SUMMARY INFORMATION HB 55 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." HB 55 HELD in Committee. Co-Chair Larson presented members with a FY 93/94 Spending Plan prepared by the Legislative Finance Division (Attachment 1). He reviewed Attachment 1. He noted that Attachment 1 includes roll-forward funding and settlements to the State of Alaska prior to July 1, 1992. Representative Martin asked if RPL's authorized by the Legislative Budget and Audit Committee on January 8, 1993 are included in adjustments to revenue. Co-Chair Larson interjected that there are no settlements included in the adjustments to revenues. MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION clarified that revised programs will be included in the 1 conference committee reports. Co-Chair Larson noted that FY 94 revenues are based on the Department of Revenue's mid scenario fall 1994 forecast. He pointed out that FY 94 revenues minus FY 94 anticipated expenditures result in a $25.4 million dollar deficient. Co-Chair Larson provided members with a handout from the Legislative Finance Division summarizing the Governor's FY 94 Operating Budget (Attachment 2). He presented members with a handout from the Legislative Finance Division, Analysis of FY 93 Authorized to FY 94 Governor's Request General Funds Only (Attachment 3). He concluded that the formula programs have increased by $16.9 million dollars (including supplementals.) He added that non-formula programs for FY 94 will exceed FY 93 by $20.8 million dollars. The total FY 94 request is $37.7 million dollars above FY 93 authorized. Co-Chair Larson pointed out budget amendments will add $8.8 million dollars in formula general fund dollars and $5.9 million in non-formula general fund dollars. He noted that an additional $5 million general fund dollars will be needed as a result of HB 158. The supplemental request if approved will add $11.1 million dollars in formula programs and $29.4 million dollars in non-formula programs. He concluded that the total FY 94 budget would be $100 million dollars above the FY 93 authorized budget. Representative Navarre stressed the importance of inclusion of FY 93 supplementals in calculating FY 93 authorized totals. He spoke against across the board cuts. Representative Martin suggested that there is waste in government spending that can be addressed through further reductions. He agreed with Representative Navarre that supplemental appropriations and RPL appropriations by the Legislative Budget and Audit Committee should be included in calculating final FY 93 authorized levels. He suggested that funding reduced by the Conference Committee was funded during the interim by the Legislative Budget and Audit Committee. Representative Navarre emphasized that the FY 93 Conference Committee held all their deliberations in public. He pointed out that, for the first time, the Conference Committee budget was lower than the House or Senate version of the budget. He stressed that he has worked to remove the opportunity for "back door" approaches to funding. Co-Chair Larson reiterated that the FY 94 requested level is above the FY 93 authorized level. 2 Representative Navarre commented that there is no category in government called "fat and inefficiency". Co-Chair Larson interjected that a seven member subcommittee has been created to consider HB 56, Formula/Mandated Programs. The subcommittee consists of Co-Chair Larson, Co- Chair MacLean, Representative Grussendorf, Representative Hanley, Representative Navarre, Speaker Barnes and Representative Moses. Co-Chair Larson discussed the procedure to be used by the Committee during budget closeouts. He explained that subcommittee chairmen will present the subcommittee's recommendations. The Governor's FY 94 Proposed Operating Budget will be used as the base. House Finance Committee members will vote on the subcommittee recommendations. Any components objected to by a member will be held open. Amendments must be submitted in written form. He stressed that potential amendments should be indicated at the time of the subcommittee closeouts but that they will be acted on at a later date. He stated that components closed would need to be reopened in order to amend. Representative Navarre stressed the importance of maintaining flexibility to offer amendments. DEPARTMENT OF ADMINISTRATION Department of Administration Subcommittee consists of Representatives Larson, Kott, Green, Brown and Hoffman. Co-Chair Larson provided members with a summary of the Department of Administration House Finance Subcommittee's proposed decrements (Attachment 4). He reviewed Attachment 4. He noted that the subcommittee's recommendation is $400.00 hundred dollars over their target reduction level. * Longevity Bonus Administration, $5.0 thousand dollar reduction. Subcommittee Chair MOVED to adopt the subcommittee's recommendation, Longevity Bonus Administration, $5.0 thousand dollar reduction. There being NO OBJECTION, it was so ordered. * Pioneers Homes, $389.9 thousand dollars unallocated reduction This represents a 1.3 percent reduction. Subcommittee