HOUSE BILL NO. 325 An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. HOUSE BILL NO. 326 An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date. FRONT SECTION Co-Chair Hanley provided members with a proposed committee substitute for HB 325 (FIN), 0-GH2038\F, dated 4/16/98 (copy on file). He reviewed the changes to the Front section. He noted that the Governor's proposal to changed "$450" to "$472" million dollars in section 1 was adopted. Section 6 of the Governor's bill was deleted. The Governor's proposal included language to clarify that the appropriation would be reduced if legislation were enacted to change the program to needs based. If the legislation is passed a fiscal note will accompany it to make the reductions. Co-Chair Hanley noted that section 6(a) was added to clarify that if there are unrestricted general funds remaining after funds are reappropriated from the budget reserve fund to the subfunds and accounts from which they were transferred, it would not go back to the unrestricted general fund account. The Governor is in agreement with the language. Any surplus funds would stay in the Constitutional Budget Reserve. Language regarding the supplemental for Disaster Relief and Fire Suppression was deleted. Co-Chair Hanley observed that the Governor has the ability to come before the Legislature and request a supplemental. New language was added in section 8 to specifically identify the types of program receipts that are appropriated conditioned on compliance with program review provisions. The amount of section 14, Alaska Marine Highway System Fund, was changed to reflect the back section. Changes were made to section 21 to reflect labor contracts. The total dollar amounts were adjusted to reflect a lower CPI amount. Section 21(c) is a new section: "Funding for salary and benefits adjustments for University of Alaska employees who are not members of a collective bargaining unit and for the following collective bargaining agreements is included in the appropriations made to the University of Alaska in sec. 31 of this Act." Co-Chair Hanley explained that the intent is that all the contracts be funded from the University's full appropriation. Representative Martin referred to section 10, Four Dam Pool Transfer Fund. He expressed concern that excess money in the Fund has been used for capital improvement projects. He maintained that $11 million dollars should have been appropriated to the Fund. Co-Chair Hanley observed that under the statutes communities are allowed to deduct some of their expenses for maintaining the infrastructure related to power generating sources from the payment. Expenditures have to be approved by the Alaska Industrial Development and Export Authority (AIDEA). Representative Grussendorf pointed out that the intent is to keep the rates stable. Co-Chair Therriault MOVED to ADOPT proposed committee substitute for HB 325 (FIN), 0-GH2038\F, dated 4/16/98. There being NO OBJECTION, it was so ordered. Representative Davies MOVED to ADOPT Amendment Front Section-1 (copy on file). He explained that the amendment is conceptual. It would add the appropriations for University of Alaska collective bargaining agreements in section 21. Co-Chair Hanley stated that he would rather move all the collective bargaining adjustments from the front section to the back section. He stressed that the intent is that the contracts be funded. Co-Chair Hanley MOVED to ADOPT to amend Amendment Front Section-1 to move contract funding to the back of the operating budget. Representative Davies spoke in support of keeping the University's contract and COLA language in the front section. A roll call vote was taken on the motion. IN FAVOR: Kelly, Kohring, Martin, Mulder, Davis, Foster, Hanley, Therriault OPPOSED: Moses, Davies, Grussendorf There being NO OBJECTION, Amendment Front Section-1 was adopted as amended. Co-Chair Hanley WITHDREW Amendment Front Section-2 (copy on file). Representative Grussendorf MOVED to ADOPT Amendment Front Section-3 (copy on file). Amendment Front Section-3 would amend section 8, page 3, line 26 by adding "test fishery receipts". There being NO OBJECTION, it was so ordered. Representative Grussendorf WITHDREW Amendment Front Section- 4 (copy on file). Co-Chair Hanley noted that fixed costs for disasters are funded in the back section of the budget. Representative Grussendorf MOVED to ADOPT Amendment Front Section-5 (copy on file). Amendment Front Section-5 would provide $6,735,460 million dollars to fund the monetary terms of the collective bargaining agreements for salary and benefit adjustments in the executive branch, Alaska Court System, University of Alaska, and legislative branch. DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR explained that the amendment would cover confidential employees for the executive branch. With the adoption of Amendment Front Section-1, Amendment Front Section-5 would provide additional funding for the University of Alaska. The appropriation would be new money. Co-Chair Hanley clarified that the goal is not to add dollars. He suggested that an amendment is needed to approve collective bargaining agreements for the Confidential Employees Association of the executive branch. