
The Federal government pays for the same the department                        
provides as long as they are eligible for those same                           
services.                                                                      
                                                                               
ALASKA CHILDREN'S TRUST FUND:  She noted the item did                          
actually go into Revenue because that's the department that                    
manages that item.  The $2.0 million is a request for a                        
deposit into the Children's Trust Fund.  She explained that                    
fund was created in 1988 by the Legislature and there was                      
currently a balance of $6.5 million.  Proceeds would be                        
available for grants made by the Children's Trust board for                    
child protection, child abuse services, etc.                                   
                                                                               
Senator Phillips asked if there was an emergency situation?                    
Ms. Clarke said she was not familiar with why it was a                         
supplemental request and perhaps someone from OMB would be                     
better qualified to provide any answers.                                       
                                                                               
LAURA BAKER, Budget Analyst, Office of Management and Budget                   
was invited to join the committee.  She explained the $2.0                     
million deposit was put into the supplemental because it was                   
an item being used in a reallocation.                                          
                                                                               
MISCELLANEOUS CLAIMS:  This was a request for $4,200 for                       
bills older than two years that have been submitted for                        
payment.                                                                       
                                                                               
RECORDS STORAGE:  There was no explanation given.                              
                                                                               
SUBSIDIZED ADOPTION PROGRAM:  This was a new request for                       
$257,000 general funds for the subsidized adoption program.                    
She explained that this particular program was a subsidy                       
payment for many children who have been in State custody for                   
special needs who are then adopted.  Ninety percent of the                     
children in this program who receive a subsidy have come                       
from the foster care component.  The department had                            
originally estimated the program would grow by eleven point                    
four percent in FY 98.  Actually, they have seen a growth of                   
eighteen percent, which is considerable above what they had                    
budgeted for and requested of the Legislature.                                 
                                                                               
Ms. Clarke advised the committee that was the last                             
departmental request.  Co-chair Pearce thanked Ms. Clarke.                     
She then called the Department of Law.                                         
                                                                               
BRENDA MARKEY, Director, Division of Administrative                            
Services, Department of Law was invited to join the                            
committee.  She noted that Dean Guaneli, Chief Assistant                       
Attorney General was present to identify and explain the                       
next item.  She noted that most of the additional costs were                   
due to a change in venue.                                                      
                                                                               
DEAN GUANELI, Chief Assistant Attorney General, Legal                          
Services Section-Juneau, Criminal Division, Department of                      
Law was invited to join the committee.                                         
                                                                               
CRIMINAL DIVISION/EXTRAORDINARY EXPENSES:  He explained                        
briefly for the committee that the State bears the burden in                   
criminal cases to prove the case beyond a reasonable doubt.                    
What that means is witnesses have to be brought to Court and                   
get them on the stand.  In Alaska it is often found that the                   
witnesses do not live in the area where the Court proceeding                   
occurs.  Two-thirds of the department's travel budget is to                    
bring witnesses to Court.  The other third is to get                           
attorneys out to the places where the Court proceedings are                    
held.  He advised the committee that this year they faced                      
the extraordinary situation of having four separate murder                     
trials; two from Yakutat that had to be moved to Juneau; and                   
two from Bethel arising out of the shooting at the high                        
school.  One had to be moved to Dillingham and the other to                    
Anchorage.  Those kinds of expenses cannot be anticipated in                   
any fiscal year.  The Dillingham trial had over thirty                         
witnesses that had to be subpoenaed from Bethel to                             
Dillingham.  Many were juvenile, high school students who                      
witnessed the shooting.  Further expenses that had to be                       
borne were having a parent or guardian accompany the minors,                   
hotels and meals.  Due to the Judge's strict time schedule                     
for the trial it was necessary to charter the witnesses from                   
Bethel to Dillingham.  He explained the same costs were                        
being entailed in the trial of the other juvenile in                           
Anchorage.                                                                     
                                                                               
Senator Donley asked why the two were not being tried                          
together.  Mr. Guaneli advised that they were severed                          
because the evidence in one would not have been admissible                     
against the other defendant.  Also, one was tried as an                        
adult and the other as a juvenile.  Senator Donley further                     
asked if the department was able to make any comments as to                    
how to save money on prosecutions next year?  Mr. Guaneli                      
said there were several bills that had been introduced to                      
make changes to criminal law.  He said the changes proposed                    
for Evidence Rule 403 and 404 would certainly help.  Another                   
change that would help the particular problem is a change in                   
rules regarding telephonic testimony.  In further response                     
to Senator Donley, Mr. Guaneli advised that the Governor had                   
introduced these bills, but he did not know their status.                      
                                                                               
