Legislature(2009 - 2010)SENATE FINANCE 532

03/23/2009 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved CSSB 89(FIN) Out of Committee
Moved SB 125 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                       March 23, 2009                                                                                           
                         9:02 a.m.                                                                                              
9:02:37 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 9:02 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Johnny Ellis                                                                                                            
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Darwin Peterson, Staff, Senator  Bert Stedman; McHugh Pierre,                                                                   
Liaison,  Department   of  Military  and   Veterans  Affairs;                                                                   
Senator Joe Paskvan; Jeff Stepp,  Staff, Senator Joe Paskvan;                                                                   
Karen  Rehfeld, Director,  Office of  Management and  Budget,                                                                   
Office  of the Governor;  Mike Maher,  Director, Division  of                                                                   
Administrative   Services,   Department    of   Environmental                                                                   
Conservation; Guy Bell, Assistant  Commissioner and Director,                                                                   
Division of Administrative Services,  Department of Labor and                                                                   
Workforce  Development; Leta  Simons,  Director, Division  of                                                                   
Support Services, Department of Natural Resources.                                                                              
PRESENT VIA TELECONFERENCE                                                                                                    
Dale  Nash,   Chief  Executive   Officer,  Alaska   Aerospace                                                                   
Development  Corporation;  Dan  Fauske,  Executive  Director,                                                                   
Alaska Housing  Finance Corporation,  Department of  Revenue;                                                                   
James  Gurke,  Director,  Public   Housing  Division,  Alaska                                                                   
Housing  Finance  Corporation,  Department of  Revenue;  Mark                                                                   
Romick,   Director,  Planning   Department,  Alaska   Housing                                                                   
Finance Corporation,  Department  of Revenue; Michelle  Rizk,                                                                   
Budget  Director,  University  of Alaska;  Denis  Wiesenburg,                                                                   
Dean and Professor,  School of Fisheries and  Ocean Sciences,                                                                   
University of Alaska Fairbanks.                                                                                                 
SB 89     "An Act relating to retirement benefits for                                                                           
          members  of  the  Alaska   Territorial  Guard;  and                                                                   
          providing for an effective date."                                                                                     
          CS SB 89 was REPORTED out of Committee with a "do                                                                     
          pass" recommendation  and with accompanying  fiscal                                                                   
          note 1  by the Department of Military  and Veterans                                                                   
SB 125    "An Act  changing the name of the  Alaska Aerospace                                                                   
          Development   Corporation   to   Alaska   Aerospace                                                                   
          SB 125 was REPORTED out of Committee with a "do                                                                       
          pass" recommendation  and with accompanying  fiscal                                                                   
          note  1 by  the Department  of Commerce,  Community                                                                   
          and Economic Development.                                                                                             
SB 161    "An  Act  making  supplemental  appropriations  and                                                                   
          capital  appropriations;  amending  appropriations;                                                                   
          and providing for an effective date."                                                                                 
          SB 161 was HEARD and HELD in Committee for further                                                                    
SENATE BILL NO. 89                                                                                                            
     "An Act relating to retirement benefits for members of                                                                     
     the Alaska Territorial Guard; and providing for an                                                                         
     effective date."                                                                                                           
9:03:54 AM                                                                                                                    
Co-Chair Stedman  explained that the bill was  first heard on                                                                   
February 3 and  was set aside to allow Congress  and the U.S.                                                                   
Army to  arrive at  a solution.  He noted  a letter  from the                                                                   
congressional  delegation  (March  18,  2009, Copy  on  File)                                                                   
informing the committee that the  benefits for the Guard will                                                                   
cease  and  asking  the  legislature   to  provide  temporary                                                                   
payments  until  Congress resolves  the  issue  later in  the                                                                   
year. Senate  Bill 89 is necessary  to ensure payment  of the                                                                   
Senator  Huggins   MOVED  to   ADOPT  Work  Draft   LS0432\S,                                                                   
Bannister, 3/21/09.                                                                                                             
Co-Chair Stedman OBJECTED for discussion.                                                                                       
DARWIN  PETERSON,  STAFF,  SENATOR   BERT  STEDMAN,  SPONSOR,                                                                   
informed the committee  that members of the  committee worked                                                                   
with the Department  of Military and Veterans  Affairs (DMVA)                                                                   
to draft  a new  CS in  light of  the fact  that Congress  is                                                                   
unable   to  make   retirement  payments   until  a   defense                                                                   
authorization bill is passed.  The CS changes the payments to                                                                   
interim payments  until the issue  is resolved.  The original                                                                   
bill had a set amount of $550  per month appropriated to each                                                                   
guardsman; the CS  takes into account the amount  each person                                                                   
is getting  paid by  the military in  relation to  the amount                                                                   
they should  be getting  paid if  territorial guard  work was                                                                   
credited. He explained  that the March 20 fiscal  note by the                                                                   
DMVA reflects  the cost of  $83,500 for the payments  through                                                                   
February 2010,  when the bill  sunsets. If Congress  does not                                                                   
resolve the  issue before the  next legislative  session, the                                                                   
issue will need to be revisited in February 2010.                                                                               
Co-Chair Stedman reiterated that  the measure was intended to                                                                   
bridge the payments until Congress could act.                                                                                   
Co-Chair  Stedman removed  his objection  to the adoption  of                                                                   
the CS. There being NO OBJECTION, it was so ordered.                                                                            
Co-Chair  Stedman queried  the  administration's position  on                                                                   
the legislation.                                                                                                                
MCHUGH PIERRE,  LIAISON, DEPARTMENT OF MILITARY  AND VETERANS                                                                   
AFFAIRS,  spoke in support  of the  legislation. He  reminded                                                                   
the committee  that 26 Alaska Territorial Guard  members will                                                                   
be  receiving a  deduction in  their federal  pay. They  were                                                                   
receiving  federal   retirement  pay  for   federal  services                                                                   
performed  through  the  federal military.  The  Division  of                                                                   
Personnel  of the U.S.  Department of  Army decided  that the                                                                   
law currently  on the  books did not  fully meet  the payment                                                                   
requirements   for  the  guard   members  and  is   therefore                                                                   
suspending  the payment  for the  time served  in the  Alaska                                                                   
Territorial  Guard from  approximately 1942  through 1946  or                                                                   
Mr. Pierre  emphasized that  DMVA is  proud of the  committee                                                                   
for taking care  of the elders, but expressed  disappointment                                                                   
in the federal  government for refusing to make  the payments                                                                   
until the problem is corrected.                                                                                                 
9:09:05 AM                                                                                                                    
Co-Chair Stedman  asked whether  the administration  supports                                                                   
the  bill.  Mr.  Pierre  responded  that  the  administration                                                                   
supports serving veterans.                                                                                                      
Co-Chair Stedman  pointed out that quick action  was required                                                                   
to make sure veterans  do not miss payments. He  asked if the                                                                   
governor's  signature was forthcoming.  Mr. Pierre  responded                                                                   
that DMVA can get the money to  the veterans who are in need.                                                                   
Senator Huggins directed attention  to page 2, line 10 of the                                                                   
CS regarding  the individual  reimbursing the department  [in                                                                   
case of  overpayment]. He  asked if  the department  had full                                                                   
confidence  that individuals  would  make the  reimbursement.                                                                   
Mr. Pierre  answered that  the department  would monitor  the                                                                   
situation  closely and  make certain  that the veterans  were                                                                   
not put  in a position to  have to repay the  department. The                                                                   
department  will   also  make  sure  veterans   do  not  miss                                                                   
Senator Huggins commented  that people he had  spoken to want                                                                   
to do the right thing.                                                                                                          
9:11:32 AM                                                                                                                    
Senator  Olson asked  how  veterans could  be  sure that  the                                                                   
payments  would  be  made  in a  timely  matter.  Mr.  Pierre                                                                   
assured  the committee  that  after the  bill  is signed  the                                                                   
department  would make  payments as quickly  as possible.  He                                                                   
anticipated that payments will  need to be sent out in April.                                                                   
Senator Olson expressed appreciation  on behalf of guardsmen.                                                                   
9:12:21 AM     AT EASE                                                                                                        
9:12:40 AM     RECONVENED                                                                                                     
Senator Thomas  commented that $83,000  is a small  amount of                                                                   
money compared to the service rendered by the veterans.                                                                         
Senator Huggins  MOVED to  REPORT CS SB  89 out of  committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
note. There being NO OBJECTION, it was so ordered.                                                                              
CS  SB 89  was REPORTED  out of  committee with  a "do  pass"                                                                   
recommendation  and with  accompanying fiscal  note 1  by the                                                                   
Department of Military and Veterans Affairs.                                                                                    
SENATE BILL NO. 125                                                                                                           
     "An  Act  changing  the name  of  the  Alaska  Aerospace                                                                   
     Development    Corporation     to    Alaska    Aerospace                                                                   
9:14:47 AM                                                                                                                    
