HOUSE BILL 75 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; and providing for an effective date." HOUSE BILL 76 "An Act making appropriations for the operating expenses of the state's integrated comprehensive mental health program; and providing for an effective date." DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES Representative Foster MOVED to adopt TRANS-#1. [Copy on file]. Representative Foster noted that he offered the amendment on behalf of Representative Williams. PETER ECKLUND, STAFF, REPRESENTATIVE BILL WILLIAMS, explained that the amendment would restore $200 thousand dollars of the funding removed by the unallocated reduction to the Alaska Marine Highway System and $200 thousand dollars to restore expenditure authority in the Marine Management BRU from the personal service funding for management level positions. Co-Chair Therriault spoke to the $200 thousand dollar reduction. Mr. Ecklund pointed out that the two appropriations would have the same money, although, the front section would need to be amended. The additional 2 amount would be $200 thousand dollars. Representative Foster noted that an unallocated cut had been evenly distributed throughout the Marine Highway component. LARRY LABOLLE, STAFF, REPRESENTATIVE RICHARD FOSTER, spoke to the percent cut in each allocation. The subcommittee's intent was to "hold harmless" maintenance and scheduling operations. The cut percentage was rationed out of general funds after the other funds were backed out, leaving $28.6 million general fund dollars and $12 million dollars to statewide services. He reiterated that the cut had been proportioned within the components. NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, agreed with the intent of the subcommittee's action. She noted that the Department's Commissioner's office is moderately sized for a statewide budget distribution of a $340 million dollar operating and a $220 million dollar capital. Mr. Ecklund advised that it was Representative Williams intent that the Commissioner's office reduce some staff in upper-management, although, the regional director positions would not be affected. Representative J. Davies questioned the need for two appropriations. Ms. Slagle advised that the Marine Highway Stabilization Fund was comprised of two different areas, with $40 million dollars in receipts from the Marine Highway System and a $28 million dollar appropriation to the front section of the bill. Mr. Ecklund commented that the funding would restore $200 thousand dollars back to the operations of the Marine Highway System so that service to the public would not be reduced. In response to Representative G. Davis' comment, Ms. Slagle explained that the DOT&PF Administration office consists of funding by two appropriations. One from the Marine Highway System and one is from the remainder of the Department's funding allocation. The Commissioner's office resides in that appropriation giving the Department some flexibility in transferring money. She reiterated that it was the intent of the subcommittee to keep operations and maintenance "harmless" from reduction. Ms. Slagle pointed out that the Department is currently in the process of reviewing management concerns. Representative Kohring OBJECTED to passage of the amendment. 3 A roll call vote was taken on the MOTION. IN FAVOR: Kelly, G. Davis, Grussendorf, Foster, Hanley, Therriault OPPOSED: Kohring, Martin, Moses, J. Davies Representative Mulder was not present for the vote. The MOTION PASSED (6-4). Representative Foster MOVED to adopt TRANS-#2. [Copy on file]. Mr. Ecklund explained that the amendment would restore a portion of the funding removed from the component by an unallocated reduction of $140 thousand dollars to the Marine Highway System. Ms. Slagle explained that this reference had been to a single appropriation made from several BRU's. The total amount of the unallocated reduction had been taken from the first available component, support services. Even though it is indicated in support services, is not necessarily the component from which it will be absorbed from. Representative Martin OBJECTED to adopting TRANS-#2. A roll call vote was taken on the MOTION. IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf, Foster, Kelly, Hanley OPPOSED: Kohring, Martin, Therriault Representative Mulder was not present for the vote. The MOTION PASSED (7-3). MIKE GREANY, DIRECTOR, DIVISION OF LEGISLATIVE FINANCE, advised that there were three components which had an extended lapse date. Ordinarily, appropriations lapse on June 30th. For the three highway/aviation components contained in the bill, there is an August 30th