HOUSE BILL 113 "An Act extending lapse dates for certain prior year appropriations; making supplemental, capital, and special appropriations; and providing for an effective date." DEPARTMENT OF NATURAL RESOURCES Section 4(e) $200.0 thousand dollars - Perseverance Trail NICO BUS, CHIEF, FINANCIAL SERVICES, DEPARTMENT OF NATURAL RESOURCES, stated that the requested funding would provide emergency repairs to the severely storm damaged Perseverance Trail. Though the trail is closed, use continues under extreme hazardous conditions. The work needs to be done before the summer season, to capture the high use period. Delaying the work until the Fall would expose workers to dangerous avalanche and weather conditions and would increase project costs by limiting the time and access. Co-Chair Therriault inquired if any of the trail rested on private property. Mr. Bus noted that the entire trail system was an "easement into perpetuity", belonging to the State of Alaska. Mr. Bus advised that no permits would be needed for blasting. Co-Chair Hanley voiced concern with the impact of the blasting on the streams. He requested that a letter of response be provided by the Department of Fish and Game, which would address the impacts of blasting on the streams, in order that consistency could be created in use for other requests. Mr. Bus replied that no permit is needed because a concrete flume exists at the bottom of the area and that no salmon can run up. Mr. Bus spoke to the breakdown of the request; $120 thousand dollars would be used for the blasting work and $80 thousand dollars would be used for the bridge repair and tread work from the beginning of the trail to the last bridge. Mr. Bus provided Committee members a handout illustrating the 10 Perseverance trail emergency repairs. [Copy on file]. He provided an overview of that handout. Representative Kohring questioned the "emergency" need of the project. He urged that the request be addressed in the Capital Budget Request (CBR). Mr. Bus reminded Representative Kohring that over 35,000 people use the trail. It is necessary to begin the work in May to be able to address summer tourism. Representative Kohring noted that the trail is used for recreation purposes only. Representative J. Davies argued that the timing of the project places it into the Supplemental Request category and that the impact of not doing the work now, would close the trail for the entire summer. Representative Martin asked if tourism raised enough money to address the concern and future repairs of the area. Mr. Bus replied that the user fee for tourism was $250 dollars a year. He argued that the State of Alaska is the land owner, whose responsibility it is to keep the area safe. Representative Martin asked if the City of Juneau would participate in covering the costs. Mr. Bus noted that the City's budget was limited as a result of many areas experiencing significant storm damage this year. Mr. Bus spoke to the timing of the repair work noting that if it commenced on May 1st, it would be ready for the summer tourists in early June. Representative J. Davies asked if the commercial use fees were placed into the General Fund. Mr. Bus informed members that those fees are placed into the Division of Parks budget, and then used for operation purposes. Section 9(a) $3,788.3 thousand dollars - Fire Suppression Mr. Bus noted that the request would address the fire suppression budget from January through June, 1997. Last year, the Department spent $7.8 million dollars and carried forward $2.1 million dollars, leaving a balance of $1.5 million dollars. Costs between now and June, 1997, are estimated to be $5.3 million dollars. Co-Chair Hanley asked the amount of fixed costs in the request. Mr. Bus replied that the fixed costs from January through July, would be $2.3 million dollars. Co-Chair Hanley understood that the fixed costs would be addressed in the Operating Budget and that the "non-fixed costs" would be addressed in the Supplemental Budget Request. Mr. Bus 11 replied that the fixed costs to the Department were $4.6 million dollars, and were divided into two time segments. Mr. Bus added that the increase to the fixed cost budget resulted from long term contracts coming up for renewal at higher amounts than originally contracted for. Section 9(c) $100.0 thousand dollars - Old Eagle School Site Mr. Bus informed Committee members that this supplemental request would fund the removal of existing buildings and facilities at the Old Eagle School site and would allow for eventual remediation of contaminated soils at the site so to reduce health and safety hazards. The request had resulted from a lawsuit which was filed by the Village of Eagle. The judge ordered that the money be appropriated by July, 1996. Co-Chair Hanley asked who built the school. Mr. Bus stated that it was purchased from the Bureau of Indian Affairs (BIA). To make the site useable, the buildings will need to be cleaned up and the soil contamination addressed. The Village of Eagle sued the U.S. Government and the State of Alaska. BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, CIVIL DIVISION, DEPARTMENT OF LAW, noted that the settlement was adopted as an order of the Court. The U.S. government is not contributing to the removal costs. There is no evidence to indicate that the contamination existed in 1967 when the State took title of the property. She stated, the State of Alaska is responsible for the clean-up costs and all hazards on the property. Ms. Ritchie continued, the Village of Eagle brought their law suit against the State in order to bring the property back to it's original state. The U.S. government and the State of Alaska moved to dismiss the case based on sovereign immunity. There exists a statute stipulating that a suit can be brought forward, if the complaint is filed by the same entity who owned the property before the contamination. The United States dismissed it, noting that they were not the former owner of the property. The judge denied that action and requested a briefing in order to check the Alaska Native Claims Settlement Act (ANCSA) status of government at that time. Co-Chair Therriault pointed out that the building was "laced" with asbestos before the State took ownership from the federal government. Ms. Ritchie assessed that the asbestos tiles were in the floor and were not in and of 12 themselves illegal. If