Legislature(2003 - 2004)
03/30/2004 09:04 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 30, 2004
9:04 AM
TAPES
SFC-04 # 62, Side A
SFC 04 # 63, Side A
SFC 04 # 63, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:04 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Co-Chair Lyda Green, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Lyman Hoffman
Senator Donny Olson
Senator B. Stevens
Also Attending: SENATOR JOHN COWDERY, SENATOR RALPH SEEKINS;
REPRESENTATIVE JIM HOLM; CHERYL FRESCA, Director, Office of
Management and Budget, Office of the Governor; RICK URION,
Director, Division of Occupational Licensing, Department of
Community and Economic Development; LUCKY SCHULTZ, Staff to Senator
Fred Dyson; CHERYL FRASCA, Director, Office of Management and
Budget, Office of the Governor; BRUCE TANGEMAN, Fiscal Analyst,
Legislative Finance Division
Attending via Teleconference: From Anchorage: STEVE ASHMAN,
Director, Division of Senior and Disabilities Services, Department
of Health and Social Services; FRANK RICHARDS, State Maintenance
and Operations Engineer, Statewide Maintenance Division, Department
of Transportation and Public Facilities; DON VALESKE, Public
Employees Local 71; From Fairbanks: DR. SCOTT LUPER, Naturopathic
Doctor; From Offnet Sites: EDEN LARSEN, President and CEO,
Associated Builders and Contractors; JEFF ALLING, Representative,
ALCAN Builders Incorporated; BARRY CHRISTENSEN, Practicing
Community Pharmacist and Legislative Chair, Alaska Pharmacists
Association
SUMMARY INFORMATION
HB 394-COMMISSION ON AGING
The Committee heard from the sponsor, the Department of Health and
Social Services, and reported the bill from Committee.
SB 40-CONSTRUCTION OF HIGHWAYS BY DOTPF
The Committee heard from the sponsor, the Department of
Transportation and Public Facilities, and took public testimony.
Two amendments were considered with one being adopted and one
failing. The bill reported from Committee.
SB 306-NATUROPATHIC MEDICINE TASK FORCE
The Committee heard from the sponsor, the Department of Commerce,
Community and Economic Development, the medical and pharmaceutical
industry. The bill was held in Committee.
SB 298-OFF-ROAD VEHICLE USE ON DALTON HIGHWAY
The Committee heard from the Sponsor. The bill was held in
Committee.
SJR 3-CONST AM: APPROPRIATION/SPENDING LIMIT
The Committee heard from the sponsor, the Office of Management and
Budget, and the Division of Legislative Finance. The bill was held
in Committee.
Co-Chair Wilken introduced Close Up Students from Aniak High
School, North Pole Middle School, the Hoonah School District, and
their accompanying teachers.
CS FOR HOUSE BILL NO. 394(HES)
"An Act extending the termination date of the Alaska
Commission on Aging and making technical revisions to
citations related to the commission."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this legislation would extend the
Alaska Commission on Aging until June 30, 2008. A Division of
Legislative Audit report [copy on file] dated October 1, 2003
supports the extension.
REPRESENTATIVE JIM HOLM, the bill's sponsor, informed the Committee
that this bill would extend the Alaska Commission on Aging beyond
its termination date. This Commission functions within the
Department of Health and Social Services and is charged with broad
responsibilities including providing assistance to seniors and
informing Alaskans of the needs of this older community. It
provides dignity and independence to seniors through programs and
services funded by the Commission, and allows more than 53,000
seniors to lead useful and meaningful lives. He urged the Committee
to support the bill.
Co-Chair Wilken announced that as per the Committee's request, Pat
Davidson, Legislative Auditor, Legislative Audit Division, is in
attendance to respond to questions regarding the Audit.
Senator Dyson asked the Department's reaction to the Audit
recommendations.
STEVE ASHMAN, Director, Division of Senior and Disabilities
Services, Department of Health and Social Services, testified via
teleconference from Anchorage and stated that some of the
deficiencies highlighted in the Audit pertaining to senior
employment services and other components have either been or would
be corrected. The Division was re-organized within the past year
and that efforts are being undertaken to insure that it is in
compliance with State and federal program regulations.
Senator Dyson, noting that the Legislature could extend the
termination date beyond the year 2008, asked whether this should be
a consideration as the issues of concern are known, are being
addressed, and the aging population of the State would continue to
increase.
Representative Holm agreed that the Commission is addressing its
problems; however, he stated that due to the fact that the Audit
does reflect that there are concerns, extending the Commission to
the year 2008 is appropriate at this time. He stated that a longer-
term extension might be considered in the year 2008.
Co-Chair Green, in response to Senator Dyson's question, stated
that it might be possible in the future to consolidate groups that
address aging and senior care issues. Therefore, she supported the
extension date, as proposed, in order to allow for merging of
boards and commissions in the future, as deemed appropriate.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
There being no objection, CS HB 394(HES) was REPORTED from
Committee with fiscal note #2 in the amount of $417,900 from the
Department of Health and Social Services.
SENATE BILL NO. 40
"An Act relating to construction of highways by the Department
of Transportation and Public Facilities."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this bill would limit the use of
Force Account Construction funds to highway construction projects
that cost less than $250,000. He noted that bill version 23-
LS0381\A, which was initially heard during the First Session of the
Twenty-Third Legislature, is before the Committee.
SENATOR JOHN COWDERY, the bill's sponsor, explained that this
legislation was introduced in response to concerns from private
construction contractors regarding the fact that a $2.4 million
highway construction project at St. Mary's in Rural Alaska was
conducted by the State through the Force Account process and
without abiding by the State Procurement Code that requires a
competitive bid process be utilized.
Senator Cowdery stated that the legislation was developed following
conversations with contractors and discussions with the Department
of Transportation and Public Facilities (DOT). He noted that DOT
was also asked to develop a Statewide Delivery Order maintenance
contract that would require a 24-hour call-out for a job. He stated
that this legislation would be in the State's best interest.
Contractors throughout the State support the $250,000 limit
specified for Force Account highway construction projects.
Senator Dyson asked that additional information be provided
regarding past situations of abuse of this issue. He also asked how
Governor Frank Murkowski's Administration is addressing the issue.
Senator Cowdery explained that in the past, and particularly in the
notorious St. Mary's project, the State circumvented the system by
utilizing State employees or hiring construction crews and paying
State employee wages rather than paying higher, contractor Davis-
Bacon wages. He characterized the State's behavior in the St.
Mary's project operation as being "very creative."
Senator Cowdery voiced support for the $250,000 State Force Account
limit and stated that it an appropriate level as the purpose of
such an account is to allow the State to respond to unforeseen
projects. He stated that this limit would assure, in a workable
manner, that DOT would operate using the competitive bid process.