lapse date. He recommended that language be included in the bill. Co- Chair Hanley requested a written copy of the information and noted that the Committee would address it at that time. DEPARTMENT OF LAW Representative Grussendorf MOVED to adopt LAW-#1. [Copy on file]. Representative Martin OBJECTED. Representative Grussendorf explained that the three positions in the Department for the Criminal Division had not been previously funded and would further reduce the ability of that division to handle the number of cases which 4 come before them. The current vacancy factor is 6.9%, while at the same time, since January, there have been forty-eight bills introduced which will increase activities and penalties directly affected by the reduction. Representative Martin responded that the positions chosen to be deleted had been vacant for the longest time and would be the mostly costly to refill. FRED FISHER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF LAW, explained that the original proposal was to delete the referenced positions and add a new position in Kenai. Since that time, the position in Kenai was deleted. DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES SECTION, CRIMINAL SECTION, DEPARTMENT OF LAW, commented that an attorney and paralegal had been transferred from Anchorage to the Kenai office. He stressed that the deletion to the two positions in the Criminal Division was a "serious" cut to the Department and that lay- offs would result. Representative Martin disagreed that it would be necessary to switch an attorney from Anchorage to Kenai. He stressed that the position had been vacant since 1994 and therefore, was not needed. Representative J. Davies stressed that there was a "big" difference between eliminating PCN's and not funding the requested positions. Co-Chair Hanley pointed out that the proposed budget was an increment over the FY97 budget. Mr. Fisher noted that the increase would cover salary increases. Also included was an increment to the Department of Fish and Game prosecuting attorney from Fish and Game funds. Co-Chair Hanley inquired if it had been the subcommittee's intent to reduce the number of attorneys. Representative Martin responded that if the positions were vacant, that was the subcommittee's intent. A roll call vote was taken on the MOTION. IN FAVOR: Moses, J. Davies, Grussendorf OPPOSED: Martin, G. Davis, Foster, Kelly, Kohring, Hanley, Therriault Representative Mulder was not present for the vote. The MOTION FAILED (3-7). Representative Grussendorf revised LAW-#2 by deleting $164.6 GF and inserting $139.6 GF and $25.0 inter-agency receipts. 5 [Copy on file]. Representative Grussendorf MOVED to adopt LAW-#2. He added that the Department of Law's budget was reduced by $2,381.9 thousand general funds dollars and that the Department's cap was $1,500.0 thousand general fund dollars; he stressed that no decrement should be taken. (Tape Change HFC 97-78, Side 2). Representative Martin acknowledged that he would support some funding. Mr. Fisher noted that funding would be appropriately indicated as interagency receipts since it was coming to the Department of Law from the Department of Natural Resources (DNR) rather than from the Mental Health Trust authority. Co-Chair Hanley questioned how the money would move to DNR. Mr. Fisher explained that the Trust Authority had budgeted $25 thousand dollars for professional services. There being NO OBJECTIONS to the revised LAW-#2, it was adopted. Representative Grussendorf MOVED to adopt LAW-#3. [Copy on file]. Co-Chair Hanley OBJECTED for the purpose of discussion. Representative Grussendorf explained that the amendment would provide $500 thousand general fund dollars to the Department for covering expenses of oil and gas litigation. He pointed out that component had been cut by 20% percent, while at the same time, the State is owed $1.4 billion dollars. Representative Martin argued that the money was encumbered and that the Department would have the opportunity to present cases to the Legislature as they arise. Co-Chair Therriault stressed that the Department should not be left with the understanding that they can come back and request supplemental funding. Representative Grussendorf WITHDREW LAW-#3. There being NO OBJECTION, it was withdrawn. He reiterated his primary concern was stipulated in LAW-#1. DEPARTMENT OF ADMINISTRATION Representative G. Davis WITHDREW ADMIN-#1. [Copy on file]. There being NO OBJECTION, it was WITHDRAWN. Representative Grussendorf MOVED to adopt ADMIN-#2. [Copy on file]. Co-Chair Hanley OBJECTED for the purpose of discussion. 