Legislature(1993 - 1994)
01/17/1994 11:00 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
January 17, 1994
11:00 a.m.
TAPES
SFC-94, #3, Side 1 (000-end)
SFC-94, #3, Side 2 (end-250)
CALL TO ORDER
Senator Steve Frank, Co-chair, convened the meeting at
approximately 11:00 a.m.
PRESENT
In addition to Co-chairs Frank and Pearce, Senators Sharp,
Kerttula, and Jacko were present. Senators Rieger and Kelly
did not attend.
ALSO ATTENDING: Shelby Stastny, Director of Office of
Management & Budget, Office of the Governor; Nancy Slagle,
Director, Division of Budget Review, Office of Management &
Budget; Mike Greany, Director, Legislative Finance Division;
Kathryn Daughhetee, Fred Fisher, Dana LaTour, Susan
Sorensen, Virginia Stonkus, and Jetta Whittaker, fiscal
analysts, Legislative Finance Division; and aides to
committee members and other members of the legislature.
SUMMARY INFORMATION
HB 370 - APPROP: FY 95 OPERATING AND LOAN BUDGET
Presentations were made by Shelby Stastny, Director of
Office of Management & Budget, Office of the Governor;
and Nancy Slagle, Director, Division of Budget Review,
Office of Management & Budget.
Mike Greany, Director, Legislative Finance Division
introduced Legislative Finance analysts.
OFFICE OF MANAGEMENT & BUDGET OVERVIEW
Co-chair Frank invited Shelby Stastny, Director of Office of
Management & Budget, Office of the Governor, and Nancy
Slagle, Director, Division of Budget Review, Office of
Management & Budget to come before the committee.
SHELBY STASTNY stated that the Office of Management &
Budget's budget was the same as introduced after the
Governor's state of the budget address with the exception of
the Alaska Court System. He said that the budget was kept
the same in nominal dollars with the exception of the areas
that the Governor thought needed additional attention. In
response to Senator Kerttula, he explained nominal dollars
meant that inflation is ignored. The areas the Governor
felt needed attention were the Department of Public Safety,
specifically the addition of State Troopers and the Fish &
Wildlife Protection Officers, Department of Law with the
addition of 2 prosecutors, and the Department of
Transportation highway maintenance. He directed the
committee's attention to a handout titled "FY95 Operating
Budget Comparison to FY94 (general funds only)" (copy on
file).
Discussion followed between Mr. Stastny and Senators
Kerttula, and Frank regarding specific additions to the
budget, need for state troopers' and their salaries, success
of the trooper academy, the court system budget, etc.
Senator Kerttula voiced his concern regarding the
departments cut. Mr. Stastny concurred pointing out cuts
have reached 25 to 28 percent. Co-chair Frank commented
that many though were automatically reinstated the following
year.
Discussion was held by Senator Kerttula, Co-chair Frank, and
Mr. Stastny regarding the existing agreement that the
administration would not interfere with the court system's
budget and their stance as a separate branch of government.
Mr. Stastny reiterated the administration's goal was to
present a budget that was the same or less dollar amount
than the prior year knowing that there was an increase in
formula programs. It was suggested to the departments that
if there were additional items added other items must be
reduced or revenues found to pay for the increase. In
response to Senator Kerttula, Mr. Stastny said the spending
plan is a 5 year forecast. In the first year, additional
revenue of $128M is proposed to be raised by different tax
methods. Senator Kerttula pointed out that Alaska's taxes
were the lowest in the United States, and that Alaska's
residents want the services but do not want to pay for them.
As a result local government is carrying the brunt of this
load and it did not make sense to ask them to carry any more
of the burden.
Mr. Stastny concurred with Senator Kerttula saying that the
budget cannot be reduced enough to solve the gap between
revenue projections and expenditures. The administration
and the legislature need to educate the people that budget
reductions cannot make up the deficit. He agreed however,
an effort must be made to keep the budget down.
Co-chair Frank asked if the administration had anything in
work to reduce costs or cause increases. Mr. Stastny said
legislation has been introduced to consolidate senior
services in the interest of efficiency. Senator Kerttula
said there must be some areas other than seniors or the poor
to cut in order to reduce the budget.
