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." 1 DEPARTMENT OF CORRECTIONS Representative Navarre MOVED to adopt Amendment 1 (Attachment 1). He explained that Amendment 1 would fully fund the request of the Department of Corrections for Correctional Industries. He stressed that a reduction will result in the closure of most of the correctional industry programs for the remainder of the fiscal year. Representative Mulder spoke in opposition to Amendment 1. He asserted that the Department of Corrections made a conscious decision to exceed their appropriation level. He emphasized that two additional managers were approved at the Wildwood and Spring Creek facilities. Representative Navarre shared Representative Mulder's frustration with the Department of Corrections. He argued that to penalize the Department forces undesired impacts. He emphasized that the Correctional Industry program is a good management tool. Representative Brown spoke in support of funding for the Correctional Industry program. She stressed that the private sector works closely with the Department. She accentuated that the program helps to provide jobs to prisoners upon release. She pointed out that the State's prison system has been in crisis. She suggested that a zero base approach be taken. A roll call vote was taken on the MOTION to adopt Amendment 1. IN FAVOR: Brown, Grussendorf, Navarre, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Hanley The MOTION FAILED (4-7). Representative Navarre MOVED to adopt Amendment 2 (Attachment 2). Representative Mulder OBJECTED. Representative Navarre explained that Amendment 2 would add $2.0 million dollars for Statewide Institutions. He acknowledged that the Department overspent their budget. He argued that the Department cannot realize sufficient savings in the remainder of the fiscal year to meet the approved funding level. Representative Mulder argued against the amendment. He pointed out that many of the Commissioner's FY 95 requests were funded in the operating budget. He maintained that the Department has spent more than was requested by the Governor. 2 Representative Brown observed that the vacancy factor approved in the FY 95 operating budget was higher than could be achieved. She emphasized that correctional institutions require 24 hour supervision. She questioned the effect of relocating prisoners on the State's public safety. She emphasized that the Department's management has changed. Representative Navarre observed that the FY 95 budget for the Department of Corrections was built on the Department's ability to realize savings from changes in operation. He noted that the Department was not able to achieve the budgeted vacancy factor. He acknowledged that the Department did not make changes recommended by the Legislature. He stressed that the new Administration is willing to implement some of the proposed solutions. He noted that the Department is requesting $3.0 million dollars for the rest of FY 95. He stressed that the Department would still have to realize a $1.0 million dollar savings. Representative Mulder pointed out that a realignment of prisoners was funded by the Subcommittee. He argued that the Department did not take the opportunity to utilize efficiencies. Representative Navarre acknowledged that efficiencies were not achieved. He observed that there was a 11 percent growth factor. He stressed that savings for empty beds cannot be realized if additional prisoners are expected to fill the beds. A roll call vote was taken on the MOTION to adopt Amendment 2. IN FAVOR: Brown, Grussendorf, Navarre, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Hanley The MOTION FAILED (4-7). Representative Navarre urged the Committee to provide the opportunity for the Department to receive funding in another vehicle if they can clearly justify the alternatives taken. DEPARTMENT OF ADMINISTRATION Representative Brown MOVED to adopt Amendment 3 (Attachment 3). Co-Chair Hanley OBJECTED. Representative Brown explained that Amendment 3 would fully fund the FY 95 supplemental request by the Office of Public Advocacy. She emphasized 3 that the Office of Public Advocacy and the Public Defender Agency are part of the criminal justice system. She observed that the Constitution requires court ordered representation be provided. She accentuated that the inability to provide representation interferes with the adjudication system and hampers law enforcement efforts. BRANT MCGEE, DIRECTOR, OFFICE OF PUBLIC ADVOCACY, DEPARTMENT OF ADMINISTRATION stated that the supplement request is needed to pay bills to contractors and other professionals who provide legal services. He emphasized that cases appointee by the court to the Office of Public Advocacy cannot be refused. He emphasized that the Agency may have to delay cases until FY 96. He observed that abused and neglected children will be adversely affected if cases cannot be continued. If cases are continued a $333.0 million dollar shortfall would result. Representative Grussendorf noted that the Legislature has increased law enforcement efforts. He maintained that all individuals deserve representation. He spoke in support of Amendments 3 and 4. Representative Kohring spoke against Amendments 3 and 4. He acknowledged that the Office of Public Advocacy and the Public Defender Agency are working