Legislature(2009 - 2010)SENATE FINANCE 532
03/23/2009 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB89 | |
| SB125 | |
| SB161 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 161 | TELECONFERENCED | |
| += | SB 89 | TELECONFERENCED | |
| + | SB 125 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 23, 2009
9:02 a.m.
9:02:37 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Darwin Peterson, Staff, Senator Bert Stedman; McHugh Pierre,
Liaison, Department of Military and Veterans Affairs;
Senator Joe Paskvan; Jeff Stepp, Staff, Senator Joe Paskvan;
Karen Rehfeld, Director, Office of Management and Budget,
Office of the Governor; Mike Maher, Director, Division of
Administrative Services, Department of Environmental
Conservation; Guy Bell, Assistant Commissioner and Director,
Division of Administrative Services, Department of Labor and
Workforce Development; Leta Simons, Director, Division of
Support Services, Department of Natural Resources.
PRESENT VIA TELECONFERENCE
Dale Nash, Chief Executive Officer, Alaska Aerospace
Development Corporation; Dan Fauske, Executive Director,
Alaska Housing Finance Corporation, Department of Revenue;
James Gurke, Director, Public Housing Division, Alaska
Housing Finance Corporation, Department of Revenue; Mark
Romick, Director, Planning Department, Alaska Housing
Finance Corporation, Department of Revenue; Michelle Rizk,
Budget Director, University of Alaska; Denis Wiesenburg,
Dean and Professor, School of Fisheries and Ocean Sciences,
University of Alaska Fairbanks.
SUMMARY
SB 89 "An Act relating to retirement benefits for
members of the Alaska Territorial Guard; and
providing for an effective date."
CS SB 89 was REPORTED out of Committee with a "do
pass" recommendation and with accompanying fiscal
note 1 by the Department of Military and Veterans
Affairs.
SB 125 "An Act changing the name of the Alaska Aerospace
Development Corporation to Alaska Aerospace
Corporation."
SB 125 was REPORTED out of Committee with a "do
pass" recommendation and with accompanying fiscal
note 1 by the Department of Commerce, Community
and Economic Development.
SB 161 "An Act making supplemental appropriations and
capital appropriations; amending appropriations;
and providing for an effective date."
SB 161 was HEARD and HELD in Committee for further
consideration.
SENATE BILL NO. 89
"An Act relating to retirement benefits for members of
the Alaska Territorial Guard; and providing for an
effective date."
9:03:54 AM
Co-Chair Stedman explained that the bill was first heard on
February 3 and was set aside to allow Congress and the U.S.
Army to arrive at a solution. He noted a letter from the
congressional delegation (March 18, 2009, Copy on File)
informing the committee that the benefits for the Guard will
cease and asking the legislature to provide temporary
payments until Congress resolves the issue later in the
year. Senate Bill 89 is necessary to ensure payment of the
benefits.
Senator Huggins MOVED to ADOPT Work Draft LS0432\S,
Bannister, 3/21/09.
Co-Chair Stedman OBJECTED for discussion.
DARWIN PETERSON, STAFF, SENATOR BERT STEDMAN, SPONSOR,
informed the committee that members of the committee worked
with the Department of Military and Veterans Affairs (DMVA)
to draft a new CS in light of the fact that Congress is
unable to make retirement payments until a defense
authorization bill is passed. The CS changes the payments to
interim payments until the issue is resolved. The original
bill had a set amount of $550 per month appropriated to each
guardsman; the CS takes into account the amount each person
is getting paid by the military in relation to the amount
they should be getting paid if territorial guard work was
credited. He explained that the March 20 fiscal note by the
DMVA reflects the cost of $83,500 for the payments through
February 2010, when the bill sunsets. If Congress does not
resolve the issue before the next legislative session, the
issue will need to be revisited in February 2010.
Co-Chair Stedman reiterated that the measure was intended to
bridge the payments until Congress could act.
Co-Chair Stedman removed his objection to the adoption of
the CS. There being NO OBJECTION, it was so ordered.
Co-Chair Stedman queried the administration's position on
the legislation.
MCHUGH PIERRE, LIAISON, DEPARTMENT OF MILITARY AND VETERANS
AFFAIRS, spoke in support of the legislation. He reminded
the committee that 26 Alaska Territorial Guard members will
be receiving a deduction in their federal pay. They were
receiving federal retirement pay for federal services
performed through the federal military. The Division of
Personnel of the U.S. Department of Army decided that the
law currently on the books did not fully meet the payment
requirements for the guard members and is therefore
suspending the payment for the time served in the Alaska
Territorial Guard from approximately 1942 through 1946 or
1947.
Mr. Pierre emphasized that DMVA is proud of the committee
for taking care of the elders, but expressed disappointment
in the federal government for refusing to make the payments
until the problem is corrected.
9:09:05 AM
Co-Chair Stedman asked whether the administration supports
the bill. Mr. Pierre responded that the administration
supports serving veterans.
Co-Chair Stedman pointed out that quick action was required
to make sure veterans do not miss payments. He asked if the
governor's signature was forthcoming. Mr. Pierre responded
that DMVA can get the money to the veterans who are in need.
Senator Huggins directed attention to page 2, line 10 of the
CS regarding the individual reimbursing the department [in
case of overpayment]. He asked if the department had full
confidence that individuals would make the reimbursement.
Mr. Pierre answered that the department would monitor the
situation closely and make certain that the veterans were
not put in a position to have to repay the department. The
department will also make sure veterans do not miss
payments.
Senator Huggins commented that people he had spoken to want
to do the right thing.
9:11:32 AM
Senator Olson asked how veterans could be sure that the
payments would be made in a timely matter. Mr. Pierre
assured the committee that after the bill is signed the
department would make payments as quickly as possible. He
anticipated that payments will need to be sent out in April.
Senator Olson expressed appreciation on behalf of guardsmen.