6 Representative Grussendorf spoke to the need for the $50 thousand dollar allocation to cover costs incurred by a pilot program established by the previous Legislature. Representative G. Davis reported that the project's completion date would be June 30, 1997, and that the request would not provide a reduction in savings. SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF ADMINISTRATION, corrected Representative Davis pointing out that the proposed reduction with the additional reduction to Labor Relations would be "harmful" to the re-engineering process. Because of reductions throughout the years, the Division of Personnel has delegated everything possible to the individual departments. She stressed that there is not $50 thousand dollars in the budget which can be reduced without affecting the re-engineering projects. Representative G. Davis agreed that re-engineering would benefit everyone in the long run and noted that he would support it if the Department believed it was a "top priority". He admitted that he had initially misunderstood that there would be savings projected from the cut. Co- Chair Therriault questioned where the cut could be shifted too. Representative G. Davis pointed out that it could be a $100 thousand dollar Finance Division cut. Ms. Barton spoke to effects of the projected budget cuts and the affect they will have on labor negotiations during the following year. The Department needs at least six months for negotiation preparation time. The team is now focusing on "cleaning up" the "grievance backlog". The negotiators organize through the Labor Relations unit which has been merged into the Division of Personnel. Co-Chair Therriault asked if the reduction to leasing would be realized this year or would the Legislature be faced with an additional supplemental request. Ms. Barton acknowledged that the leasing budget would probably be in the supplemental request next year. The Governor has allocated money for leasing in his spending plan. Co-Chair Hanley was critical that the Governor had not requested enough to fully fund leasing. Ms. Barton agreed that the Governor's leasing budget was less than the projected costs by approximately $1 million dollars. A roll call vote was taken on the MOTION. IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf, Kelly OPPOSED: Foster, Kohring, Martin, Therriault, Hanley 7 Representative Mulder was not present for the vote. The MOTION FAILED (5-5). Representative Grussendorf MOVED to adopt ADMIN-#3. [Copy on file]. Representative G. Davis OBJECTED. Representative Grussendorf explained that the amendment would place $100 thousand dollars back into the Division of Motor Vehicles (DMV) field service offices. Representative G. Davis agreed that the funds had been transferred to achieve savings and to streamline the Division, specifying that the component had been given a $100 thousand dollar unallocated reduction. Co-Chair Hanley asked if the allocated amount was the same as the amount in last year's budget. Ms. Barton understood that there were no increments in the budget except for the salary and health insurance increase. SUSAN TAYLOR, FISCAL ANALYSTS, LEGISLATIVE FINANCE DIVISION, pointed out that the Division of Motor Vehicles BRU had some administration costs which had been transferred over from the Department of Public Safety (DPS) to the Department of Administration (DOA). JAY DELANY, DIRECTOR, DIVISION OF MOTOR VEHICLES (DMV), DEPARTMENT OF ADMINISTRATION, responded to Co-Chair Hanley's question regarding the efficiencies in motor vehicle registrations and noted that any savings to the Division would not be realized until the middle of FY98. Representative J. Davies emphasized that the proposal initially promised more efficiency in "reducing" the lines at the DMV. (Tape Change HFC 97-79, Side 1). A roll call vote was taken on the MOTION. IN FAVOR: J. Davies, Grussendorf, Moses OPPOSED: G. Davis, Foster, Kelly, Kohring, Martin, Moses, Hanley, Therriault Representative Mulder was not present for the vote. The MOTION FAILED (3-7). Representative Grussendorf MOVED to adopt ADMIN-#4. [Copy on file]. Representative G. Davis OBJECTED. Representative Grussendorf explained that the amendment 8 would add $50 thousand dollars to the labor relations component. Representative G. Davis pointed out that there are no major labor negotiations occurring this year. The effort of the employees within this component would be to reduce grievances and claims. There is an additional component geared toward the required management supervisory training. He suggested that the amount to be absorbed was modest and could be incorporated. Representative J. Davies asked if it was the subcommittee's intent to further fund the component at a later date when more labor contracts need to be addressed. Ms. Barton clarified that the requested $50 thousand dollars had been earmarked for the supervisory bargaining unit agreement for management training and was not funding which could flow into the labor relations component. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Moses, J. Davies OPPOSED: G. Davis, Foster, Kelly, Kohring, Martin, Therriault, Hanley Representative Mulder was not present for the vote. The MOTION FAILED (3-7). Representative Grussendorf MOVED to adopt ADMIN-#5. [Copy on file]. Representative G. Davis OBJECTED. Representative Grussendorf explained that the amendment would add $50 thousand dollars to protection, community services and the administration component for senior services. The allocation would provide funding for license review of elderly home conditions. Representative G. Davis directed attention to the fact that this component had been moved over from the Department of Health and Social Services (DHSS). He suggested that the amount could be absorbed through greater efficiencies. Representative Kohring spoke in favor of the amendment which supports senior citizens. Ms. Barton stressed that the cut would have a $50 thousand dollar effect on services to seniors particularly to the assisted living licensing review and the general relief supplements for adult foster care. That component has never been fully funded, and that currently, there is tremendous amount of growth in those areas. A roll call vote was taken on the MOTION. 9 IN FAVOR: Grussendorf, Kohring, Moses, J. Davies OPPOSED: Foster, Kelly, Martin, G. Davis, Hanley, Therriault Representative Mulder was not present for the vote. The MOTION FAILED (4-6). Representative J. Davies MOVED to adopt ADMIN-#6. [Copy on file]. Representative G. Davis OBJECTED. Representative J. Davies explained that the amendment would bring the Office of Public Advocacy (OPA) up to the FY98 level (FY98 authorized including House level of funding in supplemental). At the subcommittee level, OPA was funded below FY97 authorized plus the supplemental requested. He clarified OPA's primary areas of responsibility: * Provides guardian ad litem representation to abused and neglected children; * Assigned whenever the Public Defender has a conflict of interest in a case; and * Public guardian section (acts as guardian and/or conservator for citizens who suffer from one of more disabilities and whom the court has decided are unable to manage their own affairs). Co-Chair Hanley questioned why the Governor's proposed budget did not fully fund OPA. Ms. Barton responded that the Governor's recommendation did not fund OPA to the projected costs for FY98 because their Office did not realize the anticipated growth in that area. Co-Chair Hanley cited that it was not the Legislature's intent to fund any more than that requested by the Governor. He summarized that additional money would not be provided through next year's supplemental. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, acknowledged that the Administration has been trying to avoid the "supplemental" practice, particularly in the areas of OPA, leasing and Public Defender (PD). She agreed that the funding should have been addressed through the operating budget and not through the supplemental. Discussion followed regarding a memo distributed by the Legislature to the Governor's Office regarding budgetary requests and supplemental funding. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Moses, J. Davies 10 OPPOSED: Kelly, Kohring, Martin, G. Davis, Foster, Therriault, Hanley Representative Mulder was not present for the vote. The MOTION FAILED (3-7). DEPARTMENT OF EDUCATION Representative Kelly MOVED to adopt ED-#1 which would grant authority to accept federal funds for "foodstuffs" available to children. [Copy on file]. There being NO OBJECTION, ED- Representative Kelly MOVED to adopt ED-#2 which would provide carryover due to the federal holdup of funds. [Copy on file]. There being NO OBJECTION, ED-#2 was adopted. Representative Kelly MOVED to adopt ED-#3. [Copy on file]. There being NO OBJECTION, ED-#3 was adopted. Representative Kelly WITHDREW ED-#4. [Copy on file]. There being NO OBJECTION, ED-#4 was WITHDRAWN. Representative Kelly MOVED to adopt ED-#5 which would correct an oversight error in the original budget document. [Copy on file]. He noted that no new funds would be involved. There being NO OBJECTION, it was adopted. Representative Kelly MOVED to adopt ED-#6 which would adopt program receipt authority for the Alaska State museums, deleting general funds and replacing it with that