SENATOR JOE PASKVAN, SPONSOR,  introduced his staff and asked                                                                   
him to speak for the legislation.                                                                                               
JEFF STEPP,  STAFF, SENATOR JOE  PASKVAN, SPONSOR,  read from                                                                   
Sponsor Statement (Copy on File):                                                                                               
     Senate Bill 125  simply seeks to change the  name of the                                                                   
     Alaska Aerospace  Development Corporation to  the Alaska                                                                   
     Aerospace Corporation.                                                                                                     
     This  name   change  will  assist  the   corporation  in                                                                   
     securing  launch and other  aerospace related  contracts                                                                   
     that  generate significant  economic benefits  to Alaska                                                                   
     by  providing long-term,  high paying,  stable jobs;  by                                                                   
     providing  local  economic  diversity; and  by  creating                                                                   
     short-term  benefits  from   projects  and  construction                                                                   
     The  name "Development"  gives the  perception that  the                                                                   
     organization  is a non-profit  administrative  body that                                                                   
     simply  encourages  aerospace   development  in  Alaska,                                                                   
     rather  than  an  organization that  owns  and  operates                                                                   
     space  launch facilities  that are  fully developed  and                                                                   
     capable of launching rockets.                                                                                              
     The launch  site in  Kodiak is operational,  functioning                                                                   
     and  self-supporting,  in that  no  Alaska General  Fund                                                                   
     appropriations    are   needed   for    operations   and                                                                   
     maintenance of the site.                                                                                                   
Mr. Stepp  added that  the fiscal  note for  $4,500 would  be                                                                   
paid for with  federal receipts and used for  new letterhead,                                                                   
stationary, logo, and website changes.                                                                                          
Mr.  Stepp concluded  that  the name  change  would help  the                                                                   
corporation meet its new 21  century  goals. The new title is                                                                   
unambiguous  about the  corporation's  capabilities and  will                                                                   
improve its ability to offer launch  services to the national                                                                   
and international  aerospace market, which benefits  both the                                                                   
nation and Alaska.                                                                                                              
Co-Chair Stedman commented on the size of the fiscal note.                                                                      
9:17:59 AM                                                                                                                    
Co-Chair Stedman opened public testimony.                                                                                       
DALE  NASH,   CHIEF  EXECUTIVE   OFFICER,  ALASKA   AEROSPACE                                                                   
DEVELOPMENT  CORPORATION   (testified  via   teleconference),                                                                   
reported   a   recent   phone  call   inquiring   about   the                                                                   
corporation's  status as a  non-profit. He believed  changing                                                                   
the  name  would  help  the corporation  to  be  viewed  more                                                                   
Senator Thomas MOVED  to REPORT SB 125 out  of committee with                                                                   
individual recommendations and  the accompanying fiscal note.                                                                   
There being NO OBJECTION, it was so ordered.                                                                                    
SB  125  was REPORTED  out  of  committee  with a  "do  pass"                                                                   
recommendation  and with  accompanying fiscal  note 1  by the                                                                   
Department of Commerce, Community and Economic Development.                                                                     
9:19:51 AM     AT EASE                                                                                                        
9:21:07 AM     RECONVENED                                                                                                     
SENATE BILL NO. 161                                                                                                           
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
9:21:18 AM                                                                                                                    
Co-Chair  Stedman  stated  the  committee's  intent  to  have                                                                   
numerous  hearings  on  the  bill.   He  requested  that  the                                                                   
administration put  as much information before  the committee                                                                   
as the administration  is comfortable with. He  stated intent                                                                   
to work  with the  administration regarding  which items  the                                                                   
administration  wants included  and  which it  does not  want                                                                   
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
OFFICE OF THE  GOVERNOR, informed the committee  that JoEllen                                                                   
Hanrahan,  a   senior  policy  analyst  for   the  Office  of                                                                   
Management  and Budget  (OMB)  had worked  extensively on  SB
161. She highlighted  a one-page summary with  items included                                                                   
and  not  included  in SB  161  ("Federal  Economic  Stimulus                                                                   
Funding  March  20,  2009,"  Copy  on  File)  as  well  as  a                                                                   
spreadsheet describing  the items not in the  bill. She added                                                                   
that  all documentation  is posted  on the  OMB website.  She                                                                   
explained that  department representatives would  present the                                                                   
projects that are included in SB 161.                                                                                           
Ms.  Rehfeld summarized  legislative history  related to  the                                                                   
American  Recovery  and Reinvestment  Act  (ARRA),  otherwise                                                                   
known  as  the economic  stimulus  bill.  The  administration                                                                   
presented the  transportation appropriation bill  in February                                                                   
for  federal  highway,  transit,  and  aviation  projects.  A                                                                   
second  appropriation  was  presented  [March  19]  for  non-                                                                   
transportation  capital  projects. Two  amendments  regarding                                                                   
Medicaid  reimbursement  have   been  submitted  through  the                                                                   
operating  budget  process,  bringing the  total  related  to                                                                   
Medicaid to approximately $128  million for the FY09 and FY10                                                                   
operating budgets.                                                                                                              
9:25:28 AM                                                                                                                    
Ms. Rehfeld  emphasized  that the governor  had not  rejected                                                                   
any of the funds currently in  the economic stimulus package.                                                                   
She  stressed that  the  governor had  been  clear about  her                                                                   
desire for on-going  discussion about items not  currently in                                                                   
SB  161.   The  governor  wants   to  fully  understand   the                                                                   
requirements  of  the  specific  programs as  well  as  state                                                                   
funding  expectations  for when  the  stimulus  funds are  no                                                                   
longer available.                                                                                                               
Ms. Rehfeld  referred to  rigorous oversight requirements  in                                                                   
Co-Chair  Stedman asked  if the  administration expected  the                                                                   
legislature to oversee public  discussion related to ARRA. He                                                                   
wondered  if a  people around  the  state would  be given  an                                                                   
opportunity to give input locally.                                                                                              
Ms. Rehfeld  stated that  the administration  hoped  that the                                                                   
public, active, and on-going committee  process would provide                                                                   
opportunity  to discuss  the  various operating  and  capital                                                                   
requests and items in the economic stimulus package.                                                                            
9:27:15 AM                                                                                                                    
Co-Chair Stedman  further clarified  that the  administration                                                                   
expected  that   the  public   process  would  be   with  the                                                                   
legislature. Ms. Rehfeld agreed  and stated that the governor                                                                   
thought it appropriate  to have the debate in  the context of                                                                   
the budget bills before the legislature.                                                                                        
Ms. Rehfeld  introduced a PowerPoint presentation,  "American                                                                   
Recovery and  Reinvestment Act  (ARRA), Enacted February  17,                                                                   
2009," (Copy on  File). She began with a description  of ARRA                                                                   
(Slide 2):                                                                                                                      
   · $787 billion economic stimulus package to accelerate                                                                       
     the nation's economic recovery                                                                                             
        o Federal tax relief                                                                                                    
             ƒ$288 billion in tax relief between now and                                                                       
               close of FFY 2011                                                                                                
        o Federal spending increases                                                                                          
             ƒ$499 billion in additional federal spending.                                                                     
Ms.  Rehfeld  reported  that   the  governor  had  asked  the                                                                   
departments  to carefully  study the  law's requirements  and                                                                   
determine what it would take for  the state to receive funds.                                                                   
Ms.  Rehfeld  pointed out  that  Slide  3 provides  a  visual                                                                   
snapshot of the various program areas within ARRA:                                                                              
   · Tax relief                          $288 billion                                                                           
   · State and Local Fiscal Relief       $$144 billion                                                                          
   · Infrastructure and Science          $111 billion                                                                           
   · Protecting the Vulnerable           $81 billion                                                                            
   · Health Care                         $59 billion                                                                            
   · Education and Training              $53 billion                                                                            
   · Energy                              $43 billion                                                                            
   · Unallocated                         $8 billion                                                                             
9:28:58 AM                                                                                                                    
Ms. Rehfeld listed the objectives of ARRA (Slide 4):                                                                            
   · Recovery                                                                                                                   
        o Job preservation and creation                                                                                         
        o Stabilize state and local economies                                                                                   
   · Reinvest                                                                                                                   
        o Build and repair infrastructure                                                                                       
        o Energy efficiency and science                                                                                         
Ms. Rehfeld turned to federal spending timelines (Slide 5):                                                                     