9:12:21 AM AT EASE
9:12:40 AM RECONVENED
Senator Thomas commented that $83,000 is a small amount of
money compared to the service rendered by the veterans.
Senator Huggins MOVED to REPORT CS SB 89 out of committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
CS SB 89 was REPORTED out of committee with a "do pass"
recommendation and with accompanying fiscal note 1 by the
Department of Military and Veterans Affairs.
SENATE BILL NO. 125
"An Act changing the name of the Alaska Aerospace
Development Corporation to Alaska Aerospace
Corporation."
9:14:47 AM
SENATOR JOE PASKVAN, SPONSOR, introduced his staff and asked
him to speak for the legislation.
JEFF STEPP, STAFF, SENATOR JOE PASKVAN, SPONSOR, read from
Sponsor Statement (Copy on File):
Senate Bill 125 simply seeks to change the name of the
Alaska Aerospace Development Corporation to the Alaska
Aerospace Corporation.
This name change will assist the corporation in
securing launch and other aerospace related contracts
that generate significant economic benefits to Alaska
by providing long-term, high paying, stable jobs; by
providing local economic diversity; and by creating
short-term benefits from projects and construction
activities.
The name "Development" gives the perception that the
organization is a non-profit administrative body that
simply encourages aerospace development in Alaska,
rather than an organization that owns and operates
space launch facilities that are fully developed and
capable of launching rockets.
The launch site in Kodiak is operational, functioning
and self-supporting, in that no Alaska General Fund
appropriations are needed for operations and
maintenance of the site.
Mr. Stepp added that the fiscal note for $4,500 would be
paid for with federal receipts and used for new letterhead,
stationary, logo, and website changes.
Mr. Stepp concluded that the name change would help the
st
corporation meet its new 21 century goals. The new title is
unambiguous about the corporation's capabilities and will
improve its ability to offer launch services to the national
and international aerospace market, which benefits both the
nation and Alaska.
Co-Chair Stedman commented on the size of the fiscal note.
9:17:59 AM
Co-Chair Stedman opened public testimony.
DALE NASH, CHIEF EXECUTIVE OFFICER, ALASKA AEROSPACE
DEVELOPMENT CORPORATION (testified via teleconference),
reported a recent phone call inquiring about the
corporation's status as a non-profit. He believed changing
the name would help the corporation to be viewed more
accurately.
Senator Thomas MOVED to REPORT SB 125 out of committee with
individual recommendations and the accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
SB 125 was REPORTED out of committee with a "do pass"
recommendation and with accompanying fiscal note 1 by the
Department of Commerce, Community and Economic Development.
9:19:51 AM AT EASE
9:21:07 AM RECONVENED
SENATE BILL NO. 161
"An Act making supplemental appropriations and capital
appropriations; amending appropriations; and providing
for an effective date."
9:21:18 AM
Co-Chair Stedman stated the committee's intent to have
numerous hearings on the bill. He requested that the
administration put as much information before the committee
as the administration is comfortable with. He stated intent
to work with the administration regarding which items the
administration wants included and which it does not want
included.
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, informed the committee that JoEllen
Hanrahan, a senior policy analyst for the Office of
Management and Budget (OMB) had worked extensively on SB
161. She highlighted a one-page summary with items included
and not included in SB 161 ("Federal Economic Stimulus
Funding March 20, 2009," Copy on File) as well as a
spreadsheet describing the items not in the bill. She added
that all documentation is posted on the OMB website. She
explained that department representatives would present the
projects that are included in SB 161.
Ms. Rehfeld summarized legislative history related to the
American Recovery and Reinvestment Act (ARRA), otherwise
known as the economic stimulus bill. The administration
presented the transportation appropriation bill in February
for federal highway, transit, and aviation projects. A
second appropriation was presented [March 19] for non-
transportation capital projects. Two amendments regarding
Medicaid reimbursement have been submitted through the
operating budget process, bringing the total related to
Medicaid to approximately $128 million for the FY09 and FY10
operating budgets.
9:25:28 AM
Ms. Rehfeld emphasized that the governor had not rejected
any of the funds currently in the economic stimulus package.
She stressed that the governor had been clear about her
desire for on-going discussion about items not currently in
SB 161. The governor wants to fully understand the
requirements of the specific programs as well as state
funding expectations for when the stimulus funds are no
longer available.
Ms. Rehfeld referred to rigorous oversight requirements in
ARRA.
Co-Chair Stedman asked if the administration expected the
legislature to oversee public discussion related to ARRA. He
wondered if a people around the state would be given an
opportunity to give input locally.
Ms. Rehfeld stated that the administration hoped that the
public, active, and on-going committee process would provide
opportunity to discuss the various operating and capital
requests and items in the economic stimulus package.
9:27:15 AM
Co-Chair Stedman further clarified that the administration
expected that the public process would be with the
legislature. Ms. Rehfeld agreed and stated that the governor
thought it appropriate to have the debate in the context of
the budget bills before the legislature.
Ms. Rehfeld introduced a PowerPoint presentation, "American
Recovery and Reinvestment Act (ARRA), Enacted February 17,
2009," (Copy on File). She began with a description of ARRA
(Slide 2):
· $787 billion economic stimulus package to accelerate
the nation's economic recovery
o Federal tax relief
ƒ$288 billion in tax relief between now and
close of FFY 2011
o Federal spending increases
ƒ$499 billion in additional federal spending.
Ms. Rehfeld reported that the governor had asked the
departments to carefully study the law's requirements and
determine what it would take for the state to receive funds.
Ms. Rehfeld pointed out that Slide 3 provides a visual
snapshot of the various program areas within ARRA:
· Tax relief $288 billion
· State and Local Fiscal Relief $$144 billion
· Infrastructure and Science $111 billion
· Protecting the Vulnerable $81 billion
· Health Care $59 billion
· Education and Training $53 billion
· Energy $43 billion
· Unallocated $8 billion
9:28:58 AM
Ms. Rehfeld listed the objectives of ARRA (Slide 4):
· Recovery
o Job preservation and creation
o Stabilize state and local economies
· Reinvest
o Build and repair infrastructure
o Energy efficiency and science
Ms. Rehfeld turned to federal spending timelines (Slide 5):
· 20 percent of the ARRA federal spending will occur
before October 2009.
