HOUSE BILL NO. 455 "An Act making and amending operating and capital appropriations and ratifying certain state expenditures; and providing for an effective date." Co Chair MacLean observed that the majority of items are being reappropriated from prior year's capital appropriations to other projects. She noted that items in the bill adhere to the following guidelines: * 1) All district reappropriation requests from individual legislators are "net zero". * 2) Only unexpended, unobligated general funds from capital projects identifiable as a specific district project, and sponsored originally by the legislature, are in the bill. * 3) No reappropriation items requested by individual legislators originally appropriated as supplemental, loan funds or trust funds were included in the draft. * 4) Each district's delegation has submitted : (a) a copy of the original appropriation and/or amended language from which the reappropriation is being made; (b) verification of true account 2 balances; (c) justification and back-up from local government and/or appropriate state agencies. Co-Chair MacLean provided members with a sectional analysis of proposed reappropriations (Attachment 1). She reviewed the legislation by section in order to entertain questions from members. There were no questions on sections 1 - 4. Representative Brown referenced section 5. She asked the amount to be lapsed. She questioned why funds are not being lapsed into the General Fund. NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF THE GOVERNOR emphasized that funds have traditionally been reappropriated in the Office of the Governor and Legislature's budgets. Representative Brown asked for clarification on the lapsed funds in Section 6. Ms. Slagle stated that $50.0 thousand dollars would be extended in the Division of Budget Review, Office of the Governor. MIKE NIZICH, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, OFFICE OF THE GOVERNOR, addressed Representative Brown's inquiry regarding extension of lapse funds in sections five and six. The estimated lapse for section five is $900.0 thousand dollars. He emphasized that the roll forward will provide funding for unexpected expenses in the Office of the Governor. Co-Chair MacLean reviewed sections 7 - 9. There were no questions. Representative Brown asked if the funds represented in section 10 are part of the Exxon settlement money. Co-Chair MacLean agreed that section 10 contains Exxon settlement money. Nancy Slagle noted that the $50.0 thousand dollar expenditure does not required trustee approval. She clarified that section 10 was submitted at the request of Commissioner Sandor, Department of Environmental Conservation. Co-Chair MacLean noted that the grant to the Prince William sound Aquaculture Corporation will be used for restoration and replacement of natural resources injured and services lost or diminished as a result of the Exxon Valdez Oil Spill. This will be accomplished through the operation of 3 hatcheries for the production of common property salmon fry for Prince William Sound. Representative Hanley expressed concern regarding section 11, expenditure of federal funding received for services provided to Medicaid recipients. He reminded the committee that an appropriation of share money was placed into a separate account last year in this section. He noted that $20.0 million dollars were going to Alaska Psychiatric Institute (API) and asked for clarification of costs. JANET CLARK, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES stated that the department plans for an initial seventy two bed facility. The department has down scaled the project to provide the minimum of necessary beds in the first phase. The department expects an additional request $8.0 million dollars next fiscal year. The replacement of API has been in the planning stage for approximately twelve years. The department has appropriated stop-gap repairs to keep API going. Last year the department was able to secure medicaid one time federal funds for new construction of API. Legislative intent was added in FY 94, requiring the department to return to the legislature to appropriation authority. Representative Brown asked if it was the department's intent to start construction before the entire amount is appropriated for that purpose. Ms. Clark reiterated that the original plan was scaled down from a 114 to a 72 bed facility. The first phase will construct patient units, kitchen and laundry facilities. Co-Chair MacLean announced that section 11 would be left open. Representative Martin questioned if section 12 was a deferred maintenance project. Representative Grussendorf clarified that the Mt. Edgecumbe High School gymnasium was recently closed due to asbestos. Lapsed money from the dormitories would be used to address the asbestos problem. There were no questions on Section 13 - 17. There were no questions on Sections 24 - 32 Representative Larson clarified that section 33 is at the request of the Office of Budget and Management. 