Legislature(2007 - 2008)HOUSE FINANCE 519
01/24/2008 01:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Fy2009 Budget Discussion and Follow-up | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT
HOUSE & SENATE FINANCE COMMITTEES
January 24, 2008
1:09 P.M.
CALL TO ORDER
Co-Chair Chenault called the Joint House & Senate Finance
Committees meeting to order at 1:09:58 PM.
HOUSE MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas Jr.
SENATE MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Fred Dyson
Senator Kim Elton
Senator Charlie Huggins
Senator Donald Olson
Senator Joe Thomas
MEMBERS ABSENT
Representative Richard Foster
ALSO PRESENT
David Teal, Director, Legislative Finance Division; Karen
Rehfeld, Director, Office of Management and Budget
SUMMARY
^FY2009 BUDGET DISCUSSION AND FOLLOW-UP
1:11:23 PM
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, spoke to reconciliation of the
th
fiscal budget summary presentation, December 10. She
commented there had been disagreement on those numbers and
requested that David Teal, Director, Legislative Finance
Division, provide an overview of the spreadsheet prepared
by that Division. (Copy on File). She mentioned areas of
difference.
1:13:06 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
referenced the three versions of the budget scenario before
the Committee. He agreed that progress had been made
during discussions with OMB. He referenced Page 1 [Common
Format]. The differences for FY08 indicate the Public
Education Fund as an adjustment to the authorization, no
longer showing it as revenue. When the Legislature left in
July 2007, there was a $530 million dollar deficit [Line
33]. The second change in the summary is the Energy Fund,
previously classified as a supplemental spending
appropriation. Now it is clear that it is set-up to be an
endowment and moved to transfers. Everything listed below
Line 51 has been categorized as a transfer, which are
appropriations with no dollars leaving the State.
Senator Elton said it was difficult to lump the
Constitutional Budget Reserve (CBR) in with the
transportation, energy and public education endowment fund
needs. He asked why the CBR had been placed in that
category. Mr. Teal explained that no dollars would
actually be leaving the State Treasury.
Senator Elton maintained that the CBR is a savings account,
not a transfer account. Mr. Teal noted that that entire
group had been labeled transfers" but agreed it is fair to
call it a savings account.
1:16:28 PM
Senator Elton stated for the record that the Legislature
has encouraged Alaskans to think of the CBR as a rainy day
account" and that he was not prepared to change that.
1:17:03 PM
Representative Gara asked if the $530 million dollar
deficit included monies used for education & the savings
accounts. He asked if the State had spent money for
services greater than received. Mr. Teal explained that
the original summary counted dollars that "sat" in the
Public Education Fund as revenue; however, it was never
legislative intent to spend that money. Classifying those
dollars as revenue would indicate that it is available to
spend. The summary attempts to highlight the actual cash
flow.
Revenue from FY08 was expected to be $3.5 billion dollars
as indicated on Line 6, Page 1. The Legislature spent $4.1
billion dollars as indicated on Line 32, Page 1. Mr. Teal
added that fortunately, additional funds came in the amount
of $3.2 billion dollars. The total revenue received was
actually $6.7 billion dollars, now providing a surplus of
$2.6 billion dollars indicated on Line 38. The Legislature
is now facing deliberation on how to dispose of that $2.6
billion dollars. There no longer is a deficit.
1:20:10 PM
Representative Gara asked if that amount was intended to
include expenditures for public education. Mr. Teal said
no. What is counted as expenditure is the amount from the
Public Education Fund that was actually spent in FY08 as
indicated on Line 11, and in the amount of $973 million
dollars. More dollars were placed into that fund.
However, what is shown as funding is the actual amount
distributed to the schools.
1:21:16 PM
Mr. Teal addressed FY09 consideration, explaining that LFD
had worked with the Administration to reformat the numbers.
The major changed items from the original summary not
included as either capital or operating expenditures by OMB
are:
• New legislation, Line 14 in the amount of $155
million dollars;
• Amendments to the operating budget, Line 15 in the
amount of $41 million dollars;
• Oil and gas investment credits, Line 22 in the
amount of $200 million dollars; and
• Capital amendments, Line 30 in the amount of $10.5
million dollar.
