HOUSE BILL NO. 137 "An Act making supplemental appropriations for operating expenses of state government for fiscal year 1995; and providing for an effective date." NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR continued her review of HB 137. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES RON LIND, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES explained that Sections 41 - 43 relate to the extreme snow falls experienced in the state of Alaska during FY 95. He stated that Section 41, Highways and Aviation Snow Removal was reduced to $2,170.0 million dollars. He added that Section 42, which funds maintenance and operations of statewide facilities for snow removal could be reduced to $49.8 thousand dollars. He observed due to heavy snow falls, Section 43, Anchorage International Airport needs to be increased to $350.0 thousand dollars. Mr. Lind observed that Sections 44 - 47 are related. He noted that the Department has received, in past years, between $1.0 and $1.5 million dollars in capital appropriation for emergency repairs to the aviation or highway system. He explained that no appropriation was made in FY 95 with the understanding that emergencies would be identified and selected items submitted to the Legislature. He briefly described projects listed in Sections 44 - 47. Mr. Lind explained that spring maintenance was identified as a problem area. Section 48 would appropriate $750.0 thousand dollars for spring maintenance. The funding would 2 be used for gravel resurfacing, leveling frost heaves with asphalt and pot hole patching. He added that approximately $150.0 thousand dollars will be allocated per district. In response to a question by Representative Martin, Mr. Lind clarified that there is some money for spring maintenance in the Department's budget. He stressed that the deferred maintenance amounts in the Department's capital budget was reduced in FY 95. He did not think that the supplemental appropriation would result in a reduction to their FY 96 budget. Representative Navarre spoke in support of Section 48. He emphasized that delayed maintenance will result in more costly repairs. Mr. Lind discussed Section 49. He noted that the Department owes $230.3 thousand to the Department of Law for litigation related to the Copper River Highway. He explained that the Department of Transportation and Public Facilities is billed by the Department of Law. He noted that most of the $2.0 million dollars paid to the Department of Law comes from federal funds. Representative Therriault observed that the amount is reflected in the Department of Law as interagency receipts. In response to a question by Co-Chair Hanley, Mr. Lind clarified that the appropriation would pay for attorney legal costs which were not asked for by the Department. He explained that the Department is unable to anticipate the exact expenditure. In response to a question by Representative Brown, Mr. Lind stated that the charge has been paid by the Department of Law. If the appropriation is not funded the accounting system would show that the Department of Law spent money that the Legislature appropriated with the assumption that they would be reimbursed, but for which they were not reimbursed. He noted that the Legislature can write off the revenue that the Department of Law did not receive. The effect on the General Fund would be the same. Representative Parnell asked how the Department of Law billed the Department of Transportation and Public Facilities. Mr. Lind explained that the Department of Law submits a billing by case number showing which attorneys spent how many hours working on a project. Mr. Lind explained that Section 50 also reimburses the Department of Law for state right-of-way litigation. Ms. Slagle noted that some of the costs may pay for outside counsel. 3 Mr. Lind discussed Section 51. This section pays personnel costs for two airport employees that were laid off when they were unable to pass certification by the Alaska Police Standards Council. The employees failed the vision portion on the test. The court ordered that you cannot demonstrate that an employee cannot do a job that they have been employed to do for 10 to 12 years. The employees were put back to work. Representative Mulder suggested that the settlement terms could be influenced by a preknowledge of the amount appropriated for settlement by the Legislature. GARY HAYDEN, DIRECTOR, ALASKA MARINE HIGHWAY SYSTEM, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES discussed Section 52. He noted that the Alaska Marine Highway System Fund is facing a $1.6 million dollar deficit for FY 95. He acknowledged that revenues sales were down approximately $400.0 thousand dollars. He added that the Leconte was brought into service in November and December. The decision to run the Leconte during November and December cost an additional $200.0 thousand dollars. He stressed that the Columbia has been laid up an addition 4 weeks in an attempt to reduce costs. He added that an attempt is being made to encourage ridership. He discussed factors contributing to a reduction in ridership. Co-Chair Foster questioned how much the Department of Transportation and Public Facilities pays to the Department of Labor. Mr. Lind responded that the Department of Transportation and Public Facilities pays very little for violations to the Department of Labor. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Ms. Slagle explained that Section 53 would extend the lapse date for Rural Development Grants. The grants were part of the operating budget. Ms. Slagle noted that Section 54 funds the city of Egegik's first year organization grant. DEPARTMENT OF CORRECTIONS Ms. Slagle observed that Section 55 represents a fund source change for prison phones of $200.0 thousand dollars from general fund program receipts to general fund dollars. She explained that the system is not in place to track receipt of the funds from the prisoners. Ms. Slagle stated that Section 56 would pay $39.3 thousand 4 dollars to implement the transfer of the community jails from the Department of Public Safety. Ms. Slagle noted that Section 57 would fund $1,611.5 million dollars in contempt of court fines related to the Cleary settlement. Ms. Slagle explained that Section 58 pays $457.0 thousand dollars in legal personnel actions for pending decisions. UNIVERSITY OF ALASKA Ms. Slagle noted that Section 59 pays $130.0 thousand dollars for snow and ice removal at the Anchorage and Prince William Sound Campuses. MARY LOU BURTON, STATEWIDE BUDGET DIRECTOR, UNIVERSITY OF ALASKA noted that Section 68 funds $153.0 thousand dollars for the cost of removing the panels on the Butrovich Building. Section 69 is $1,326.0 million dollars for replacement of the panels. She explained that the University had planned to wait for the litigation settlement before replacing the panels. She stated that the University was informed that the panels needed to be taken off immediately because they were in danger of falling and causing injury. The panels were removed at a cost of $153.0 thousand dollars from the University's Risk Loss Prevention Fund. Section 68 would replace the funds used to remove the panels. She stated that the University would be willing to make the appropriation of Section 69 conditional to repay any amount to the general fund for any litigation proceeds. Ms. Burton explained that the appropriation needs to made in the supplemental in order to allow work to proceed this summer. If the panels are not replaced further deterioration may occur. Litigation is being pursued against the contractor, manufacturer and the architect. The University has recovered $1.0 million dollars in insurance. (Tape Change, HFC 95-28, Side 2) Representative Navarre questioned the University's motivation to pursue the case if the state prepays the cost of replacement. Ms. Burton assured him that the University will pursue litigation to recover costs. ALASKA COURT SYSTEM ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM stated that Section 60 will support trial costs associated with the North Slope Royalty Case. 5 Mr. Snowden noted that Section 61 will pay $51.7 thousand dollars for retroactive magistrate pay based on a reclassification. He observed that Section 61 is a one time cost. In response to a question by Representative Parnell, Mr Snowden clarified that the North Slope Royalty case will go to trial in April. STATEWIDE Ms. Slagle explained that Section 62 pays miscellaneous claims and stale-dated warrants that cannot be paid without an appropriation for the lapsed funds. She stressed that misplaced bills or improperly billed claims result in funds lapsing. CAPITAL SUPPLEMENTAL REQUESTS Ms. Slagle stated that Section 63 appropriates to Alaska Housing Finance Corporation (AHFC) $258.0 thousand dollars for low income weatherization after Kobuk River flooding. Ms. Slagle noted that Section 64 appropriates $1.8 million dollars to AHFC for the supplemental housing program. BOB BARATKO, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE explained that Section 64 is an underestimate of the Program's need. He noted that another $6.6 million dollars was identified by HUD. The $1.8 million dollar appropriation will make the federal match. Ms. Slagle observed that Section 63 can be reduced to $149.1 thousand dollars. Ms. Slagle noted that Sections 65 - 67 are capital projects in the Department of Public Safety. She briefly review the projects. Section 65 appropriates $41.6 thousand dollars for the Civil Air Patrol hangar roof at Merrill Field. Section 66 appropriates $100.0 thousand dollars for the city of Homer jail upgrade to code compliance. She observed that the appropriation is needed to assure life and safety. Co-Chair Hanley expressed concern that the state will not be reimbursed. He noted that the state is negotiating contracts that will upgrade the amounts paid to communities. He observed that some communities will receive an additional capital appropriation. Representative Parnell noted that many of the community jails suffer from building code violations. 6 HB 138 was HELD in Committee for further discussion. (Tape Change, HFC 95-29, Side 1)