Senator Hoffman asked whether this limit is pertinent only to
general funds expenditures.
Senator Cowdery responded that it would apply to any project
exceeding $250,000 regardless of whether the funding for that
project was State or federal.
Senator Olson asked whether this legislation would specifically
apply to Department of Transportation and Public Facilities (DOT)
highway construction projects.
Senator Cowdery responded that the legislation could be expanded to
include all State departments, as the intent is to address abuses
within the State procurement system process.
Senator Olson asked whether this bill could therefore apply to
other departments.
Senator Cowdery pointed out that, as reflected, in the bill's
title, this legislation is specific to DOT.
Amendment #1: This amendment deletes language in Section 1, lines
eight through eleven, on page one that reads as follows.
"when the estimated cost of a construction project is less
than $100,000 or when it appears to be in the best interest of
the state and the estimated cost of a construction project is
$250,000 or less, the department may perform the work
notwithstanding any other provisions of law.
In addition, the following language would be inserted on page one
following line seven in Section 1.
the department may perform the work notwithstanding any other
provisions of law when
(1) the estimated cost of a construction project is less
than $100,000;
(2) the construction project is not connected by a land
road to the main road system of the state and the commissioner
determines that [OR WHEN} it appears to be in the best
interests of the state; or
(3) the construction project is connected by a land road
to the main road system of the state, the estimated cost of a
construction project is $250,000 or less, and the commissioner
determines that it appears to be in the best interests of the
state[, THE DEPARTMENT MAY PERFORM THE WORK NOTWITHSTANDING AN
Y OTHER PROVISIONS OF LAW].
New Test Underlined [DELETED TEXT BRACKETED]
Senator Olson moved Amendment #1.
Co-Chair Wilken objected for clarification. He noted that Amendment
#1 is accompanied by a sponsor statement from Senator Olson and a
copy of Administrative Order No. 199 [copies on file].
Senator Olson stated that this amendment addresses the fact that
the legislation, as presented, would require all DOT public road
projects exceeding $250,000 to be subject to the competitive bid
process. This process could limit the economic feasibility of
numerous Rural construction projects. Therefore, this amendment
would exempt Rural road projects that are not connected to the
Alaska road system from the competitive bid requirement. Questions
regarding the use of the competitive bid process in these areas is
best answered by language in Administrative Order No. 199, which
addresses construction projects in rural Alaska. This Order has
been in effect since October 2002.
Senator Olson noted that Administrative Order No. 199 is working
effectively and was, when developed, supported by a vast number of
people in the construction industry, including State contracting
agencies, the Associated General Contractors, labor unions, and
rural construction entities.
Senator Olson stressed that $250,000 oftentimes might not even
provide for the required air transportation and mobilization and
demobilization of equipment and materials relating to a
construction projects in Rural areas.
Senator Dyson asked whether the intent of the amendment is to
provide local people an opportunity to work.
Senator Olson responded that is correct. He cited several
successful "Force Account" projects, including the St. Mary's
project, that were completed below budget, on time, and with no
worker's compensation claims. Another benefit of hiring local
residents and having local expenditures, including equipment, is
that a community is able to continue to utilize purchased equipment
to maintain its roads and airports. He stressed that were the
$250,000 limitation in place, construction projects costs would be
driven upward due to equipment transportation and other related
expenditures rather than being the result of labor expenses. He
exampled the 1998 Selawik Boardwalk Improvement project as one
whose $75,000 labor costs were minimal when compared to its
$310,000 cost relating to equipment transportation and other
associated things. He referred the Committee to the "DOT&PF Force
Account Report" [copy on file] dated February 12, 2003 that was
provided by the sponsor that depicts Force Account projects for the
years 1998 through 2002.
Senator Olson argued that the $250,000 limitation would be a
logical approach for a construction project that could be reached
via the State's connected road system; however, the fact that a
project is not on a road system has significant financial impact
that, adhering to the competitive bid policy, would not serve to be
in the best interest of the State.
Senator Hoffman, referencing the aforementioned Force Account list,
stated that projects such as boardwalk projects do not require a
high level of skilled labor; however, the costs associated with the
project mobilization and the demobilization expenses could either
increase the costs associated with the project or serve to provide
"less of a project." In addition, he noted that in addition to
providing jobs to rural residents, experiences indicate that when a
community is involved in a project, it becomes invested in it and
subsequently takes care of it. Therefore, he summarized that the
benefit of Force Account projects include getting a better product,
local control and investiture, and dollars being spent in a
community which has few other financial opportunities. "The
Amendment makes a lot of sense."
Senator Cowdery spoke against the amendment, particularly in
regards to Davis Bacon wages not being paid, the State procurement
code being circumvented, and there being questions regarding the
liability of using city rather than private contractor equipment.
Rural contractors have testified that they have been denied the
opportunity to bid on rural projects because Force Account
operations were conducted. He noted that local contractors support
the development of a DOT day-labor Delivery Order Contract, which
would specify a 24-hour callout timeframe through which maintenance
projects could be conducted. Development of this contract would not
be difficult as DOT is quite good of estimating what a job would
cost. This would assure that the public is served at the best price
and would allow local contractors an opportunity to bid jobs
accordingly.
Senator Hoffman, referencing the sponsor's position that the Force
Account program has been abused, characterized that position as a
"stretch" as the aforementioned Force Account report indicates that
the jobs conducted in this manner between the years 1998 and 2002
amount to less than three percent of the total construction
projects of the Department. Therefore, he stated that legislation
that would prevent Rural residents from working these limited
projects "is going a little bit too far."
Senator Dyson voiced appreciation for the intent of the
legislation; however, he understood that this amendment would not
preclude the use of Davis Bacon wages. In addition, the use of
local qualified applicants and equipment would be beneficial. He
questioned how limiting the price of a contract would prevent State
government from utilizing State employees.
Senator Cowdery explained that the initial purpose for allowing use
of Force Accounts was to address unforeseen problems that might
occur relating to a job that was already under contract. The use of
Force Accounts "was never intended" to fund a job "from scratch."
Co-Chair Wilken asked that Committee discussion focus on Amendment
#1.
Senator Dyson understood that in order to provide a good bid
package, such things, as core samples are required. Continuing, he
opined that the development of a DOT Delivery Order Contract would
be useful in managing the many small jobs that do not require in-
depth investigation. Funding of these jobs through the use of Force
Accounts would be more cost efficient. The question is, what is the
threshold. He agreed with Senator Olson that were local equipment
and labor available, their use would be more economical. Therefore
he asked the sponsor whether $250,000 is the right threshold
limitation for Force Account work.