authority. [Copy on file]. There being NO OBJECTION, it was adopted. Representative Kelly WITHDREW ED-#7. [Copy on file]. There being NO OBJECTION, the amendment was WITHDRAWN. Representative Kelly WITHDREW ED-#8. [Copy on file]. There being NO OBJECTION, ED-#8 was WITHDRAWN. Co-Chair Hanley revised ED-#9, changing $270 thousand general fund dollars to $135 general fund dollars each to Vocational Rehabilitation and AVTEC. [Copy on file]. That action would reduce the Alaska State Archives component to $80 thousand dollars, the Governor's requested amount. Representative J. Davies questioned if that funding would allow the second archives position to be maintained. KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION, explained that the cut would provide for only a part-time position. The Department will be loosing Capital Improvement Project (CIP) receipts at the end of this fiscal year. The archives component is 11 budgeted at maximum vacancy and would not be able to fully fund a full time position. Co-Chair Hanley offered an additional revision to the amendment, reducing by $10 thousand dollars each the VocRehab and AVTEC add-backs and reducing the Alaska State Archives by $80 thousand dollars. Co-Chair Hanley MOVED to adopt the amended ED-#9. There being NO OBJECTION, it was adopted. Representative J. Davies WITHDREW ED-#10. [Copy on file]. There being NO OBJECTION, it was WITHDRAWN. Representative J. Davies MOVED to adopt ED-#11. [Copy on file]. Representative Kelly OBJECTED. REPRESENTATIVE KIM ELTON explained that the amendment would restore the 67% funding which had been cut from the State Board of Education, including the one support position assigned to the board. Representative Kelly proposed that the board needed to be more independent. Ms. Rehfeld explained that the position cut was an existing position which had been reassigned in the FY98 budget; that person had been transferred in to the State Board budget position. It is funded entirely to charge-back funds in the Department of Education. The reduction will eliminate all the inter- agency receipts, the position and the general fund support for the State Board. Representative Kelly noted that he would support a $49.1 thousand dollar personal services line item. He did not support the travel component. Representative Kelly MOVED to amend ED-#11, deleting the general fund $40.2 thousand dollars and leaving the interagency receipts. Ms. Rehfeld understood that the intent of the amendment was to restore the $49.1 thousand dollars in personal services from interagency receipts. There being NO OBJECTION, the amended ED-#11 was adopted. Representative Kelly provided a conceptual amendment to ED- designated program receipts line to $312.7 thousand dollars for projects funded by corporate receipts. (Tape Change HFC 97-79, Side 2). There being NO OBJECTION, ED-#9(a) was adopted. Representative J. Davies MOVED to adopt ED-#13. [Copy on file]. Representative Kelly OBJECTED. 12 Representative Elton noted that ED=#13 would restore general funding which would: * Protect the receipt of over $4 million dollars in federal funds for vocational education; * Maintain the statewide testing program; and * Maintain the Youth and Justice program to increase parental involvement as a means of addressing at- risk youth. Representative Kelly noted that these funds are not in danger as alluded by Representative Elton. Ms. Rehfeld noted that the component contained $713 thousand general fund dollars; the $184 thousand dollars was a match amount. The cut would be significant to the general fund support for the testing program. A reduction of the proposed size will limit the Department's ability to have a quality testing program and will substantially jeopardize the federal match. There are few personnel associated in the State general fund dollars that support the activities of the teaching and learning support for the quality schools component. Representative J. Davies voiced a conflict in that his wife is a public school teacher. Representative Kelly argued that this is a large BRU and that the Commissioner has the authority to move money around. He did not agree that the funds were in jeopardy, stressing that cuts must be made to achieve the cap. A roll call vote was taken on the MOTION. IN FAVOR: J. Davies, Grussendorf OPPOSED: Kelly, Kohring, Martin, G. Davis, Foster, Hanley, Therriault Representative Mulder and Representative Moses were not present for the vote. The MOTION FAILED (2-7). Representative J. Davies MOVED to adopt ED-#14. [Copy on file]. Representative Kelly OBJECTED. Representative Elton explained that the amendment would restore general