Senator Donley believed that appropriate questions should be                   
asked today in order to look at reforms the Legislature                        
could advocate to hold down future costs.                                      
                                                                               
Mr. Guaneli further referred to a memorandum requesting an                     
additional $100,000 to cover travel expenses; also the sex-                    
offender registration program.                                                 
                                                                               
Senator Donley asked again about the Bethel murder trial and                   
why it was so difficult.  Mr. Guaneli explained the change                     
of venue and the need to bring forward so many witnesses due                   
to the fact that the State had charged the defendant with                      
First Degree Murder.  This takes a lot.                                        
                                                                               
JUDGMENTS AND CLAIMS:  Ms. Martin explained the revised                        
numbers for this item is in the memorandum from OMB dated 17                   
April and received late yesterday.  That amount was $695,602                   
general funds and $327,760 AHFC corporate receipts.                            
                                                                               
BARBARA RITCHIE, Deputy Attorney General, Department of Law                    
was invited to join the committee.  She responded to Senator                   
Sharp's question and advised that the claim was listed in                      
with the Cleary case.                                                          
                                                                               
                                                                               
(Tape #127, Side B switched to #128, Side A at approximately                   
2:45 p.m.)                                                                     
                                                                               
                                                                               
There was some discussion amongst the committee members                        
regarding the department's monthly report.                                     
                                                                               
Senator Torgerson asked for a brief review on claim number                     
five under Judgments and Claims.  (Hackett and Groom vs.                       
Commerce)  Ms. Ritchie explained that this was a lawsuit                       
filed against the State with regards to the Americans with                     
Disabilities Act.  The employee claimed the right to certain                   
work place modifications.  She advised that she did not have                   
much information regarding the case because most of it was                     
protected and confidential.  In further response to Senator                    
Torgerson she said that this was an area of increasing                         
litigation.                                                                    
                                                                               
Co-chair Pearce advised Ms. Ritchie that the department's                      
back up was incomplete and would it please be provided the                     
committee.  She said this made it difficult to know anything                   
about the cases.  Ms. Ritchie said she would provide the                       
committee with the requested back up.                                          
                                                                               
TRUSTEES FOR ALASKA GOVERNMENTAL COORDINATION:  Ms. Ritchie                    
explained that this was a claim for a judgment at the                          
Superior Court level.  The case involved an administrative                     
appeal from the State's concurrence with the EPA as required                   
by the Federal Coastal Zone Management Act regarding renewal                   
of the Clean Water Permit for discharges from the Cook Inlet                   
offshore oil platforms.  It was required that this be                          
consistent with the Alaska Coastal Management Program.  The                    
Native village of Port Graham appealed this decision.  The                     
amount sought in the judgement is approximately $24,000.                       
                                                                               
Co-chair Pearce asked the status of the decision.  Ms.                         
Ritchie said it was not entirely clear and that she would                      
provide information by Monday that would explain the status.                   
                                                                               
Senator Torgerson asked if we were paying all the legal                        
fees?  Ms. Ritchie indicated that was correct.                                 
                                                                               
PETRIE CASE:  Ms. Ritchie explained this was a case brought                    
against the State of Alaska and the Department of Community                    
and Regional Affairs.  It arose out of events back in 1993                     
involving the merger of the Alaska Energy Authority.  She                      
explained that the Legislature had passed legislation, which                   
split the existing programs between AIDEA and the Department                   
of Community and Regional Affairs.  After offering continued                   
employment to Mr. Petrie shortly thereafter he was advised                     
that he was going to be laid off.  He in turn filed suit                       
because he felt he was laid off due to prior involvement in                    
the investigation of the former Energy Authority director.                     
Mr. Petrie alleged that Representative Ramona Barnes, then                     
Speaker of the House, insisted that during the transition he                   
not be retained.  There was substantial evidence that this                     
was correct.  The case was eventually settled and the final                    
total cost of damages was estimated at between $423,000 and                    
$578,000.  He also had claims for violation of                                 
constitutional rights and punitive damages.  She explained a                   
settlement worked out with retired Judge Ripley in the                         
amount of $337,500.  She pointed out that the Alaska Supreme                   
Court recently ruled that the "Whistle-Blower Act" does not                    
authorize awards of punitive damages against the State.                        
                                                                               