Senator Cowdery supported the $250,000 limit. Originally, a
$100,000 limit was entertained. Continuing, he noted that DOT is
responsible for providing contractors with such things as soil
analysis because jobs that go to bid should not be misrepresented.
A job that has a soil problem could become very expensive.
Senator Dyson clarified that rather than referring to jobs in which
a contract has been awarded, he is referring to small jobs in which
it would not be cost effective to prepare a bid package and go
thought the competitive bid process.
Senator Cowdery stated that during previous, separate Committee
discussions with local contractors in Nome, Bethel and other
communities, testimony supported a limit, as it would allow local
contractors to participate in a competitive bid process.
Senator Dyson asked whether DOT could respond to his question.
Senator Olson stated that the amendment was patterned after
language in Administrative Order No. 199. The purpose of the
amendment is to provide an opportunity for local hire as opposed to
addressing Davis Bacon wages. He referenced Order language in this
regard on page two, section 3.(a) that reads as follows.
3.(a) Grant agreements for projects first funded for
construction after the date of this Order under the following
state programs shall include a requirement for the payment of
prevailing wages, including contributions to a pension or
retirement account, equal to the prevailing wages under AS
36.05, as modified through the use of the progressive,
graduated pay scale developed under (b) of this paragraph, on
all public construction projects:
Senator Olson stated that the inclusion of this language in the
Order was the reason that contractors and labor unions supported
it. This language does address wage concerns.
Senator Hoffman noted that, based on the Force Account Report for
the years 1998 through 2002, less than one half of one-percent of
the jobs depicted are under the $250,000 limit. Therefore, were
this amendment not adopted it would "slam the door" on the
potential for local hire in Rural Alaska, as, it could be said that
"basically this bill" would not allow the use of Force Account
projects in rural Alaska due to the high cost of construction in
those areas. He reiterated that while there is a lack of a skilled
workforce in those areas, things such as boardwalk projects could
use local hire and therefore benefit a community. Therefore, he
voiced support for the amendment, which would preserve "the status
quo" of less than three-percent of available DOT construction
projects and thereby provide jobs and revenue to Rural areas. "This
is not asking too much."
Senator B. Stevens questioned how Administrative Order No. 199
could relate to Force Account projects conducted in Rural areas in
1998 through 2002, as it was not enacted until October 1, 2002;
specifically that it is unknown whether Davis Bacon wages were or
were not being paid during that time. He also noted that the
legislation would not prevent DOT from awarding three percent or
more of its projects to rural areas regardless of whether a Force
Account were utilized.
Co-Chair Wilken characterized Senator B. Stevens's comments as
pertaining to the bill in general. Therefore, he stated that a
further discussion in this regard would continue after discussions
relating to Amendment #1 are concluded.
Senator Dyson asked whether DOT has "a policy or threshold"
regarding how minor construction projects in Rural Alaska would be
addressed "on a Force Account basis, and if so," is utilizing Force
Account funding more efficient than utilizing the competitive bid
process.
FRANK RICHARDS, State Maintenance and Operations Engineer,
Statewide Maintenance Division, Department of Transportation and
Public Facilities, testified via teleconference from Anchorage and
responded that the funding source of a project is one of the
primary determining factors in both Rural and urban area projects.
Before any work is advanced, the Department must conduct a cost
analysis to determine what method of construction would be the most
cost effective.
Senator Dyson asked whether Amendment #1 would provide the
Department, after its cost analysis is conducted, more flexibility
to address Rural construction projects.
Mr. Richards responded that the $250,000 ceiling denoted in the
Amendment "would still limit" the Department's ability to perform
work. Another issue would be the definition of what would
constitute a Rural area. Were this designation applied to Rural
roads that are part of the State's continuous highway system, it
would be "severely limit" the Departments work efforts.
Senator Dyson understood that the amendment would eliminate the
$250,000 limitation on construction jobs in Rural areas not
connected to the highway system.
Mr. Richards responded that were the amendment to allow the
Commissioner to remove constraints pertaining to projects in Rural
areas that are not part of a contiguous road system, the Department
would view it as favorable. This would apply to villages primarily
in Western and Northwestern Alaska as well as some communities in
Southeast Alaska. However, were it to apply to Rural places such as
Tok and Northway that are on the contiguous highway system, it
would be limiting.
Senator Dyson understood therefore that the amendment would provide
the Department more flexibility on projects that are not connected
via the contiguous road system.
SFC 04 # 62, Side B 09:51 AM
[NOTE: Due to a technical malfunction, Side B of Tape 62 did not
record; however, the minutes continue, uninterrupted, on Side A of
Tape 63.]
SFC 04 # 63, Side A 09:51 AM
Senator Dyson voiced the understanding, however, that the
Department is uneasy about the lack of a definition for what
constitutes a Rural area."
Mr. Richards viewed Force Accounts as being "a tool in the toolbox"
that the Department could use to support its maintenance,
construction and operation responsibilities to the State's
transportation system.
Mr. Richards stated that in response to the furor that resulted
after the Force Account was utilized for the St. Mary's project,
the Department worked with contractors and labor unions to develop
Administrative Order No. 199. As a result, the Order provided a
framework through which either the Force Account or a competitive
bid process would be utilized to address Rural area projects on a
fair basis.
Senator Olson pointed out that while there is some ambiguity
regarding the definition of Rural, the Amendment is specific to
off-road system construction projects.
Senator Hoffman asked the Department for justification for its
analysis reflected in fiscal note #1, dated February 18, 2003 that
specifies that there would be "lost savings" exceeding $25 million
were this legislation enacted.
In response to a question from Co-Chair Wilken, Senator Hoffman
pointed out that the answer to this question is important, as
adoption of Amendment #1 might serve to continue savings rather
than negating them.
Mr. Richards responded that the calculation used to determine the
$25 million potential lost cost savings is based on annual savings
of four million dollars for six years that would result were the
State to use Force Account funding rather than conducting projects
utilizing the competitive bid process, based on historical cost
analyses. He noted that most of the money that could be saved is
federal money with a General Fund (GF) match.
Senator Hoffman declared that he supports the amendment because he
"would rather save money than blow it."
Senator B. Stevens asked, for clarification, the amount of the
total $505 million surface transportation program expenditures, as
specified in the 2002 Force Account Report, that were directly
related to construction projects. He stated that this is an
important element of the equation, as, as depicted, the calculation
that only 2.23 percent of the total $505 million was spent on Force
Account projects, could be misleading.
Mr. Richards affirmed that the total amount would include other
components.
Senator B. Stevens stressed therefore, that the 2.23 percent
depicted is on the low side as were funding for Shakwak, the Marine
Highway System, Trails and Recreation Access for Alaska (TRAAK),
and other federal components removed, the percentage of money spent
for Force Account Construction projects would increase.
