Legislature(2009 - 2010)SENATE FINANCE 532

04/02/2009 09:00 AM FINANCE

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09:12:05 AM Start
09:12:14 AM SB161
01:54:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                       April 2, 2009                                                                                            
                         9:12 a.m.                                                                                              
9:12:05 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 9:12 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                                                                                                                  
Karen  Rehfeld, Director,  Office of  Management and  Budget,                                                                   
Office of  the Governor; Dan  Spencer, Director,  Division of                                                                   
Administrative Services,  Department of Public  Safety; Larry                                                                   
Persily,  Staff, Representative  Hawker;  Jo Ellen  Hanrahan,                                                                   
Analyst,  Office  of Budget  and  Management,  Office of  the                                                                   
Governor;  Chris Ashenbrenner,  Council on Domestic  Violence                                                                   
and  Sexual Assault;  Alison Elgee,  Assistant  Commissioner,                                                                   
Finance  and Management  Services, Department  of Health  and                                                                   
Social   Services;   Mike  Maher,   Director,   Division   of                                                                   
Administrative   Services,  Department   of  Revenue;   Bryan                                                                   
Butcher, Director,  Government Affairs and  Public Relations,                                                                   
Alaska Housing Finance Corporation, Department Of Revenue.                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
John  Mallonee, Acting  Director,  Child Support  Enforcement                                                                   
Division, Department of Revenue.                                                                                                
SB 161    "An  Act  making  supplemental  appropriations  and                                                                   
          capital appropriations; amending appropriations;                                                                      
          and providing for an effective date."                                                                                 
SENATE BILL NO. 161                                                                                                           
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
SB161   was  HEARD  and   HELD  in   Committee  for   further                                                                   
9:12:14 AM                                                                                                                    
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
OFFICE OF THE  GOVERNOR, mentioned the items  not included in                                                                   
SB 161  known as the Economic  Stimulus Bill. She  noted that                                                                   
the Office of Management and Budget  (OMB) gleaned additional                                                                   
information  regarding  the  requirements   for  receipt  and                                                                   
expenditure  of  the  federal funds  along  with  application                                                                   
eligibility  including  costs  and  long  term  benefits  for                                                                   
Alaska.  Initially  the Governor  presented  the  legislation                                                                   
without many of  the federal stimulus items  due to questions                                                                   
regarding fund  requirements. She remarked that  the Governor                                                                   
submitted  the required certification  identified as  Section                                                                   
1607 Certification  dated the 31  of March, 2009  in order to                                                                   
meet the timelines  required by law. The  legislature adopted                                                                   
a resolution regarding acceptance  of federal stimulus funds.                                                                   
She suggested  the next step  is the appropriation  bill. She                                                                   
emphasized the Governor's appreciation  for the legislature's                                                                   
efforts during public hearings on SB 161.                                                                                       
Co-Chair Stedman  informed that  the first order  of business                                                                   
was Page  3, Item  #26 of the  spreadsheet titled  "Items Not                                                                   
Included in the March 19 Economic  Stimulus Bill" dated March                                                                   
30, 2009 (Copy on File).                                                                                                        
9:18:39 AM                                                                                                                    
DAN SPENCER,  DIRECTOR, DIVISION OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT OF  PUBLIC SAFETY, discussed item  #26 identifying                                                                   
it as a $50  thousand item originating from  the municipality                                                                   
of  Anchorage  as  a direct  grant  from  the  Department  of                                                                   
Justice.  He explained  that funds  are used  to enhance  law                                                                   
enforcement's  response  to online  child  victimization  and                                                                   
child  pornography  cases. He  expected  additional  stimulus                                                                   
funds of $400  thousand to flow directly to  the Municipality                                                                   
of Anchorage. The funding encompasses  overtime and supplies,                                                                   
but  not  additional   personnel.  He  anticipated   a  final                                                                   
agreement with  the Municipality of Anchorage  for receipt of                                                                   
federal stimulus funds.                                                                                                         
Co-Chair Stedman  asked for  clarification of the  additional                                                                   
personnel issue. Mr. Spencer responded  that existing funding                                                                   
covers overtime,  supplies, and  travel costs related  to the                                                                   
combined  effort of  the Municipality  of  Anchorage and  the                                                                   
Department  of Public  Safety's  work on  the enforcement  of                                                                   
internet crimes against children,  yet neglects the inclusion                                                                   
of a personnel position.                                                                                                        
Co-Chair Stedman  recounted concern regarding the  budget and                                                                   
the potential  of "strings attached" or unfunded  mandates to                                                                   
the receipt of  federal economic stimulus funds.  He inquired                                                                   
about  the  department's  position   on  potential  budgetary                                                                   
impacts. Mr. Spencer replied that  the department did not see                                                                   
potential  budgetary impacts  in  receiving federal  stimulus                                                                   
Co-Chair Hoffman understood that  the only eligible applicant                                                                   
is the Anchorage  police department. He asked  why the police                                                                   
department sub-grants  the funds to  the state as  opposed to                                                                   
using the  funds themselves.  Mr. Spencer  answered that  the                                                                   
Anchorage  police  department  currently  employs  a  similar                                                                   
grant.  The  economic  stimulus grant  allows  the  Anchorage                                                                   
police department to employ additional enforcement staff.                                                                       
9:21:47 AM                                                                                                                    
Co-Chair  Stedman  asked  if  the  department  found  unknown                                                                   
"strings  attached" to  item #26. Mr.  Spencer repeated  that                                                                   
the department  did not find  any "strings attached"  to item                                                                   
LARRY PERSILY,  STAFF, REPRESENTATIVE HAWKER,  addressed item                                                                   
#26 at  $50 thousand  stating that he  and the House  Finance                                                                   
Committee found no "strings attached."                                                                                          
Senator Thomas  stated that  the concern  about item  #26 was                                                                   
the requirement  of state money supplanting  federal stimulus                                                                   
money.  He   asked  if   the  department's  opinion   changed                                                                   
regarding  the   issue.  Mr.   Spencer  responded   that  the                                                                   