funds in order to: * Prevent a guaranteed loss of $668.0 federal funds for Adult Basic Education (ABE); and * Prevent a potential loss of $8 million federal funds for Special Education as a result of not meeting federal maintenance of 13 effort requirements. Representative Kelly noted that there had been an effort to combine the BRU's in the Department. The rational was to address those items which were not directly student related. Representative J. Davies pointed out that $600 thousand dollars would be impacted the Adult Basic Ed component and would be a substantial impact to students as that service provides 30% of all high school diplomas given in the State. Ms. Rehfeld noted that with a reduction to the general fund support, the Department will loose the federal ABE funds in FY99. In the component there is only $200 thousand dollars in general funds. Representative Grussendorf voiced support of the General Education Diploma (GED) and the small investment required of the State for the continued receipt of federal funding. Ms. Rehfeld explained that there has been no change in the general fund support for either the Adult Basic Education program or the amount of general fund for the Special Education staff. The Department transferred components into the Special and Supplemental Services component in total. Representative J. Davies added that the Adult Basic Education program was one of the most cost effective program the State has, compared to K-12 support. The Adult Basic Education program targets students in the age group 18-24 years old. Ms. Rehfeld spoke to the federal requirement of a maintenance of effort. At risk would be $668 thousand federal fund dollars in FY99 if the State should fail to meet the maintenance of effort. She continued, $8 million dollars federal special education funding could be jeopardized because of supplanting issues. Special Education funds are made available to the State of Alaska based upon the number of children being served. The Department through the State's Foundation Formula distributes close to $100 million dollars for Special Education. There are general funds which help support those staff persons. Representative Foster stressed the need for continued support for GED funding in Bush Alaska. He voiced support for the amendment. Representative Kelly MOVED to AMEND ED-#14, restoring $100 thousand dollars. Ms. Rehfeld explained that the Committee had not reduced the grant amount. The reductions occurred to line items where there are no general fund dollars. The remaining reduction of $260.8 thousand dollars would be removed from the personal service components. The 14 Department can not accommodate the cuts. Representative Kelly MOVED to revise ED-#14, restoring the contractual line to $150.0 thousand dollars. There being NO OBJECTION, it was amended. There being NO OBJECTIONS to the amended ED-#14, it was adopted. Representative J. Davies MOVED to adopt ED-#15. [Copy on file]. Representative Kelly OBJECTED. Representative Elton commented that the amendment would restore funding for the one position currently responsible for teacher certification. A roll call vote was taken on the MOTION. IN FAVOR: Kohring, J. Davies, Grussendorf, Foster OPPOSED: Martin, G. Davis, Kelly, Therriault, Hanley Representatives Mulder and Moses were not present for the vote. The MOTION FAILED (4-5). Representative J. Davies revised ED-#16, changing the total amount to $254 thousand dollars. [Copy on file]. Representative J. Davies MOVED the revised ED-#16. Representative Kelly OBJECTED. Representative Elton explained that the amendment would restore general funds in order to: * Prevent a guaranteed loss of $379.4 thousand dollars in federal funds for a net loss of $758.8 thousand dollars, eliminating services to 1000 disabled Alaskans. Representative Kelly stated that the amendment would provide an increase over FY97 proposed budget. He pointed out that there are many programs which need funding. He did not support funding the proposed program. Ms. Rehfeld advised that the Department had included an increase in federal authorization based on carry-forward authorization, which had been requested in this years supplemental bill. There is an increase on the federal level budget for the Rehab Program. (Tape Change HFC 97-80, Side 1). A roll call vote was taken on the MOTION. 15 IN FAVOR: J. Davies, Grussendorf OPPOSED: Martin, G. Davis, Foster, Kelly, Kohring, Hanley, Therriault Representatives Moses and Mulder were not present for the vote. The MOTION FAILED (2-7). HB 75 and HB 76 were HELD in Committee for further consideration. # ADJOURNMENT The meeting adjourned at 10:30 P.M. 16