Mr. Richards affirmed that the $505 million amount is all-inclusive
in that it does contain such things as Shakwak, federal highway
funding, and other Community Transportation Program (CTP) funding
for surface transportation projects. He also noted that the 2002
projects listed on the Force Account Report comprise the 2.23
percent. It is important to note, that while the State does
contract out for the majority of the cost of materials, equipment,
and supplies, the benefits to the State of using Force Account
funding is garnered from savings associated with State personnel
and equipment costs.
Senator B. Stevens understood that and commented that the purpose
of his comments was to clarify that the percentages of Force
Account construction projects is actually higher than depicted. He
also noted that CTP projects in the year 2002 amounted to
approximately $340 million. For further clarification, he asked
whether projects in Southeast Alaska communities such as Juneau,
Ketchikan, Sitka, and other communities that are served by the
Alaska Marine Highway System rather than a contiguous surface road
system, would be included under the auspice of this Amendment.
Mr. Richards reiterated that the question of what would constitute
"Rural" must be addressed.
Senator B. Stevens asked the Amendment's sponsor whether the intent
of the Amendment would be to include in its Rural, off-the-road
system designation, communities in Southeast Alaska that are served
by the Alaska Marine Highway System.
Senator Olson responded that the purpose of the Amendment is to
address the high cost of transportation construction in Northwest
and Western Alaska. He stated that he would either defer to or work
with the bill's sponsor to address questions regarding Southeast
Alaska communities.
Senator Hoffman stated that the inclusion of these communities is
insignificant, as, were their inclusion to equate, for example, to
the 2002 CTP program level of $340 million, their inclusion might
increase Force Account expenditures "to a whopping 3.3 percent."
Senator B. Stevens pointed out that, "there is nothing to prevent
those projects from being included under the normal process."
AT EASE 10:00 AM/ 10:00 AM
Senator Olson stated that there is no adversarial intent behind the
offering of this amendment. Its purpose is to recognize that the
bill raises some concern and to make its impact more palatable by
furthering language that was supported in Administrative Order No.
199. He stated that the Amendment would compliment the intent of
the bill, which is to provide consideration for contractors.
Senator Cowdery suggested that adoption of this amendment could
lead to increased levels of Force Account exemptions for projects
in Rural Alaska.
Senator Olson asked whether any federal highway penalties might be
incurred were the amendment adopted. He also asked whether the
adoption of the bill in its current form might incur federal
penalties.
Mr. Richards voiced being unaware of any penalties.
A roll call was taken on the motion.
IN FAVOR: Senator Dyson, Senator Olson, and Senator Hoffman
OPPOSED: Senator Bunde, Senator B. Stevens, Co-Chair Green, and Co-
Chair Wilken
The motion FAILED (3-4)
Amendment #1 FAILED to be adopted.
DON VALESKE, Business Manager, Public Employees Local 71, testified
via teleconference from Anchorage and shared that the Committee
discussion and testimony has clarified that this bill is limited to
construction projects rather than to both maintenance and
construction projects which was his concern.
Senator Olson asked whether Mr. Valeske supports the legislation.
Mr. Valeske commented that due to the fact that the bill does not
apply to maintenance projects, he does not have a position on the
bill. However, he noted that he is supportive of local hire as it
is beneficial to local people and communities. He noted that Local
71 members were involved in the St. Mary's project.
EDEN LARSEN, President and CEO, Associated Builders and
Contractors, testified via teleconference from an offnet site in
support of the bill.
Co-Chair Wilken noted that Members' bill packets contain a written
comment [copy on file] from the Associated Builders and Contractors
(ABC).
Senator Hoffman asked the reason behind their support.
Ms. Larsen responded that ABC's "fundamental principle" is that an
"open and competitive bidding process is the best methodology for
State procurements." Limits on what the State could conduct through
the use of Force Accounts and the continuance of the established
procurement process are appropriate.
Senator Hoffman asked whether ABC's position is mindful of the fact
that this legislation would serve to lose the State $25 million
dollars in lost savings over the next six year. Continuing, he
stressed that no abuse of the system has been provided. The fact
that Force Account Construction projects have cost the State less
than three percent of the total construction budget and would save
the State $25 million dollars over the next six years makes it
difficult to understand why, in these times of a fiscal dilemma,
anyone would support this legislation.
Ms. Larsen responded that testimony has been provided to ABC
regarding the fact that many small construction businesses in off-
road system communities have gone out of business due to the
increased usage of Force Account Construction projects over the
last eight years. The cost to these communities of losing these
businesses and their year-round employment opportunities should be
a consideration in "the true costs." She noted that the
justification for using Force Account Construction funding is that
money would be saved by not being required to pay prevailing wages.
The ABC's position is that there is a reason for an established
wage scale and that this should be considered when allowing the
State to avoid the competitive bid process.
Senator Olson asked the number of people in ABC who are actively
involved in road construction.
Ms. Larsen responded that ABC has a minimum of three contractors
who are actively involved in building roads and other roadwork.
Senator Olson understood Ms. Larsen to say that some contractors
have gone out of business due to Force Account Construction.
However, he countered that the impetus behind the number of
contractors, both in rural Alaska and on the road system, being
reduced is that the number of State road construction projects in
the State have been diminishing.
Ms. Larsen noted that she is "only passing along" comments that ABC
has received from Rural contractors.
Senator Hoffman and Senator Olson asked that the names of the
businesses that have gone out of business in Rural Alaska be
provided.
Ms. Larsen stated that she would attempt to acquire this
information.
JEFF ALLING, Representative, ALCAN Builders Incorporated, testified
via teleconference from an offnet site in support of the bill.
Co-Chair Wilken asked whether the sponsor would be opposed to the
legislation being subject to a four-year termination period.
Senator Cowdery responded he would not object.
Conceptual Amendment #2: This conceptual amendment would establish
a termination date of June 30, 2008.
Co-Chair Wilken moved to adopt Conceptual Amendment #2.
There being no objection, Conceptual Amendment # 2 was adopted.
Senator Bunde moved to report the bill, as amended, from Committee
with individual recommendations and accompanying fiscal note.
There being no objection, CS SB 40(FIN) was REPORTED from Committee
with a zero fiscal note, dated March 26, 2004 from the Department
of Transportation and Public Facilities.
AT EASE 10:15 AM / 10:16 AM
SENATE BILL NO. 306
"An Act relating to the practice of naturopathic medicine; and
providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this bill, which is sponsored by
Senator Ralph Seekins, would enact an Act relating to the practice
of naturopathic medicine. Initially, consideration was given to
implementing a Board to oversee naturopathic medicine; however,
that is not now being considered. The Department of Community and
Economic Development was asked to explain the Department's Division
of Occupational Licensing flow chart, titled "Implementation of
CSSB306(FIN)" [copy on file] that depicts how licensed Naturopathic
Physicians would be monitored.