   · 20  percent  of the  ARRA  federal spending  will  occur                                                                   
     before October 2009.                                                                                                       
   · An  additional  38  percent  is projected  to  be  spent                                                                   
     before October 2010.                                                                                                       
   · By  October  2011,  about  80 percent  of  the  stimulus                                                                   
     package-related spending will have occurred.                                                                               
Ms. Rehfeld  described  the five primary  methods of  federal                                                                   
funds distribution (Slide 6):                                                                                                   
   · Formula:    Medicaid   [Federal    Medical    Assistance                                                                 
     Percentage] (FMAP), Education, Highway Infrastructure                                                                      
        o Limits need for new processes to receive and                                                                          
          expend funds                                                                                                          
   · Demand:    Premium  Subsidies   for  COBRA  Continuation                                                                 
     Coverage, Unemployment Insurance, Food Stamps                                                                              
   · Competition:    Broadband,   COPS,   National    Science                                                                 
        o States, Communities, Non-profits, Others                                                                              
   · One-Time  Automatic   Disbursement:     Social  Security                                                                 
     payments, Veterans & Supplemental Security Income                                                                          
   · Federal   Agency    Operating   and    Spending   Plans:                                                                 
     Environmental cleanup of nuclear waste sites, National                                                                     
     Parks construction, Defense and Veterans infrastructure                                                                    
Ms. Rehfeld  emphasized that  the bulk  of stimulus  money to                                                                   
Alaska  would   be  through  legislative   authorization  and                                                                   
appropriations. She  explained that the demand  method refers                                                                   
to programs that  are caseload or workload driven.  The third                                                                   
item  consists  of  items  that  are  open  for  competition.                                                                   
Legislative authorization  would be  required to  receive and                                                                   
spend the  funds. The  last two items  relate to  the federal                                                                   
government for allocating funds to the states.                                                                                  
9:31:13 AM                                                                                                                    
Ms.   Rehfeld    pointed   to    Slide   7,    "Unprecedented                                                                   
Accountability & Transparency":                                                                                                 
   · Distribution of funds through formula programs                                                                             
        o Existing framework for tracking and reporting                                                                         
   · Inspector General Funding                                                                                                  
        o Appropriations for IG [Inspector General] services                                                                    
          in every department                                                                                                   
   · Recovery Act Accountability & Transparency Board                                                                           
   · Expedited application for and obligation of funds                                                                          
        o State agencies continue to meet application                                                                           
   · Certifications  & Assurances by the State                                                                                  
Ms. Rehfeld recalled that the  administration had assured the                                                                   
public that the state would meet  the timelines, so that when                                                                   
the decision has  been made regarding which  funds to receive                                                                   
and  expend, opportunities  will  not  be missed  because  of                                                                   
failure to meet application deadlines.                                                                                          
9:32:42 AM                                                                                                                    
Ms.  Rehfeld discussed  Slide 8,  "Governor Certification  by                                                                   
April 3, 2009":                                                                                                                 
     SEC 1607  (a) Not later than  45 days after the  date of                                                                   
     enactment of  this Act, for funds provided  to any State                                                                   
     or  agency  thereof, the  Governor  of the  State  shall                                                                   
     certify that:                                                                                                              
      (1) the State will request and use funds provided by                                                                      
     this Act; and                                                                                                              
      (2) the funds will be used to create jobs and promote                                                                     
     economic growth.                                                                                                           
Ms. Rehfeld  reiterated the governor's  desire to  engage the                                                                   
public  in a  discussion regarding  the  stimulus money.  She                                                                   
stated that the governor wants  to ensure that funds accepted                                                                   
by  Alaska will  not cause  unrealistic  future general  fund                                                                   
Ms.  Rehfeld  turned  to  "Other  Governor  Certifications  &                                                                   
Assurances"  (Slide 9).  She  highlighted  actions that  were                                                                   
done proactively to secure the funds:                                                                                           
   · Unemployment Insurance $25 weekly increase                                                                                 
     (signed February 18, 2009)                                                                                                 
   · Transportation maintenance of effort                                                                                       
     (signed March 12, 2009  Sec 1201)                                                                                          
   · Transportation appropriate use of taxpayer dollars                                                                         
     (signed March 12, 2009  Sec 1511)                                                                                          
   · Energy - three assurances required; to meet two of                                                                         
     these  would require changes to Alaska's regulatory                                                                        
     energy policy and a statewide energy building code                                                                         
9:34:54 AM                                                                                                                    
Ms. Rehfeld addressed a pie chart  on Slide 10 related to the                                                                   
estimated allocation of stimulus  dollars to state government                                                                   
in Alaska. The  chart does not represent dollars  that may go                                                                   
to  municipalities  or  other  organizations.  The  estimates                                                                   
change as federal agencies refine  allocations. Of the amount                                                                   
allocated   to  come   through   state  appropriations,   the                                                                   
administration  has   requested  $514  million   for  capital                                                                   
projects (55 percent)  and $128.5 for Medicaid  (14 percent).                                                                   
There  is  approximately  $288  million  (31  percent)  still                                                                   
pending for operating and capital expenditures.                                                                                 
9:36:18 AM                                                                                                                    
Co-Chair   Stedman   queried   the   administration's   goals                                                                   
regarding  the  public  process  related to  the  funds.  Ms.                                                                   
Rehfeld  responded  that there  was  information  on the  OMB                                                                   
website,   including   individual    project   requests   and                                                                   
descriptions  for  items  included   and  excluded  from  the                                                                   
legislation. She  stated that the public and  the legislature                                                                   
have the information and could testify or act accordingly.                                                                      
Ms. Rehfeld touched  on legislation already submitted  by the                                                                   
administration (Slide 11):                                                                                                      
   · Total ARRA Request to Date : $642.9* million                                                                               
   · $262.9 Transportation HB154/SB123*                                                                                         
   · $251.5 Non-DOT Economic Stimulus SB161                                                                                     
   · $128.5 Medicaid FY09 & FY10 Amendments                                                                                     
     *Transportation Bill includes request for excess                                                                           
     authority for contingent funding that is not included                                                                      
Ms. Rehfeld  explained that  amounts in the  bill and  on the                                                                   
spreadsheet  are different  because  of possible  contingency                                                                   
funds that could be available from other states.                                                                                
Co-Chair Stedman  informed the public that  federal officials                                                                   
have  assured  legislators that  there  is little  chance  of                                                                   
other states not  using funds. He warned against  counting on                                                                   
the extra funds. He did not want  the public to receive mixed                                                                   
messages. He  stated that  Alaska could expect  approximately                                                                   
$263 million and not $461 million.                                                                                              
Ms. Rehfeld  agreed that  clarity is  important. She  pointed                                                                   
out  that information  from  federal agencies  is  constantly                                                                   
Ms. Rehfeld turned to Slide 12,  "ARRA Budget Request: $642.9                                                                   
million," with  a pie graph representing the  pieces included                                                                   
in SB 161.                                                                                                                      
    · Transportation: 41 percent                                                                                                
    · Environmental Conservation water and sewer projects:                                                                      
      11 percent                                                                                                                
    · University of Alaska research vessel: 18 percent                                                                          
    · Revenue public housing items: 6 percent                                                                                   
    · Education: 3 percent                                                                                                      
    · Medicaid: 20 percent                                                                                                      
9:41:03 AM                                                                                                                    
Ms. Rehfeld listed issues to discuss before making budget                                                                       
decisions (Slide 13):                                                                                                           
   · Policy Issues  $73.2 million                                                                                             
        o Statewide  policy  and  code  changes  that  effect                                                                   
          individuals and/or businesses                                                                                       
        o Statute changes that  impact the way a state agency                                                                   
          does business and may effect the public                                                                             
        o Permanent  increased  liability for  the State  and                                                                   
   · Operating and Capital Issues $214.4                                                                                      
        o One Time Funds                                                                                                      
        o Managing Expectations                                                                                               
        o Opportunities  to benefit the  state that  will not                                                                   
          increase long term costs to the state                                                                               