Chair Larson MOVED to adopt the subcommittee's 3 recommendation, Pioneers Homes, $389.9 thousand dollars unallocated reduction. Representative Navarre OBJECTED. Co-Chair Larson stressed that other senior programs have been cut while pioneer homes have been held harmless. He noted that it is the subcommittee's intention to reduce funding to pioneer homes in order to prevent further reduction to senior programs. Representative Navarre asked if deferred maintenance would be reduced. Co-Chair Larson agreed that deferred maintenance may be affected. Representative Navarre asked if it is the intent of the subcommittee to allow the Department of Administration to have discretion in applying the reduction. NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION stated that deferred maintenance for the pioneer homes is generally included in the capital budget. She emphasized that deferred maintenance would be affected if funding was not available for interim repairs. She stressed that each home would choose to apply reductions to different areas of their budget. Representative Navarre WITHDREW HIS OBJECTION. Representative Grussendorf OBJECTED. Commissioner Usera was unable to specify the area of reductions. She emphasized the need for a thorough assessment. The component was HELD open. (Tape Change, HFC 93-35, Side 1) Representative Brown noted that the Mental Health Trust Board has recommended that $821.1 thousand dollars be appropriated for care of alzheimer victims. Subcommittee Chair Larson agreed that this request will be discussed at a later date. * Older Alaskan Services Project Choice, $10.0 thousand dollar reduction The start-up of Project Choice would be delayed by one month or the program would be reduced by one position for three months. $42.4 thousand dollars would be shifted from general fund to inter agency receipts. Subcommittee Chair Larson MOVED to adopt the subcommittee's recommendation, Older Alaskan Services Project Choice, $10.0 thousand dollar reduction. 4 Representative Brown offered Amendment 1 (Attachment 5). She noted her objection to closure of the Older Alaskan (OAC) Commission's budget. She noted her intention to increase the OAC, Nutrition, Transportation and Support component (Attachment 5). Amendment 1 was HELD in Committee. Members discussed the amendment process. Co-Chair Larson assured members that amendments would not be precluded. Co-Chair MacLean restated the motion to adopt the subcommittee's recommendation, Older Alaskan Services Project Choice, $10.0 thousand dollar reduction. There being NO OBJECTION, it was so ordered. She noted that the rest of the OAC component would be HELD open. Representative Martin noted his objection to personal use of frequent flyer miles gained through state business. * Public Defender, $166.8 thousand dollar reduction. This recommendation is 2.2 percent below the Governor's FY 93 request. This represents an increase of $350.0 thousand dollars over the FY 93 authorized level. The supplemental FY 93 request would add $383.0 thousand dollars to the FY 93 authorized level if approved. Subcommittee Chair Larson MOVED to adopt the subcommittee's recommendation, Public Defender, $166.8 thousand dollar reduction. Representative Navarre OBJECTED. He requested that the component be HELD open. Subcommittee Chair Larson pointed out that the subcommittee's recommendation includes the FY 93 authorized level and a $347.7 thousand dollar supplemental request minus $47.7 thousand dollars. Members discussed funding for the Public Defender. Subcommittee Chair Larson pointed out that the Public Defender's and the Office of Public Advocacy's budgets are increasing more than the Prosecutor's budget. Members further discussed closeout procedures. The Public Defender component was HELD open. Subcommittee Chair Larson noted that there is a funding shift in the OAC, Project Choice component. JOHN BITNEY, STAFF, REPRESENTATIVE LARSON explained that the $42.4 thousand dollar reduction is a fund source change from the Department of Administration to inter agency receipts. General funds are being transferred from the Department of Health and Social Services for administration of the program. Subcommittee Chair Larson MOVED that the funding shift be accepted. There being NO OBJECTION, it was so ordered. 5 * Office of Public Advocacy, $14.1 thousand dollar reduction This represents FY 93 authorized plus a $400.0 thousand dollar increase. The supplemental request is $616.4 thousand dollars. The subcommittee's recommendation is $14.1 below the FY 93 authorized and supplemental request. Representative Brown pointed out that the Office of Public Advocacy (OPA) has been short-funded in past years. She asked that the Office of Public Advocacy be HELD open. Representative Navarre asked for information regarding indigent recovery. He asked if the OPA will need a FY 94 supplemental. He reiterated the need to incorporate the FY 93 supplemental amount to the authorized FY 93 level. Commissioner Usera observed that the Department of Administration recommended legislation to reduce OPA