department's  opinion  about  the  item changed  due  to  the                                                                   
reduction of allowable overtime compensation.                                                                                   
9:24:15 AM                                                                                                                    
Mr. Spencer  addressed item  #27 and  funding for the  Alaska                                                                   
State Troopers. Item #27 addresses  personal service costs of                                                                   
new trooper  positions, travel,  training, supplies  and sub-                                                                   
grants  to  other  state  agencies  and  to  units  of  local                                                                   
government  for  the  funding   of  projects  supporting  the                                                                   
approved Justice  Assistance Grant  (JAG). The funds  include                                                                   
$5,821,000 for the JAG program,  with $1,282,000 specifically                                                                   
directed  to local governments.  This  formula is similar  to                                                                   
that of current  grants received on regular  annual programs.                                                                   
The plan passes  $150 thousand annually to the  Department of                                                                   
Law (DOL)  with the expectation  of one attorney  position. A                                                                   
small amount  of funding is designated  to the crime  lab for                                                                   
supplies  and  equipment  related to  the  investigations.  A                                                                   
small  sum is related  to internet  crime,  but the focus  is                                                                   
sexual  assault  and  child  abuse  cases.  The  department's                                                                   
preference is that  new positions exhibit their  worth by the                                                                   
end of three  years and thereby continued. The  commitment is                                                                   
for  long range  planning  and investigative  resources.  All                                                                   
necessary  trooper  positions   are  taken.  Added  positions                                                                   
increase   patrol   and  investigative   capacity   providing                                                                   
proactive law enforcement.                                                                                                      
9:29:53 AM                                                                                                                    
Mr. Spencer informed that the  funds in item #27 are directed                                                                   
toward   equipment   costs,    software   improvements,   and                                                                   
municipalities.   He  stated  that   the  Governor   and  the                                                                   
legislature  make decisions  regarding use  of the funds.  He                                                                   
noted that the application is due April 9, 2009.                                                                                
Co-Chair   Stedman   requested    clarification   about   the                                                                   
application process. He asked  if the application process was                                                                   
covered in the  Governor's letter to President  Barack Obama.                                                                   
Mr.  Spencer responded  that  the  Governor's  letter to  the                                                                   
President  mentioned ongoing  work  with  the legislature  on                                                                   
various  programs.   Co-Chair  Stedman  clarified   that  the                                                                   
application was not yet submitted.                                                                                              
Co-Chair Hoffman  requested the portion of  domestic violence                                                                   
and sexual assault  efforts focused on Alaska's  rural areas.                                                                   
Mr. Spencer answered that item  #27 prioritizes areas of high                                                                   
domestic  and sexual  assault  incidence  giving rural  areas                                                                   
significant focus.                                                                                                              
9:32:36 AM                                                                                                                    
Co-Chair Hoffman  stated that  he recognized the  severity of                                                                   
childhood  sexual  abuse  and  opined  that  the  control  of                                                                   
alcohol abuse  is equally important.  He opined  that alcohol                                                                   
abuse  is the  root of  both the  sexual  abuse and  domestic                                                                   
violence problems. He supported  the use of one time funds to                                                                   
stem the  flow of alcohol  into rural areas thereby  reducing                                                                   
the incidence  of domestic violence, child sexual  abuse, and                                                                   
virtually all other crimes in rural Alaska.                                                                                     
Mr.  Spencer acknowledged  the issues  expressed by  Co-Chair                                                                   
Hoffman.  Co-Chair Hoffman  opined  that  the enforcement  of                                                                   
alcohol  abuse programs  is passive.  He requested  increased                                                                   
enforcement in the Bethel area.  Mr. Spencer admitted that he                                                                   
lacked information regarding Bethel.                                                                                            
9:35:48 AM                                                                                                                    
Co-Chair  Hoffman repeated  that law  enforcement efforts  in                                                                   
the Bethel area remain inadequate and ineffective.                                                                              
Co-Chair  Stedman requested  the  opinion of  Mr. Persily  on                                                                   
item  #27.  Mr.  Persily  announced  that  $5.8  million  are                                                                   
allotted  to the  state,  with  $1.25 million  designated  to                                                                   
local governments.  The $3.8 million for 19  different cities                                                                   
and  boroughs  in the  state  is  an  allocation set  by  the                                                                   
Department  of Justice.  He  stated that  the  municipalities                                                                   
have  a  May 18,  2009  deadline  for  funds not  subject  to                                                                   
legislative appropriation.  The funds travel directly  to the                                                                   
municipalities   including  Fairbanks,   Anchorage,   Bethel,                                                                   
Wasilla, Palmer, North Slope Borough,  Dillingham, and Sitka.                                                                   
Co-Chair Stedman  noted concern  about the growing  operating                                                                   
account.  He asked if  the department  increased the  trooper                                                                   
count by six or more over the  next several years through its                                                                   
natural  evolution,  or  were  the  changes  contemplated  in                                                                   
planning sessions  with the Department of Public  Safety. Mr.                                                                   
Spencer  answered  that the  expectation  is  for long  range                                                                   
planning sessions in the upcoming  summer. Based on the crime                                                                   
rates  observed and  required  allocations for  investigative                                                                   
resources, the positions are necessary.                                                                                         
Co-Chair Stedman  clarified that the department  requires the                                                                   
positions regardless  of the stimulus  package. He  asked the                                                                   
amount  of positions  were  available  in the  public  safety                                                                   
trooper  arena.  Mr.  Spencer answered  that  vacant  trooper                                                                   
positions do not exist.                                                                                                         
9:38:53 AM                                                                                                                    
Co-Chair Stedman  noted the process confuses  legislators and                                                                   
citizens. The Governor amended  the 2010 budget. He cited the                                                                   
1,957 increase  of full time  employees across the  state. He                                                                   
stated  that 6 trooper  positions and  one attorney  position                                                                   
remain imbedded in the overall  evolution of employee growth.                                                                   
This equates  392 new positions  added each year  since 2007.                                                                   
He opined that  the stimulus package addresses  approximately                                                                   