Mr. Teal noted that OMB & LFD are now in agreement that
those numbers should be classified as FY09 expenditures.
Disagreement exists in the changes column as OMB has
indicated an increase of $39 million dollars; however, when
adding the totals, it provides different numbers.
1:23:51 PM
Ms. Rehfeld expressed that there are two key differences in
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the current discussion from the December 10 fiscal summary
presentation, which are the treatment of the tax credit and
the issue of supplemental funding. When Governor Palin
initially announced the budget plan, she included some
proposed additional fiscal expenditures for FY08. Those
requests will now be included in the supplemental bill.
Ms. Rehfeld reported that OMB had presented both FY08 and
FY09 on the same document, to be used as a comparison
point. She acknowledged the new starting point. It was
known there would be supplemental funding needed
specifically for the Senior Benefits Program and oil tax
credits. OMB placed that credit below the line because it
was considered both an investment and a credit, being
somewhat neutral revenue. The amount indicated on Line 32,
Page 1, is $459.6 billion dollars, prepared by the
Legislative Finance Division (LFD) as compared to the
number from the Administration summary with the
difference being $150 million dollars, represented by the
tax credit. There is no agreement on how to address the
tax credit, although, suggested it be revenue neutral.
Compared to the OMB summary, the number was a $150 million
dollars tax credit, not including supplemental placeholder
in the amount of $50 million dollars.
Ms. Rehfeld maintained that the Governor's intent was clear
th
in the December 10 presentation regarding the proposed
budget, including additional expenditures not before the
Committee.
1:27:01 PM
Senator Stedman delineated his concerns regarding the
credit issues indicated on the top line; he thought they
should be gross revenue but are shown as net. Line 22,
Page 1, indicates the oil and gas investment credits for
the small producers. He reiterated that gross revenue had
been understated and offset by the 20% capital tax credit
taken. He recommended that number be adjusted for greater
transparency.
1:28:51 PM
Ms. Rehfeld advised that there has been on-going
conversation with Department of Revenue to make certain
that the treatment of those numbers remain consistent and
be either net or gross.
Mr. Teal explained the two issues:
• The first issue is the credits taken by the majors,
used as the tax is turned in. What LFD indicates as
revenue is actually the net of the major's credits
as deducted from their tax payment. He hoped that
the Department of Revenue would further explain the
numbers.
• The second issue is the investment credits for the
non-majors. They do not owe tax and it is not
considered revenue that has an off-set. When a
credit is paid, it is not a refund of taxes paid but
rather an appropriation reimbursing them for the
investments made.
1:31:07 PM
Senator Stedman commented that cross referencing the
numbers was confusing. He stated that for the State to
offer a transparent plan, the numbers must be clear. Mr.
Teal reiterated that OMB would be speaking with the
Department of Revenue to address that concern. The
situation exists now because the need to show the credits
is new. Under a gross tax system, the credits were
indicated as revenue; there were no tax credits, hence the
number was simple. With the State now offering a net
profits tax, the Department of Revenue will need to change
their forecast procedure. He recommended that the
Legislature make the request to the Department rather than
LFD.
1:33:05 PM
Mr. Teal referenced Page 1, indicating that the agency
operating appropriations increased by 13% total, with an
11% increase in agency budgets and a 22% increase in the
statewide portion of the operating budget.
He asked what the Legislature really wants to control
either the entire budget or to focus only on the agency
operations. It has been presented as perating with two
splits.
Ms. Rehfeld suggested addressing the issues on a statewide
basis. From the public perspective, it might be
difficult to judge what is in an agency request versus the
operating budget. She did appreciate the "grouping"
recommendation.
1:35:45 PM
Senator Elton asked if the Administration would support
moving Revenue Sharing out of the Capital Budget. Ms.
Rehfeld advised that the appropriation would be moved to
the Capital Budget in the Governor's budget proposal.