9:42:24 AM                                                                                                                    
Ms. Rehfeld turned to the subject of energy and the                                                                             
assurances required under Section 410 of ARRA:                                                                                  
     Sec 410                                                                                                                    
     (a)(1) that the state regulatory  authority will seek to                                                                   
     implement   a  policy   to   ensure  utility   financial                                                                   
     incentives  are  aligned   with  helping  customers  use                                                                   
     energy more efficiently.                                                                                                   
     (a) (2) requires that the state, or the applicable                                                                         
     units of governmental that have authority to implement                                                                     
     building codes will implement:                                                                                             
        · building  energy  code  for  residential  buildings                                                                 
          that meets the International Energy Conservation                                                                      
        · building energy code  for commercial buildings that                                                                 
          meets standards ANSI/ASJHRAE/IESNA standards                                                                          
        · a  plan for  achieving  compliance  with the  above                                                                 
          energy  codes within  8 years  of enactment   in at                                                                 
          least  90 percent of  new and renovated  buildings,                                                                   
          the  plan shall  include  training and  enforcement                                                                   
          programs and measurement of the rate of compliance                                                                    
          each year.                                                                                                            
     (a)(3) that the grants will be prioritized, "to the                                                                        
     extent practicable," toward energy efficiency and                                                                          
     renewable energy programs.                                                                                                 
Ms.  Rehfeld highlighted  code  requirements for  residential                                                                   
and commercial  buildings. She  stressed the requirement  for                                                                   
90  percent  compliance  within  an  eight-year  period.  She                                                                   
thought  there  were  questions  about how  best  to  achieve                                                                   
compliance  to   the  code  requirements.  She   referred  to                                                                   
conflicting information  from the  U.S. Department  of Energy                                                                   
(USDOE) regarding  which types  of energy the  assurances are                                                                   
attached to. The  administration has asked USDOE  for written                                                                   
Ms. Rehfeld described references  in the law that are subject                                                                   
to  interpretation. In  one  place, ARRA  clearly  stipulates                                                                   
that funds allocated through the  state energy program ($28.6                                                                   
million)  are linked to  assurances. In  another place,  ARRA                                                                   
references  all  three  programs  as  being  subject  to  the                                                                   
Ms. Rehfeld referred to application  timelines and emphasized                                                                   
that the  state did  not want  to miss  deadlines. She  noted                                                                   
that  the   administration  has   been  told  through   email                                                                   
correspondence  that the  March  23 deadline  for an  initial                                                                   
application will not  need to be met. The May  12 deadline is                                                                   
in the USDOE written guidance.  The administration is working                                                                   
with USDOE to sort through the deadlines.                                                                                       
9:44:59 AM                                                                                                                    
Co-Chair  Stedman  queried  the  status  of  codes  affecting                                                                   
programs  like   the  weatherization  program.   Ms.  Rehfeld                                                                   
answered that there have been  different interpretations from                                                                   
USDOE;    the   administration    has    requested    written                                                                   
clarification to aid the budget  decision-making process. She                                                                   
stated  that if  the assurance  applies to  the state  energy                                                                   
program, there would  need to be discussion  about what would                                                                   
be required statutorily to implement an energy code.                                                                            
Co-Chair  Stedman asked  if the finance  committees  had been                                                                   
copied the  letters sent to  USDOE. Ms. Rehfeld  replied that                                                                   
OMB  had  been  working  with  finance  committee  staff  and                                                                   
sharing email correspondence.                                                                                                   
Co-Chair Stedman informed the  public that the correspondence                                                                   
referred  to  was  with  the  legislative  budget  and  audit                                                                   
consultant. Ms.  Rehfeld added  that the discussion  included                                                                   
correspondence to the finance committee staff as well.                                                                          
Co-Chair  Stedman   asked  for  more  information   regarding                                                                   
9:47:18 AM                                                                                                                    
Ms. Rehfeld reiterated  that the administration  is trying to                                                                   
get written guidance from USDOE.                                                                                                
Ms.  Rehfeld listed  considerations  related  to a  statewide                                                                   
energy building code (Slide 16):                                                                                                
   · Public debate on energy building code                                                                                      
       o Cost versus potential savings to homeowners                                                                            
        o Cost to enforce at state and local levels                                                                             
        o Local control concerns                                                                                                
        o Cost to the state to continue funding renovation                                                                      
          programs for buildings that are not built to                                                                          
          energy efficiency standards                                                                                           
Ms.  Rehfeld turned  to  another  area of  discussion  needed                                                                   
related to the unemployment insurance  (UI) program. The base                                                                   
period  used  to  calculate  eligibility  would  need  to  be                                                                   
changed if the law is changed (Slide 17):                                                                                       
     An estimated increase in the number of individuals that                                                                    
     could be eligible for unemployment insurance would                                                                         
     result in:                                                                                                                 
        o $2 million annual impact on UI Trust fund                                                                             
        o $10 per worker cost to the employer                                                                                   
        o .03% employer rate increase                                                                                           
Ms. Rehfeld  emphasized that  legislation would be  required;                                                                   
approximately  $15.6 million  in federal  funds to the  state                                                                   
would be impacted.                                                                                                              
9:49:41 AM                                                                                                                    
Ms. Rehfeld directed  attention to ARRA items  that are still                                                                   
pending, depicted  by a  pie graph on  Slide 18.  She pointed                                                                   
out that  the largest portion  is approximately  $171 million                                                                   
under the Department of Education  and Early Development. The                                                                   
largest    subcategory    under   education,    the    fiscal                                                                   
stabilization fund at around $93  million, would be allocated                                                                   
to  school districts  based  on  Title I  eligible  students.                                                                   
There  is a  formula  for distributing  the  funds to  school                                                                   
Ms.  Rehfeld explained  that at  this point  only 18  percent                                                                   
has been  included in  SB 161 for  education or job  training                                                                   
projects. Within  the stabilization fund are  assurances that                                                                   
the governor  would need to make  to receive the  funds, such                                                                   
as  career  and  technical  standards   and  data  assessment                                                                   
systems to  track the progress  of students, teacher  quality                                                                   
and distribution  assurances, and effective  intervention for                                                                   
low performing schools.                                                                                                         
Ms. Rehfeld  added that  education funding  is allocated  for                                                                   
Title I:  special education  funding, technology  funds, food                                                                   
assistance programs,  services for homeless  students, school                                                                   
lunch program, and  funds from the National  Endowment of the                                                                   
Arts that would go to the Arts Council.                                                                                         
9:52:29 AM                                                                                                                    
Co-Chair Stedman asked whether  all the funds had to be taken                                                                   
or if part could  be taken. Ms. Rehfeld stated  that specific                                                                   
guidance  from  the U.S.  Department  of Education  would  be                                                                   
required regarding the stabilization  funds. She did not know                                                                   
if the funds  could be separated. She guessed  there would be                                                                   
challenges accepting one part and not the other.                                                                                
Ms. Rehfeld returned to the pie  chart on Slide 18. Under the                                                                   
Department  of  Revenue,  the  largest piece  is  related  to                                                                   
energy  programs. A  smaller piece  is related  to the  Child                                                                   
Support  Enforcement  Division.  She described  the  item  as                                                                   
similar to  Medicaid; the federal  government is  extending a                                                                   
regulation  currently in place  to allow  the state  to count                                                                   
federal incentive payments as  part of the match. At the time                                                                   
the operating budget was put forward,  the administration was                                                                   
not aware of the extension, so  additional general funds were                                                                   
included  to make  up  for the  loss  of federal  funds.  She                                                                   
anticipated  there  would  be more  discussion  and  possible                                                                   
amendment to the budget.                                                                                                        
Co-Chair Stedman  referred to  communication between  OMB and                                                                   
the  legislature.   He  recognized  the  complexity   of  the                                                                   
situation and stated  intent to work with OMB to  look at the                                                                   
items one at a  time. He assured the public  that more detail                                                                   
would be presented some time in the future.                                                                                     
9:55:38 AM                                                                                                                    