18  new positions.  The  natural  evolution adds  nearly  400                                                                   
positions each year. The potential  increase in the operating                                                                   
budget  results  from  "strings   attached"  to  the  federal                                                                   
stimulus dollars.  The state increases its employee  count by                                                                   
2 percent each  year. The proposed plan impacts  the employee                                                                   
count minimally and the six troopers  requested exist in next                                                                   
year's operating  budget request  regardless of  the stimulus                                                                   
9:41:48 AM                                                                                                                    
Mr. Spencer  agreed that  a request  for position funding  is                                                                   
required pending  the disapproval  of federal stimulus  funds                                                                   
for  the requested  positions.  Co-Chair Stedman  appreciated                                                                   
the public discussion prior to important policy decisions.                                                                      
Mr. Spencer addressed  item #28 or victim  assistance formula                                                                   
grants of $545 thousand for the  Council on Domestic Violence                                                                   
and  Sexual Assault.  The council  submitted an  application.                                                                   
The funding  allocations are statutorily mandated.  The focus                                                                   
areas are determined  by the council subject  to the guidance                                                                   
from the Governor  and the legislature through  a competitive                                                                   
grant application process.                                                                                                      
9:45:32 AM                                                                                                                    
Mr.  Persily stated  that  a review  performed  by the  House                                                                   
Finance Committee  identified item #28 as a  "one time" boost                                                                   
with   strong  support.   No  problems   or  questions   were                                                                   
identified. Co-Chair  Stedman asked about  "strings attached"                                                                   
to   item  #28.   Mr.   Persily  responded   that   reporting                                                                   
requirements were the only identified "strings attached."                                                                       
Co-Chair  Stedman asked  about  the application  process  for                                                                   
both  items  #28  and #29.  Mr.  Persily  answered  that  the                                                                   
applications for items #28 and #29 were submitted.                                                                              
Co-Chair  Stedman  mentioned  the  requested  employee  count                                                                   
increase of  18-20 positions with  the stimulus  package. The                                                                   
amended  budget  for  FY10  includes  a  148  position  count                                                                   
increase. He  encouraged focus on  the scale of  the stimulus                                                                   
package request, which is counter to press information.                                                                         
JO ELLEN HANRAHAN, ANALYST, OFFICE  OF BUDGET AND MANAGEMENT,                                                                   
OFFICE  OF THE  GOVERNOR,  addressed reporting  and  tracking                                                                   
requirements. She opined that  the level of tracking increase                                                                   
requires  more  detail  when dealing  with  federal  stimulus                                                                   
funds.  She  mentioned  that the  potential  uses  of  fiscal                                                                   
stabilization  funds  to offset  the  cost of  the  increased                                                                   
reporting and  tracking requirements.  She informed  that the                                                                   
requirements  are frequently  beyond that  which is  normally                                                                   
required in a federal program.                                                                                                  
9:49:42 AM                                                                                                                    
Mr. Spencer mentioned three other  competitive grant programs                                                                   
not  included  on  the spreadsheet.  The  programs  with  the                                                                   
Department  of Justice  include counterparts  in the  federal                                                                   
stimulus  program.  This  particular   program  allocates  $1                                                                   
billion  nationwide for  additional  police  officers in  the                                                                   
event  that police  officers are  dismissed due  to state  or                                                                   
local  budget   reductions.  This   program  comes   with  an                                                                   
immediate  cost to  grant applicants.  He  opined that  there                                                                   
were many "strings attached."                                                                                                   
9:53:06 AM                                                                                                                    
Co-Chair  Hoffman asked  about the  application process.  Mr.                                                                   
Spencer responded  that the process includes  a proposal. The                                                                   
scoring  criteria  for  the stimulus  bill  are  unknown.  He                                                                   
speculated that Alaska is ineligible for the grant.                                                                             
Mr.  Spencer  expressed  interest   in  yet  another  funding                                                                   
source. This  item addresses rural drug  crimes, particularly                                                                   
those   with  a   federal   prosecution   nexus.  The   third                                                                   
application encompasses  rural law  enforcement. The  goal is                                                                   
three  troopers for  Village  Public Safety  Officers  (VPSO)                                                                   
oversight.  The operating  budget proposal  presented by  the                                                                   
Governor    and   adopted   by    the   committee    included                                                                   
recommendations for 15 additional  VPSO positions in FY10 and                                                                   
the  proposal  from  the  task   force  requests  another  15                                                                   
positions in FY11.                                                                                                              
9:56:41 AM                                                                                                                    
Senator  Thomas  asked  if  the   justice  assistance  grants                                                                   
include  additional  costs.  Mr. Spencer  answered  that  the                                                                   
grants for the justice assistance cover all of the costs.                                                                       
Senator  Thomas  asked  about  denied  applications  for  the                                                                   
Police Grants Program and the  lack of concern about "strings                                                                   
attached" during the prior application processes.                                                                               
Senator Olson addressed items  #3 and #4 and funds addressing                                                                   
victims  through  the  Council   for  Domestic  Violence.  He                                                                   
inquired about  the amount of  money allocated  for shelters.                                                                   
Mr. Spencer answered that a significant  amount, perhaps most                                                                   
funds  aid shelters  for the  victims  of domestic  violence.                                                                   
Senator  Olson asked if  approximately  fifty percent  of the                                                                   
funds will go to shelters in need of funding.                                                                                   
9:59:18 AM                                                                                                                    
Mr.  Spencer stated  that  the  requirements  of the  program                                                                   
identify  the types of  services eligible  for funding,  with                                                                   
most services in Alaska provided by the shelters.                                                                               
CHRIS ASHENBRENNER,  COUNCIL ON DOMESTIC VIOLENCE  AND SEXUAL                                                                   
ASSAULT,  announced that  a great  majority  of the  eligible                                                                   
funds exist for victim's service  programs. The STOP violence                                                                   
against   women   formula   grant   program   addresses   law                                                                   