Co-Chair Chenault referenced the statewide formula
programs; he worried about moving each into their own
category. He anticipated that the public will miss the
formula funding projects that continue to grow. He urged
that "real numbers are simple to understand. By breaking
down State spending into the three categories of General
Funds, Capital Funds and other funds", allows more room
for confusion of the actual costs. He reiterated that
Alaskan want to know how much revenue the State actually
has and how much of that is being spent.
1:40:19 PM
Co-Chair Hoffman questioned the on-going disagreements
regarding the supplemental funding requests. He maintained
that classification of expenditures should reflect accurate
costs. Ms. Rehfeld countered that the Administration did
identify the proposed supplemental expenditures in their
FY08 budget numbers; hence, the 12/10/07 presentation
appears different. She pointed out that the LFD numbers do
not include those items. She reiterated that the
Governor's package was comprehensive. Mr. Teal indicated
that information is addressed on Page 2 of the handout.
Co-Chair Hoffman believed that costs for the supplemental
funding requests would exceed the $50 million dollar amount
included in the Governor's proposal. Ms. Rehfeld
acknowledged that the numbers are difficult to predict; she
admitted that the amount was probably conservative.
1:43:59 PM
Representative Hawker applauded the current dialogue,
attempting to make the numbers more comparable. He
questioned the 9% decrease in the K-12 education funding.
He realized Line 14 addresses the issue, but requested
further testimony for the record.
Mr. Teal instructed that the 9% decrease is a result of a
FY08 showing the total cost of K-12 education; the FY09
budget highlights what current law specifies is paid to the
schools. In FY08, the formula had been enhanced by $48
million dollars for district cost factors and $21 million
dollars for school improvement grants. Each was a one time
item for FY08 and outside the Public Education Fund.
In current FY09 law, school improvement and district cost
funding factors were not included. Line 14, FY09
legislative funding proposed $155 million dollars of which,
$141 million of those dollars would implement the task
force recommendations to restore the $50 million dollars
for district cost factor consideration. School improvement
grants are replaced by increases to the Base Student
Allocation (BSA) in the amount of $200 million dollars;
intensive need increases totals another $141 million
dollars, which would be added to the $885 million. The
recommended dollars to be spent on K-12 education do not
include:
• The direct appropriations to the Teachers Retirement
System/Public Employees Retirement System (TRS/PERS)
retirement systems made on the behalf of the school
districts, in the amount of $206 million dollars; or
• The school debt reimbursement.
Mr. Teal indicated that the number listed on Line 11 was
vastly understated. He added that the amount proposed on
Line 14 still does not provide the real numbers spent on
education.
Representative Hawker appreciated the inclusion of the
footnotes, which better clarifies that language for the
layperson. He added that the Administration's 12/10/07
presentation was complicated for most anyone to understand.
1:48:56 PM
Ms. Rehfeld compared the numbers presented on 12/10/07 by
the Administration versus the numbers currently on the
table in the amount of $478.7 billion dollars. In the
12/10/07 report, each of those numbers are also indicated
it the report before Committee members including revenue
sharing, education and new legislation funding precisely
laid out. She agreed it was confusing.
Representative Hawker interjected that the Administration
had capitalized on "holding the line on the budget",
highlighting a 1% increase to the operating budget, an
indication that is not accurate or hones, not conforming to
reality. He stressed that it is not fair to structure a
presentation so that the average person does not understand
the details. He maintained that the format proposed by LFD
is more clear and reasonable. Ms. Rehfeld responded that
the focus had been the bottom line number of 4%, the
difference between the tax credit and the supplemental.
1:52:18 PM
Senator Stedman echoed concerns voiced by Representative
Hawker that the numbers provided by the Administration were
a disservice to the public. He pointed out that the
operating budget has substantially grown and that the
numbers should accurately reflect the State's position.
Senator Stedman encouraged cleaning-up the funding source
issues. The media has locked into concerns surrounding the
General Fund. He concurred that the overhead costs should
include federal funds. The Senate intends to "clean-up"
the incongruities for the public's clarity.