· An additional 38 percent is projected to be spent
before October 2010.
· By October 2011, about 80 percent of the stimulus
package-related spending will have occurred.
Ms. Rehfeld described the five primary methods of federal
funds distribution (Slide 6):
· Formula: Medicaid [Federal Medical Assistance
Percentage] (FMAP), Education, Highway Infrastructure
o Limits need for new processes to receive and
expend funds
· Demand: Premium Subsidies for COBRA Continuation
Coverage, Unemployment Insurance, Food Stamps
· Competition: Broadband, COPS, National Science
Foundation
o States, Communities, Non-profits, Others
· One-Time Automatic Disbursement: Social Security
payments, Veterans & Supplemental Security Income
beneficiaries
· Federal Agency Operating and Spending Plans:
Environmental cleanup of nuclear waste sites, National
Parks construction, Defense and Veterans infrastructure
programs
Ms. Rehfeld emphasized that the bulk of stimulus money to
Alaska would be through legislative authorization and
appropriations. She explained that the demand method refers
to programs that are caseload or workload driven. The third
item consists of items that are open for competition.
Legislative authorization would be required to receive and
spend the funds. The last two items relate to the federal
government for allocating funds to the states.
9:31:13 AM
Ms. Rehfeld pointed to Slide 7, "Unprecedented
Accountability & Transparency":
· Distribution of funds through formula programs
o Existing framework for tracking and reporting
· Inspector General Funding
o Appropriations for IG [Inspector General] services
in every department
· Recovery Act Accountability & Transparency Board
· Expedited application for and obligation of funds
o State agencies continue to meet application
deadlines
· Certifications & Assurances by the State
Ms. Rehfeld recalled that the administration had assured the
public that the state would meet the timelines, so that when
the decision has been made regarding which funds to receive
and expend, opportunities will not be missed because of
failure to meet application deadlines.
9:32:42 AM
Ms. Rehfeld discussed Slide 8, "Governor Certification by
April 3, 2009":
SEC 1607 (a) Not later than 45 days after the date of
enactment of this Act, for funds provided to any State
or agency thereof, the Governor of the State shall
certify that:
(1) the State will request and use funds provided by
this Act; and
(2) the funds will be used to create jobs and promote
economic growth.
Ms. Rehfeld reiterated the governor's desire to engage the
public in a discussion regarding the stimulus money. She
stated that the governor wants to ensure that funds accepted
by Alaska will not cause unrealistic future general fund
expectations.
Ms. Rehfeld turned to "Other Governor Certifications &
Assurances" (Slide 9). She highlighted actions that were
done proactively to secure the funds:
· Unemployment Insurance $25 weekly increase
(signed February 18, 2009)
· Transportation maintenance of effort
(signed March 12, 2009 Sec 1201)
· Transportation appropriate use of taxpayer dollars
(signed March 12, 2009 Sec 1511)
· Energy - three assurances required; to meet two of
these would require changes to Alaska's regulatory
energy policy and a statewide energy building code
9:34:54 AM
Ms. Rehfeld addressed a pie chart on Slide 10 related to the
estimated allocation of stimulus dollars to state government
in Alaska. The chart does not represent dollars that may go
to municipalities or other organizations. The estimates
change as federal agencies refine allocations. Of the amount
allocated to come through state appropriations, the
administration has requested $514 million for capital
projects (55 percent) and $128.5 for Medicaid (14 percent).
There is approximately $288 million (31 percent) still
pending for operating and capital expenditures.
9:36:18 AM
Co-Chair Stedman queried the administration's goals
regarding the public process related to the funds. Ms.
Rehfeld responded that there was information on the OMB
website, including individual project requests and
descriptions for items included and excluded from the
legislation. She stated that the public and the legislature
have the information and could testify or act accordingly.
Ms. Rehfeld touched on legislation already submitted by the
administration (Slide 11):
· Total ARRA Request to Date : $642.9* million
· $262.9 Transportation HB154/SB123*
· $251.5 Non-DOT Economic Stimulus SB161
· $128.5 Medicaid FY09 & FY10 Amendments
*Transportation Bill includes request for excess
authority for contingent funding that is not included
here.
Ms. Rehfeld explained that amounts in the bill and on the
spreadsheet are different because of possible contingency
funds that could be available from other states.
Co-Chair Stedman informed the public that federal officials
have assured legislators that there is little chance of
other states not using funds. He warned against counting on
the extra funds. He did not want the public to receive mixed
messages. He stated that Alaska could expect approximately
$263 million and not $461 million.
Ms. Rehfeld agreed that clarity is important. She pointed
out that information from federal agencies is constantly
updated.
Ms. Rehfeld turned to Slide 12, "ARRA Budget Request: $642.9
million," with a pie graph representing the pieces included
in SB 161.
· Transportation: 41 percent
· Environmental Conservation water and sewer projects:
11 percent
· University of Alaska research vessel: 18 percent
· Revenue public housing items: 6 percent
· Education: 3 percent
· Medicaid: 20 percent
9:41:03 AM
Ms. Rehfeld listed issues to discuss before making budget
decisions (Slide 13):
· Policy Issues $73.2 million
o Statewide policy and code changes that effect
individuals and/or businesses
o Statute changes that impact the way a state agency
does business and may effect the public
o Permanent increased liability for the State and
employers
· Operating and Capital Issues $214.4
o One Time Funds
o Managing Expectations
o Opportunities to benefit the state that will not
increase long term costs to the state
9:42:24 AM
Ms. Rehfeld turned to the subject of energy and the
assurances required under Section 410 of ARRA:
Sec 410
(a)(1) that the state regulatory authority will seek to
implement a policy to ensure utility financial
incentives are aligned with helping customers use
energy more efficiently.