with minimal dollars and have a large backlog of cases. He emphasized that the situation is not unanticipated or an emergency. He maintained that the problem is on going and requires changes in budgeting. He noted that additional funding can be achieved through collections. He accentuated that the emphasize should be placed on other receipts and sources of revenues. Representative Brown noted that receipts for services rendered are included in the budget. She noted that a report in 1990 by the Ombudsman found that the Legislature has failed to fund the Office of Public Advocacy's (OPA) basic budget request for three years, even though OPA has documented an on going increase in work load and associated costs. Mr. McGee observed that OPA's budget has traditionally been short-funded by approximately $500.0 thousand dollars. He clarified that there are no opportunities to collect receipts that are not already included in OPA's FY 95 operating budget. Representative Kohring pointed out that $200.0 thousand dollars of OPA's request is being funded. A roll call vote was taken on the MOTION to adopt Amendment 4 3. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). Representative Brown MOVED to adopt Amendment 4 (Attachment 4). She observed that the Public Defender Agency handles 17,000 cases with 57 lawyers that work and average of 56.5 hours a week. She maintained that the public will be harmed by the failure to fund the request. She observed that cases will be delayed. Representative Navarre spoke in support of Amendment 4. He stressed that a class action lawsuit could result from caseloads that do not allow adequate representation as required by the Constitution. JOHN SALEMI, DIRECTOR, PUBLIC DEFENDER AGENCY, DEPARTMENT OF ADMINISTRATION observed that the Agency handles 17,000 cases of which the majority are criminal. He observed that the Agency is already short by 10 lawyers, as determined by the National Standards Association. He stressed that the supplemental request will only keep the 13 regional offices open to the end of the year. He noted the expense of representation in rural areas of the State. (Tape Change, HFC 95-37, Side 2) Mr. Salemi stated that if funding is denied that cases will be delayed. He observed that defendants have the right to have their cases processed within 120 days. Defendants or the court can insist that cases continue. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). DEPARTMENT OF HEALTH AND SOCIAL SERVICES Representative Brown MOVED to adopt Amendment 5 (Attachment 5). She noted that the amendment would fund adult Medicaid services such as optometrists and eyeglasses, dental care, treatment of speech, occupational therapy, and hearing and language disorders. The loss of these services impacted more than 16,000 Alaskans. 5 Co-Chair Hanley observed that the decision was made not to fund the last 10 optional Medicaid services. He emphasized that it is not appropriate to restore this funding in the middle of the fiscal year. He stated that the Committee is working with the Department to prioritize services. Representative Therriault stressed that a policy call was made. He expressed the hope that a proposal be developed for the next fiscal year. A roll call vote was taken on the MOTION Amendment 5. IN FAVOR: Brown, Grussendorf, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Hanley The MOTION FAILED (3-7). Representative Brown MOVED to adopt Amendment 6 (attachment 6). Co-Chair Hanley OBJECTED for purpose of discussion. He observed his intention of restoring $310.0 thousand dollars in federal receipts for the Department of Health & Social Services, Division of Family and Youth Services. Representative Brown WITHDREW Amendment 6. Co-Chair Hanley MOVED to adopt Amendment 6A. He explained that the amendment would restore $310.0 thousand dollars in federal receipts for the Department of Health & Social Services, Division of Family and Youth Services. Representative Martin spoke against Amendment 6A. He stressed that the State should not take federal money just be cause it is available. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre, Kelly, Kohring, Mulder, Parnell, Therriault, Foster, Hanley OPPOSED: Martin The MOTION PASSED (10-1). Representative Brown MOVED to adopt Amendment 7 (Attachment 7). Co-Chair Hanley OBJECTED. Representative Brown spoke in support of the amendment. The amendment would fully fund the FY 95 supplemental request for the Division of Family and Youth Services, for operational costs at Mclaughlin Youth Center. She maintained that the funding is needed to maintain security. 6 Co-Chair Hanley noted that $460.0 thousand dollars of the $580,500 thousand dollar request was approved. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). DEPARTMENT OF LABOR Representative Martin MOVED to adopt Amendment 8 (Attachment 8). Representative Parnell OBJECTED. Representative Martin explained that the amendment would appropriate $55.6 thousand dollars to the Department of Labor for census mapping. He spoke in support of the amendment. He clarified that no funding has been appropriated for this item by the Division of Election. Representative Mulder noted that his support for the amendment was continent on the Division of Election's willingness to transfer funding to the Department of Labor. Representative Martin noted that the Division of Elections has agreed to transfer funding in FY 96. A roll call vote was taken on the MOTION to adopt Amendment 8. IN FAVOR: Navarre, Brown, Grussendorf, Martin OPPOSED: Kelly, Kohring, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (4-7). DEPARTMENT OF PUBLIC SAFETY Representative Grussendorf MOVED to adopt Amendment 9 (Attachment 9). Representative Parnell OBJECTED. Representative Grussendorf explained that the amendment would appropriate $682.4 thousand dollars to support the Community Jails Program. He maintained that 17 communities containing contract jails were lead to believe that the Governor's Task Force on the Community Jails Program would make adjustments for the current year. Representative Parnell stressed that adjustments should be made in the FY 96 budget. He argued that the Task Force did not mislead communities. He noted that the Department can transfer funds. 7 DEL SMITH, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS stated that he is not aware of funding within the Department that can be transferred to cover community jail costs. He acknowledged that the Department indicated that it would honor the Task Force's recommendations. A roll call vote was taken on the MOTION to adopt Amendment 9. IN FAVOR: Brown, Grussendorf, Navarre, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Hanley The MOTION FAILED (4-7). DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES Co-Chair Foster MOVED to adopt Amendment 10 (Attachment 10). He explained that the amendment would combine sections 27 and 34 into one to allow the Department more flexibility. Co-Chair Hanley noted that the funding remains the same. There being NO OBJECTION, it was so ordered. Representative Grussendorf MOVED to adopt Amendment 11 (Attachment 11). Representative Parnell OBJECTED. Amendment 11 would appropriate $739,836 thousand dollars, attributable to interest earned on the Alaska Marine Highway System Fund, from the general fund to the Alaska Marine Highway System Fund. He emphasized the importance of the Alaska Marine Highway to residents of Southeast Alaska. In response to a question by Representative Mulder, Representative Grussendorf noted that the Columbia would be held in dry dock until June. Representative Mulder questioned if $175.0 thousand dollars would be sufficient to keep the Columbia on schedule. Representative Grussendorf did not think $175.0 thousand dollars would be sufficient. Representative Martin noted that revenues were reduced as a result of a decline of ridership. Representative Grussendorf stressed that the Alaska Marine Highway System pays for a portion of its cost. Representative Navarre noted that the Tustumena will be dry docked an additional eight weeks during the busy summer months if the request is not approved. Representative Therriault maintained that the shortfall is the result of policy calls by management of the Alaska Marine Highway System. Representative Mulder noted that the FY 95 House Finance 8 Subcommittee recommended that the Alaska Marine Highways be held harmless from serious reductions. He acknowledged that there were factors that were beyond the control of the Department. He MOVED to AMEND Amendment 11 to a reduced funding level of $250.0 thousand dollars. Representative Grussendorf argued that $250.0 thousand dollars would not be sufficient to allow ships to operate on schedule. Representative Navarre spoke in support of sufficient funding to allow the Tustumena which serves Kodiak to begin service on schedule. REPRESENTATIVE BILL WILLIAMS noted the importance of the ferry system on his district. He ask the Committee to support the request for additional funding. Representative Grussendorf argued in favor of increasing the funding amount in the amendment to the amendment. REPRESENTATIVE ALAN AUSTERMAN stated that he did not support the supplemental request for additional funding for the ferry system. He maintained that the Alaska Marine Highway System can live within its budget. Representative Navarre pointed out that service will have to be reduced if a supplemental request is not granted. He stressed that communities will be penalized because committee members are "mad at the Department." (Tape Change, HFC 95-38, Side 1) Representative Martin alleged that any supplemental request granted will be added to the future base. He stressed that agencies must live within their appropriations. Representative Grussendorf stressed that 17,000 residents in 13 communities in Southeast Alaska depend on ferry service. He conceded that bad management decisions resulted in a loss of $500.0 thousand dollars. He emphasized that the reduction in service will occur during peak weeks. Representative Austerman asserted that the Department is using the reduction of service as a threat to get extra funds. He stressed that the Department must be forced to take responsibility for their own budgets. Representative Navarre disagreed that the Department is using a reduction of services as a threat. He emphasized that the decision to keep ships in dry dock is the result of a lack of options. He stressed that the Committee must weight the cost to communities and the public. He noted that changes implemented by the Alaska Marine Highway System have increased revenues in an effort to cover the cost of 9 