1:55:56 PM
Co-Chair Meyer noted concern with the inclusion of "other
funds" throughout the operating budget. Those are funds
typically used in the capital budget. He recommended the
focus be on the operating budget. In order for the process
to be more clear, dividends should be placed back into the
capital budget.
1:57:31 PM
Representative Kelly added concern with the placement and
identification numbers to the public, which have glossed
over the seriousness of the operating budget increases.
The proposed funding is not sustainable. He emphasized the
need for real numbers given to the public; he maintained
that education funding remains a genuine statewide problem,
reiterating the situation is critical for Alaska.
2:01:49 PM
Mr. Teal continued with the overview. He agreed that the
fiscal summary is confusing, advising that it is a budget
document, which requires year's of experience to
understand. The handout does attempt to compare it in an
appropriate & understandable manner. He added that OMB
agrees with the budget for FY09, as presented.
2:03:25 PM
Mr. Teal delineated the changes where OMB attempted to
build in a supplemental. The disagreement originates
because LFD uses the July fiscal summary as the base, using
the statistics of where the Legislature left the budget at
the end of session and using that as the starting point.
LFD compared the FY09 operating budget proposal to that
th,
base. OMB uses the base as of the December 10
presentation, which builds in additional spending. The
Legislature has not yet accomplished that and are some of
the options currently being faced by the Legislature. Mr.
Teal recommended that the base used be the one in place in
July.
Mr. Teal explained that if the Governor anticipates
building the supplemental into the FY08 base, the action
will increase the amount of FY08 spending. Providing the
FY09 number should indicate a difference between FY08 and
FY09, and would then appear smaller.
2:05:18 PM
Mr. Teal advised that highlighted Line 45 had been zeroed
out and placed into Line 22, putting it back into the FY08
base. The argument is that the Legislature passed the
credits and they must be paid, building it back into the
base. Sometimes, those actions result in large
supplemental funding requests.
Mr. Teal referenced Senior Care. The Legislature did
convene in Special Session and increased FY08 costs by
$18.5 million dollars, which happened after July, 2007.
The amount moves from supplemental Line 42 to the formula
line programs on Line 12, an action which changed the
comparison. He reiterated the argument to include
supplemental FY08 spending in the base and at that time,
the FY09 supplemental could be built into the FY09 spending
plan. No one knows what the FY09 supplemental will be, but
to assume that $50 million dollars be used as a
"placeholder" is not an accurate estimate. A proper base
of comparison is what the Legislature did last year and
adjusting that for vetoes. A correct FY09 budget would be
the Governor's request before inclusion of the supplemental
funding request.
2:07:37 PM
Representative Crawford thanked Representative Hawker for
clarifying the issues and requested a more simple
explanation of hidden costs.
2:08:56 PM
Representative Hawker addressed the difficulty of providing
supplemental activity information. He emphasized the need
to move the $18.5 million dollars into the FY08 operating
budget management plan in order to be able to accurately
evaluate the budget proposal. To compare the two budgets
with the FY09 budget and including that item with the FY08
budget not indicating that spending is confusing. During
Special Session, a bill was passed with the understanding
that the amount would be included and would not be
st
considered supplemental funding. The 1 chart attached,
illustrates the amount without the dollars and shows an
increase in the formula programs. He agreed that 19% is a
much smaller amount than 23%, but that is the more accurate
number.
Representative Hawker recalled many previous years of large
supplemental requests, creating an inaccurate account of
the budget. He encouraged more genuine supplemental
activity restraint.
2:12:17 PM
Ms. Rehfield reported that the Department of Corrections
budget has been a challenge. She listed several concerns
with inmate health care and staffing, acknowledging that
some improvements are being made.
Representative Hawker requested an opinion by LFD in the
"truth in budgeting". Mr. Teal advised that in order to
attain a "true supplemental" requires funding a budget at
the level required. He recalled a time when Senator Green
made the decision to eliminate supplemental budgets except
for unforeseen overruns. Supplemental budget funding
decreased that year.
2:16:19 PM
Senator Stedman recommended that cross-year funding
mechanisms be eliminated, which he believed contributes to
distortion in budget spending. He applauded discussions on
a new process being put in place to clean up the process.