enforcement,  prosecution,  and   victim  services  including                                                                   
Senator Ellis  stated that the  Alaska Women's Aid  in Crisis                                                                   
shelter in  Anchorage must  close without available  funding.                                                                   
He  understood that  the shelter  required a  new boiler.  He                                                                   
requested  information  regarding  an emergency  fund  for  a                                                                   
shelter in need of a new boiler.                                                                                                
Ms.  Ashenbrenner  responded   that  capital  improvement  or                                                                   
emergency  funds are  unavailable  to women's  shelters.  She                                                                   
advocated  for  the  use  of   federal  funds  for  emergency                                                                   
purposes funding  energy efficiency in the shelters.  The use                                                                   
of  "one time"  funds in  this  way provides  savings to  the                                                                   
organizations in the long run.                                                                                                  
Co-Chair  Hoffman  understood  that  funds  exist  for  rural                                                                   
areas. He opined that the federal  stimulus package neglected                                                                   
rural Alaska.  Mr. Spencer requested clarification  about the                                                                   
fund source that Co-Chair Hoffman referred to.                                                                                  
10:03:16 AM                                                                                                                   
Co-Chair   Hoffman   explained   that   he   understood   the                                                                   
flexibility of local governments  applying for funds. He felt                                                                   
that  rural Alaska  received inadequate  attention under  the                                                                   
stimulus package submitted by the state.                                                                                        
Mr. Spencer  answered that investigators are  responsible for                                                                   
the entire state.  The investigators travel as  needed to all                                                                   
regions of Alaska, including the rural areas.                                                                                   
Co-Chair  Hoffman  opined  that   the  state  should  take  a                                                                   
regional approach to addressing the issues.                                                                                     
Mr. Spencer  offered an upcoming  response for  the committee                                                                   
regarding the  issue of rural  inclusion in federal  stimulus                                                                   
applications.  Co-Chair  Stedman  stated that  the  committee                                                                   
would anxiously await the response.                                                                                             
10:05:42 AM                                                                                                                   
Ms.  Hanrahan  moved  on  to   the  Department  of  Revenue's                                                                   
requests. The  state receives  federal funding for  the state                                                                   
match allowing eligibility for  additional state dollars. The                                                                   
American  recovery   act  allows  a  state   use  of  federal                                                                   
incentive  receipts as a  portion of  their state match.  The                                                                   
state is  also eligible for  additional federal funds  in the                                                                   
form of earned incentive receipts.  The American Recovery Act                                                                   
allows  the  Child  Support  Services  Division  use  of  the                                                                   
existing  federal  incentive  receipts  as state  match.  The                                                                   
state is eligible for $3.2 million in the next two years.                                                                       
Co-Chair Stedman  asked about the portion referred  to by Ms.                                                                   
Hanrahan. Ms.  Hanrahan answered  the transaction  allows the                                                                   
division to receive  $2.7 million in economic  stimulus funds                                                                   
reducing receipt  supported services. Co-Chair  Stedman asked                                                                   
the identifying  number listed  on the  handout. He  asked if                                                                   
this  was  the  item  marked   $585  thousand.  Ms.  Hanrahan                                                                   
answered that both the unmarked  item and item #30 accomplish                                                                   
the same goal,  but the transactions for  technical budgetary                                                                   
reasons  must list separately.  In addition,  a $400  million                                                                   
general fund match is required.                                                                                                 
Mr. Persily clarified  that the original FY10  budget request                                                                   
submitted by  the Governor requested  state funds  to replace                                                                   
the loss  of federal funds.  For at least  15 years  prior to                                                                   
2008, the federal government allowed  states the use of these                                                                   
incentive  monies for  successful  child support  operations.                                                                   
The  federal government  allowed  states use  of the  federal                                                                   
incentive  money in a  two for  one matching federal  dollars                                                                   
for child  support operations. In  FY08, a change  in federal                                                                   
law took affect and it is no longer  possible to turn federal                                                                   
dollars into  matching funds.  This budget request  for state                                                                   
funds makes up  for that loss by reducing the  need for state                                                                   
money in child support operations.                                                                                              
10:11:07 AM                                                                                                                   
Ms. Hanrahan noted  that this is merely a switching  of funds                                                                   
and there  is little change  in total fund authorization  for                                                                   
the  Child   Support  Services  Division.   Co-Chair  Stedman                                                                   
detailed that  the state merely  supplants state  funds while                                                                   
receiving some federal funds.  Ms. Hanrahan acknowledged that                                                                   
the  state  reduces  receipt   quoted  services  and  regular                                                                   
federal  authorization.  Co-Chair  Stedman  asked  about  the                                                                   
application for  these two items. Ms. Harnahan  admitted that                                                                   
she lacked information about the  application process for the                                                                   
two  items.  She remarked  that  federal  incentive  receipts                                                                   
remain eligible as  state match for the period  of October 1,                                                                   
2008 through September 30, 2010.                                                                                                
JOHN  MALLONEE, ACTING  DIRECTOR,  CHILD SUPPORT  ENFORCEMENT                                                                   
DIVISION,    DEPARTMENT    OF    REVENUE    (testified    via                                                                   
teleconference), stating  that no formal  application exists.                                                                   
He informed that the grant is  open ended and based on actual                                                                   
Co-Chair Hoffman  asked about the sections for  child support                                                                   
services. He inquired  about applying for one  section alone.                                                                   
Mr. Mallonee answered that the  application requires multiple                                                                   
10:14:22 AM                                                                                                                   
Ms. Hanrahan explained  that the federal language  expires in                                                                   
2010. The federal incentive funds  then expire as state match                                                                   
for the Child Support Services Division.                                                                                        
Co-Chair Stedman  introduced item #35 and the  Alaska Housing                                                                   
Finance Corporation (AHFC) State Energy Program.                                                                                
BRYAN  BUTCHER,  DIRECTOR,  GOVERNMENT   AFFAIRS  AND  PUBLIC                                                                   