Co-Chair Stedman  queried the status of the  state's building                                                                   
codes relative to ARRA requirements.  He wondered which items                                                                   
would need to be addressed with legislation.                                                                                    
DAN  FAUSKE,  EXECUTIVE  DIRECTOR,   ALASKA  HOUSING  FINANCE                                                                   
CORPORATION,   DEPARTMENT    OF   REVENUE    (testified   via                                                                   
teleconference), responded  that residential  structures with                                                                   
Alaska Housing Finance Corporation  (AHFC) loan activity must                                                                   
adhere  to  certain  standards.  He thought  Alaska  led  the                                                                   
nation  in terms  of  energy  statutes, especially  with  the                                                                   
Building Energy  Efficiency Standards  (BEES). The  standards                                                                   
set forth  by BEES  are restricted  to AHFC; outside  lending                                                                   
institutions  such as  Fannie  Mae and  Freddie  Mac are  not                                                                   
forced to adhere  to the standards if they lend  money in the                                                                   
state. One of the  questions AHFC has had is  how a statewide                                                                   
building energy code will affect  outside lenders. He did not                                                                   
know if the lenders would have  to adhere to the standards as                                                                   
well  as  statewide  entities  such  as  AHFC.  There  was  a                                                                   
question  whether the  state energy  program,  weatherization                                                                   
program, and block energy grants  (totaling approximately $54                                                                   
million)  would fall  under the  domain of  the state  energy                                                                   
grant. He thought the state needed  an answer to the question                                                                   
before accepting the funds.                                                                                                     
9:59:10 AM                                                                                                                    
Ms. Rehfeld  continued with  the pie chart  on Slide  18. She                                                                   
listed the types  of funds under the Department  of Labor and                                                                   
Workforce  Development:  the  change in  the  alternate  base                                                                   
rate,  other  employment  services and  training  funds,  and                                                                   
vocational  rehabilitation and  independent living  services.                                                                   
For  the  Department  of  Health  and  Social  Services,  the                                                                   
largest  piece  is  the  childcare  development  block  grant                                                                   
program  ($3.2  million);  other  pieces  include  electronic                                                                   
health records funds and funds  for food stamp, immunization,                                                                   
and infant  learning programs.  There is  also a small  piece                                                                   
for senior meals that is not included in SB 161.                                                                                
Ms.  Rehfeld  noted  that  under  the  Department  of  Public                                                                   
Safety,  there  are  components  of  the  justice  assistance                                                                   
grants,  grants  to  the Council  on  Domestic  Violence  and                                                                   
Sexual Assault, and Service Training  Officer Program grants.                                                                   
Some of the components are competitive;  if the department is                                                                   
successful  competing  for  the  grants, there  would  be  an                                                                   
opportunity  through Legislative  Budget  and  Audit to  come                                                                   
before the legislature.  There are questions  regarding using                                                                   
state  general  funds  for  on-going   funding  for  any  new                                                                   
positions created through the competitive grants.                                                                               
10:01:22 AM                                                                                                                   
Ms. Rehfeld reported  that under the Department  of Commerce,                                                                   
Community and Economic Development,  items pending discussion                                                                   
include  programs for  Serve Alaska,  expansion of  community                                                                   
development  block  grants,  and   community  services  block                                                                   
grants. She noted that the two  block grants would be capital                                                                   
Ms. Rehfeld explained that there  was a question regarding an                                                                   
existing program  for diesel  emissions under the  Department                                                                   
of  Environmental  Conservation.  The department  would  need                                                                   
granting authority  in order to be able to  receive the funds                                                                   
and then grant them to non-state entities.                                                                                      
Co-Chair Stedman summarized the  items the administration had                                                                   
presented   as   operating  items   not   requested   pending                                                                   
additional budget  decisions and items not  requested dealing                                                                   
with AHFC.  He asked  how the  administration envisioned  the                                                                   
finance committee  facilitating the public  discussion needed                                                                   
to  meet  the  deadline.  Ms.   Rehfeld  responded  that  the                                                                   
committee  could look at  and get  public testimony  for both                                                                   
the items included and not included.                                                                                            
Co-Chair Stedman  asked if OMB  would then come  forward with                                                                   
the  items in  line  item  form so  that  each  one could  be                                                                   
addressed. He gave  the example of the senior  lunch program;                                                                   
a policy call could be made to include or exclude any item.                                                                     
10:04:37 AM                                                                                                                   
Ms. Rehfeld  acknowledged that  the suggested approach  could                                                                   
get the information out. She reiterated  the administration's                                                                   
concerns  regarding on-going  expectations  for funding.  She                                                                   
reminded the  committee that that  the individual  line items                                                                   
were  posted  on  the OMB  website  and  suggested  that  the                                                                   
information   already  provided   could  be   used  for   the                                                                   
Co-Chair  Stedman  asked  if the  administration  would  come                                                                   
forward  on each item  in order  to provide  clarity for  the                                                                   
public.  Ms. Rehfeld  agreed  with  the suggested  course  of                                                                   
Co-Chair Stedman  added that the  finance committee  had been                                                                   
concerned about the  growth of the operating  budget and were                                                                   
tuned  to  possible  future  impacts.   He  stated  that  the                                                                   
committee also  recognizes that  the operating account  is up                                                                   
25 percent  over the  past three  years; the decisions  about                                                                   
the stimulus funds will not be made in a vacuum.                                                                                
Ms. Rehfeld agreed with the importance  of talking about each                                                                   
of the items carefully.                                                                                                         
10:07:13 AM                                                                                                                   
Ms. Rehfeld discussed concerns  about accepting federal funds                                                                   
on Slide 19, "One Time Funds":                                                                                                  
   · ARRA Funds Used For:                                                                                                       
        o Salaries may delay, but not prevent, layoffs                                                                          
        o Expansion of services to Alaskans will abruptly                                                                       
        o Public  Safety capacity increases will create on-                                                                     
          going position costs                                                                                                  
        o Permanent   changes    in   programs   may   create                                                                   
          expectations for continuing programs once the                                                                         
          federal funds are no longer available                                                                                 
Ms. Rehfeld  turned to the  subject of accountability  (Slide                                                                   
   · Significant responsibility is incumbent upon the State,                                                                    
     even for pass through funds                                                                                                
   · Accountability attaches to the Governor                                                                                    
        o Ladder certifications down to sub-grantees                                                                            
        o Tracking of expenditures                                                                                              
        o Reporting requirements                                                                                                
Ms.   Rehfeld   emphasized  the   importance   of   following                                                                   
guidelines for accountability.  She stated that the inspector                                                                   
general  function  has  been  strengthened  in  unprecedented                                                                   
Ms. Rehfeld pointed  out that the accountability  attaches to                                                                   
the governor.  The governor has  to certify that  the process                                                                   
is done  correctly. The ladder  certifications could  go down                                                                   
to the  recipient level. For example,  if the state  chose to                                                                   
put forward  all the education  funds that are  not currently                                                                   
before the committee, there could  be additional requirements                                                                   
to school districts  through the Department of  Education and                                                                   
Early  Development  that the  assurances  be  met. The  funds                                                                   
cannot be used to supplant other funds.                                                                                         
10:09:55 AM                                                                                                                   
Senator  Huggins encouraged  the administration  to view  the                                                                   
accountability   requirements   on   Slide  20   as   minimum                                                                   
requirements that the state aims to exceed.                                                                                     
Co-Chair  Stedman  noted  for  the  public  that  Legislative                                                                   
Finance has  been working  on a separate  fund code  for ARRA                                                                   
funds in order to track impacts  on future budgets. He wanted                                                                   
to be  able to clearly  separate the  stimulus funds  out. He                                                                   
agreed  that the  federal requirements  should  be viewed  as                                                                   
minimum requirements.                                                                                                           
Ms. Rehfeld added that tracking  numbers were being set up at                                                                   
the  federal   agency  level   as  well.  She   stressed  the                                                                   
significant reporting requirements.                                                                                             
10:12:05 AM                                                                                                                   
Ms.  Rehfeld directed  attention  to Slide  21,  "Responsible                                                                   
Questions Before Committing Alaska":                                                                                            
   · Are we fully utilizing the federal funds that are                                                                          
     currently available to us?                                                                                                 
   · Is the state ready and willing to accept these as                                                                          