Senator Torgerson asked if in the Gas for Votes settlement                     
the correct amount was $65,000?  Ms. Ritchie said it was the                   
Supreme Court ruling in the amount of approximately $80,000.                   
There will be no further bill.                                                 
                                                                               
Co-chair Pearce indicated that if tallied together the                         
Cleary matter would be $2,807,498.  Ms. Ritchie concurred.                     
                                                                               
Senator Sharp asked for identification of the AHFC case.                       
Co-chair Pearce advised Senator Sharp where it was but noted                   
that there was no back up for it.  Ms. Ritchie said she                        
would get it to the committee.                                                 
                                                                               
KOYOKUK:  Co-chair Pearce asked Ms. Ritchie to identify this                   
item for the committee. Ms. Ritchie said it was in the                         
packet transmitted late yesterday evening.  She indicated it                   
was in a memo from Carol Carroll to Annalee McConnell.  This                   
related to a case of flooding response and clean-up.  The                      
settlement was $1.6 million plus interest for a total amount                   
of $1,695,735.64.  She explained the settlement and                            
mediation discussions with retired Judge Ripley.  She said                     
the result of entering renegotiations was the settlement and                   
the State was able to maximize its recovery from FEMA.  They                   
were also able to reduce invoiced amounts by $1.3 million                      
and reduce the interest on the date of settlement by twenty                    
months.                                                                        
                                                                               
(A brief tape malfunction is noted at this time.)                              
                                                                               
Mr. Guaneli spoke to the passed abortion legislation.  He                      
noted the problem for the civil division and that they had                     
advised the Governor that both of the laws were                                
unconstitutional.  Due to the conflict of interest issue it                    
was necessary to have two attorneys (who volunteered) from                     
the criminal division handle the litigation.   He noted that                   
the case had taken considerable time and effort from the two                   
prosecutors in Fairbanks in addition to the same effort by                     
an Anchorage appellate attorney.  Both of the laws were                        
struck down by the Superior Court on summary judgments.  The                   
particular supplemental appropriation is to cover the cost                     
the criminal division had to bear in filling a position to                     
handle these cases.  It was assumed the appeal would                           
continue over a two-year period and therefore $300,000 with                    
an extended lapse date is proposed.                                            
                                                                               
In response to a question by Senator Sharp, Mr. Guaneli said                   
that even if the civil division had handled the case they                      
would have had to come back with a supplemental request.                       
                                                                               
OIL & GAS LITIGATION:  Ms. Ritchie said there was an                           
amendment in the memo presented last evening for a reduction                   
from $2.5 million to $1.5 million.                                             
                                                                               
CIVIL DIVISION:  She explained this was a reappropriation to                   
the civil division of $200,000.  She pointed out a memo in                     
the packet addressing this issue.  Co-chair Pearce asked                       
what the funding source was.  Ms. Ritchie said it would be                     
the unexpended unobligated balance of longevity bonus                          
grants.  Co-chair Pearce asked the extraordinary situation                     
in the civil division regarding this matter.  Ms. Ritchie                      
said it was addressed in the memo.  She indicated that it                      
was basically the same situation as outlined by Mr. Guaneli                    
in the Criminal Division.  She explained the most                              
significant increase was in the Child Protection and                           
Juvenile Delinquency case work they have been experiencing.                    
She noted that since August 1997 the cases have been                           
skyrocketing.  The department is unable to cover the                           
shortfall by other components as they are short in those                       
areas as well.  She outlined several areas they were running                   
short in and the department has no control over incoming                       
caseload.  For example, she advised the committee that                         
regarding campaign finance reform they have had four                           
lawsuits filed.  The most significant as to costs was the                      
one filed by the ACLU.  She also pointed out that they had                     
been unable to meet the budgeted vacancy factor for the                        
civil division and therefore were projecting a shortfall.                      
                                                                               
She did say they were doing constant updates on their                          
projections and also their timekeeping and billing system                      
for the civil division.  They were also trying to keep                         
closer track of where their resources were going.                              
                                                                               