operations. Representative Kelly in response to comments made by Representative Austerman, noted that a highway that suffers maintenance can be driven on. He noted that without a supplemental appropriation a major portion of Southeast Alaska's transportation system will be shut down. He spoke in support of additional funding. Representative Austerman maintained that Kodiak residents accept that the Alaska Marine Highway System saves money by tying up ships. REPRESENTATIVE JERRY MACKIE pointed out that the ferry system is the highway system for 37 communities in his district. He added that his constituents pay to support their highway. He noted that the extent of state support has been reduced. He observed that his communities do not have jet service and are dependent on the ferry system. Co-Chair Hanley observed that a poor management decisions contributed to the need for a supplemental. Representative Navarre noted that the original supplemental request was for $2.3 million dollars. The request was reduced by Office of Management and Budget to $739,836 thousand dollars. He maintained that the Department needs to have the flexibility to manage the system. There being NO OBJECTION, the motion to amend Amendment 11 to $250.0 thousand dollars was adopted. Representative Navarre MOVED to AMEND Amendment 11 to $500.0 thousand dollars. Representative Martin OBJECTED. Representative Navarre WITHDREW his motion to amend Amendment 11. Representative Navarre MOVED to AMEND Amendment 11 to $400.0 thousand dollars. A roll call vote was taken on the MOTION. IN FAVOR: Kelly, Navarre, Therriault, Brown, Grussendorf, Foster OPPOSED: Kohring, Martin, Mulder, Parnell, Hanley The MOTION PASSED (6-5). A roll call vote was taken on the main MOTION to adopt Amendment 11 at the amended level of $400.0 thousand dollars. IN FAVOR: Kelly, Navarre, Therriault, Brown, Grussendorf, Foster 10 OPPOSED: Kohring, Martin, Mulder, Parnell, Hanley The MOTION PASSED (6-5). Representative Navarre WITHDREW Amendment 12. Representative Brown MOVED to adopt Amendment 13 at an amended level of $110.0 thousand dollars (Attachment 12). The amendment would appropriate $110.0 thousand dollars for snow removal at the University of Alaska, Anchorage and Prince William Sound campuses. Co-Chair Hanley pointed out that the University will have to absorb some of the snow removal costs. There being NO OBJECTION, it was so ordered. ALASKA COURT SYSTEM Representative Navarre MOVED to adopt Amendment 14 (Attachment 13). He explained that the amendment would add $158.6 thousand dollars for costs associated with the Arctic North Slope royalty case. There being NO OBJECTION, it was so ordered. DEPARTMENT OF REVENUE Co-Chair Foster MOVED to adopt Amendment 15 (Attachment 14). He explained that the amendment would reinstate $1.8 million dollars in corporate receipts to the Department of Revenue, Alaska Housing Finance Corporation (AHFC) to match federal HUD funds. He noted that the appropriation will provide necessary improvements for rural housing projects. He emphasized that housing is desperately needed in rural Alaska. JOHN WALSH, STAFF, REPRESENTATIVE FOSTER explained, in response to concerns expressed by Representative Martin, that the amendment will not impact the transfer of corporate receipts. He noted that corporate receipts are not subject to the default provisions. Representative Martin OBJECTED. Co-Chair Foster noted that the appropriation will bring in $9.0 million dollars in federal matching funds. Representative Kohring reiterated that the amendment will leverage a large sum for the state of Alaska. He noted that private funding is not available for rural housing. He noted that there is chronic overcrowding and a lack of weatherization in rural Alaska. Co-Chair Hanley expressed concern with actions taken by AHFC. He repeated that AHFC has indicated that if the State takes a dividend from their corporate receipts that their 11 bond rating will be adversely effected. Co-Chair Hanley clarified in response to a question by Representative Parnell, that this item was not discussed during the FY 95 budget deliberations. Representative Brown summarized that there are new unanticipated federal dollars that will be lost if a state match is not provided. Mr. Walsh observed that there has been a continual effort by congressional leaders to provide funding for improvement of Alaska's rural housing. A roll call vote was taken on the MOTION to adopt Amendment 15. IN FAVOR: Mulder, Navarre, Parnell, Brown, Grussendorf, Kelly, Kohring, Foster OPPOSED: Martin, Therriault, Hanley The MOTION PASSED (8-3). UNIVERSITY OF ALASKA Representative Therriault MOVED to adopt Amendment 16 (Attachment 15). He explained that the amendment will provide funding for replacement of panels in the Butrovich Building in the University of Alaska. He emphasized that the panels must be ordered in this fiscal year in order to be available before winter. Representative Mulder questioned the cost to purchase the panels. WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA did not know the exact amount needed for the purchase of the panels. Co-Chair Hanley spoke in support of funding for the purchase of the needed panels. He suggested that the additional funding could be appropriated in the FY 96 budget. Amendment 16 was HELD in Committee for further discussion. DEPARTMENT OF ADMINISTRATION Representative Brown MOVED to adopt Amendment 17 (Attachment 16). She noted that the amendment would fund $48.0 thousand dollars for the continuation of the Citizen's Foster Care Review Board in the Department of Administration. Co-Chair Hanley spoke in opposition of the amendment. He maintained that the need was not unanticipated. 