4 Nancy Slagle, at the request of Representative Brown, explained that section 35 would allow the department to access funds that had been used as a lease deposit for the Tokyo Office of International Trade. The funds would then be used to acquire less expensive lease space. Ms. Slagle clarified that an unallocated reduction was taken to the Tokyo office in addition to the reductions made during the budget process. She further noted that the transaction outlined in section 35 would enable the department to keep the office open at a lower cost. VIRGINIA STONKUS, FISCAL ANALYST, LEGISLATIVE FINANCE DIVISION explained that the 1995 surcharge was not put into SB 215. This language would make the appropriation conform to whatever enabling legislation goes into effect. In response to a question by Representative Brown, Ms. Stonkus clarified that sections 20 and 21 of the front section of CSSB 370 (FIN) address the 1994 surcharge on the spill reserve balance, depending on when the bill goes into effect. She reiterated that section 37 addresses the 1995 surcharge account to allow for the split on the sixty forty percentage. Ms. Stonkus clarified that SB 215 set up the procedures for accommodating the fund, but did not provide the mechanism to appropriately allow for the mechanics of the transaction. She further noted that sections 20 and 21 were recommended by the Division of Legal Services in order to conform to the bill. Representative Brown asked if this was considered an appropriation. Ms. Stonkus explained that the FY 95 surcharge would be considered a new appropriation. Representative Therriault noted that funds would be allocated to the new structure. Instead of two accounts, there will be two accounts within one fund. The appropriation can not be contained in SB 215, since it is only enabling legislation. ARTHUR SNOWDEN, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM, explained that section 38 would reappropriate funds for a new imaging system into computer hardware and software maintenance. Representative Martin referred to section 39. He asked if statewide funds were being reappropriated. Ms. Stonkus confirmed that statewide funds are being reappropriated. REPRESENTATIVE BILL HUDSON spoke in support of section 39. 5 He noted that the Perseverance Theater job training program offers training for individuals all over the state of Alaska. There were no questions regarding sections 40 - 43. NICO BUS, DEPARTMENT OF NATURAL RESOURCES spoke in regards to section 44. He noted that funding for the Forest Practices Act effectiveness research project was included in the capital budget. He stressed that the reappropriation is needed to be fully funded. There were no questions regarding sections 45 - 49. Representative Hanley discussed section 50. He maintained that the Denali southside visitor center development and Talkeetna water and sewer projects were statewide. Ms. Slaggle clarified that projects contained in sections 50 and 51 were identified as discretionary funds. She explained that some water and sewer projects in Talkeetna were identified as part of the governor's village safe water projects. These projects were not included in sections 50 and 51. Representative Martin echoed concern that projects contained in sections 50 and 51 were not statewide projects. There were no questions in regards to sections 52 and 53. Ms. Slagle noted that section 54 was requested by the Office of Budget and Management. There were no questions in regards to section 55. (Tape Change, HFC 94-151, Side 2) EDGAR BLATCHFORD, COMMISSIONER, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS spoke in support of section 56. There were no questions in regards to sections 57 - 59. Co-Chair Larson discussed reappropriation of carry forwards for the Legislature contained in sections 45 - 48. He itemized the carry forward amounts as detailed in a summary by the Legislative Finance Division (Attachment 2). Representative Navarre expressed concern with the amount carried forward by the Senate. Representative Therriault expressed concern with section 42. He questioned if funding being reappropriated from Fairbanks water and sewer projects was discretionary. 6 Representative Hoffman expressed similar concerns in regards to section 44. Representative Brown noted that more than $8 million dollars would be carried forward in the Legislature's budget. She maintained that the funds should lapse into the General Fund. Representative Navarre observed that the Senate FY 95 operating budget is in excess to the amount spent in FY 94 or FY 93. He noted that the House FY 95 operating budget is below the amount appropriated to the House in FY 94 or FY 93. Co-Chair MacLean provided members with AMENDMENT 1 (copy on file). She MOVED to AMEND Amendment 1, delete $320.0 thousand dollars and insert $150.0 thousand dollars. She explained that the amendment would provide funding for Arctic Power in the amount of $250.0 thousand dollars and provide $150.0 thousand dollars for radio stations throughout the state. Stations need state funding in order to match federal grants for equipment upgrades. She noted that the federal government will provide 3 dollars for every 1 dollar of state funding. She maintained that a lack of state support to the Alaska Public Broadcasting Commission could endanger the state's ability to get future federal grants. The amendment would only fund half of the state match requirement for each station. She noted that funding for ANWR will remain in the governor's office. Representative Brown questioned the $250.0 thousand dollar grant to Arctic Power. Representative Hanley explained that $3.0 million dollars was appropriated from the Office of the Governor for a national ANWR educational effort. A portion of this money is being appropriated to Arctic Power. The amendment would also allocate a portion of this money to the radio stations. DIANE KAPPLAN, EXECUTIVE DIRECTOR, ALASKA PUBLIC RADIO NETWORK explained that the projects contained in amendment 1 have been awarded or has pending federal grants for which a local match is required. Representative Therriault queried if stations can capture federal funds with their existing state funds. Ms. Kapplan observed that permission would be needed from the Alaska