2:18:40 PM
Senator Hoffman suggested that the confusion surrounding
the budget rests with the Legislature. He recalled a
process in the past in which moving funds looked like a
budget reduction. He maintained that in the past, the
Legislature has made the process more complicated. He
echoed sentiments of moving forward with more clear intent.
2:20:07 PM
Representative Gara addressed the State's obligations:
• Save money during times of high oil prices;
• Study what works and continue with that; and
• Investigate items that do not work and change the
way they are done.
Representative Gara commented that the presentation has
been both helpful and frustrating. He agreed that it is
not helpful to use inaccurate numbers. He referenced Page
1, pointing to the 11% increase to General Fund funding
while adding in the "other" funds, adjusting the number
$1.2 to $1.364 billion dollars, approximately a 15%
increase.
Mr. Teal consulted that General Funds are not the only
important funds to consider. The Legislature must consider
all State funding. He referenced sources of other funds
such as the student loan proceeds, a return of dollars to
the General Fund capital. There is no good answer for why
each item is not classified as General Fund revenue. Many
of those funds have been reclassified as other funds; the
process has slowed the appearance of the general fund
budget decline. For the public, the press and during the
subcommittee process, the focus tends to be on the affect
to the General Fund.
2:24:50 PM
Representative Gara emphasized that regardless of how the
funds are segregated, it is all State spending. He asked
Ms. Rehfeld if the Administration was still at about an 8%
increase. Ms. Rehfeld said yes. Mr. Teal interjected that
when there is an 8% change, there must be a base. The
issue is how to come an agreement on the common base when
comparing those numbers. Senior Care is a good example,
which was funded without a fiscal note.
Representative Hawker maintained that the conversation has
been essential and observed that the word "fund" has a few
different meanings. The complexity & confusion illustrate
a point, clearly stated in the constitutional foundation
that there shall not be dedicated funds. Many issues exist
because the Legislature has found ways to get around that
language. He urged that the budget process remain close to
the use of a single pot of dollars, leading to greater
honesty in budgeting.
2:29:30 PM
Senator Elton related that the Governor plans spending in
different ways; pointing to the Renewable Energy Fund & the
Transportation Fund. It might be called "smart spending
but it remains spending and using of State dollars. He
indicated confusion with the use of "transfers" to the
Public Education Fund, the Renewable Energy Fund & the
Transportation Fund. He maintained that the "lump"
spending in with the Constitutional Budget Reserve (CBR),
distracts from the source.
2:31:35 PM
Mr. Teal informed that LFD does publish budget reports
addressing total State funds. Those reports combine
information on General Fund and non-duplicated other funds
in order to provide greater clarity in actual State
spending.
2:32:29 PM
Mr. Teal stated that Page 3 of the handout represents the
legislative view of the Governor's plan [it is not the
Governor's plan]. Changes were made to keep the
definitions consistent.
• $6 million dollars of capital projects were moved
into the operating budget, considered to be
operating items.
• There was $35 million dollars of corporate dividends
moved from debt service to customary use in the
capital budget.
• Also, included are the student loan dividends,
directed into non-formula operations and moved to
the capital budget.
• $9.6 million dollars was moved from an appropriation
to the Department of Law from the Capital Income
Fund placing General Funds into the operating and
spending capital income fund in that space.
Mr. Teal pointed out that there is no net impact; he urged
further consideration of the true costs of doing business.
Following a legislative education funding mechanism for K-
12, education would then be funded one year in advance; the
Governor proposed $1 billion dollars education funding for
FY09. The anticipated need for FY10 for education is $1.1
billion dollars. To reflect true costs, requires bumping
the Governor's proposed up to $1.1 billion dollars.
He continued, retirement costs are at approximately $40
billion dollars, in which the Governor proposed putting
$450 million in for FY08 and reducing contributions in
FY09. The true costs of doing business in FY09 would
require adding the $40 million back in, requiring a cost
increase of $148 million dollars. He mentioned the
understated fuel costs for FY09. The restatement of the
Legislature view spends more money and means that the
$150 million dollar deposit to the CBR would not happen.