     onetime funds or will there be an expectation that the                                                                     
     state will backfill the hole when federal funds are                                                                        
   · Is the public fully informed and in concurrence with                                                                       
     proposed increases to the state operating budget?                                                                          
10:12:43 AM                                                                                                                   
Ms.  Rehfeld discussed  potential  benefits to  the state  of                                                                   
using  stimulus funds  targeted for  one-time activities  and                                                                   
items. Slide 22 listed some examples:                                                                                           
   · Intensive teacher training                                                                                                 
   · Expand student and teacher use of technology in schools                                                                    
   · Obtain state-of-the art  assistive devices that reduce                                                                     
     barriers to obtaining employment, learning, or living                                                                      
   · Equipment, technology and software upgrades to sustain                                                                     
     or enhance services in education, public safety,  and                                                                      
     workforce training programs                                                                                                
   · Rapid deployment of workforce development strategies on                                                                    
     work skills and work preparedness for targeted                                                                             
   · Modifications to facilities for safety, efficiency,                                                                        
     improved durability and longevity                                                                                          
Ms. Rehfeld  reiterated the administration's desire  to avoid                                                                   
creating future operating expense for the state.                                                                                
10:13:42 AM                                                                                                                   
Ms. Rehfeld  provided information  regarding the  OMB website                                                                   
and links on Slide 23, "ARRA Web Site Alaska.gov/Recovery":                                                                     
· Alaska Federal Economic Stimulus Information                                                                                  
· Links to Federal Recovery.Gov Web Site                                                                                        
· Grant Information                                                                                                             
· Alaska Legislation/Appropriation Bills and Back Up                                                                            
· Department Fact Sheets                                                                                                        
10:15:23 AM         AT EASE                                                                                                   
10:20:39 AM         RECONVENED                                                                                                
Co-Chair  Stedman  stated  his  intent to  sort  through  the                                                                   
spreadsheet of  included items accompanying SB  161. He noted                                                                   
that excluded items would be covered  with the departments at                                                                   
a later date.                                                                                                                   
10:21:41 AM                                                                                                                   
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT                                                                                 
Ms. Rehfeld  spoke to the  Department of Education  and Early                                                                   
Development's  (DEED) item  from  the spreadsheet,  "Economic                                                                   
Stimulus March 19, 2009" (Copy on File).                                                                                        
     Item 2    State Fiscal Stabilization Fund                                                                                  
Ms. Rehfeld  explained that the  item has not  been allocated                                                                   
to a  specific project; the  item consists of  flexible funds                                                                   
under the stabilization program.  The administration suggests                                                                   
using  the funds  for  education and  training.  Some of  the                                                                   
items considered  are one-time  funds that would  assist DEED                                                                   
in  providing   statewide  service  through   technology  and                                                                   
distance delivery  improvements. There is also  a significant                                                                   
deferred maintenance list.                                                                                                      
Co-Chair  Stedman asked  when the draft  allocation  would be                                                                   
brought before  the committee.  Ms. Rehfeld replied  that the                                                                   
administration  could bring suggestions,  but the  intent was                                                                   
to keep the item open for discussion with the legislature.                                                                      
DEPARTMENT OF ENVIRONMENTAL CONSERVATION                                                                                      
MIKE MAHER,  DIRECTOR, DIVISION  OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT OF  ENVIRONMENTAL CONSERVATION (DEC),  provided an                                                                   
overview of five items for DEC.                                                                                                 
     Item 4    Alaska Clean Water Stimulus                                                                                      
     Projects include sewer collection,  treatment, discharge                                                                   
     and water quality related  projects. These funds will be                                                                   
     allocated  and administered by  the Municipal  Grant and                                                                   
     Loan program.                                                                                                              
Mr. Maher  reminded the  committee that  roughly $23  million                                                                   
had  been  included   for  clean  water  projects   when  DEC                                                                   
testified on its capital budget.  The stimulus item would add                                                                   
funds  and  allow  the  department to  move  forward  on  the                                                                   
priority list for the larger municipalities.                                                                                    
Co-Chair  Stedman  asked if  there  would  be an  attempt  to                                                                   
modify  the  list. Mr.  Maher  responded  that that  was  his                                                                   
understanding. Co-Chair  Stedman clarified that  the priority                                                                   
list was accessible on-line for the public.                                                                                     
     Item 5    Alaska Drinking Water Stimulus                                                                                   
     Projects  include  drinking   water  source,  treatment,                                                                   
     storage, and  distribution. These funds will  be managed                                                                   
     by  the  Municipal  Grant   and  Loan  program  and  the                                                                   
     Drinking Water program.                                                                                                    
Mr. Maher  added that the  stimulus funding would  allow more                                                                   
communities to be included sooner.                                                                                              
    Item 6    Leaking Underground Storage Tank Stimulus                                                                         
     Projects  include  those  that involve  the  cleanup  of                                                                   
     leaking  underground  storage   tank  sites.  There  are                                                                   
     currently  501  open Leaking  Underground  Storage  Tank                                                                   
     (LUST)  sites  in  Alaska, and  the  Contaminated  Sites                                                                   
     program  plans to  use the  funds to  cleanup 10-20  so-                                                                   
     called  "orphan"  sites  (sites  where  the  responsible                                                                   
     party cannot be located or is not viable).                                                                                 
Mr. Maher  detailed  that the  sites would  be chosen from  a                                                                   
priority list based on need.                                                                                                    
     Item 7    Village Safe Water Stimulus                                                                                      
     Projects   include   water  and   sewer   infrastructure                                                                   
     improvements.  Funds are being  allocated by  the Indian                                                                   
     Health Service  using a statewide database  of water and                                                                   
     sewer project  needs in Native communities.  These funds                                                                   
     will be managed by the Village Safe Water program.                                                                         
Mr. Maher explained  that the appropriation would  go through                                                                   
the department's  safe water program  for villages.  There is                                                                   
roughly $700  million of  need in the  state; the  item would                                                                   
add to the roughly  $90 million in the governor's  budget. He                                                                   
added that a list could not be  provided as the projects will                                                                   
come  through  tribal  assistant  grants.  A  list  has  been                                                                   
offered to the Indian Health Service.  He understood that the                                                                   
projects would be chosen from that list.                                                                                        
10:27:10 AM                                                                                                                   
Co-Chair  Stedman  asked  for the  list  to  be sent  to  the                                                                   
finance  committee as  well.  Mr. Maher  agreed  to send  the                                                                   
     Item 8    Water Quality Planning Stimulus                                                                                  
     Projects   include   natural    conditions   statistical                                                                   
     analysis  implementation  tools, grants  for  stormwater                                                                   
     projects,    environmental   assessments,    and   green                                                                   
     infrastructure assessments.                                                                                                
Mr. Maher  pointed out  that the  money would be  distributed                                                                   
through  grants or  contracts.  The program  is on-going.  In                                                                   
addition  to the  40 percent  pass-through requirement,  ARRA                                                                   
requires that  20 percent be  spent on green  infrastructure,                                                                   
water, and energy efficiency improvements.                                                                                      
Co-Chair Stedman  asked if the items represented  extra money                                                                   
going to  the projects on the  lists. Mr. Maher  responded in                                                                   
the affirmative and added that  the department was not trying                                                                   
to  supplant anything  that is  currently  in the  governor's                                                                   
budget.  In addition,  the village  safe  water program  will                                                                   
create jobs for people in smaller communities.                                                                                  
Co-Chair  Stedman  asked  if  the  projects  could  be  under                                                                   
contract in the allotted time.  Mr. Maher responded that they                                                                   
10:28:58 AM                                                                                                                   
OFFICE OF MANAGEMENT and BUDGET                                                                                               
     Item 9    ARRA Statewide  Competitive, Discretionary and                                                                   
               Incentive Grants                                                                                                 
     Executive Branch placeholder  for future grant awards in                                                                   
     order  for departments  to be  able to  comply with  the                                                                   
     Legislative   Budget   and    Audit   Committee   review                                                                   
     provisions of AS 37.07.080(h).                                                                                             
Ms. Rehfeld  described the item  as a $1 million  placeholder                                                                   
for  the executive  branch  in the  event  that agencies  are                                                                   
successful  in competing for  a capital  grant not  listed in                                                                   