RICK URION, Director, Division of Occupational Licensing,
Department of Community and Economic Development, clarified that
the Governor Frank Murkowski Administration has no position in
regards to this legislation. Were the Legislature to adopt
regulations in regards to Naturopathic medicine, the Department
would implement supporting rules and regulations. However, the
Department has been regulating this profession and numerous others
without assistance from a Board, for approximately seventeen years
and could continue to do so absent any new legislation.
Co-Chair Wilken asked the current process through which a complaint
against a Naturopath might be reviewed.
Mr. Urion responded that the Department's investigative staff would
address the complaint, and, were it deemed necessary, it might be
forwarded to a hearing officer. A multitude of different processes,
including such things as memorandums of agreement, have been
established through which issues regarding each profession are
addressed.
Co-Chair Wilken asked whether the flow chart provided by the
Department [copy on file] would depict the process involving
naturopaths.
Mr. Urion affirmed.
Co-Chair Wilken asked that the flow chart be explained.
Mr. Urion explained that currently when a complaint is filed, the
Division's investigative staff who, based on a priority list that
heavily ranks Life/Safety issues, would determine whether charges
should be filed addresses it. Were that the case, a hearing officer
would be assigned, a trial might ensue, and the hearing officer
would render a decision including the level of punishment. This
could include such things as license removal, suspension and fines.
Were the defendant to reject the decision of the hearing officer,
they have the right to appeal to a higher court.
Mr. Urion shared that in situations in which there is a Board, the
Board would have the authority to act on the complaint.
Co-Chair Wilken asked whether the Department, in conjunction with
Naturopaths, developed the chart.
Mr. Urion concurred.
Co-Chair Wilken asked whether the Division's investigators are
trained professionals.
Mr. Urion responded that while none of the Division's investigators
are trained in any of the fields that they investigate, they are
trained investigators. He noted however, that they do consult with
the appropriate medical professional pertinent to each situation.
He noted that the Medical Board recently adopted a procedure that
specifies that complaints dealing with such things as sexual abuse,
alcohol, or drug misuse be immediately forwarded to the Division's
investigators. However, determinations regarding standards of care
complaints are determined by the Board and then forwarded to the
investigators, who could independently make a determination if they
so chose.
Co-Chair Wilken asked for confirmation that this is the current
practice relating to Medical Board.
Mr. Urion affirmed.
Co-Chair Wilken opined therefore that a procedure akin to a triage
occurs at the investigative level in that the investigator consults
with a medical professional. The investigator would receive a
complaint from a patient, and then the triage would occur in which
it would be determined whether the complaint is serious enough to
advance immediately to a hearing officer.
Mr. Urion clarified that in serious cases, the state investigator
would have the authority to make the determination. Complaints
regarding standards of care might require an investigative review
that might include a medical professional.
Co-Chair Wilken understood that an investigator would be expected
to consult with the appropriate medical professional.
Mr. Urion agreed. He stated that this is the current procedure
utilized when reviewing complaints against naturopaths.
SENATOR RALPH SEEKINS, the bill's sponsor, noted that language on
the bottom of the flow chart specifies that in the case of non-
threatening public safety issue or a Standards of Care complaint,
investigators could consult with the Qualified Trade Association of
Naturopathic Physicians (NP/QTA), which would consist of volunteers
from the field.
Co-Chair Wilken asked whether this organization exists today or
would be established by this legislation.
Senator Seekins responded that while this organization does not
currently exist, its establishment would be clearly defined in a
forthcoming committee substitute.
Mr. Urion declared that this would be an opportunity in which
government and private enterprise could work together to regulate
an industry. No professional entity would benefit from "condoning
bad behavior" within its profession.
Co-Chair Wilken summarized that the complaint process would be that
a wronged patient would go to the State, It would then be directed
to an investigator. The investigator could consult with the three-
member NP/QTA panel.
Senator Olson questioned "the wisdom" of allowing naturopaths to
have their own board, as currently the process provides an
investigator the ability to consult with professionals. In
addition, he asked whether there could be the option of having
naturopathic complaints heard by the eight-member Medical Board.
Mr. Urion voiced concern to the appropriateness of having these
complaints heard before the Medical Board due to the negative
comments the medical field has made in regard to naturopaths.
Continuing, he noted that at this point, the Division could monitor
the Naturopathic profession without implementation of a Board.
Senator Bunde countered that currently the Board of Medicine has
oversight over a wide range of medical professions including
Physician Assistants (PAs), Nurse Practitioners (NPs), Registered
Nurses (RNs), Oseopathics, dentists, and paramedics. All these
professions are included under the term "physician" and, since this
bill would expand that term to include Naturopaths, it would be
logical that they be included in those professions monitored by the
Board.
Senator Seekins responded that he would not object to the inclusion
of a naturopath on the Medical Board, were it suggested. Inclusion
of a naturopath on the Board would provide some insight to the
Board regarding Standards of Care for the profession. However, due
to the fact that naturopathic medicine presents competition,
naturopaths "have a fear that there may be some objection "from the
more recognized medical professions.
Co-Chair Wilken recalled that, until a few years ago when they were
granted voting rights, Physician Assistants were ex officio members
of the Medical Board. Perhaps this might be an option with
naturopaths.
AT EASE 10:28 AM / 10:28 AM
Senator Olson clarified earlier information regarding which
professions the State Medical Boards oversees. While it does govern
paramedics, physicians, and physician assistants, it does not have
direct regulatory oversight in regards to dentists, nurses, and
nurse practitioners.
Senator Olson also noted that when he, a medical doctor, was on the
State Medical Board, its seven-person membership consisted of five
physicians and two lay people. He subsequently supported the
representation of a PA on the Board due to their increasing numbers
in the State. He noted that the number of naturopaths in the State
is limited.
Co-Chair Wilken noted that there are currently 27 Naturopaths in
the State.
Senator Seekins countered that any board that regulates a
profession should have, as part of its membership, a representative
of each profession in order to negate such things as "hostility"
against that profession.
Co-Chair Wilken asked for confirmation that PAs were, at one time,
ex officio members of the Board.
Senator Olson specified that PAs were diligent in attending every
meeting even before they had representation on the Board. In that
regard, once they were admitted to the Board, they became voting
members. He agreed with Senator Seekins that representation at the
Board level is important.
Co-Chair Wilken pointed out that the definition of minor surgery is
included in the bill in Section 13, subsection (6), page six, line
19 and reads as follows.