caseload by eliminating non-constitutionally mandated functions from their purview. The recommendations were removed from the omnibus bill. Caseload savings are not anticipated. The Department of Administration has maximized management of OPA. The Department has maintained the program's cost despite a growing caseload. Commissioner Usera commented on rule 39. She explained that the Supreme Court has provided for cost recovery of indigent defense. Rule 39 allows the Department of Administration to attach permanent fund dividend checks of those convicted for indigent defense. She clarified that there is a three year delay of recover upon release. Cost recovery would not occur for four years. The Office of Public Advocacy was HELD open. * Office of Commissioner, $54.0 thousand dollar unallocated reduction All components in the Office of Commissioner would be included. Representative Navarre OBJECTED. Commissioner Usera expressed concern that core government services suffer from cuts due to the political inability to reduce popular programs. She understood that the reduction could be taken from operational components in services to state agency. Representative Navarre stressed that the reduction is out of the general government category. There being NO OBJECTION, it was so ordered. 6 * Alaska Public Offices Commission (APOC), replace $26.5 general fund program receipts with general fund dollars. Representative Navarre asked if lobbyist fees could be raised or filing fees for public office instituted. Subcommittee Chair Larson agreed that it would be possible. Representative Navarre suggested that the Committee introduce legislation to increase revenues through fees to APOC. There being NO OBJECTION to the reduction, it was so ordered. * Information Services, $60.0 thousand dollar reduction Commissioner Usera noted that the Department of Administration budgets for maintenance. Surplus funds are transferred to the Information Services Fund for future acquisitions. This reduction would reduce the amount available for future acquisitions. Subcommittee Chair Larson MOVED to adopt the subcommittee's recommendation, Information Services, $60.0 thousand dollar reduction. There being NO OBJECTION, it was so ordered. Subcommittee Chair Larson provided members with a list of increment requests for the Department of Administration (Attachment 6). The subcommittee did not approve any of the requests. He observed that the House Finance Committee can choose to act on additional requests at another time. Representative Brown clarified that the increment request for OAC/Nutrition services was for $190.2 thousand dollars. She added that the request for Foster Care Review program was $200.0 thousand dollars. Representative Hanley pointed out that the Department of Health and Social Services, House Finance Subcommittee is contemplating funding of increment requests through the Mental Health Trust Account. Representative Grussendorf asked when amendments will be considered. Co-Chair Larson stated that it would be appropriate to note the intention of amendment at any time. He added that amendments will be considered at a later date. Representative Hoffman noted that as a member of the Department of Administration House Finance Subcommittee he would have voted for approval of an increment for the Public Broadcasting Commission. The increment failed on a 4 to 4 vote. Representative Hoffman was absent from the meeting. 7 Members further discussed which components would be held open. Only components formally closed would require a vote to reopen for amendment. (Tape Change, HFC 93-35, Side 2) Representative Brown stated that she would like to hold everything open that is not specifically closed. Members further discussed the amendment process. Representative Grussendorf stressed that caps prevent members from supporting needed programs. Representative Foster provided the Committee with Amendment 2 (Attachment 7). Amendment 2 is an increment for the Public Broadcasting Commission. Representative Grussendorf spoke in support of Amendment 2. He noted that the cut of $300.0 thousand dollars to Public Broadcasting is compounded by the addition of two new stations. Subcommittee Chair Larson OBJECTED to Amendment 2. He asked that Amendment 2 be HELD open. Amendment 2 was HELD open. Subcommittee Chair Larson provided members with a list of potential legislation (Attachment 8). He reviewed Attachment 8: * Provide APOC with authority to charge fees; * Allow state option to self-insure for group health or group life insurance for state employees; * Delete spouse coverage for group life and health insurance in cases where coverage is duplicative; * Possible legislation to allow RATNet to host fund raisers; * Transfer RATNet to Public Broadcasting; * Tax credits for corporate contributions to public broadcasting; * Reduce annual cost of leasing by purchasing buildings; * Legislation by the administration to consolidate senior services. Representative Brown introduced Amendment 3 (Attachment 3). Amendment 3 was HELD in Committee. 8 HB 55 was HELD in Committee.