the legislation.                                                                                                                
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT                                                                                 
GUY BELL,  ASSISTANT COMMISSIONER  AND DIRECTOR,  DIVISION OF                                                                   
ADMINISTRATIVE  SERVICES, DEPARTMENT  OF LABOR AND  WORKFORCE                                                                   
DEVELOPMENT, introduced the department's item.                                                                                  
     Item 10   Additional    Funding   for   AVTEC    [Alaska                                                                   
               Vocational    Technical    Center]    Culinary                                                                   
               Building Replacement and Cafeteria Upgrade                                                                       
     Funding from the Economic  Development Administration to                                                                   
     support   the  increased   costs  of  construction   and                                                                   
     equipment for AVTEC's Culinary  Building Replacement and                                                                   
     Cafeteria Upgrade project.                                                                                                 
Mr. Bell  informed the committee  that the Alaska  Vocational                                                                   
Technical  Center  building  was   in  Seward  and  that  the                                                                   
previous  year the  legislature  had appropriated  over  $8.6                                                                   
million  to  the   department  for  the  project.   The  cost                                                                   
estimates  came in  higher; without  the  stimulus money  the                                                                   
facility could not be completed.  The building would be ready                                                                   
for occupancy in late 2010.                                                                                                     
Mr. Bell noted that the department  had applied for the funds                                                                   
from   the    Economic   Development   Administration;    the                                                                   
application is still under review.                                                                                              
Co-Chair  Stedman asked  if the  item could  offset the  FY10                                                                   
capital budget.  Mr. Bell  replied that  if the general  fund                                                                   
portion  were reduced,  the level  of upgrades  would not  be                                                                   
achieved. Co-Chair  Stedman clarified that the  answer to the                                                                   
question was no.  Mr. Bell replied that the  short answer was                                                                   
10:31:37 AM                                                                                                                   
DEPARTMENT OF NATURAL RESOURCES                                                                                               
LETA  SIMONS,   DIRECTOR,  DIVISION   OF  SUPPORT   SERVICES,                                                                   
DEPARTMENT  OF  NATURAL RESOURCES,  testified  regarding  the                                                                   
department's item.                                                                                                              
     Item 11   Forestry and Fire Economic Stimulus - Fire                                                                       
               Fuels and Forest Management                                                                                      
     This project will provide  for hazardous fuels reduction                                                                   
     and wood to energy projects  that will minimize the rash                                                                   
     of wildland  fire to homes and community  infrastructure                                                                   
     while providing wood energy and employment.                                                                                
Ms. Simons described the item  as a tree-cutting project that                                                                   
will  provide for  hazardous fuel  reduction. The  department                                                                   
has  submitted  the  projects   to  the  Forest  Service  for                                                                   
consideration. The department  has been informed that it will                                                                   
receive $1.5 million. She did  not believe the actual project                                                                   
list had been approved.                                                                                                         
Co-Chair Stedman asked for more information.                                                                                    
Senator  Thomas asked  if  the project  would  be similar  to                                                                   
other projects  in the  Interior such  as one removing  black                                                                   
spruce  near public  structures.  Ms. Simons  responded  that                                                                   
there are a variety of projects  being submitted; the funding                                                                   
will   be  passed   through  to   local  governments.   Local                                                                   
governments have  already submitted applications  for various                                                                   
projects.  There are  various cutting  projects to  eliminate                                                                   
hazardous fuels in  areas where it is possible  and turn some                                                                   
of the wood into  woodstove fuel. She did not  yet know where                                                                   
the projects would actually be.                                                                                                 
Co-Chair Stedman  asked when the list would  be available for                                                                   
review. Ms.  Simons did not know,  but she expected  it soon.                                                                   
She added that  the projects have short turnaround  as far as                                                                   
implementation. From  the time the funding is  rewarded, some                                                                   
of the projects  are seven-day implementation  and others are                                                                   
thirty-day   implementation.   She   hoped   to   have   more                                                                   
information in the next ten days.                                                                                               
10:34:19 AM                                                                                                                   
Senator Huggins  asked if  the projects  would be done  using                                                                   
current  personnel. Ms.  Simons replied  that the  department                                                                   
could  use  its firefighting  crews.  Mostly  the  department                                                                   
expected to pass  the funds to municipalities;  in many cases                                                                   
the municipalities  would hire  the department for  the work.                                                                   
The fire fighting  crews would be utilized prior  to the fire                                                                   
fighting season.                                                                                                                
Senator  Huggins asked  if a new  person would  be hired  for                                                                   
supervision  of the  projects. Ms.  Simons was  not aware  of                                                                   
additional need for administration.                                                                                             
ALASKA HOUSING FINANCE CORPORATION                                                                                            
JAMES  GURKE,  DIRECTOR,  PUBLIC   HOUSING  DIVISION,  ALASKA                                                                   
HOUSING   FINANCE   CORPORATION,    DEPARTMENT   OF   REVENUE                                                                   
(testified  via  teleconference),  introduced the  first  two                                                                   
items for Alaska Housing Finance Corporation (AHFC).                                                                            
     Item 12   Capital Fund Program                                                                                             
     This  program  provides  funding  for  the  capital  and                                                                   
     management  activities of  Public  Housing Agencies  and                                                                   
     will  be  used to  help  renovate and  modernize  public                                                                   
     housing units.  Funds will be distributed  competitively                                                                   
     to Public Housing Authorities nationwide.                                                                                  
Mr. Gurke explained  that there was a  competitive allocation                                                                   
for the  capital fund program  of $1 billion  nationwide. The                                                                   
corporation  anticipates the  item sum  based on the  formula                                                                   
allocation.  He said  there is  not much detail  on the  U.S.                                                                   
Department  of Housing  and Urban  Development (HUD)  webpage                                                                   
about  the nature  of the  competition,  but the  information                                                                   
should be available soon.                                                                                                       
Co-Chair Stedman asked when the  department would have a more                                                                   
accurate number  so that the  committee could  decide whether                                                                   
the item  should be included or  excluded from the  bill. Mr.                                                                   
Gurke replied that the specifications  should be available in                                                                   
a few weeks.                                                                                                                    
10:37:13 AM                                                                                                                   
     Item 13   Capital Fund Program (CFP) - Formula                                                                             
     This  program  provides  funding  for  the  capital  and                                                                   
     management  activities of  Public  Housing Agencies  and                                                                   
     will  be  used to  help  renovate and  modernize  public                                                                   
     housing  units. Funds  will be  distributed to  grantees                                                                   
     that received funding in FFY08.                                                                                            
Mr. Gurke  explained that  nine unfunded  projects have  been                                                                   
identified  throughout the  state. Many  of the projects  are                                                                   
deferred maintenance  projects.  Three projects in  Anchorage                                                                   
cover painting, boiler replacement,  and substantial concrete                                                                   
work. There is  a project in Fairbanks to rebuild  a fourplex                                                                   
that  was  burned  down. Another  Fairbanks  project  is  for                                                                   
repair. A  project in  Ketchikan addresses accessibility  and                                                                   
roof repair at a senior housing  complex. In Bethel there are                                                                   
two projects with substantial  floor replacement of 117 units                                                                   
of public housing  as well as the leveling  of the buildings.                                                                   
Finally,  there is  a  project in  Nome  replacing doors  and                                                                   
improving weatherization for 32 units.                                                                                          
Co-Chair Stedman  queried the ability of the  items to offset                                                                   
capital  appropriation   items.  Ms.  Rehfeld   replied  that                                                                   
generally  stimulus funds  cannot be  used to supplant  other                                                                   
budget items.                                                                                                                   
MARK ROMICK,  DIRECTOR, PLANNING  DEPARTMENT, ALASKA  HOUSING                                                                   
FINANCE  CORPORATION, DEPARTMENT  OF  REVENUE (testified  via                                                                   
teleconference), provided an overview of the next items.                                                                        
     Item 14   Emergency Shelter Grants (ESG)                                                                                   
     This  program provides  foreclosure  prevention and  re-                                                                   
     housing,   case   management    and   social   services,                                                                   
     renovation,  major  rehabilitation,   or  conversion  of                                                                   
     buildings for use as emergency  shelters or transitional                                                                   
     housing,   shelter   operating    costs,   and   related                                                                   
Mr. Romick explained  Item 14 as an existing  federal program                                                                   
administered by HUD.  The funds would be used  to bolster the                                                                   
existing emergency shelter grant  system in Alaska. The funds                                                                   
could  be used  for  major  rehabilitation or  conversion  of                                                                   
buildings  for  use as  emergency  shelters  or  transitional                                                                   
housing. The  regulations governing the ESG  program stimulus                                                                   