(6) "minor surgery"
(A) means the use of
(i) operative, electrical, or other methods for
surgical repair and care incidental to superficial lacerations
and abrasions or superficial lesions, and the removal of
foreign bodies located in superficial tissues; and
(ii) antiseptics and local anesthetics in connection
with methods authorized under (i) of this subparagraph;
definition;
(B) does not include use of general or spinal
anesthetics, major surgery, surgery of the body cavities, or
specialized surgery, such as plastic surgery, surgery
involving the eyes, or surgery involving tendons, ligaments,
nerves, or blood vessels.
Co-Chair Wilken asked Senator Olson to address his concern
regarding allowing naturopaths to conduct "further tests."
Senator Olson voiced the understanding that one of the reasons that
naturopaths are requesting prescriptive authority is because their
position is that they have similar education and training levels to
that of medical doctors. However, while many of the initial
educational courses were the same, there was a "divergence later
on" as the foundation of the naturopathic delivery system was one
of being "basically drug free."
Senator Olson voiced that, with the care of the patient in mind,
there is concern that in the continuance of their care, limiting
prescriptive treatment to medical doctors would be appropriate to
the balance. He noted that there has been an abiding identification
within the medical profession that medical doctors prescribe
medication. In order to expand rather than restrict naturopath
prescriptive authority, it could be suggested that naturopaths
should be required to qualify for Part One, Two, and Three of the
National Medical Board examination rather than being required to
pass only Parts One and Two. Part Three is the section that tests
prescriptive knowledge. Therefore, their ability to pass all three
sections of the examination would indicate that their training was
comparable to that of a medical doctor and would allow them to have
prescriptive authority.
Senator Seekins, being respectful of Senator Olson, clarified that
rather than seeking to be recognized as medical doctors,
naturopaths are seeking to have prescriptive rights that are less
than a PA and NP. This was clarified in Amendment #1 which the
Committee during its first hearing on the bill. That amendment
inserted a new subsection into Section 11, subsection Sec.
08.45.120 on page five, line 16 that reads as follows.
(4) after becoming registered with the federal Drug
Enforcement Administration, prescribe only those controlled
substances allowed under Schedules III, IV, and V.
Senator Olson clarified that a PA could only practice medicine
under a collaborative agreement and direct oversight by a medical
doctor (MD). Were something to go wrong, the MD would also be held
liable.
Senator Bunde asked how an NP's training would differ from that of
a PA in this regard.
Senator Olson stated that while he is familiar with PA requirements
and the associated prescriptive limitations, he is unfamiliar with
the requirements for a NP.
Senator Seekins shared that he is familiar with the NP requirements
as his wife is a nurse and a close friend is a NP.
SFC 04 # 63, Side B 10:40 AM
Senator Seekins noted therefore, that NPs could prescribe all
levels of prescriptive medications as they have a higher level of
training than PAs. "It would be inconceivable" that any
practitioner … would not seek assistance from other caregivers when
encountering serious situations.
Co-Chair Wilken noted that concerns have been raised due to the
understanding that Naturopathic Doctors (ND) would not have medical
malpractice insurance. He referred the Committee to Item #3 on page
two of a letter [copy on file] dated February 24, 2004 from Dr.
Scott Luper, ND that Co-Chair Wilken had received in response to
comments in a letter [copy on file] dated February 9, 2004 that Co-
Chair Wilken had received from Tom Wilson, PA-C. The comment and
response, as written in Dr. Luper's letter are as follow.
#3. The bill is too broad. Currently one could prescribe
antibiotics to dangerous heart medications, to chemotherapy.
Allopathic M.D. would most likely not prescribe medication
outside of their specialty, as it would be considered outside
of the "standard of care". If a bill were passed a formulary
would be much more acceptable and safe.
3). Response: Mr. Wilson suggests that an ND might be tempted
to prescribe outside of their training/education and that an
MD "would most likely not" prescribe inappropriately. This is
not realistic. A good "DOC" is a good "DOC". NDs will be
liable for malpractice on par with MD's and under the auspices
of the Div. of Occupational Licensing.
DR. SCOTT LUPER, Naturopathic Doctor, testified via teleconference
from Fairbanks and clarified that NDs are able to acquire
malpractice insurance and that ND malpractice insurance is less
costly that MD malpractice insurance due to the fact that the
complaints against them are fewer. He stated that, while he pays
$3,000 a year, the majority of his ND colleagues pay between $600
and $2,000 annually.
Co-Chair Wilken surmised that NDs carry malpractice insurance in
line with their standards of care.
Dr. Luper affirmed. He noted that the standard ND medical
malpractice coverage would provide one million dollars per
occurrence and three million dollars total.
Senator Bunde surmised that MDs pay higher medical malpractice
insurance due to the fact that they write prescriptions and perform
surgeries. Therefore, he opined that ND's rates might increase were
this legislation adopted.
Dr. Luper responded that this has been investigated and it has been
determined that the rates would not increase. He further noted that
the Alaskan ND rates are comparable to those being charged in
states that provide NDs prescriptive and minor surgery authority.
Dr. Luper disclosed that in order to address the question of
safety, he had conducted a survey of states that license NDs. He
had acquired the number of ND disciplinary actions in Arizona,
Oregon, Hawaii and Connecticut. ND disciplinary actions including
such things as license suspensions and other punishing actions are
approximately half of the amount pertaining to allopathic or MD
disciplinary actions. In Arizona, for instance, the disciplinary
rate for MDs is about one percent of those licensed, and about half
a percent for NDs. Nationwide the rate for NDs is .34 percent. No
disciplinary action has occurred against NDs in Alaska during the
seventeen years in which they have been licensed in the State. This
is a reason why the rates are low and is a testament to the quality
and care provided by the profession. He clarified that there are 39
licensed NDs in the State.
BARRY CHRISTENSEN, Practicing Community Pharmacist and Legislative
Chair, Alaska Pharmacists Association, testified via teleconference
from an offnet site to voice concern on behalf of the Association's
200 plus members in regards to the prescriptive authority being
proposed in the bill for NDs. He informed the Committee that while
he heard reference to Amendment #1, he is unaware of its contents.
Co-Chair Wilken informed the testifier that Amendment #1 removed
the requirement regarding Prescriptive Schedules I and II and
retained Schedules III, IV, and V in the authority being proposed
for NDs.