(a) (2) requires that the state, or the applicable
units of governmental that have authority to implement
building codes will implement:
· building energy code for residential buildings
that meets the International Energy Conservation
Code
· building energy code for commercial buildings that
meets standards ANSI/ASJHRAE/IESNA standards
· a plan for achieving compliance with the above
energy codes within 8 years of enactment in at
least 90 percent of new and renovated buildings,
the plan shall include training and enforcement
programs and measurement of the rate of compliance
each year.
(a)(3) that the grants will be prioritized, "to the
extent practicable," toward energy efficiency and
renewable energy programs.
Ms. Rehfeld highlighted code requirements for residential
and commercial buildings. She stressed the requirement for
90 percent compliance within an eight-year period. She
thought there were questions about how best to achieve
compliance to the code requirements. She referred to
conflicting information from the U.S. Department of Energy
(USDOE) regarding which types of energy the assurances are
attached to. The administration has asked USDOE for written
guidance.
Ms. Rehfeld described references in the law that are subject
to interpretation. In one place, ARRA clearly stipulates
that funds allocated through the state energy program ($28.6
million) are linked to assurances. In another place, ARRA
references all three programs as being subject to the
assurances.
Ms. Rehfeld referred to application timelines and emphasized
that the state did not want to miss deadlines. She noted
that the administration has been told through email
correspondence that the March 23 deadline for an initial
application will not need to be met. The May 12 deadline is
in the USDOE written guidance. The administration is working
with USDOE to sort through the deadlines.
9:44:59 AM
Co-Chair Stedman queried the status of codes affecting
programs like the weatherization program. Ms. Rehfeld
answered that there have been different interpretations from
USDOE; the administration has requested written
clarification to aid the budget decision-making process. She
stated that if the assurance applies to the state energy
program, there would need to be discussion about what would
be required statutorily to implement an energy code.
Co-Chair Stedman asked if the finance committees had been
copied the letters sent to USDOE. Ms. Rehfeld replied that
OMB had been working with finance committee staff and
sharing email correspondence.
Co-Chair Stedman informed the public that the correspondence
referred to was with the legislative budget and audit
consultant. Ms. Rehfeld added that the discussion included
correspondence to the finance committee staff as well.
Co-Chair Stedman asked for more information regarding
timelines.
9:47:18 AM
Ms. Rehfeld reiterated that the administration is trying to
get written guidance from USDOE.
Ms. Rehfeld listed considerations related to a statewide
energy building code (Slide 16):
· Public debate on energy building code
o Cost versus potential savings to homeowners
o Cost to enforce at state and local levels
o Local control concerns
o Cost to the state to continue funding renovation
programs for buildings that are not built to
energy efficiency standards
Ms. Rehfeld turned to another area of discussion needed
related to the unemployment insurance (UI) program. The base
period used to calculate eligibility would need to be
changed if the law is changed (Slide 17):
An estimated increase in the number of individuals that
could be eligible for unemployment insurance would
result in:
o $2 million annual impact on UI Trust fund
o $10 per worker cost to the employer
o .03% employer rate increase
Ms. Rehfeld emphasized that legislation would be required;
approximately $15.6 million in federal funds to the state
would be impacted.
9:49:41 AM
Ms. Rehfeld directed attention to ARRA items that are still
pending, depicted by a pie graph on Slide 18. She pointed
out that the largest portion is approximately $171 million
under the Department of Education and Early Development. The
largest subcategory under education, the fiscal
stabilization fund at around $93 million, would be allocated
to school districts based on Title I eligible students.
There is a formula for distributing the funds to school
districts.
Ms. Rehfeld explained that at this point only 18 percent
has been included in SB 161 for education or job training
projects. Within the stabilization fund are assurances that
the governor would need to make to receive the funds, such
as career and technical standards and data assessment
systems to track the progress of students, teacher quality
and distribution assurances, and effective intervention for
low performing schools.
Ms. Rehfeld added that education funding is allocated for
Title I: special education funding, technology funds, food
assistance programs, services for homeless students, school
lunch program, and funds from the National Endowment of the
Arts that would go to the Arts Council.
9:52:29 AM
Co-Chair Stedman asked whether all the funds had to be taken
or if part could be taken. Ms. Rehfeld stated that specific
guidance from the U.S. Department of Education would be
required regarding the stabilization funds. She did not know
if the funds could be separated. She guessed there would be
challenges accepting one part and not the other.
Ms. Rehfeld returned to the pie chart on Slide 18. Under the
Department of Revenue, the largest piece is related to
energy programs. A smaller piece is related to the Child
Support Enforcement Division. She described the item as
similar to Medicaid; the federal government is extending a
regulation currently in place to allow the state to count
federal incentive payments as part of the match. At the time
the operating budget was put forward, the administration was
not aware of the extension, so additional general funds were
included to make up for the loss of federal funds. She
anticipated there would be more discussion and possible
amendment to the budget.
Co-Chair Stedman referred to communication between OMB and
the legislature. He recognized the complexity of the
situation and stated intent to work with OMB to look at the
items one at a time. He assured the public that more detail
would be presented some time in the future.
9:55:38 AM
Co-Chair Stedman queried the status of the state's building
codes relative to ARRA requirements. He wondered which items
would need to be addressed with legislation.
DAN FAUSKE, EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE (testified via
teleconference), responded that residential structures with
Alaska Housing Finance Corporation (AHFC) loan activity must
adhere to certain standards. He thought Alaska led the
nation in terms of energy statutes, especially with the
Building Energy Efficiency Standards (BEES). The standards
set forth by BEES are restricted to AHFC; outside lending
institutions such as Fannie Mae and Freddie Mac are not
forced to adhere to the standards if they lend money in the
state. One of the questions AHFC has had is how a statewide
building energy code will affect outside lenders. He did not
know if the lenders would have to adhere to the standards as
well as statewide entities such as AHFC. There was a
question whether the state energy program, weatherization
program, and block energy grants (totaling approximately $54
million) would fall under the domain of the state energy
grant. He thought the state needed an answer to the question
before accepting the funds.