With regards to the lawsuits involving campaign finance                        
reform Senator Phillips asked if the four lawsuits could be                    
combined?  Ms. Ritchie said that would be a major                              
undertaking.  However, the Court had ordered a stay on three                   
of the lawsuits pending the final outcome of the lawsuit                       
filed by the ALCU.                                                             
                                                                               
OIL & GAS:  Co-chair Pearce noted that the amendment would                     
reduce the amount to $1.5 million.  Ms. Ritchie concurred                      
and said this was because of the Exxon Valdez settlement.                      
                                                                               
                                                                               
(Tape #128, Side A switched to Side B at approximately 3:30                    
p.m.)                                                                          
                                                                               
                                                                               
She gave a brief explanation on this settlement.  She                          
cautioned the committee, that even though there were areas                     
they were able to reduce costs, there were other areas that                    
some unanticipated events occur that may cause increases.                      
                                                                               
Senator Sharp asked if the $1.5 supplemental was needed for                    
all the oil and gas litigations or was it needed for other                     
services under the umbrella of oil and gas litigations.                        
                                                                               
TINA KOBAYASKI, Assistant Attorney General, Oil, Gas and                       
Mining Section, Department of Law was invited to join the                      
committee.  She said that most of the costs were for outside                   
expert counsel.                                                                
                                                                               
Senator Adams indicated that there had been a meeting                          
conducted by Attorney General, Bruce Bothelo and Ms.                           
Kobayashi about six weeks earlier.  Even though it was a                       
confidential meeting, all legislators had been invited and                     
they had gone over all the cases and knew about the                            
supplemental request at that time.                                             
                                                                               
Senator Sharp asked about some reappropriations or roll-over                   
monies that was not going to be used by the department in                      
the amount of a quarter-and-a-half million.  He asked if                       
there was an anticipated roll-over this year?  Ms. Ritchie                     
said that anything unspent will lapse.                                         
                                                                               
Co-chair Pearce noted for the committee that the Department                    
of Law also had some stale dated warrant items and records                     
storage costs.  There were no questions.  Ms. Markey                           
explained that under the stale dated warrants this referred                    
to an old claim from 1995.                                                     
                                                                               
Co-chair Pearce called Public Safety, Domestic Violence.                       
                                                                               
JAYNE ANDREEN, Executive Director, Council on Domestic                         
Violence and Sexual Assault, Department of Public Safety was                   
invited to join the committee.                                                 
                                                                               
DOMESTIC VIOLENCE:  The request was the result of a two-fold                   
need in Alaska.  Due to the Domestic Violence Act passed in                    
1996 there arose a significant need for training for human                     
service workers and child abuse reporters.  They have                          
managed to obtain Federal funds to subsidize a significant                     
part of that training, especially with the Criminal and                        
Civil Justice systems.  At a Governor's summit on Domestic                     
Violence in December, it was recommended a central clearing                    
house for all training materials and trainers in the State.                    
It was also recommended that training be provided school                       
teachers, personnel, health providers, etc.  The requested                     
funds would be used to begin the central clearing house                        
through a web site as well as expanding on the existing                        
training, developing more curriculums and making trainers                      
available for human services providers.  Ms. Andreen                           
explained why it was presented as a supplemental rather than                   
a budget request.  She said that some of the process had                       
been started in developing a curriculum.  They made a                          
commitment with the Domestic Violence summit to have the                       
training up and running by the end of this calendar year.                      
                                                                               
Co-chair Pearce noted that the Department of Public Safety                     
had $2,100 in miscellaneous warrants and $800 for storage                      
costs.                                                                         
                                                                               
Co-chair Pearce then called Department of Revenue, CSED.                       
                                                                               
LAURIE PERKINS, Director, Division of Administrative                           
Services, Department of Revenue was invited to join the                        
committee.  She noted there were six items to be brought                       
before the committee.                                                          
                                                                               
CSED:  This was for non-reimbursable costs of collecting                       
child support payments for children in State custody and to                    
repay required reimbursements.  She said in the past                           
matching Federal funds had been used to collect child                          
support.  It was learned through a Federal audit that these                    
expenditures do not qualify for Federal participation.  The                    
$140,000 request is the Federal share and the department is                    
requesting a general fund appropriation for it.                                
                                                                               