Mr. Christensen addressed the position that NDs education is
"equivalent or nearly equivalent" to that of an MD because,
similarly, they also have a four-year degree. "While this may be
true in an academic sense, our membership has had little if any
interaction with naturopaths during our professional training" but
have had extensive training with PAs, NPs, and MDs "and have
developed good working professional relationships with these
professionals. This relationship is very important when working
with patients and recognizing "problems with dosing, drug
interactions and drug abuse." He questioned the fact that while the
definition of naturopathy that is included in the bill does not
include medicine, the bill would provide full prescriptive
authority to NDs. He noted that most states that allow ND
prescribing provide NDs with limited prescriptive authority. He
stated that pharmacists would be more comfortable with this
legislation were NDs required to work collaboratively with other
licensed prescriptors. Lastly, he raised concern regarding the
prescriptive authority of controlled substances, or narcotics, and
stated that control of such substances should be closely guarded.
Absent a presciptor-based narcotic tracking system, this issue
would continue to be "the number one" concern of pharmacists. He
assured that while there is no reason to believe that NDs would
abuse this prescriptive authority, increasing their availability by
expanding the number of prescriptors would provide another
potential avenue for narcotic abusing patients.
Mr. Christensen stated that while the amendment would limit ND
prescriptive authority to Schedule III, IV, and V drugs, the
majority of narcotic drugs are included in those categories.
Therefore, the Membership would continue to voice concerns.
Senator Olson asked, for clarification, the Association's position
on Amendment #1.
Mr. Christensen responded that a majority of the Membership would
continue to have problems primarily due to the inclusion of
Schedule III, which encompasses narcotic painkillers. He noted that
since he was unaware of the amendment prior to this, the membership
has not been conferred with in its regard.
Senator Olson asked the percent of patients who might be receiving
prescriptive relief from either Schedule II through V or III
through V.
Mr. Christensen responded that the majority of people who take pain
relievers are utilizing Schedule III drugs, as it is the outpatient
pain drug of choice. A written prescription is not required for
Schedule III drugs whereas one is required for Class II drugs.
Therefore, he estimated that approximately 70 percent of
individuals who are taking painkillers are taking Schedule III
drugs. Schedule IV drugs are anti-anxiety rather than painkiller
types of drugs.
Senator Bunde voiced that it would be an inconvenience were someone
to seek naturopathic care and then discover that they would be
required to go to another medical professional were a prescription
drug required to treat, for instance, high blood pressure or an
antibiotic such as penicillin. He asked what which schedule these
types of prescriptions are included.
Mr. Christensen responded that antibiotics are "not a scheduled
narcotic" and therefore are not regulated by the Drug Enforcement
Administration. They are instead classified as a prescription by
the Food and Drug Administration (FDA) and would require a
prescription. A narcotic-based pain reliever such as Tylenol #3
would be a Schedule III drug.
Senator Olson clarified that the drugs included in "Schedules I
through V are those that are directly related to the potential for
abuse by either a patient or a patient prescriptor." An antibiotic
would not fall in this category.
Senator Seekins understood that as part of a pharmacist's training,
they are taught how to recognize signs of abuse or mistakes.
Mr. Christensen affirmed.
Senator Seekins understood therefore that "even now" in the medical
profession, abuse does occur.
Mr. Christensen agreed.
Co-Chair Wilken stated that the bill would be HELD in Committee in
order to develop a committee substitute that would include
Amendment #1 and clarify language regarding the voluntary review
committee.
CS FOR SENATE BILL NO. 298(TRA)
"An Act relating to the use of off-road vehicles within five
miles of the right-of-way of the James Dalton Highway."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR RALPH SEEKINS, the bill's sponsor, stated that this
legislation would serve to address concerns regarding a letter
[copy on file], date stamped January 20, 2004 from the United
States Department of the Interior's Bureau of Land Management
received by trappers who operate trap lines north of the Yukon
river bridge.
Co-Chair Wilken stated that this legislation would allow the use of
off-road vehicles within five miles of the right-of-way of the
James Dalton Highway south of Mile 235.
Senator Seekins declared that, unless State law is changed to
accommodate the use of motorized vehicles in this area, individuals
would have a May 1, 2004 deadline to change to non-motorized access
of the area. Use of the area by trappers and others on motorized
vehicles should not be eliminated "due to a quirk in State law."
Addressing this issue in a manner that would allow continuing
access to the area on motorized vehicles is the intent of this
legislation. He stated that he has discussed this issue with
trappers, the Alyeska Pipeline Authority, and other affected users.
In order to address the variety of questions that have been raised,
he asked that the bill be referred to a subcommittee, chaired by
Senator Olson.
Co-Chair Wilken stated that SB 298 would be assigned to a
subcommittee.
Senator Bunde stated that there has been a history of over zealous
Alaska State Trooper enforcement in the affected area. He
encouraged the subcommittee to investigate the opportunity for
people to use existing mining trails and roads in the area, outside
of the Alaska pipeline corridor. He noted that there are numerous
differences of opinions regarding the legality of using these
roads.
Senator Olson stated that it is troubling that there is an agency,
and in this case a federal agency, that is working against
traditional users and is threatening to burn down cabins that often
provide shelter and have saved lives of hikers, downed pilots and
others in need of protection against the elements of nature in
remote areas of the State.
Co-Chair Wilken appointed Senator Olson chair of subcommittee.
Co-Chair Wilken ordered the bill HELD in Committee.
CS FOR SENATE JOINT RESOLUTION NO. 3(JUD)
Proposing an amendment to the Constitution of the State of
Alaska relating to an appropriation limit and a spending
limit.
This was the sixth hearing for this bill in the Senate Finance
Committee.
Senator Dyson informed the Committee that the appropriation and
spending limit formula that has been developed was based on State
budgets that had been adopted for the past several years.
Unfortunately, due to the fact that these budgets were relatively
flat, when the formula was applied, the unintended result is a
flatter budget than is practical for State operations. The Office
of Management and Budget would further explain this situation.
Co-Chair Wilken clarified that the working document is committee
substitute Version 23-LS0296\B, as amended by Amendments #1 and #4.
Following action on some forthcoming amendments, a new committee
substitute would be developed.
CHERYL FRASCA, Director, Office of Management and Budget (OMB),
Office of the Governor, informed the Committee that with the
assistance of the Division of Legislative Finance, OMB has
developed a spreadsheet titled "CS SJR 3" [copy on file] that
depicts the outcome of the currently drafted formula.
BRUCE TANGEMAN, Fiscal Analyst, Legislative Finance Division
pointed out that the formula results are depicted beginning on line
"9" which is titled "Avg Growth (existing base yrs)".
Ms. Frasca expressed that the information specifies that for fiscal
years 2007, 2008, and 2009 there would be zero annual growth, a
slight increase in FY 10 and then marginal growth in the subsequent
years. She noted that while the State has been able to control
expenses for such things as Medicaid in the near term, it is
unlikely that this would be possible in future years. A realistic
growth level for Medicaid and K-12 spending in the future would be
approximately $100 million.