9:59:10 AM
Ms. Rehfeld continued with the pie chart on Slide 18. She
listed the types of funds under the Department of Labor and
Workforce Development: the change in the alternate base
rate, other employment services and training funds, and
vocational rehabilitation and independent living services.
For the Department of Health and Social Services, the
largest piece is the childcare development block grant
program ($3.2 million); other pieces include electronic
health records funds and funds for food stamp, immunization,
and infant learning programs. There is also a small piece
for senior meals that is not included in SB 161.
Ms. Rehfeld noted that under the Department of Public
Safety, there are components of the justice assistance
grants, grants to the Council on Domestic Violence and
Sexual Assault, and Service Training Officer Program grants.
Some of the components are competitive; if the department is
successful competing for the grants, there would be an
opportunity through Legislative Budget and Audit to come
before the legislature. There are questions regarding using
state general funds for on-going funding for any new
positions created through the competitive grants.
10:01:22 AM
Ms. Rehfeld reported that under the Department of Commerce,
Community and Economic Development, items pending discussion
include programs for Serve Alaska, expansion of community
development block grants, and community services block
grants. She noted that the two block grants would be capital
items.
Ms. Rehfeld explained that there was a question regarding an
existing program for diesel emissions under the Department
of Environmental Conservation. The department would need
granting authority in order to be able to receive the funds
and then grant them to non-state entities.
Co-Chair Stedman summarized the items the administration had
presented as operating items not requested pending
additional budget decisions and items not requested dealing
with AHFC. He asked how the administration envisioned the
finance committee facilitating the public discussion needed
to meet the deadline. Ms. Rehfeld responded that the
committee could look at and get public testimony for both
the items included and not included.
Co-Chair Stedman asked if OMB would then come forward with
the items in line item form so that each one could be
addressed. He gave the example of the senior lunch program;
a policy call could be made to include or exclude any item.
10:04:37 AM
Ms. Rehfeld acknowledged that the suggested approach could
get the information out. She reiterated the administration's
concerns regarding on-going expectations for funding. She
reminded the committee that that the individual line items
were posted on the OMB website and suggested that the
information already provided could be used for the
discussion.
Co-Chair Stedman asked if the administration would come
forward on each item in order to provide clarity for the
public. Ms. Rehfeld agreed with the suggested course of
action.
Co-Chair Stedman added that the finance committee had been
concerned about the growth of the operating budget and were
tuned to possible future impacts. He stated that the
committee also recognizes that the operating account is up
25 percent over the past three years; the decisions about
the stimulus funds will not be made in a vacuum.
Ms. Rehfeld agreed with the importance of talking about each
of the items carefully.
10:07:13 AM
Ms. Rehfeld discussed concerns about accepting federal funds
on Slide 19, "One Time Funds":
· ARRA Funds Used For:
o Salaries may delay, but not prevent, layoffs
o Expansion of services to Alaskans will abruptly
end
o Public Safety capacity increases will create on-
going position costs
o Permanent changes in programs may create
expectations for continuing programs once the
federal funds are no longer available
Ms. Rehfeld turned to the subject of accountability (Slide
20):
· Significant responsibility is incumbent upon the State,
even for pass through funds
· Accountability attaches to the Governor
o Ladder certifications down to sub-grantees
o Tracking of expenditures
o Reporting requirements
Ms. Rehfeld emphasized the importance of following
guidelines for accountability. She stated that the inspector
general function has been strengthened in unprecedented
ways.
Ms. Rehfeld pointed out that the accountability attaches to
the governor. The governor has to certify that the process
is done correctly. The ladder certifications could go down
to the recipient level. For example, if the state chose to
put forward all the education funds that are not currently
before the committee, there could be additional requirements
to school districts through the Department of Education and
Early Development that the assurances be met. The funds
cannot be used to supplant other funds.
10:09:55 AM
Senator Huggins encouraged the administration to view the
accountability requirements on Slide 20 as minimum
requirements that the state aims to exceed.
Co-Chair Stedman noted for the public that Legislative
Finance has been working on a separate fund code for ARRA
funds in order to track impacts on future budgets. He wanted
to be able to clearly separate the stimulus funds out. He
agreed that the federal requirements should be viewed as
minimum requirements.
Ms. Rehfeld added that tracking numbers were being set up at
the federal agency level as well. She stressed the
significant reporting requirements.
10:12:05 AM
Ms. Rehfeld directed attention to Slide 21, "Responsible
Questions Before Committing Alaska":
· Are we fully utilizing the federal funds that are
currently available to us?
· Is the state ready and willing to accept these as
onetime funds or will there be an expectation that the
state will backfill the hole when federal funds are
gone?
· Is the public fully informed and in concurrence with
proposed increases to the state operating budget?
10:12:43 AM
Ms. Rehfeld discussed potential benefits to the state of
using stimulus funds targeted for one-time activities and
items. Slide 22 listed some examples:
· Intensive teacher training
· Expand student and teacher use of technology in schools
· Obtain state-of-the art assistive devices that reduce
barriers to obtaining employment, learning, or living
independently
· Equipment, technology and software upgrades to sustain
or enhance services in education, public safety, and
workforce training programs
· Rapid deployment of workforce development strategies on
work skills and work preparedness for targeted
populations
· Modifications to facilities for safety, efficiency,
improved durability and longevity
Ms. Rehfeld reiterated the administration's desire to avoid
creating future operating expense for the state.