RELATIONS, ALASKA HOUSING FINANCE  CORPORATION, DEPARTMENT OF                                                                   
REVENUE, discussed  item #35 and  the $28 million  contingent                                                                   
on the  application of  a statewide  energy code. The  United                                                                   
States  Department of  Energy  (DOE) funds  for State  Energy                                                                   
Program   (SEP)    special   projects   such    as   building                                                                   
technologies,   codes   and   standards,   wind   and   power                                                                   
technologies,  renewable  energy   for  remote  areas,    and                                                                   
transportation  technologies.   He  explained  the state  has                                                                   
eight  years to  comply and  compliance  following the  eight                                                                   
year period  means that  a minimum of  ninety percent  of the                                                                   
state is deemed  energy efficient. He stated  that the Alaska                                                                   
Energy  Authority (AEA)  is influential.  He stated  that the                                                                   
money  is  strictly  residential   developing  standards  for                                                                   
public  and  commercial  buildings.   Since  1992,  AHFC  has                                                                   
complied with  the building  efficiency standards  by statute                                                                   
and financing cannot  occur with out meeting  those codes. He                                                                   
suggested that the policy decision  splitting the policy code                                                                   
lies in the hands of the legislature and the Governor.                                                                          
10:20:18 AM                                                                                                                   
Co-Chair Stedman  asked about  potential "strings"  attached.                                                                   
He mentioned the  requirement of achieving 90  percent energy                                                                   
efficiency  in  eight  years.  He  requested  the  difference                                                                   
between  commercial and  residential and  how the arrival  of                                                                   
ninety  percent   efficiency   is  calculated.  Mr.   Butcher                                                                   
answered  that   the  percentage  of  energy   efficiency  is                                                                   
determined by  square footage and  applies to homes  built or                                                                   
renovations preformed using federal funds.                                                                                      
Mr. Persily  informed that the  law states that  within eight                                                                   
years of  enactment or 2017, at  least ninety percent  of new                                                                   
and renovated commercial and residential  square footage must                                                                   
comply   with  energy   efficiency   standards.  This   lumps                                                                   
residential and commercial together.                                                                                            
10:22:29 AM                                                                                                                   
Co-Chair  Stedman asked  about whether  the expected  changes                                                                   
are  large   or  small.  Mr.   Butcher  responded   that  the                                                                   
residential  aspect  includes   most  communities  that  have                                                                   
building  codes including  Anchorage,  Fairbanks, and  Kenai.                                                                   
Many  rural  Alaskan  loans are  handled  by  Alaska  Housing                                                                   
Finance Corporation (AHFC). Co-Chair  Stedman understood that                                                                   
the star rating system was obsolete.                                                                                            
Mr.  Persily   added  that  large  commercial   buildings  in                                                                   
Anchorage meet  the energy  efficiency standards  required by                                                                   
the Act.                                                                                                                        
Co-Chair  Stedman  asked  about  the state  meeting  hall  in                                                                   
Anchorage and  its level of energy efficiency.  Senator Ellis                                                                   
informed  that state  funds were  not used  for the  Dena'ina                                                                   
convention  center  in  Anchorage.  Mr.  Persily  offered  to                                                                   
research the current standards of the building.                                                                                 
10:24:41 AM                                                                                                                   
Mr. Butcher informed that AHFC  addresses residential aspects                                                                   
of  the  item.  Most banks  have  interest  in  borrowing  on                                                                   
buildings with efficiency standards already met.                                                                                
Co-Chair Stedman asked how burdensome  the "strings attached"                                                                   
with item #35  are to Alaskan citizens. Mr.  Butcher answered                                                                   
that the cost of a rating is $300  required to obtain an AHFC                                                                   
loan. He stated  that he had been told by builders  that $5-8                                                                   
thousand must be  spent on an average building  to qualify as                                                                   
energy efficient.                                                                                                               
Co-Chair  Stedman asked  about building  codes. Ms.  Hanrahan                                                                   
answered  that  13 communities  in  Alaska  require  building                                                                   
codes.  Anchorage and  Fairbanks  are now  upgraded with  the                                                                   
energy building  code. The American  Recovery Act  insists on                                                                   
using the  2009 energy  codes. She stated  that the  cost for                                                                   
the inspectors  to travel is covered  by an energy  rater for                                                                   
40 out of 385 communities. Co-Chair  Stedman requested a list                                                                   
of the stated figures. Ms. Hanrahan agreed to comply.                                                                           
Co-Chair Stedman asked about building  codes and whether most                                                                   
metropolitan  areas are  under  the new  building codes.  Ms.                                                                   
Hanrahan answered  that only two  communities have  an energy                                                                   
code in force.                                                                                                                  
10:28:14 AM                                                                                                                   
Co-Chair Stedman stated that Ketchikan,  Wrangell, Sitka, and                                                                   
Petersburg  have building  codes. He asked  about South  East                                                                   
Alaska and the existing building codes.                                                                                         
Ms. Hanrahan  stated that a  building code is  different from                                                                   
an  energy code.  She listed  the  communities with  building                                                                   
codes  as   Anchorage,  Juneau,   MatSu,  Fairbanks,   Kenai,                                                                   
Ketchikan,  Kodiak,  Nome, Palmer,  Petersburg,  Valdez,  and                                                                   
Wrangell, and Skagway.                                                                                                          
Co-Chair Stedman  requested a  breakdown from AHFC  and their                                                                   
portion of the building and energy code requirements.                                                                           
10:30:14 AM                                                                                                                   
Senator Thomas  realized that resistance to the  expansion of                                                                   
building  and   energy  codes   exists.  He  inquired   about                                                                   
accepting federal funds with the  expectation of saving state                                                                   
money in  the long  term. Mr.  Butcher proposed the  question                                                                   
"is the  benefit of the energy  code worth the  state expense                                                                   
and  inconvenience." He  opined  that this  program  required                                                                   
additional information.                                                                                                         
Co-Chair  Hoffman  asked  about new  construction  funds.  He                                                                   
asked if  the blueprints  must meet  the new requirements  in                                                                   