Co-chair Frank reiterated that it was inappropriate to ask
small communities to cut their budgets further while the
state holds its departments harmless. Mr. Stastny concurred
but said that as oil revenues go down, municipal assistance
and revenue sharing are reduced since it is based on a
percentage. Senators Kerttula and Jacko pointed out that
many smaller communities do not have the opportunity to
produce additional revenues. Reducing or eliminating
municipal assistance and revenue sharing pushes progress
back 10-15 years and will halt basic utilities and progress
made in those small communities. Mr. Stastny believed that
those areas need to be given special consideration.
Senator Jacko voiced his opposition and asked what
consideration was given to an additional tax being levied
against a fishery where over 1100 permits are in jeopardy of
being lost to back taxes. Mr. Stastny said that the
administration's policy says the resource must be managed
and used for all citizens of Alaska. The limited access
granted must reimburse the other members of the state for
taking that resource. He agreed that there are significant
concerns about the fishing industry. The bill would
initiate a nominal royalty of 2 percent this year, with an
increase to 5 percent in a few years. If a permit generates
less than $10,000 a year, the tax would be refunded to the
fisherman. Senator Jacko pointed out there are already
existing taxes that fishermen pay. Mr. Stastny maintained
the existing taxes paid for government services and not for
the use of the resources.
Co-chair Frank asked if the Department of Corrections'
budget would be handled by budget amendments. Mr. Stastny
was surprised by that comment and agreed he would not
support any budget amendments that do not have extenuating
circumstances. Mr. Stastny said supplementals would not
exceed a maximum of $40M. He indicated, for example, that
the Department of Law was being funded at 50 percent and
would require additional funds, and the Department of Health
& Social Services have decisions to make regarding
additional programs.
NANCY SLAGLE indicated, in response to Co-chair Frank, that
the supplemental budget is due the 30th day of the session
and that it would be ready before then. Senator Kerttula
asked for information on the hold harmless program. Mr.
Stastny agreed that it was an area to investigate.
End SFC-93 #3, Side 1
Begin SFC-93 #3, Side 2
Senator Sharp asked the administration's stance on allowing
additional University of Alaska land selections in order to
enlarge its land base and future revenue producing
capability. Mr. Stastny agreed to investigate it further,
but did not believe the administration was totally in favor
of it.
Senator Sharp asked the status of the SBS executive life
account. Mr. Stastny said the assistant attorney general
Jim Baldwin informed him that a final settlement could be
made but others involved are balking at the settlement.
Negotiations are on-going but it is unknown at this time
when a settlement will be made.
Mr. Stastny stated the expansion of Spring Creek by 50 beds
in the Department of Corrections will cause a budget
amendment in the amount of $500,000. Co-chair Frank felt
that was too high.
In response to Co-chair Frank, Mr. Stastny said his goal was
to introduce the capital budget by the end of January and it
would include the capital matching grant within the $100M.
Co-chair Frank stated that the legislature was indeed
interested in reducing the operating costs of government.
Mr. Stastny answered that his departments had been
instructed to follow that philosophy and had requested
cooperation, information and ideas to assist in that
process.
Senator Kerttula and Co-chair Frank discussed revenue
enhancement and related legislation.
Co-chair Frank asked Mike Greany, Director, Legislative
Finance Division, to introduce the fiscal analysts and their
budget assignments. Senator Kerttula was critical of the
loss of so many of the staff and asked the reason for the
high turnover. Mr. Greany stated the personnel loss was due
to promotions and completely voluntary. He went on to
introduce the analysts and their responsibilities as
follows: Kathryn Daughhetee, Dept. of Corrections, Alaska
Court System, Dept. of Law, Dept. of Public Safety; Fred
Fisher, Dept. of Military & Veteran Affairs, Dept. of
Natural Resources, Dept. of Transportation & Public
Facilities; Dana LaTour, Dept. of Education, Dept. of Labor,
University of Alaska; Susan Sorensen, Dept. of Health &
Social Services, Dept. of Administration; Virginia Stonkus,
Dept. of Environmental Conservation, Dept. of Fish & Game,
Dept. of Community & Regional Affairs; Jetta Whittaker,
Dept. of Commerce & Economic Development, Dept. of Revenue,
Loan Programs, and revenue analysis with Mike Greany, who is
also responsible for the Office of the Governor, and the
Legislature.
ADJOURNMENT
The meeting was adjourned at approximately 12:00 p.m.
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