10:13:42 AM
Ms. Rehfeld provided information regarding the OMB website
and links on Slide 23, "ARRA Web Site Alaska.gov/Recovery":
· Alaska Federal Economic Stimulus Information
· Links to Federal Recovery.Gov Web Site
· Grant Information
· Alaska Legislation/Appropriation Bills and Back Up
· Department Fact Sheets
10:15:23 AM AT EASE
10:20:39 AM RECONVENED
Co-Chair Stedman stated his intent to sort through the
spreadsheet of included items accompanying SB 161. He noted
that excluded items would be covered with the departments at
a later date.
10:21:41 AM
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT
Ms. Rehfeld spoke to the Department of Education and Early
Development's (DEED) item from the spreadsheet, "Economic
Stimulus March 19, 2009" (Copy on File).
Item 2 State Fiscal Stabilization Fund
$20,699,000
Ms. Rehfeld explained that the item has not been allocated
to a specific project; the item consists of flexible funds
under the stabilization program. The administration suggests
using the funds for education and training. Some of the
items considered are one-time funds that would assist DEED
in providing statewide service through technology and
distance delivery improvements. There is also a significant
deferred maintenance list.
Co-Chair Stedman asked when the draft allocation would be
brought before the committee. Ms. Rehfeld replied that the
administration could bring suggestions, but the intent was
to keep the item open for discussion with the legislature.
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
MIKE MAHER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC), provided an
overview of five items for DEC.
Item 4 Alaska Clean Water Stimulus
Projects include sewer collection, treatment, discharge
and water quality related projects. These funds will be
allocated and administered by the Municipal Grant and
Loan program.
$23,637,000
Mr. Maher reminded the committee that roughly $23 million
had been included for clean water projects when DEC
testified on its capital budget. The stimulus item would add
funds and allow the department to move forward on the
priority list for the larger municipalities.
Co-Chair Stedman asked if there would be an attempt to
modify the list. Mr. Maher responded that that was his
understanding. Co-Chair Stedman clarified that the priority
list was accessible on-line for the public.
Item 5 Alaska Drinking Water Stimulus
Projects include drinking water source, treatment,
storage, and distribution. These funds will be managed
by the Municipal Grant and Loan program and the
Drinking Water program.
$19,500,000
Mr. Maher added that the stimulus funding would allow more
communities to be included sooner.
Item 6 Leaking Underground Storage Tank Stimulus
Projects include those that involve the cleanup of
leaking underground storage tank sites. There are
currently 501 open Leaking Underground Storage Tank
(LUST) sites in Alaska, and the Contaminated Sites
program plans to use the funds to cleanup 10-20 so-
called "orphan" sites (sites where the responsible
party cannot be located or is not viable).
$1,000,000
Mr. Maher detailed that the sites would be chosen from a
priority list based on need.
Item 7 Village Safe Water Stimulus
Projects include water and sewer infrastructure
improvements. Funds are being allocated by the Indian
Health Service using a statewide database of water and
sewer project needs in Native communities. These funds
will be managed by the Village Safe Water program.
$24,260,000
Mr. Maher explained that the appropriation would go through
the department's safe water program for villages. There is
roughly $700 million of need in the state; the item would
add to the roughly $90 million in the governor's budget. He
added that a list could not be provided as the projects will
come through tribal assistant grants. A list has been
offered to the Indian Health Service. He understood that the
projects would be chosen from that list.
10:27:10 AM
Co-Chair Stedman asked for the list to be sent to the
finance committee as well. Mr. Maher agreed to send the
list.
Item 8 Water Quality Planning Stimulus
Projects include natural conditions statistical
analysis implementation tools, grants for stormwater
projects, environmental assessments, and green
infrastructure assessments.
$240,000
Mr. Maher pointed out that the money would be distributed
through grants or contracts. The program is on-going. In
addition to the 40 percent pass-through requirement, ARRA
requires that 20 percent be spent on green infrastructure,
water, and energy efficiency improvements.
Co-Chair Stedman asked if the items represented extra money
going to the projects on the lists. Mr. Maher responded in
the affirmative and added that the department was not trying
to supplant anything that is currently in the governor's
budget. In addition, the village safe water program will
create jobs for people in smaller communities.
Co-Chair Stedman asked if the projects could be under
contract in the allotted time. Mr. Maher responded that they
could.
10:28:58 AM
OFFICE OF MANAGEMENT and BUDGET
Item 9 ARRA Statewide Competitive, Discretionary and
Incentive Grants
Executive Branch placeholder for future grant awards in
order for departments to be able to comply with the
Legislative Budget and Audit Committee review
provisions of AS 37.07.080(h).
$240,000
Ms. Rehfeld described the item as a $1 million placeholder
for the executive branch in the event that agencies are
successful in competing for a capital grant not listed in
the legislation.
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT
GUY BELL, ASSISTANT COMMISSIONER AND DIRECTOR, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, introduced the department's item.
Item 10 Additional Funding for AVTEC [Alaska
Vocational Technical Center] Culinary
Building Replacement and Cafeteria Upgrade
Funding from the Economic Development Administration to
support the increased costs of construction and
equipment for AVTEC's Culinary Building Replacement and
Cafeteria Upgrade project.
$3,000,000
Mr. Bell informed the committee that the Alaska Vocational
Technical Center building was in Seward and that the
previous year the legislature had appropriated over $8.6
million to the department for the project. The cost
estimates came in higher; without the stimulus money the
facility could not be completed. The building would be ready
for occupancy in late 2010.
Mr. Bell noted that the department had applied for the funds
from the Economic Development Administration; the
application is still under review.
Co-Chair Stedman asked if the item could offset the FY10
capital budget. Mr. Bell replied that if the general fund
portion were reduced, the level of upgrades would not be
achieved. Co-Chair Stedman clarified that the answer to the
question was no. Mr. Bell replied that the short answer was
no.