addition to  an energy rating  for verification.  Mr. Butcher                                                                   
responded that  the state must  submit an energy  rating with                                                                   
proper  paperwork  to  AHFC confirming  the  four  star  plus                                                                   
Co-Chair  Hoffman asked  if the requirements  applied  to new                                                                   
construction.  Mr. Butcher  responded  that the  requirements                                                                   
apply to new construction and renovation.                                                                                       
Co-Chair   Stedman  asked   if  this   applied  to   all  new                                                                   
residential construction or only  that financed through AHFC.                                                                   
10:34:04 AM                                                                                                                   
Mr. Butcher answered  that any new construction  requires the                                                                   
state energy standard.                                                                                                          
Co-Chair Stedman  asked about a newly built  recreation cabin                                                                   
and  whether  that  would  require  building  to  the  energy                                                                   
efficient codes.                                                                                                                
Mr. Butcher stated  that AHFC finances owner  occupied homes,                                                                   
not recreational homes.                                                                                                         
Mr. Persily stated  that the research in House  Finance shows                                                                   
that  if the  state  adopts an  energy  efficiency code,  the                                                                   
state  could  allow exemptions  for  cabins  without  running                                                                   
water  or  electricity.  Co-Chair  Stedman  asked  about  the                                                                   
existing  program  and complimentary  synergy  existing  with                                                                   
that which is already in place for Alaska.                                                                                      
Mr. Butcher  suggested that  the residential aspect  requires                                                                   
little change, but the commercial side is unfamiliar.                                                                           
Co-Chair  Stedman   asked  if   the  $20  million   would  be                                                                   
supplanted by these federal stimulus funds.                                                                                     
10:37:00 AM                                                                                                                   
Ms. Hanrahan  stated that  there are  no exemptions  from the                                                                   
law for the state. She opined  that ninety percent compliance                                                                   
with energy  requirements was  extremely high. She  explained                                                                   
that the  law did not state  the requirement based  on square                                                                   
footage,  but instead  on the requirement  of ninety  percent                                                                   
compliance  of  new  construction  or  renovated  space.  The                                                                   
measurement  of  percentage  whether it  is  square  footage,                                                                   
population,  or  number  of  units   is  yet  unknown.  Final                                                                   
guidance  is not yet  available from  the Federal  Government                                                                   
regarding this program.                                                                                                         
Co-Chair Hoffman  addressed high  energy costs in  Alaska. He                                                                   
suggested that Alaska  may comply, as opposed  to states with                                                                   
warmer climates.  Mr. Persily added that the  energy code law                                                                   
suggests  that   states  must  meet  or  exceed   either  the                                                                   
standards for  the international energy conservation  code or                                                                   
achieve greater energy savings.                                                                                                 
Co-Chair  Hoffman asked  if funds  are  redirected to  energy                                                                   
projects  in other  states if  Alaska chooses  not to  accept                                                                   
them. He  inquired if Alaska  might receive additional  funds                                                                   
that are not  accepted by other states. Ms.  Hanrahad did not                                                                   
understand the question.                                                                                                        
Co-Chair  Hoffman  restated  the question  "if  other  states                                                                   
forgo their  dollars, can Alaska  access them?"  He explained                                                                   
the advantage of accessing unclaimed stimulus dollars.                                                                          
10:41:38 AM                                                                                                                   
Ms.  Hanrahan answered  that she  was  unsure whether  unused                                                                   
funds are  allocated to other  states. She promised  a follow                                                                   
up report to the committee.                                                                                                     
Senator  Thomas  inquired  about   proof  of  ninety  percent                                                                   
compliance and  a potential penalty  for lack  of compliance.                                                                   
Mr. Butcher  stated that a portion  of the funds in  item #35                                                                   
develop software allowing tracking of compliance levels.                                                                        
Mr. Persily stated  that he had a conversation  with a member                                                                   
of the  department of energy  headquarters who  presented the                                                                   
question  "what if  Alaska  is at  70  percent compliance  in                                                                   
eight years."                                                                                                                   
Ms. Hanrahan stated that she receives  different answers from                                                                   
various  sources   encouraging  conservative   decisions  and                                                                   
written documentation from legal council.                                                                                       
10:43:44 AM                                                                                                                   
Co-Chair Stedman  addressed item #36 and  weatherization. Mr.                                                                   
Butcher  informed   that  the  AHFC  weatherization   program                                                                   
assists low and moderate income  families in attaining decent                                                                   
and  affordable   housing  though   the  weatherization   and                                                                   
rehabilitation  of  existing homes.  Weatherization  provides                                                                   
for fire safety,  furnace and electrical  repairs, education,                                                                   
chimney  and  woodstove  repairs,  and  the  installation  of                                                                   
egress windows  during bedroom  window replacement.  He noted                                                                   
that $18 million is administered  along with the $200 million                                                                   
received last year from the legislature.  The funds were used                                                                   
to increase the limit from 150  to 200 percent of the Federal                                                                   
Poverty Limit  (FPL) upgrading the definition  of low income.                                                                   
The previous amount  of federal funds placed into  a home was                                                                   
$2500 currently updated to $6500.  The funds are administered                                                                   
as a portion of the $200 million.  The program is exempt from                                                                   
Davis-Bacon   wages  because   they  are  cost   prohibitive.                                                                   
Currently, the exemption is questioned.                                                                                         
Co-Chair Stedman  addressed potential repairs and  the impact                                                                   
of Davis-Bacon wages.                                                                                                           
Mr. Butcher  stated that  the wages  apply internally  to the                                                                   
five weatherization providers  responsible for energy audits.                                                                   
The consumer hiring a contractor is not affected.                                                                               
Co-Chair Stedman asked if contractors  pay Davis-Bacon wages.                                                                   
