HOUSE BILL NO. 327 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." DEPARTMENT OF REVENUE Co-Chair Hanley referred to the proposed $492,800 thousand dollar appropriation for a Telecommunicaitons Disaster Recovery System. PETER BUSHRE, CHIEF FINANCIAL INVESTMENT OFFICER, DEPARTMENT OF REVENUE explained that the system would take advantage of new fiber optic cable links between Juneau and the lower 48 states for high-speed transmission of financial data. He emphasized that the Alaska Permanent Fund Corporation needs a way to continue financial activity if Juneau is cutoff from the rest of the nation. He explained that data would be transmitted, daily to a storage site in Seattle that could be used if communications are not available from Juneau. He added that the Department of Revenue's Treasury Division could also use the cable link. Co-Chair Hanley clarified that funding would be used to lease cable space. Mr. Bushre added that funding would also be used to purchase equipment and engineer the hookup. In response to a question by Representative Davies, Mr. Bushre observed that the capital expense would be recovered in six years. After the capital expense there would be and additional operating cost of $166 thousand dollars for the first year. The annual cost for subsequent years would be $46 thousand dollars. BILL JOHNSON, INFORMATION TECHNOLOGY SPECIALIST, ALASKA PERMANENT FUND CORPORATION explained that GCI is laying the cable this summer. The Department of Revenue approached GCI for an estimation. Representative Martin referred to the $7.7 million dollar appropriation for low income housing weatherization. JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF REVENUE provided members with a handout on the weatherzation program (copy on file). He noted that total authorizations since 1979 amount to $90,784,168 million dollars. He observed that 27,642 homes were weatherized during this time. He emphasized that the program is ongoing. He added that the program also provides safety improvements. Co-Chair Hanley asked if Alaska Housing Finance Corporation (AHFC) has a year 2000 computer problem. (Some computer systems were not programmed to go beyond the year 1999.) Mr. Bitney noted that their operating request includes funding to address the year 2000 problem. He added that their software is outdated. In response to a question by Co-Chair Hanley, Mr. Bitney noted that this is the first year that the Senior Housing Development program appropriation has identified specific projects. Prior year appropriations were made as a lump sum. He observed that grants were ranked and scored. Representative Martin referred to past grants for the Alaska Craftsman and Home Energy Rating Programs. Mr. Bitney noted that it is the Corporation's intent to release FY 98 funds through competitive bids. The Corporation is pursuing billings from a prior grantee. That grantee cannot participate in any Request for Proposals (RFP) or grants that the Corporation makes available. Two designated grants, for $300 thousand dollars each, were vetoed in FY 98. An additional grant of $600 thousand dollars was appropriated. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION explained that Congress did not reauthorize the Intermodal Surface Transportation Efficiency Act (ISTEA). Instead, they extended ISTEA for an additional 6 months. Approximately $100 million dollars will be available to the state of Alaska until May 1, 1998. If no congressional action is taken, the State may get the unobligated balance of $95 million dollars. If Congress passes legislation the state of Alaska could receive approximately $300 million dollars. Co-Chair Hanley summarized that under the worse case scenario the State would receive approximately the same amount as FY 98. In response to a question by Representative Davies, Ms. Slagle clarified that there is a 10 percent state match requirement for ISTEA. General fund dollars are also needed for non-participating expenses that the federal government does not cover. Co-Chair Hanley referred to the proposed United States Army Corps of Engineers projects. He asked if the State received authorization for the current fiscal year beyond what was appropriated. Ms. Slagle noted that there was an over authorization. Co-Chair Hanley asked for further information regarding the FY 98 and FY 99 levels. Ms. Slagle explained that the requested level of authorization for the Department of Transportation and Public Facilities' equipment fleet is the same as for previous years. She noted that light duty vehicles are purchased every two years to reduce administrative costs. She added that the purchase of white, light duty vehicles has lowered costs and allowed a higher resale price. Co-Chair Hanley referred to the proposed International Airport Revenue projects. He noted that there is proposed legislation to increase the bond capacity at the (Anchorage) airport. He questioned if the appropriation should be included in the legislation and the budget. DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR noted that the Administration is still addressing the issue. Ms. Slagle pointed out that the project was presented to the air carriers as a bonding package. She noted that the air carriers would have to be contacted if the legislation is not enacted. Representative Martin requested back-up material regarding the bonding package. Ms. Slagle noted that increased landing and terminal rental fees would pay the debt service. Co-Chair Hanley asked for a break down of appropriations not related to the terminal expansion project. He assured Ms. Slagle that the Conference Committee can address the fiscal note if the legislation is enacted. Co-Chair Hanley asked for a list of projects with additional authorization under the U.S, Army Corps of Engineers that were turned down last year. He questioned if the list is prioritized and whether it is an estimate. UNIVERSITY OF ALASKA MARY LOU BURTON, DIRECTOR, BUDGET DEVELOPMENT, UNIVERSITY OF ALASKA clarified that the appropriation for deferred maintained is the University's number one priority. The other two projects do not require general fund. The Small Business Development program would be funded through Alaska Industrial Development and Export Authority (AIDEA). Physical Education Facility Design and Construction for the Juneau Campus would be funded through university receipts. Receipt authority would be used to seek grants or loans. The facility would be repaid through user fees. DEPARTMENT OF PUBLIC SAFETY Co-Chair Hanley referred to the proposed $600 thousand dollar appropriation for APSIN redesign and implementation. KENNETH BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION noted that the project would use a combination of federal and state funding. He noted that they do not have a year 2000 problem. He stressed that the project would replace an application that was written in 1984. Co-Chair Hanley referred to the proposed $700 thousand dollar appropriation for the Academy Expansion. He clarified that the appropriation is in addition to the $1.4 million dollar appropriation for housing. The total cost is approximately $2.1 million dollars. In response to a question by Representative Mulder, Mr. Bischoff explained that the Academy is funded through the operating budget. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGMENT AND BUDGET, OFFICE OF THE GOVERNOR observed that the Administration submitted a FY 98 capital request for construction of a women's wing. The appropriation was not approved. Co-Chair Therriault asked for back-up on the Academy's FY 98 request. (Tape Change, HFC 98 - 17, Side 2)