10:31:37 AM
DEPARTMENT OF NATURAL RESOURCES
LETA SIMONS, DIRECTOR, DIVISION OF SUPPORT SERVICES,
DEPARTMENT OF NATURAL RESOURCES, testified regarding the
department's item.
Item 11 Forestry and Fire Economic Stimulus - Fire
Fuels and Forest Management
This project will provide for hazardous fuels reduction
and wood to energy projects that will minimize the rash
of wildland fire to homes and community infrastructure
while providing wood energy and employment.
$2,500,000
Ms. Simons described the item as a tree-cutting project that
will provide for hazardous fuel reduction. The department
has submitted the projects to the Forest Service for
consideration. The department has been informed that it will
receive $1.5 million. She did not believe the actual project
list had been approved.
Co-Chair Stedman asked for more information.
Senator Thomas asked if the project would be similar to
other projects in the Interior such as one removing black
spruce near public structures. Ms. Simons responded that
there are a variety of projects being submitted; the funding
will be passed through to local governments. Local
governments have already submitted applications for various
projects. There are various cutting projects to eliminate
hazardous fuels in areas where it is possible and turn some
of the wood into woodstove fuel. She did not yet know where
the projects would actually be.
Co-Chair Stedman asked when the list would be available for
review. Ms. Simons did not know, but she expected it soon.
She added that the projects have short turnaround as far as
implementation. From the time the funding is rewarded, some
of the projects are seven-day implementation and others are
thirty-day implementation. She hoped to have more
information in the next ten days.
10:34:19 AM
Senator Huggins asked if the projects would be done using
current personnel. Ms. Simons replied that the department
could use its firefighting crews. Mostly the department
expected to pass the funds to municipalities; in many cases
the municipalities would hire the department for the work.
The fire fighting crews would be utilized prior to the fire
fighting season.
Senator Huggins asked if a new person would be hired for
supervision of the projects. Ms. Simons was not aware of
additional need for administration.
ALASKA HOUSING FINANCE CORPORATION
JAMES GURKE, DIRECTOR, PUBLIC HOUSING DIVISION, ALASKA
HOUSING FINANCE CORPORATION, DEPARTMENT OF REVENUE
(testified via teleconference), introduced the first two
items for Alaska Housing Finance Corporation (AHFC).
Item 12 Capital Fund Program
This program provides funding for the capital and
management activities of Public Housing Agencies and
will be used to help renovate and modernize public
housing units. Funds will be distributed competitively
to Public Housing Authorities nationwide.
$1,200,500
Mr. Gurke explained that there was a competitive allocation
for the capital fund program of $1 billion nationwide. The
corporation anticipates the item sum based on the formula
allocation. He said there is not much detail on the U.S.
Department of Housing and Urban Development (HUD) webpage
about the nature of the competition, but the information
should be available soon.
Co-Chair Stedman asked when the department would have a more
accurate number so that the committee could decide whether
the item should be included or excluded from the bill. Mr.
Gurke replied that the specifications should be available in
a few weeks.
10:37:13 AM
Item 13 Capital Fund Program (CFP) - Formula
This program provides funding for the capital and
management activities of Public Housing Agencies and
will be used to help renovate and modernize public
housing units. Funds will be distributed to grantees
that received funding in FFY08.
$3,307,000
Mr. Gurke explained that nine unfunded projects have been
identified throughout the state. Many of the projects are
deferred maintenance projects. Three projects in Anchorage
cover painting, boiler replacement, and substantial concrete
work. There is a project in Fairbanks to rebuild a fourplex
that was burned down. Another Fairbanks project is for
repair. A project in Ketchikan addresses accessibility and
roof repair at a senior housing complex. In Bethel there are
two projects with substantial floor replacement of 117 units
of public housing as well as the leveling of the buildings.
Finally, there is a project in Nome replacing doors and
improving weatherization for 32 units.
Co-Chair Stedman queried the ability of the items to offset
capital appropriation items. Ms. Rehfeld replied that
generally stimulus funds cannot be used to supplant other
budget items.
MARK ROMICK, DIRECTOR, PLANNING DEPARTMENT, ALASKA HOUSING
FINANCE CORPORATION, DEPARTMENT OF REVENUE (testified via
teleconference), provided an overview of the next items.
Item 14 Emergency Shelter Grants (ESG)
This program provides foreclosure prevention and re-
housing, case management and social services,
renovation, major rehabilitation, or conversion of
buildings for use as emergency shelters or transitional
housing, shelter operating costs, and related
activities.
$1,144,000
Mr. Romick explained Item 14 as an existing federal program
administered by HUD. The funds would be used to bolster the
existing emergency shelter grant system in Alaska. The funds
could be used for major rehabilitation or conversion of
buildings for use as emergency shelters or transitional
housing. The regulations governing the ESG program stimulus
package came out on March 19; the department is going
through them to ensure there will be no difficulties. He did
not think there would be an issue in terms of timing. There
will be a competitive process between now and the September
deadline to commit funds. The department anticipates being
able to easily allocate the entire amount.
Item 15 Home Investment Partnerships
This program expands the supply of affordable, low- and
moderate-income housing and to strengthen the ability
of the state to design and implement strategies to
achieve an adequate supply of safe, energy-efficient,
and affordable housing.
$5,490,700
Item 16 Low-Income Housing Grants in Lieu of Tax
Credits
This program allows taxpayers to receive a grant from
the Treasury Department in lieu of low-income housing
tax credits. So, the state's housing agency would
receive a grant up to a maximum of 85% of 40% of the
State's low-income housing tax credit allocation in
lieu of credits. The grant would apply to each state's
2009 low-income housing tax credit allocation.
$28,500,000
Mr. Romick reported that Items 15 and 16 came about as a
consequence of the collapse of the low-income housing tax
credit market. The use of the tax credit is contingent on
corporate individuals having income. Many of the large users
of the tax credit program do not have much income or have
many tax credits already due to losses, causing the value of
the tax credit to drop 30 percent in an eight-month time
period. The two programs are designed to address projects
that were on the waiting list but would not move forward as
a result of the collapsing equity markets.