Mr. Butcher reminded that the exemption currently exists.                                                                       
10:48:09 AM                                                                                                                   
Senator  Thomas  suggested  that  this  proves  an  excellent                                                                   
opportunity  to  change  and spread  the  money  around.  Ms.                                                                   
Hanrahan addressed  the Davis-Bacon wage issue  as a national                                                                   
issue that is applicable to all  funds spent for the American                                                                   
Recovery Act must  meet the Davis-Bacon Act.  The federal OMB                                                                   
is currently addressing the issue.                                                                                              
Co-Chair Hoffman  asked about  the administration's  position                                                                   
on  the  acceptance   of  the  weatherization   dollars.  Ms.                                                                   
Hanrahan answered that the Governor's  position is unchanged.                                                                   
Her belief is  that these are items that increase  the budget                                                                   
and  place  a  burden  on  Alaskans,   but  remain  open  for                                                                   
discussion with the legislature.                                                                                                
Co-Chair   Hoffman   asked  the   administration's   position                                                                   
regarding building code requirements.  Ms. Hanrahan responded                                                                   
that  all  requests  are  available  for  discussion  by  the                                                                   
10:50:32 AM                                                                                                                   
Mr.  Butcher addressed  item #37  and  the implementation  of                                                                   
energy  efficiency and  conservation block  grants. The  U.S.                                                                   
DOE funds for  energy efficiency and conservation  activities                                                                   
for    communities,   including    but    not   limited    to                                                                   
developing/implementing    an     energy    efficiency    and                                                                   
conservation  strategy. The DOE  retain technical  consultant                                                                   
services to  assist in  the development  of such a  strategy.                                                                   
He  mentioned the  varying grants.  The amount  of funds  has                                                                   
been amended  to $9.5 million.  In addition, $4.3  million of                                                                   
direct grants exist through municipalities.                                                                                     
Mr. Persily expanded  that the law states that  60 percent of                                                                   
the $9.5  million allocation must  be granted  to communities                                                                   
that do  not qualify  for funding directly  from the  DOE. He                                                                   
stated  that  there  are  20  communities  receiving  funding                                                                   
directly from  DOE. Mr.  Butcher noted  that two percent  was                                                                   
designated for Indian tribes and  two percent is competitive.                                                                   
Mr.  Persily stated  that  the funds  going  directly to  the                                                                   
communities, the  $4.3 million is not subject  to the state's                                                                   
application or going through the legislature.                                                                                   
Co-Chair  Hoffman   asked  how  the  amount   was  determined                                                                   
throughout the communities. Mr.  Persily answered that it was                                                                   
through federal law or allocation.                                                                                              
10:53:06 AM                                                                                                                   
Co-Chair Stedman recessed until 1:30                                                                                            
10:54:06 AM    RECESSED                                                                                                       
1:37:30 PM     RECONVENED                                                                                                     
Mr. Persily informed that the  new Dena'ina Convention center                                                                   
in Anchorage  does indeed conform  to energy code  standards.                                                                   
He spoke  with the  engineer of record  for the new  building                                                                   
who explained  that the standards have become  commonplace in                                                                   
the industry and tend to save money.                                                                                            
Co-Chair  Stedman began  with  the Department  of Health  and                                                                   
Social Services.                                                                                                                
ALISON ELGEE, ASSISTANT COMMISSIONER,  FINANCE AND MANAGEMENT                                                                   
SERVICES,   DEPARTMENT  OF   HEALTH   AND  SOCIAL   SERVICES,                                                                   
addressed item  #12 regarding health information  technology.                                                                   
She  spoke  to  the concept  of  transitioning  providers  to                                                                   
electronic  medical  records   while  providing  an  exchange                                                                   
environment  where  medical records  are  safely  transferred                                                                   
from  one entity  to another  while  avoiding duplication  of                                                                   
expensive testing. The $2 million  item is a placeholder. The                                                                   
item is an area of the economic  stimulus funding with little                                                                   
provided  guidance. She  stated  that little  information  is                                                                   
available  from the  federal government  regarding  potential                                                                   
"strings attached."                                                                                                             
Ms. Elgee stated that she was  unaware of "strings attached."                                                                   
The time horizon  is longer than other items  of the Economic                                                                   
Stimulus bill as  it is available through 2015.  The proposal                                                                   
in the  bill carries  a match rate  of ten percent  initially                                                                   
for administrative  functions. The match rate  then increases                                                                   
throughout the time horizon by 10 percent per year.                                                                             
1:41:56 PM                                                                                                                    
Co-Chair  Stedman acknowledged  the four  positions for  item                                                                   
#12 and  the general  fund match  of $40  thousand, which  he                                                                   
considered  "strings  attached."  He mentioned  that  Senator                                                                   
Paskavan sponsored SB 133 which  creates an electronic health                                                                   
information   exchange   system.   He  wondered   about   the                                                                   
connection between SB 133 and SB 161.                                                                                           
Ms. Elgee responded  that SB 133 addresses a  similar subject                                                                   
matter, the  creation of a  health information  exchange. The                                                                   
suggested  fiscal  note  for SB  133  utilized  the  Economic                                                                   
Stimulus funding.  The fiscal note projects the  real cost of                                                                   
creating the information exchange  without clarification from                                                                   
the federal  government about  whether the federal  funds are                                                                   
available  to the state.  The money  seen on the  spreadsheet                                                                   
(Copy on  File) was intended as  a placeholder as there  is a                                                                   
significant planning  effort in  terms of meeting  the Health                                                                   
Insurance   Portability   and  Accountability   Act   (HIPPA)                                                                   
requirements   involved  in  insuring   privacy  of   patient                                                                   
Co-Chair  Stedman asked  if the department  supports  SB 133.                                                                   
Ms. Elgee responded that the department  supports the concept                                                                   
of SB 133, although she could  not make a statement regarding                                                                   
the Economic Stimulus funding due to all of the unknowns.                                                                       