they were well maintained, there would not be a release of fiber. The problem developed when the State purchased the property, and it was no longer maintained. Co-Chair Hanley voiced his frustration that the State is held liable for an REAA responsibility. Ms. Ritchie reiterated that this is State property and that it is not being operated by an REAA at this time. Mr. Nico advised that the requested funding would only address Phase I of the project. Following completion of that, the oil contamination problem would need to be addressed. This request has been expedited because of the Court settlement order completion by July 1, 1997. Ms. Ritchie reiterated that there are no facts indicating that a problem existed before the State took over ownership of the property. Committee members noted their surprise that the federal government would not be responsible for any of the costs. (Tape Change HFC 97-47, Side 2). DEPARTMENT OF LAW Section 6(a) 0.0 - Oil and gas audits & legal proceedings FRED FISHER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF LAW, pointed out that in most years since FY79, the Department has received more than one appropriation per year for oil and gas litigation purposes. Beginning in FY92, the Legislature changed that policy by making only one appropriation per year. Consequently, from the years FY92 through FY95, the Department requested supplemental appropriations, although, had difficultly spending those appropriations by the end of the fiscal year. As a result, management policy was to encumber the funds received late in the fiscal year and spend those funds during the following fiscal year. This practice was questioned last year by the Division of Budget and Audit, at which time, the Department requested a lapse date extension which was granted by the Legislature. Mr. Fisher spoke to the available options. He noted that concerns had been expressed with tapping the Constitutional Budget Reserve (CBR) fund 3/4 vote. Ms. Ritchie noted her surprise by handout provided from the Governor's Office recommending deletion of the request. [Copy on file]. 13 Mr. Fisher referenced another option which would request a General Fund supplemental in leu of the last date extension. An additional option would be deleting the entire section. He believed, to discontinue the current practice would place the Department in a situation requiring future supplemental appropriations. Co-Chair Hanley agreed that there have been carry-forwards for many years. He suggested that the Department provide a budget which clarifies what they anticipate the need will be for litigation. Should the Department have unforseen circumstances, they will then come to the Legislature for a supplemental. Co-Chair Hanley requested no more carry- forwards. Mr. Fisher advised, of the $7 million dollars allocated, the Department has spent $6.1 million dollars and anticipates using the remainder before the end of the fiscal year. He pointed out that the request had been made in order to clear potential audit questions. Co-Chair Hanley noted that a split supplemental would not create problems; carry-forwards create problems. Mr. Fisher pointed out that prior year costs to the budget generally are representative of actual expenditures and encumbrances as of the end of the fiscal year. That action has created confusion to oil and gas litigation costs. Co-Chair Hanley requested a spread-sheet of the "actual" costs as well as anticipated "actual" costs to be spent by the Department over the year. The chart should indicate the $7 million dollars that was encumbered in the previous fiscal year and spent in this fiscal year. Section 6(b) $97.1 thousand dollars - Civil Ms. Ritchie provided Committee with a handout identifying additional FY97 judgments from the General Fund. [Copy on file]. The list contains a total itemized request of $235.1 thousand General Fund dollars. Co-Chair Hanley asked if the Venetie versus State case was a judgement or settlement. Ms. Ritchie stated that request was for $11.7 thousand dollar costs awarded to the plaintive by the federal District Court arising from the trial of that case. The request does not cover attorney fees or settlement costs. No payment was involved in the settlement. 14 She commented that this was not the Venetie case that the State is currently taking to the Supreme Court. The case referenced in Section 6(b) originated in November, 1986, when the IRA Councils of Venetie sued the State and the Commissioner of the Department of Health and Social Services for an injunctive and declaratory relief addressing substitute birth certificates. The State declined to issue the birth certificates on the basis that the Tribal Courts did not have the authority to undertake the adoption. Mr. Ritchie continued, the case went to the 9th Circuit Court and then remanded back to the District Court for a trial on the Tribal status issue. When the case was remanded, it was consolidated for the purposes of a trial. Eventually, the judge issued a decision on tribal status and Indian country. Ms. Ritchie noted that the request would cover costs accrued by the plaintiffs in that case. They also sought attorney fees which Judge Holland denied. The issue of case addressed Tribal status and costs were awarded. Co-Chair Hanley noted that Alaska Legal Services was representing the Venetie case. Ms. Ritchie interjected that case was being represented by Alaska Legal Services, although, the tax case was represented by the Native American Rights Fund. Alaska Legal Services is a private, non-profit, established by federal law, and recipient of funding under the Legal Service's Act appropriated by Congress. Legal Services is allowed under federal law, to represent any sort of group or association if that group is composed of people eligible for that assistance under the Legal Services Corporation Act. That criteria is based upon income. Representative J. Davies asked if the interest column would increase. Ms. Ritchie replied that the interest column had been calculated through June 30, 1997. Ms. Ritchie noted that in 1996, Congress amended the Legal Services Act to prohibit recipients of Legal Services funding from collecting attorney's fees. That prohibition applies to all cases after the enactment date, although, would not apply to cases with pending issues prior to that time. HB 113 was HELD in Committee for further discussion.