MISCELLANEOUS TELEPHONE CHARGES:  Late last year it was                        
admitted by the telephone vendor that the telephone billings                   
had been in error and billed the department for $147,000.                      
She advised that the fiscal year 1998 portion had been paid.                   
The $82,000 is comprised of general funds match of $27,900                     
and under Federal receipts the amount of $54,205.                              
                                                                               
RECORDS STORAGE CHARGE:  This request was in the amount of                     
$7,400.                                                                        
                                                                               
FIELD OFFICE RELOCATION, JUNEAU:  This was a relocation                        
requested by the Department of Administration to move from                     
the existing location to a State leased facility.  The move                    
would reduce the overall State lease costs.                                    
                                                                               
Senator Adams asked once the relocation was accomplished                       
what would be the costs savings on an annual basis to the                      
State?  Ms. Perkins said she did not know that amount but                      
Dugan Petty could provide it.                                                  
                                                                               
ALCOHOL BEVERAGE CONTROL BOARD:  She said the administrative                   
clerk, responsible for processing liquor licenses had an                       
extended paid medical leave.  In order to keep up with the                     
statutory requirements to process liquor licenses it was                       
necessary to hire a temporary clerk.  The request was in the                   
amount of $16,000 general funds to cover those costs.                          
                                                                               
Ms. Perkins noted the final request was forwarded in the                       
memo to OMB and provided late last evening.  It was in the                     
amount of $240,000 general funds.  The appropriation was                       
needed to augment the Federal incentives, which had been                       
reduced as a result of ATAP collections decreasing.  She                       
explained that Federal incentives plus general fund matching                   
to get their thirty-four percent State match which is                          
matched by the Federal government for sixty-six percent.                       
She said they had taken immediate steps to reduce costs by                     
instituting a hiring freeze, renegotiated RSA's, reduced                       
travel expenses and by doing this they had been able to                        
reduce the shortfall from $1.189 million to $705,000.                          
                                                                               
Senator Sharp indicated that when he served on LB&A they                       
knew the Federal incentives would not last forever.  The                       
purpose of the incentives was to get programs up and running                   
and not to last forever.  Ms. Perkins said the law governing                   
Federal incentives was changing.  After the year 2000 it                       
will be based on the amount of total collections rather than                   
just ATAP.                                                                     
                                                                               
Co-chair Pearce said this concludes all the departments.  In                   
review she noted that Department of Labor had a                                
miscellaneous claim; Department of Environmental                               
Conservation had an expenditure ratification for $110,000;                     
and the Governor's office had an overexpenditure.                              
                                                                               
Co-chair Pearce took a five minute at ease.  Committee was                     
reconvened.                                                                    
                                                                               
MARLA GREENSTEIN, Executive Director, Commission on Judicial                   
Conduct testified before the committee via teleconference.                     
She explained they were the agency that handles ethical                        
complaints against Judges.  Last year they handled four big                    
complaints; two very serious matters that required outside                     
attorney fees.  She said those were reflected in the                           
supplemental request.  The amended request was increased to                    
$95,830.  The reason was for an oversight on her part.  She                    
also realizes that they were consistently underfunded in                       
their personal services line item.                                             
                                                                               
There being no questions,  Co-chair Pearce returned to the                     
Department of Transportation.                                                  
                                                                               
NANCY SLAGLE, Director, Division of Administrative Services,                   
Department of Transportation and Public Facilities was                         
invited to join the committee.                                                 
                                                                               
ALASKA MARINE HIGHWAY FUND:  This was a request for                            
$1,741,199 in general funds for the Alaska Marine Highway                      
System Fund.  This would cover the direct extraordinary                        
costs related to the Prince Rupert blockade and also the                       
lost revenues incurred from refunds that were made for                         
ticketed passengers specifically related to that incident.                     
                                                                               
Section 18(b) is additional authority for the Marine Highway                   
System to cover those extraordinary costs incurred during                      
that incident.                                                                 
                                                                               