Co-Chair Wilken understood therefore that the aforementioned
section of the chart depicts the outcome of the formula as
currently drafted, using an annual inflation rate of three percent
and a one percent population growth rate. In FY 06, the State would
be projected to experience an additional general fund growth of
$428 million dollars with no further gain until FY 10.
LUCKY SCHULTZ, Staff to Senator Dyson, affirmed that is correct
with the exception being that the $428 million would reflect total
appropriations minus exemptions rather than being specifically
general funds.
Mr. Shultz stated that the reason the annual growth is reflected as
zero in several of the fiscal years is that this Senate bill
contains "a no ratchet down provision." The House version of the
bill does not include this provision.
Ms. Frasca stated that the Administration is offering for
consideration the formula beginning on line 23 of the spreadsheet
titled "2 yr growth (adjusted base yrs)". This formula reflects a
$56 million increase in total appropriation growth in FY 06 and an
average of approximately $105 million going forward.
Co-Chair Wilken noted that the spreadsheet depicts four different
scenarios.
Ms. Frasca stated that in addition to the four scenarios being
depicted in a line item format section, there is a corresponding
chart format at the bottom of the spreadsheet.
Senator Hoffman understood that the Public Employees Retirement
System/Teachers Retirement System (PERS/TRS) obligation would be
approximately $56 million in FY 06. In that case, the proposed
formula would reflect flat growth. Therefore, a detailed analysis
of the PERS/TRS obligation projections should be developed in order
for the Committee to understand its impact. Particularly as the
number of retiring State employees is expected to increase in the
next few years.
Ms. Frasca stated that the numbers presented on the chart "are not
the result of an analysis of what spending could be … in terms of
spending pressures." For example, in the FY 05 budget, the
Administration covered the increase in PERS/TRS expenses by
absorbing the expenses through reductions in other areas.
Acknowledging that a formula would specify a spending limit, she
stated that the budget would continue to be under pressure and
choices would be required. This bill is not intended to allow for
uncontrolled spending, but rather would require the State to
examine how its money would be spent. There would "always be
competing wants and competing needs. This would be the challenge
going forward."
Co-Chair Wilken understood that the PERS expectation for FY 06
would be approximately $100 million.
Ms. Frasca responded that that would be the amount including school
district and local government expenses, in addition to Executive
branch expenses. She agreed that these costs would continue through
the next five years unless the State's financial market investments
were to rebound.
Co-Chair Wilken informed that a detailed PERS/TRS presentation is
scheduled for April 6, 2004.
Senator Dyson stated that in order to arrive at a workable formula,
"fiddling" with the base numbers has had to occur. He asked that
Ms. Frasca explain the changes that have been made to the base
years.
Ms Frasca pointed out that part of the challenge includes the fact
that the total spending for FY 04 has not yet been concluded, and
that the budget for FY 05 has not been finalized. Therefore,
"crafting a limit for going forward" by utilizing the look-back
mechanism is difficult.
Senator Dyson voiced that it might be that "the fiddled with
numbers" would not be far from reality.
Mr. Tangeman declared that the numbers, as depicted in the current
formula, beginning on line nine of the spreadsheet titled "Avg
Growth (existing base years)," are not too far from what is
expected. FY 06 calculations are based on FY 02, FY 03, and FY 04
appropriations which each reflect $100 million appropriation
reductions. Therefore the first year is based on years of reduced
appropriations. "Plugging set numbers for FY 04 and FY 05" was
conducted "in order to alleviate the question of what might
actually happen at the end of this Session to allow uniform
growth." Therefore, the inclusion of $100 million in appropriation
growth for FY 04 and FY 05 would probably be close to where those
budgets would "end up." This would provide a better idea of where
FY 06 would actually be. The PERS/TRS obligations for FY 04 are
approximately $3.1 billion, and the FY 05 budget submitted by the
Governor calculates that $2.9 billion would be required. This
reflects a substantial decrease. Were an amendment specifying that
the PERS/TRS appropriation for FY 04 and FY 05 be between $3.3
billion and $3.4 billion adopted, it would allow "plenty of
headroom for the PERS/TRS issue going forward" as the current
projection for FY 05 is $2.9 billion. This would allow for
increased growth going forward.
Co-Chair Wilken stated that were a forthcoming amendment adopted
that would repeal this legislation in four years, perhaps
consideration could be given to setting aside the PERS/TRS issue
for a few years.
Senator Bunde pointed out that even were a spending limit
established, the entirety of that money would not be required to be
appropriated. However, he noted that the Legislature "has never
left a dollar on the table," as such things as public pressure
would be ever-present. Therefore, he contended that the upper limit
"would also be the base."
Co-Chair Wilken acknowledged the remark.
Senator Hoffman disagreed. He stated that the State currently has a
spending limit that is substantially higher than what is being
appropriated today.
Co-Chair Wilken pointed out that the State currently has "a huge
deficit and a slush fund that allows us to do that."
Senator B. Stevens declared that were the PERS/TRS obligation to
increase to a level exceeding the limit, the Legislature could
recognize it as an "extraordinary circumstance" and address it in
such a manner "as the situation, which created it, occurred outside
the realm of the control of the Administration or the Legislature,
or control of anybody for that matter." Therefore, he asked whether
the PERS/TRS situation might qualify under the parameters of an
extraordinary circumstance definition.
Mr. Schultz responded that this question had been asked previously,
and that upon investigation, it was discovered that the State of
Connecticut specifically does not define extraordinary
circumstances as they desired the interpretation to be left up to
the Governor and the Legislature. An extraordinary circumstance has
not been invoked in that State since this directive was established
in 1992.
Co-Chair Wilken stated that further discussion regarding the
extraordinary circumstance issue must ensue.
Senator Dyson asked for further Committee feedback regarding the
appropriateness of placing a Statewide ballot measure before the
people that would be "based on numbers that have been adjusted in
order to make the formula work." While the argument is compelling,
the formula must work and be practical into the future without
being less credible. Provided no objection to this approach were
forthcoming, a new committee substitute would be developed that
would encompasses the Administration's proposal. In addition, he
noted his intention to specify a four-year termination date in the
legislation. However, he noted that at the end of this four-year
period, there would be two alternatives: the first being that the
"ineffective spending" limit that is currently in the Constitution
would be re-instituted along with the Constitutional requirement
that specifies that one-third of the budget be appropriated to
support capital projects or that those two components and the
formula terminate in four years. The second choice is his
preference.
Co-Chair Wilken suggested that the Committee consider additional
amendments and then develop a committee substitute.
Senator Bunde, responding to Senator Dyson's request for Committee
feedback, stated that he would prefer a system based on reality
rather than theory. He would also support abolishment of all three
components at the end of four years.
The bill was HELD in Committee for further consideration.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 11:27 AM
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