1:44:30 PM                                                                                                                    
Mr.  Persily noted  that  the  state administers  grants  for                                                                   
healthcare  providers  across Alaska.  One  provision of  the                                                                   
stimulus bill is the eligibility  of up to $67,750 per health                                                                   
care  provider  for  implementation   of  electronic  medical                                                                   
Senator  Olson asked  electronic  medical  records for  rural                                                                   
Alaska.  Ms.   Elgee  answered  that  the   state  recognized                                                                   
significant band  width issues associated with  rural Alaska.                                                                   
She  informed  that  anon-profit  group;  The  Alaska  Health                                                                   
Network conducted a study estimating  the need of $13 million                                                                   
as  a solution  to the  band width  problems  faced by  rural                                                                   
Alaska. Mr. Persily  noted that $7.2 billion  in the economic                                                                   
stimulus bill  are administered as grants or  loan guarantees                                                                   
for rural areas.                                                                                                                
Senator Olson  asked if competitive grants existed  among the                                                                   
three  telecommunications companies  in  Alaska. Mr.  Persily                                                                   
answered that two federal agencies  run the competitive grant                                                                   
1:47:08 PM                                                                                                                    
Co-Chair   Stedman  addressed   item  #13   and  the   public                                                                   
assistance  for child  care benefits.  Ms. Elgee stated  that                                                                   
the   funding   includes  approximately   $4   million.   One                                                                   
requirement  states  that  Alaska   may  not  supplant  state                                                                   
funding with  this increase.  A portion  of the funding  must                                                                   
targeted  quality  expansion   of  infant  and  toddler  care                                                                   
programs.  The   balance  of   funding  improves   access  to                                                                   
childcare  assistance  for  rate  reimbursement  charged  for                                                                   
childcare or expanding eligibility.                                                                                             
Mr. Persily  stated that the  House Finance Committee  had no                                                                   
problems and found no "strings attached" to item #13.                                                                           
Ms.  Elgee  addressed  item #14  and  the  public  assistance                                                                   
Supplemental  Nutrition  Assistance Program  (SNAP)  formerly                                                                   
known as the  food stamp program. Included is  an increase in                                                                   
food  stamp   benefits  for   all  recipients.  The   funding                                                                   
addresses  administrative costs  for  outreach and  necessary                                                                   
program  changes.  Mr. Persily  noted  the lack  of  "strings                                                                   
attached" to item #14.                                                                                                          
1:50:27 PM                                                                                                                    
Ms.  Elgee addressed  item  #15 and  the  Women, Infant,  and                                                                   
Children  (WIC) nutrition  program  administered through  the                                                                   
Department of Public Assistance.  This program eligibility is                                                                   
caseload  driven.  She  estimated the  availability  of  $177                                                                   
thousand pending Alaska's eligibility.                                                                                          
Mr.  Persily  added  that  research   in  the  House  Finance                                                                   
Committee showed no negative impacts or "strings attached."                                                                     
Ms.  Elgee  addressed  item #16  and  increased  funding  for                                                                   
immunization,   prevention   and  wellness,   and   infection                                                                   
reduction grants.  Mr. Persily stated that the  House Finance                                                                   
Committee  found zero  "strings attached"  minus the  ongoing                                                                   
issue of proper  accounting, reporting, and  following of the                                                                   
Ms.  Elgee   addressed   item  #17,  an   expansion   of  the                                                                   
Individuals  with Disabilities  Education  Act which  expands                                                                   
the   state's   infant   learning   program.   Infrastructure                                                                   
improvements  such  as  converting  providers  to  electronic                                                                   
education   records    and   improving   Medicaid    claiming                                                                   
opportunities are the focus.                                                                                                    
Mr. Persily stated that the House  Finance Committee found no                                                                   
"strings attached" to item #17.                                                                                                 
1:53:09 PM                                                                                                                    
Ms. Elgee addressed  item #18 and the expansion  of the grant                                                                   
program  through   the  administration  on  aging   for  home                                                                   
delivered  and congregate  meals  provided throughout  senior                                                                   
centers. The amount  is $485 thousand administered  as grants                                                                   
to  those  senior  centers  already   part  of  the  existing                                                                   
commission on  aging grant program.  Mr. Persily  stated that                                                                   
item #18  remains available  throughout the federal  stimulus                                                                   
period only.                                                                                                                    
1:54:06 PM                                                                                                                    
Co-Chair Stedman  introduced item #34 from the  Department of                                                                   
Environmental Conservation.                                                                                                     
MIKE MAHER,  DIRECTOR, DIVISION  OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT OF REVENUE, addressed item #34 and the Air Non-                                                                      
point mobile source stimulus.  The item allows the department                                                                   
the  provision  of grants  predominantly  to  rural areas  of                                                                   
Alaska  for diesel emission  reduction.  The item allows  for                                                                   
the  replacement of  diesel generators,  school buss  fleets,                                                                   
and the conversion  of vehicles from diesel  power to natural                                                                   
gas  or propane.  The small  program  requires no  additional                                                                   
positions.  The program  requires  grant authority.  Co-Chair                                                                   
Stedman clarified that the grant requires statutory work.                                                                       
Mr. Persily stated that this program  has available funds for                                                                   
municipalities. The  purpose of the item is  the reduction of                                                                   
emissions and energy savings.  Co-Chair Stedman asked if this                                                                   
was a "one  time" grant. Mr. Maher responded  that additional                                                                   
funding might exist downstream, although exact amounts are                                                                      
SB161 was HEARD and HELD in Committee for further                                                                               
The meeting was adjourned at 1:57 PM.                                                                                           

Document Name Date/Time Subjects
American Recovery & Reinvestment Act DERA.DOCX SFIN 4/2/2009 9:00:00 AM
SB 161
Amendment 2 A.5.pdf SFIN 4/2/2009 9:00:00 AM
HB 98
OMB_Economic_Stimulus_capital_not_included_in_3-19-09.pdf SFIN 4/2/2009 9:00:00 AM
SB 161
Economic Stimulus Not Included Op and CIP items 3-30-09.xls SFIN 4/2/2009 9:00:00 AM
SB 161
Assoc of AK School Boards Support SB161.pdf SFIN 4/2/2009 9:00:00 AM
SB 161
SB161 Congressional Research Service.pdf SFIN 4/2/2009 9:00:00 AM
SB 161
CSHB 199 (FIN) Version E (2).pdf SFIN 4/2/2009 9:00:00 AM
HB 199