Senator Sharp asked if money collected from tickets went                       
into the Marine Highway fund.  Ms. Slagle indicated that was                   
correct.  The refunded tickets were paid from that fund.                       
Senator Sharp further inquired if they were asking for the                     
entire $1.7 million out of general funds.  Again Ms. Slagle                    
indicated that was correct.  She clarified that it was the                     
loss of revenues associated with the blockade.  Senator                        
Sharp said this fund always had a balance in it because                        
ticket revenue goes into it and the Legislature supplements                    
it from general funds.  He wanted to know why they were                        
being asked for general funds to make up the lost revenue.                     
Ms. Slagle said that was because they had seen lost revenues                   
decreasing and this was to help avoid depletion of the                         
Marine Highway Fund itself.  She also explained that their                     
budget was based on a certain amount of revenue they                           
anticipated receiving from the sale of tickets, food, etc.                     
                                                                               
Senator Phillips asked how many days total the blockade was?                   
What amount of revenue did this represent?                                     
                                                                               
BOB DOLL, General Manager, Ferry Operations, Southeast                         
Region, Department of Transportation and Public Facilities                     
was invited to join the committee.  He responded to Senator                    
Phillips question and said it represented the cumulative                       
effects over the next two months of all of the tickets that                    
had to be refunded.  Senator Phillips asked what was the                       
procedure if a boat unexpectedly broke down and had to be                      
dry-docked.  Mr. Doll explained that normally if they were                     
dealing with a single ship and a limited amount of time, and                   
depending on the time of year, probably the Alaska Ferry                       
System could rebook those individuals in a number of                           
different ways.  When it occurs as did during the blockade                     
and totally shuts off a major exit point, that creates a                       
different problem.  In further response to Senator Phillips,                   
he said in the case of a vessel being broke down and put                       
into dry-dock they would not normally ask the Legislature                      
for a supplemental.  This was a special case.                                  
                                                                               
Co-chair Pearce indicated the ship did not shut down the                       
point of entry; the Governor did and then refused to reopen                    
it.                                                                            
                                                                               
SENATOR ROBIN TAYLOR was invited to join the committee.  He                    
reiterated the same point as Co-chair Pearce.  On the 19th                     
of July there was a blockade situation while the Governor                      
was floating down the river.  He did nothing about it and                      
then refused to take the vessel back south because he was                      
going to litigate the matter.  He said what was really lost                    
here was suffered by the people of Southeast Alaska who were                   
no longer interconnected with the road system.  The overall                    
cost of this incident is probably three times more the                         
amount being requested before this committee.  He said this                    
would put the money back out of the general fund and into                      
the Marine Highway Fund, which is essential to its                             
operation.  They were supposed to have recovered all of this                   
amount plus more in litigation.  Instead, the litigation has                   
been resolved in the approximate amount of USD156,000 to be                    
spent by the Canadians to encourage people to come to Prince                   
Rupert.                                                                        
                                                                               
Senator Adams asked if there was litigation going on at this                   
time to recover our losses from the Canadian government?                       
Ms. Slagle said she believed the settlement was reached with                   
the Canadian government and the department has received some                   
money to pay claims and they have received some assistance                     
in the lease costs for the Prince Rupert facility.  Senator                    
Adams asked the monetary figure.  Ms. Slagle said it was                       
approximately $90,000/year in lease cost assistance.                           
                                                                               
Co-chair Pearce said she also recalled all the statements                      
that we were going to sue and force the Canadians to pay us.                   
She asked if the State ended up not having a good case?  And                   
why did the State settle for so much more less than they                       
said they were going to?  Ms. Slagle said she was not privy                    
to that information and it would be best to pose those                         
questions to the Department of Law.                                            
                                                                               
Ms. Slagle explained the next item as being the actual cost                    
that was incurred related to the Prince Rupert blockade                        
incident.  It covers legal costs as well as over time,                         
travel and contractual services extraordinary to this                          
incident.  Co-chair Pearce asked that she explain what they                    
were doing in pulling $518,000 from the Marine Highway Fund                    
and what were they doing with it.  Ms. Slagle said this was                    
actual expenditures out of the Marine Highway System Fund.                     
There were some crew overtime costs they had paid for,                         
travel needs they covered, $325,000 legal expenses which                       
included outside counsel as well as Department of Law.  Co-                    
chair Pearce asked if the department was asking they ratify                    
funds they had already spent?  Ms. Slagle indicated it was                     
increasing their authorization level to cover those                            
expenditures.  Co-chair Pearce asked if the department had                     
already RSA'd $325,000 to the Department of Law.  Ms. Slagle                   
said they had an RSA in place with them already.  Their                        
actual expenditures through the end of February was $302,000                   
they expected.  Co-chair Pearce said she hoped the                             
Commissioner for the Department of Transportation was not                      
going to sign to send the money over to the Department of                      
Law when they did not recover any money.  She said, "that                      
would be crazy".  Ms. Slagle indicated that they were                          
required to pay regardless of the outcome under the RSA                        
agreement.  Co-chair Pearce asked if there was not some sort                   
of performance measure in the RSA agreement?  She did not                      
know why the Department of Transportation would be required                    
to pay that under the circumstances.                                           
                                                                               