Public Broadcasting Commission in order to divert operating support to capital support. There being NO OBJECTION, AMENDMENT 1 was amended. Representative Brown recommended that the entire amount be 7 returned to the Office of the Governor for use in promoting ANWR. She MOVED to AMEND Amendment 1, delete $250.0 thousand dollars to Arctic Power. Co-Chair MacLean OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Brown OPPOSED: Grussendorf, Hoffman, Navarre, Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (1-10). Co-Chair MacLean MOVED to ADOPT AMENDMENT 1 as amended. There being NO OBJECTION, it was so ordered. DAVE GRAY, STAFF, REPRESENTATIVE MACKIE provided members with AMENDMENT 2 (copy on file). He explained that the amendment would reappropriate $50.0 thousand dollars from statewide energy and power project development to a feasibility study of an electrical intertie between Petersburg and Kake. Representative Navarre wondered why the project was not funded through the statewide energy and power project development appropriation. Mr. Gray clarified that the project was submitted for consideration. Representative Hanley noted that grants are awarded on a competitive basis or according to ranking of priority. BRUCE GERAGHTY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS explained that there is $365,288 thousand dollars remaining in the fund. He observed that the Petersburg/Kake intertie project is on a list of projects to be considered. He did not recommend the reappropriation. Representative Navarre MOVED to ADOPT AMENDMENT 2. A roll call vote was taken on the MOTION. Representative Hanley OBJECTED. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLe an, Larson Representative Hoffman was not present for the vote. The MOTION FAILED (3-7). Co-Chair MacLean provided members with AMENDMENT 3 (copy on file). She explained that the amendment would reappropriate $500.0 thousand dollars to the Alaska Marine Highway System. 8 REPRESENTATIVE BILL HUDSON observed that there is an appropriation of $4.0 million dollars in the capital budget for the Alaska Marine Highway maintenance overhaul. He asserted that $4.0 million dollars is insufficient to keep the vessels running. He noted there have been past reductions to appropriations for deferred maintenance. The amendment would reappropriate $500.0 thousand dollars from the Highway System Administration building to vessel maintenance and overhaul. Representative Navarre MOVED to ADOPT AMENDMENT 3. There being NO OBJECTION, it was so ordered. REPRESENTATIVE CARL MOSES provided members with AMENDMENT 4 (copy on file). He explained that the amendment reappropriates $2.3 million dollars from the Pedro Bay School project to other district projects. The Pedro Bay School project was vetoed by the Governor. Co-Chair Maclean MOVED to ADOPT AMENDMENT 4. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Hoffman, Foster, Martin, Parnell, MacLean, Larson OPPOSED: Brown, Navarre, Hanley, Therriault The MOTION PASSED (7-4). Representative Moses provided members with AMENDMENT 5 (copy on file). Amendment 5 would expand the title. Co-Chair MacLean MOVED to ADOPT AMENDMENT 5. There being NO OBJECTION, it was so ordered. REPRESENTATIVE IRENE NICHOLIA provided members with AMENDMENT 6 (copy on file). She explained that the request would reappropriate the balance of the Regional Boarding School Feasibility Study to the Galena School District. The funds would be used for planning and analysis of a regional boarding school. She noted that when the U.S. Air Force downsized in Galena several building were left vacant. These buildings could be used to house a regional boarding high school. (Tape Change, HFC 94-152, Side 1) Representative Therriault OBJECTED. He expressed concern that the Department of Education study be completed prior to the reappropriation. Co-Chair MacLean clarified that the Department of Education does not object to the amendment. Representative Therriault WITHDREW his OBJECTION. There being NO OBJECTION, AMENDMENT 6 was adopted. 9 AMENDMENT 7 was WITHDRAWN. Representative Grussendorf provided members with AMENDMENT 8 (copy on file). He explained that the City of Sitka is requesting forgiveness of the remaining interest on their Alaska Power Authority state loan. He noted that $12 million dollars remains on the loan. The city of Sitka has paid $3 million dollars on the principle and $6 million dollars in interest. Discussion pursued regarding the amortization of the loan. AMENDMENT 8 was HELD. Representative Brown provided members with AMENDMENT 9 (copy on file). She explained that amendment 9 would repeal a project appropriated in 1992. She maintained that the redesign of Fireweed Lane, Anchorage was not supported by the community. She observed that the Spenard Community Council has requested the repeal. Representative Brown MOVED to ADOPT AMENDMENT 9. Co-Chair MacLean clarified that the amendment addresses federal authority. Funds have not been appropriated for the project. There being NO OBJECTION, it was so ordered. AMENDMENT 10 was HELD. Ms. Slagle pointed out that in AMENDMENT 4, section 2 the appropriation source "Educational Facilities Maintenance and Construction Fund" should have been the "General Fund". Co-Chair MacLean MOVED to AMEND Amendment 4 by deleting "Educational Facilities Maintenance and Construction Fund" and inserting "General Fund". There being NO OBJECTION, it was so ordered. Co-Chair Larson MOVED to close all sections with the exception of sections 8, 10, 11, 42, 45, 46, 47 and 48. There being NO OBJECTION, it was so ordered. HB 455 was HELD in Committee for further discussion.