Mr. Romick explained that there are several projects
eligible for the funds under the item; the majority of them
will collapse if the funds do not become available. The
projects are in Hooper Bay, Fairbanks, Kodiak, Palmer, and
Anchorage.
Mr. Romick provided more information on Item 16, pointing
out that AHFC has the ability to exchange up to 85 percent
of 40 percent of the state's low-income housing tax credit
allocation, or as much as $28 million, for the purpose of
sustaining existing tax credit projects.
10:43:07 AM
Mr. Romick added that the funds would be used for the 2009
tax credit projects that were awarded in January 2009. The
projects will be ready for construction summer of 2009,
assuming the funds are available.
MICHELLE RIZK, BUDGET DIRECTOR, UNIVERSITY OF ALASKA
(testified via teleconference) explained the next item:
Item 17 UAF Alaska Region Research Vessel Additional
Receipt Authority
The American Reinvestment and Recovery Act directed $3
billion to the National Science Foundation (NSF) to
enable U.S. investment in America's scientific
enterprise. Of this funding, NSF will direct $196
million to the University of Alaska Fairbanks (UAF) for
the construction of the Alaska Region Research Vessel.
In FY05, UAF was given receipt authority up to $80
million for NSF funding to purchase a new research
vessel. Since this time the NSF funding has increased
by $116 million to accommodate inflation and changes in
scope of work over the past few years.
$116,000,000
Co-Chair Stedman queried the expected on-going maintenance
and operation costs of the vessel and how the university
planned to cover them. Ms. Rizk replied that NSF has
obligated $10 million annually to cover the operating costs
of the ship when the ship becomes operational. Non-NSF
scientists will pay user fees to utilize the ship. The
National Science Foundation will have the ship built; if UAF
operates the ship, the economic benefit to Alaska is
maximized through creating jobs, Alaska purchases, and
competitive research advantages for the state.
Co-Chair Stedman asked when the ship would be built. Ms.
Rizk responded that the ship was expected to be operating in
2013. The university is currently in the RFP process.
10:46:14 AM
Item 18 UA Economic Stimulus Federal Receipt
Authority Competitive, Discretionary, and
Incentive Grants
University of Alaska placeholder for future grant
awards. The University of Alaska plans to pursue
economic stimulus grant funding opportunities from
various federal agencies. The main areas of focus will
be energy, research, technology, and health.
$1,000,000
Ms. Rizk explained that Item 18 was a capital grant
placeholder for the university. She noted that research
projects are temporary in nature and carry no on-going
funding needs.
Senator Huggins questioned the discharge regulations that
would apply to the research vessel.
DENIS WIESENBURG, DEAN and PROFESSOR, SCHOOL OF FISHERIES
AND OCEAN SCIENCES, UNIVERSITY OF ALASKA FAIRBANKS
(testified via teleconference), answered that the vessel
would be operated under Coast Guard regulations. The
National Science Foundation operates all research vessels in
an approved manner. The vessel has certain obligations and
abilities to take care of the discharge in a way that is
environmentally sensitive. Such provisions have been a part
of the design process of the vessel.
Co-Chair Stedman asked for information regarding how the
university will have the ship qualify for discharge. Mr.
Wiesenburg replied that the information would be provided
for the committee.
Co-Chair Stedman wanted to know if additional costs were
incurred because of changing requirements. Mr. Wiesenburg
responded that the increased costs have been because of the
increased complexity of the design of the ship. The design
was lengthened to provide better seakeeping capability and
scientific capability. The National Science Foundation also
added contingency funds in their request to Congress that
were included in ARRA.
Co-Chair Stedman asked for more detail regarding discharge
costs. He requested backup for the committee. Mr. Wiesenburg
answered that the information would be provided.
Item 21 UAF Alaska Region Research Vessel Additional
Receipt Authority prior year fund source
change
Add $80 million in Federal Economic Stimulus Funds and
remove $80 million of Federal Receipts to the
appropriation made in sec. 2, ch. 159, SLA 2004, page
54.
Ms. Rizk explained that the item changed the fund source.
10:49:51 AM
Co-Chair Stedman asked if the new ship would meet the
discharge standards comparable to those of cruise ships. He
wondered how National Oceanic and Atmospheric
Administration (NOAA) and U.S. Coast Guard discharge
criteria compared to cruise ship criteria.
Ms. Rehfeld added that the only other item on the
spreadsheet was a statement in section four regarding the
one-time nature of the appropriations.
SB 161 as HEARD and HELD in Committee for further
consideration.
10:51:30 AM
ADJOURNMENT
The meeting was adjourned at 10:50 AM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS SB 89 - Work Draft.PDF |
SFIN 3/23/2009 9:00:00 AM |
SB 89 |
| 2009-03-18ATG Letter to AK Joint Armed Services Committee.pdf |
SFIN 3/23/2009 9:00:00 AM |
SB 89 |
| Economic Stimulus Sectional March 19, 2009.xls |
SFIN 3/23/2009 9:00:00 AM |
SB 161 |
| SB 161 OMB Presentation.ppt |
SFIN 3/23/2009 9:00:00 AM |
SB 161 |
| Economic Stimulus Program Funding Summary March 20 2009.pdf |
SFIN 3/23/2009 9:00:00 AM |
SB 161 |
| Economic Stimulus Not Included Op and CIP items 3-22-09.pdf |
SFIN 3/23/2009 9:00:00 AM |
SB 161 |
| SB89-DMVA-VS-3 20 09 Pg 1-2.pdf |
SFIN 3/23/2009 9:00:00 AM |
SB 89 |
| OMB Economic Stimulus Summary As of March 22 2009.pdf |
HFIN 3/24/2009 8:30:00 AM SFIN 3/23/2009 9:00:00 AM |
HB 199 SB 161 |