Ms. Slagle indicated the department had nothing in the memo                    
that was sent over last evening.  In response to a question                    
by Senator Phillips, Mr. Doll said that it was his                             
understanding the litigation was against the fishermen                         
themselves as individuals.  The Government of Canada made                      
the agreement, which involved obtaining the agreement of the                   
individuals who had participated in the blockade.  He                          
believed that has been accomplished and at that point the                      
settlement would be effective.  He noted that some of the                      
money had been delivered.                                                      
                                                                               
Senator Torgerson advised the committee that at the Co-                        
chair's request he would try to close out at 4:00 p.m. on                      
Monday the DOT budget.  They would leave open only the                         
Southeast Region and Marine Highway System.                                    
                                                                               
Co-chair Pearce called the Department of Labor.                                
                                                                               
ARBE WILLIAMS, Director, Division of Administrative                            
Services, Department of Labor was invited to join the                          
committee.  She referred to the memo of 17 April to OMB,                       
page two and said the Department of Labor was requesting the                   
amount of $88,000 in general funds.  She said the need arose                   
at their joint workshop with the U.S. Census Bureau.                           
Software is required to continue the next phase of the                         
census work.  $50,000 is needed for FY '98 and $38,000 is                      
needed for FY '99.  She said the $50,000 would be used to                      
complete Phase I which was to verify changes made in the                       
last three years as to the boundaries was incorporated into                    
the electronic census bureau's tiger line files.  Monies                       
would also be used to correct the 1990 tiger line files and                    
to load the layers of all of the corrections made to the                       
1990 files up through the present date.  She said this need                    
for corrections was because the 1990 census was based on                       
1927 geodetic surveys.  The year 2000 was going to be based                    
on the 1983 geodetic survey.  Phase II would allow the                         
department to create precinct boundaries.                                      
                                                                               
Co-chair Pearce said it seemed like the Feds should have to                    
pay since we do the census for them.  Ms. Williams said the                    
census bureau has never paid for that work.                                    
                                                                               
Co-chair Pearce called the University.                                         
                                                                               
WENDY REDMOND, University of Alaska was invited to join the                    
committee.  She explained that last year they were in                          
negotiations with the United Academic a new faculty union.                     
They had anticipated what the contract would be and the                        
requested amount reflected the difference, which was a .5                      
percent difference for half a year.  She said that OMB did                     
not actually include any money but gave them a net zero from                   
this year's budget.  She said she did not know what that                       
meant and the University would rather have the money.                          
                                                                               
SETTLEMENT OF A CLAIM: This request was for  $606,500 for a                    
liability claim.  It was directed to remain confidential by                    
the Court.  She is allowed to speak only executive session                     
regarding this matter in order to secure the funding.                          
                                                                               
Senator Parnell asked if the confidentiality extended only                     
to the terms of the settlement or did it also include who                      
the parties were and who the attorneys are.  Ms. Redmond                       
said she could handle this confidential matter very quickly                    
with no need to keep anyone waiting.                                           
                                                                               
Senator Adams asked that the committee go into executive                       
session in her office for the purpose of discussing this                       
private matter.  Co-chair Pearce said she has already been                     
briefed regarding this matter and she did not need to                          
attend.  Senator Sharp indicated that his office could be                      
used, which was agreed to by the committee.                                    
                                                                               
Co-chair Pearce outlined the committee schedule for Monday                     
at 9:00 a.m. to begin full subcommittee closeouts.                             
                                                                               
                                                                               
ADJOURNMENT                                                                    
                                                                               
Co-chair Pearce adjourned the meeting at approximately 4:40                    
p.m.                                                                           
SFC-98 -35- 4/18/98                                                            
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Document Name Date/Time Subjects