Mr. Teal advised that the above mentioned view is
appropriate if legislators want to look at the true cost of
doing business in FY09.
2:38:38 PM
Ms. Rehfeld pointed out that the Governor's interest was to
provide a comprehensive plan including the amounts
necessary for public education, should her proposed three
year plan be implemented. She indicated the
Administration's appreciation addressing how to save the
surplus for future short falls. She added that the
Governor intends to look closely at forthcoming amendments.
2:40:05 PM
Senator Stedman requested guidance when addressing the
capital account and that relationship to revenue sharing.
He hoped to avoid similar vetoes, which occurred last year.
Ms. Rehfeld noted the difficulty the Governor had in
determining last year's capital budget, a process which
must include work within the State agencies and their
budgets. The Administration attempted to stick with core
service issues & priority areas such as education & the
water and sewer infrastructure. The Governor does not have
the ability to evaluate one community's project need over
another. Ms. Rehfeld was optimistic that last year's
problems would be avoided.
2:43:28 PM
Senator Stedman asked about the Administration's definition
of "earmarks. Ms. Rehfeld explained that technically,
earmarks have not been defined. The State does have the
option of using federal criteria for earmarks, to determine
community and State priorities, if local matching funds
exist.
Senator Stedman asked if a Department of Transportation and
Public Facilities project in a village district would be
defined as an earmark. Ms. Rehfeld responded that through
the Department's process, the federal highway system works
down through the transportation plan need list to determine
if a project should be included.
Senator Stedman reiterated the question. Ms. Rehfeld
addressed the priorities used for ranking the projects.
Senator Stedman asked if the current process for requesting
city projects was a waste of time. Ms. Rehfeld replied
that it was never a "waste of time" and that there was
priority projects as proposed by the Legislature included
in the Capital Budget.
Senator Stedman inquired the allocation percentages of the
Administration's projects versus those of the Legislature
funding in the Capital Budget. Ms. Rehfeld stated that
dollar amount has not been identified. Senator Stedman
requested further information on the percentage amounts
allocated. Ms. Rehfeld added, the Governor recognizes a
need for revenue sharing.
2:49:00 PM
Senator Dyson commented on earmarks, while noting concerns
with the inclusion of intent language throughout the
budget. He maintained that case law shows that the
Legislature has the right to determine how money is
appropriated and discussed previous evaluation of missions
and measures. Senator Dyson addressed obfuscation and who
the perpetrators to the State are. He applauded the work
done by Ms. Rehfeld and Mr. Teal.
2:53:54 PM
Co-Chair Meyer commented that Page 3 provides pertinent
information for the Legislature. He noted that the
indication is a 15% increase in the operating budget and a
12% overall increase, comparing that to the Governor's
proposed 4% increase.
Co-Chair Meyer requested that guidelines be provided to the
Legislature for preparing the capital budget in order to
prevent future vetoes such as last year. He hoped future
miscommunications could be prevented.
2:56:46 PM
Ms. Rehfeld agreed.
Senator Elton reiterated his understanding of the review
process used for community projects. Ms. Rehfeld gave
examples of statewide programs, whereby, the communities
could apply for projects. She suggested sticking to the
core areas the Governor has outlined. Senator Elton
understood the process; however, pointed out that there are
many projects that do not fit neatly" into categories. It
does not seem fair to veto those requests. He emphasized
the importance of having a review process in writing.
Ms. Rehfeld explained it would be difficult to review a
project if it had not come through a State run program
evaluation team. After the budgets are passed, then the
Administration must review all accompanying documentation
associated with that request.
3:01:29 PM
Representative Gara echoed sentiments expressed by Senator
Elton. He stated the Administration does damage to the
State governing through "sound bites". He commented the
Governor will have a difficult time passing the budget
since she created an expectation that it is not genuine and
honest. He requested more information on the real numbers.
Ms. Rehfeld countered that the concern exists on an
th,
impression of the budget presented on December 10which is
not accurate. She maintained that the presentation was
clear, however, there is confusion on how those differences
were handled.