package  came  out  on  March 19;  the  department  is  going                                                                   
through them to ensure there will  be no difficulties. He did                                                                   
not think there  would be an issue in terms  of timing. There                                                                   
will be a  competitive process between now and  the September                                                                   
deadline to  commit funds.  The department anticipates  being                                                                   
able to easily allocate the entire amount.                                                                                      
     Item 15   Home Investment Partnerships                                                                                     
     This program expands the  supply of affordable, low- and                                                                   
     moderate-income  housing and  to strengthen the  ability                                                                   
     of  the state  to  design  and implement  strategies  to                                                                   
     achieve  an adequate supply  of safe,  energy-efficient,                                                                   
     and affordable housing.                                                                                                    
     Item 16   Low-Income  Housing  Grants  in  Lieu  of  Tax                                                                   
     This program  allows taxpayers  to receive a  grant from                                                                   
     the Treasury  Department in  lieu of low-income  housing                                                                   
     tax  credits.  So,  the  state's  housing  agency  would                                                                   
     receive a  grant up to  a maximum of  85% of 40%  of the                                                                   
     State's  low-income  housing  tax credit  allocation  in                                                                   
     lieu of credits.  The grant would apply  to each state's                                                                   
     2009 low-income housing tax credit allocation.                                                                             
Mr. Romick  reported that  Items 15  and 16  came about  as a                                                                   
consequence  of the collapse  of the  low-income housing  tax                                                                   
credit market.  The use  of the tax  credit is contingent  on                                                                   
corporate individuals having income.  Many of the large users                                                                   
of the  tax credit program  do not have  much income  or have                                                                   
many tax credits already due to  losses, causing the value of                                                                   
the tax  credit to  drop 30  percent in  an eight-month  time                                                                   
period.  The two programs  are designed  to address  projects                                                                   
that were on the  waiting list but would not  move forward as                                                                   
a result of the collapsing equity markets.                                                                                      
Mr.  Romick   explained  that  there  are   several  projects                                                                   
eligible for the  funds under the item; the  majority of them                                                                   
will  collapse if  the  funds do  not  become available.  The                                                                   
projects are  in Hooper Bay,  Fairbanks, Kodiak,  Palmer, and                                                                   
Mr. Romick  provided more  information  on Item 16,  pointing                                                                   
out that  AHFC has the ability  to exchange up to  85 percent                                                                   
of 40  percent of the state's  low-income housing  tax credit                                                                   
allocation,  or as much  as $28 million,  for the  purpose of                                                                   
sustaining existing tax credit projects.                                                                                        
10:43:07 AM                                                                                                                   
Mr. Romick  added that the funds  would be used for  the 2009                                                                   
tax credit  projects that were  awarded in January  2009. The                                                                   
projects  will  be ready  for  construction summer  of  2009,                                                                   
assuming the funds are available.                                                                                               
MICHELLE   RIZK,  BUDGET  DIRECTOR,   UNIVERSITY  OF   ALASKA                                                                   
(testified via teleconference) explained the next item:                                                                         
     Item 17   UAF  Alaska Region Research  Vessel Additional                                                                   
               Receipt Authority                                                                                                
     The American  Reinvestment and Recovery Act  directed $3                                                                   
     billion  to the  National  Science  Foundation (NSF)  to                                                                   
     enable   U.S.   investment   in   America's   scientific                                                                   
     enterprise.  Of  this  funding,  NSF  will  direct  $196                                                                   
     million to the University  of Alaska Fairbanks (UAF) for                                                                   
     the construction  of the Alaska Region  Research Vessel.                                                                   
     In  FY05, UAF  was  given receipt  authority  up to  $80                                                                   
     million  for  NSF funding  to  purchase  a new  research                                                                   
     vessel. Since  this time  the NSF funding  has increased                                                                   
     by $116 million to accommodate  inflation and changes in                                                                   
     scope of work over the past few years.                                                                                     
Co-Chair Stedman  queried the  expected on-going  maintenance                                                                   
and  operation costs  of the  vessel and  how the  university                                                                   
planned  to  cover  them.  Ms.  Rizk  replied  that  NSF  has                                                                   
obligated $10  million annually to cover the  operating costs                                                                   
of  the  ship when  the  ship  becomes  operational.  Non-NSF                                                                   
scientists  will  pay user  fees  to  utilize the  ship.  The                                                                   
National Science Foundation will  have the ship built; if UAF                                                                   
operates  the  ship,  the  economic   benefit  to  Alaska  is                                                                   
maximized  through  creating   jobs,  Alaska  purchases,  and                                                                   
competitive research advantages for the state.                                                                                  
Co-Chair  Stedman asked  when the  ship would  be built.  Ms.                                                                   
Rizk responded that the ship was  expected to be operating in                                                                   
2013. The university is currently in the RFP process.                                                                           
10:46:14 AM                                                                                                                   
     Item 18   UA    Economic   Stimulus   Federal    Receipt                                                                   
               Authority Competitive, Discretionary, and                                                                        
               Incentive Grants                                                                                                 
     University  of  Alaska  placeholder   for  future  grant                                                                   
     awards.  The  University   of  Alaska  plans  to  pursue                                                                   
     economic  stimulus  grant   funding  opportunities  from                                                                   
     various federal  agencies. The main areas  of focus will                                                                   
     be energy, research, technology, and health.                                                                               
Ms.  Rizk  explained  that  Item   18  was  a  capital  grant                                                                   
placeholder  for  the  university. She  noted  that  research                                                                   
projects  are  temporary  in nature  and  carry  no  on-going                                                                   
funding needs.                                                                                                                  
Senator  Huggins questioned  the  discharge regulations  that                                                                   
would apply to the research vessel.                                                                                             
DENIS  WIESENBURG, DEAN  and PROFESSOR,  SCHOOL OF  FISHERIES                                                                   
AND   OCEAN   SCIENCES,  UNIVERSITY   OF   ALASKA   FAIRBANKS                                                                   
(testified  via  teleconference),  answered that  the  vessel                                                                   
would  be  operated   under  Coast  Guard   regulations.  The                                                                   
National Science Foundation operates  all research vessels in                                                                   
an approved  manner. The vessel  has certain obligations  and                                                                   
abilities  to take care  of the  discharge in  a way  that is                                                                   
environmentally sensitive.  Such provisions have  been a part                                                                   
of the design process of the vessel.                                                                                            
Co-Chair  Stedman asked  for  information  regarding how  the                                                                   
university  will have  the ship  qualify  for discharge.  Mr.                                                                   
Wiesenburg  replied that  the information  would be  provided                                                                   
for the committee.                                                                                                              
Co-Chair  Stedman wanted  to know  if  additional costs  were                                                                   
incurred  because of  changing  requirements. Mr.  Wiesenburg                                                                   
responded that the  increased costs have been  because of the                                                                   
increased complexity  of the design  of the ship.  The design                                                                   
was lengthened  to provide  better seakeeping capability  and                                                                   
scientific capability.  The National Science  Foundation also                                                                   
added contingency  funds  in their request  to Congress  that                                                                   
were included in ARRA.                                                                                                          
Co-Chair Stedman  asked for  more detail regarding  discharge                                                                   
costs. He requested backup for  the committee. Mr. Wiesenburg                                                                   
answered that the information would be provided.                                                                                
     Item 21   UAF Alaska Region Research Vessel Additional                                                                     
               Receipt Authority prior year fund source                                                                         
     Add $80 million  in Federal Economic Stimulus  Funds and                                                                   
     remove   $80  million   of  Federal   Receipts  to   the                                                                   
     appropriation  made in sec. 2,  ch. 159, SLA  2004, page                                                                   
Ms. Rizk explained that the item changed the fund source.                                                                       
10:49:51 AM                                                                                                                   
Co-Chair  Stedman  asked  if  the new  ship  would  meet  the                                                                   
discharge standards  comparable to those of  cruise ships. He                                                                   
wondered    how    National     Oceanic    and    Atmospheric                                                                   
Administration   (NOAA)  and   U.S.  Coast  Guard   discharge                                                                   
criteria compared to cruise ship criteria.                                                                                      
Ms.  Rehfeld   added  that  the   only  other  item   on  the                                                                   
spreadsheet  was a statement  in section  four regarding  the                                                                   
one-time nature of the appropriations.                                                                                          
SB  161   as  HEARD  and   HELD  in  Committee   for  further                                                                   
10:51:30 AM                                                                                                                   
The meeting was adjourned at 10:50 AM.                                                                                          

Document Name Date/Time Subjects
CS SB 89 - Work Draft.PDF SFIN 3/23/2009 9:00:00 AM
SB 89
2009-03-18ATG Letter to AK Joint Armed Services Committee.pdf SFIN 3/23/2009 9:00:00 AM
SB 89
Economic Stimulus Sectional March 19, 2009.xls SFIN 3/23/2009 9:00:00 AM
SB 161
SB 161 OMB Presentation.ppt SFIN 3/23/2009 9:00:00 AM
SB 161
Economic Stimulus Program Funding Summary March 20 2009.pdf SFIN 3/23/2009 9:00:00 AM
SB 161
Economic Stimulus Not Included Op and CIP items 3-22-09.pdf SFIN 3/23/2009 9:00:00 AM
SB 161
SB89-DMVA-VS-3 20 09 Pg 1-2.pdf SFIN 3/23/2009 9:00:00 AM
SB 89
OMB Economic Stimulus Summary As of March 22 2009.pdf HFIN 3/24/2009 8:30:00 AM
SFIN 3/23/2009 9:00:00 AM
HB 199
SB 161