12 A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Hanley The MOTION FAILED (4-7). MISCELLANEOUS Representative Martin MOVED to adopt Amendment 18 (Attachment 17). He explained that the amendment would transfer the unappropriated balance of the Earnings Reserve Account into the principle of the Permanent Fund. Co-Chair Hanley felt that the issue needed further discussion. He noted that there were some estimates that permanent fund dividends would be reduced by the transfer. He clarified that the Earnings Reserve Account would not be subject to the Constitutional Budget Reserve sweep since it is established in the Permanent Fund. Discussion ensued in regards to the effect of the transfer on permanent fund dividends. Representative Brown spoke against adoption of Amendment 18. Representative Martin maintained that the only way to ensure that the money will be saved for future legislatures is by placing it into the principle of the Permanent Fund. Representative Parnell stated that he supports the concept, but feels there needs to be more discussion. A roll call vote was taken on the MOTION. IN FAVOR: Navarre, Kelly, Martin, Mulder OPPOSED: Parnell, Therriault, Grussendorf, Kohring, Hanley, Foster The MOTION FAILED (4-7). DEPARTMENT OF NATURAL RESOURCES Co-Chair Hanley MOVED to adopt Amendment 19 (Attachment 18). He explained that the amendment would appropriate $1.5 million dollars to the Disaster Relief Fund. There being NO OBJECTION, it was so ordered. DEPARTMENT OF LAW Co-Chair Hanley MOVED to adopt Amendment 20 (Attachment 19). He explained that the amendment would fully fund payments 13 for judgments against the State. There being NO OBJECTION, it was so ordered. DEPARTMENT OF CORRECTIONS Co-Chair Hanley MOVED to adopt Amendment 21 (Attachment 20). He explained that the amendment would add a new section regarding the effective date for payments by the Department of Corrections for contempt of court fines. He explained that the section was inadvertently removed when the bill was redrafted. Representative Brown OBJECTED for purpose of discussion. She observed that the amendment indicates that the appropriation is effective only if the Court deposits the money into the general fund. She asked if the Administration supports the amendment. Co-Chair Hanley explained that the amendment asks the Attorney General to notify the Governor that there is no court order that would prevent the money from going to general fund. Representative Brown questioned if the amendment prevents the Court from making any dispositions of the money other than to the general fund. Ms. Slagle stated that the appropriation would be null and void if the Court decided to do anything with the money other than to place it into the general fund. She noted that there has been a request that money be placed into a trust fund for the prisoners. She observed that the request was drafted by the Department of Law. Representative Grussendorf spoke in support of the amendment. There being NO OBJECTION, Amendment 21 was adopted. Representative Navarre stated that he felt the amendment was unnecessary. Representative Brown expressed objections based on her belief that the amendment was unnecessary. DEPARTMENT OF ADMINISTRATION Representative Navarre MOVED to RESCIND the Committee's action in failing to adopt Amendment 4. THe amendment would fund the Public Defender Agency at $125.0 thousand dollars. He explained that the Public Defender Agency anticipates program receipts from permanent fund dividend collections which cannot be spent without authorization. He suggested that the general fund amount could be reduced to $36.0 thousand dollars. Co-Chair Hanley pointed out that the $89.0 thousand dollars 14 from permanent fund collections will be deposited into the general fund. A roll call vote was taken on the MOTION to rescind. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-7). DEPARTMENT OF REVENUE Representative Martin MOVED to adopt old section 15. He explained that the amendment would add $259.5 thousand dollars for additional safekeeping and debt management advisor fees. There being NO OBJECTION, it was so ordered. UNIVERSITY OF ALASKA Co-Chair Hanley referred to Amendment 16. Ms. Redman observed that the University is negotiating a construction bid for replacement of the panels on the Butrovich Building. She explained that the funding must be available when the bid is granted. She stated that the amount needed in FY 95 general fund dollars is $989.0 thousand dollars. Representative Therriault amended Amendment 16 to reflect $989.0 thousand dollars in general fund dollars. Representative Therriault MOVED to adopt amended Amendment 16. Representative Navarre spoke in support of the amendment. There being NO OBJECTION, it was so ordered. Representative Mulder MOVED to report CSHB 137 (FIN) out of Committee with individual recommendations. CSHB 137 (FIN) was reported out of Committee with a "do pass" recommendation.