Representative Gara pointed out that the Administration had
highlighted the 4% increase in the General Fund fully aware
that the increase was actually 8%. He acknowledged
temptation to use the smaller number, but such action does
not help the budget process.
3:05:00 PM
Senator Hoffman referenced the Statewide Transportation
Improvement Program (STIP) projects and planning associated
with those projects. He worried about eliminating projects
that are resting on the threshold. It is wasteful use of
energy, particularly when all criteria has been met. He
admitted that there was a project in his district that
falls into such a category and asked reconsideration of it.
3:08:56 PM
Representative Thomas stressed that most capital projects
are necessary funding needs and that the Legislature must
stick together when those vetoes come up. He pointed out
that his district had made requests for matching grants for
water and sewer issues, which were vetoed.
Representative Joule pointed out that capital requests
originate from legislators understanding the needs of each
of their districts. Legislators need to agree on a process
for coming to agreement with the Executive Branch on those
requests.
3:12:30 PM
Senator Stedman commented on the health, life and safety
criteria used by the Governor for justification to
determine last year vetoes. The obligation of
legislators is beyond the constitutional mandates. He
urged greater flexibility and balance within each
department and community involvement to lift the standard
of living, especially for children and seniors. It is the
obligation of each elected official to address those
inequities. He warned that hoarding dollars is criminal
and that the capital budget should drive the economy.
3:17:02 PM
Senator Dyson did not think that the Legislature should
relinquish responsibility to delegate funds whether through
the capital or operating budget. He reiterated that the
Legislature should determine how the capital dollars are
spent, not the Governor.
Representative Kelly appreciated the discussion. He
encouraged that the future of Alaska be sustainable and
hoped that a shift in the base could occur at this time.
He inquired which page of the handout addresses such
options.
Mr. Teal explained that there is not much difference
between the three sheets - the difference being whether
public education is funded for one or three years. The
Governor's plan to put three years ahead for education does
not drain the entire fund; however, if there is sufficient
revenue, money would continue to be placed into the Public
Education Fund.
Representative Kelly commented that there is a big
difference between a prepaid expense, savings and forward
funding education. He urged that Sheet 3 be adopted. The
goal of forward funding education for one year should be
supported. He stressed that current oil prices are not
sustainable.
Representative Kelly concluded his testimony addressing the
PERS/TRS liability. He urged that a 25-year amortization
be used to make the public aware of the situation.
3:26:09 PM
Mr. Teal clarified that pre-funding education does not make
any difference. Having a three year balance does not
change the amount of money that flows out. The formula
essentially never goes down. The school districts want to
know how much more they will get each year, which provides
them certainty. He stressed that it is not a balance of
funds.
Ms. Rehfeld emphasized the Governor's intention was always
to continue prefunding the next year education budget.
3:28:06 PM
Representative Crawford pointed out a portion of the
capital budget vetoed last year to the Fire Island project.
He questioned what the Governor's intent now was with that
project. Ms. Rehfeld did not have any details, but knew
that Alaska Energy Authority (AEA) & Alaska Industrial
Development Export Authority (AIDEA) were working on a
proposal. She did not think the work would be completed
this session; it is not included in the current budget.
3:31:01 PM
Representative Hawker referenced Sheet 3, hoping that it
did not include endorsement of any new dedicated funds. He
hoped there was genuine communication occurring at this
meeting between OMB and LFD. He acknowledged that the
th
numbers proposed in the December 10 budget outline were
accurate; however, the issue remains that the associated
publicity was not honest. It is important to illustrated
what is savings and what is not. The intent should be to
get on track for fair & accurate budget presentations
without distorting reality.
Ms. Rehfeld acknowledged that progress has been made, yet
disagreed with the characterization made by Representative
Hawker.
3:33:56 PM
Senator Stedman stated that the Senate intends to make the
system more transparent. The Senate Finance Committee will
work earnestly with the Office of Management and Budget &
Legislative Finance Division, attempting to make the system
more accurate.
ADJOURNMENT
The meeting was adjourned at 3:34 P.M.
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