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR agreed that language is needed to fund the collective bargaining agreements for the Confidential Employees Association of the executive branch. Co-Chair Hanley MOVED to amend Amendment Front Section-5 by replacing it with the following language from Amendment Front Section-2: "Funding for collective bargaining agreements for the Confidential Employees Association, representing certain employees of departments of the executive branch of state government, is included in the appropriations made to those departments in sec. 31 of this Act." Co-Chair Hanley clarified that no new funding is being appropriated to fund these contracts. There would be an unallocated reduction of $117 thousand dollars spread throughout the agencies. Ms. McConnell questioned if the intent is to set this union apart from others. Co-Chair Hanley clarified that the intent is not to treat the union differently, but to accommodate the contract within the Majority's spending plan. Co-Chair Hanley clarified that the entire $627.4 thousand dollars for the University of Alaska was moved to the back section. Authorization language is maintained in the front section. Representative Kohring spoke against approving the contracts. Representative Foster expressed concern with unallocated reductions. A roll call vote was taken on the motion. IN FAVOR: Davies, Davis, Foster, Grussendorf, Kelly, Martin, Moses, Mulder, Therriault, Hanley OPPOSED: Kohring The MOTION PASSED (10-1). Co-Chair Hanley explained that the Governor had proposed an additional $1.6 million dollars for the University of Alaska and $117 thousand dollars for the Confidential Employees Association. There being NO OBJECTION, Amendment Front Section-5 was adopted as amended. Co-Chair Hanley MOVED to ADOPT Amendment Front Section-6 on behalf of Representative Williams (copy on file). Amendment Front Section-6 would add $442,860 thousand dollars for additional education support in the Ketchikan School District. KYLE JOHANSEN, STAFF, REPRESENTATIVE WILLIAMS spoke in support of Amendment Front Section-6. He emphasized that jobs have been lost in Ketchikan due to the closure of its pulp mill. He noted that federal timber receipts have been reduced. Ketchikan cannot increase its funding through the foundation funding. Ketchikan has not received any hold harmless funding to make up for the drop in their school population. (Tape Change, HFC 98 - 115, Side 2) Co-Chair Therriault reiterated that Ketchikan does not rise to the 10 percent trigger for additional funding. Mr. Johansen stressed that the trigger is too high. Co-Chair Therriault emphasized that the entire foundation formula would be reviewed in SB 36. Representative Martin maintained that all the state's school districts should be reviewed as a whole. Representative Grussendorf maintained that no school district would ever trigger the 10 percent requirement for additional funding. He spoke in support of the amendment. Mr. Johansen explained that Ketchikan received an additional $25 million dollars from a federal settlement. The settlement requires the money be used to start new economic development to replace the mill closure. Ketchikan has lost approximately 230 students in the current school year. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses OPPOSED: Davis, Foster, Kelly, Kohring, Martin, Mulder, Therriault, Hanley The MOTION FAILED (3-8). MENTAL HEALTH Co-Chair Hanley MOVED to ADOPT Amendment Mental Health-2 (copy on file). Amendment Mental Health-2 would add $530 thousand dollars for Mental Health Trust Land Management. He explained that appropriations from the Mental Health Trust were inadvertently left out. There being NO OBJECTION, it was so ordered. DEPARTMENT OF HEALTH AND SOCIAL SERVICES Co-Chair Hanley MOVED to ADOPT Amendment HSS-2 (copy on file). Amendment HSS-2 would transfer $70 thousand dollars from Medicaid Services to the Department of Fish and Game, Commissioner's Office. He observed that $100 thousand fish and game fund dollars were deleted from the Commissioner's office. There being NO OBJECTION, it was so ordered. Representative Martin MOVED to ADOPT Amendment HSS-3 (copy on file). Amendment HSS-3 explains the intent of the House Finance Committee in deleting funding for the General Relief Medical program (GRM). The letter of intent states that a major portion of GRM funding is used to pay for free elective abortions and abortion related services. The intent also maintained that there is little or no regulatory overview or accountability for the expenditures. Representative Davies OBJECTED. He spoke against the amendment. Representative Martin spoke in support of the amendment. Representative Kohring added his name as a sponsor. A roll call vote was taken on the motion. IN FAVOR: Foster, Kelly, Kohring, Martin, Mulder, Therriault, Hanley OPPOSED: Davies, Davis, Grussendorf, Moses The MOTION FAILED (4-7). Representative Davies MOVED to ADOPT Amendment HSS-4 (copy on file). Amendment HSS-4, as amended by the sponsor, would transfer $76 thousand dollars from Medicaid Services to Confidential Employees Association Bargaining Agreements. Representative Davies clarified that the intent is that the bargaining unit is treated the same as all the other bargaining units. There being NO OBJECTION, it was so ordered. Co-Chair Hanley MOVED to ADOPT Amendment HSS-5 (copy on file). Amendment HSS-5 would transfer $50 thousand dollars from Medicaid Services to the COMPASS Component in the Department of Health and Social Services. There being NO OBJECTION, it was so ordered. Co-Chair Hanley MOVED to ADOPT the proposed committee substitute for HB 326 (front section) #0-GH2040\E, dated 4/8/98 (copy on file). There being NO OBJECTION, it was so ordered. DEPARTMENT OF ENVIRONMENTAL CONSERVATION Representative Davies MOVED to ADOPT Amendment DEC-21 (copy on file). Amendment DEC-21 would restore a position in Administrative Services. Funding for the position was adopted in a previous amendment. There being NO OBJECTION, it was so ordered. Co-Chair Hanley MOVED to ADOPT Amendment DEC-22 (copy on file). Amendment DEC-22 corrects a technical problem in Amendment DEC-3A. It clarifies that the funding source in Amendment DEC-3a is the Alaska Drinking Water Fund. There being NO OBJECTION, it was so ordered. DEPARTMENT OF PUBLIC SAFETY Representative Davis MOVED to ADOPT Amendment PS-8 (copy on file). Amendment PS-8 would delete $50 thousand dollars from the Office of Public Advocacy and $50 thousand dollars from the Alaska Public Defenders Agency; and add $50 thousand dollars for Fish and Wildlife Service, Enforcement/Investigative Services and $50 thousand dollars for Department of Public Safety, Alaska State Troopers Detachments. Representative Davis spoke in support of the amendment. Representative Davies OBJECTED. Representative Grussendorf expressed concern with the funding source. Co-Chair Hanley spoke in support of the amendment. He noted that both offices have come in under their original request during a number of years. He noted that there is additional money in their budgets to fund some of the Smart Start Program. Representative Davies expressed support for the addition, but expressed concern with the deletion. Representative Foster and Representative Davies spoke against the amendment. Ms. McConnell stressed that both offices will have a significant increase due to an intensified effort on child abuse and neglect enforcement. She stressed that the offices have had to keep positions open in areas where there is a backlog because they did not know if a supplemental request would be approved. She expressed concern with the funding level and predicted that there would be a significant bottleneck in the offices. Both offices have seen increased caseloads in the last three months, related to child abuse and neglect. Representative Davis MOVED to amend the amendment to put all $100 thousand dollars into the Fish and Wildlife Services. There being NO OBJECTION, it was so ordered. Representative Davies MOVED to amend the amendment by changing the deletes to the Department of Law, Oil and Gas Litigation. He maintained that the Committee is intentionally underfunding the Office of Public Advocacy and Permanent Fund. He stated that he would rather see the Department of Law, Oil and Gas Litigation component intentionally underfunded. Co-Chair Hanley expressed frustration with the size of the Smart Start program. He maintained that the level of the program was designed to fit into the level that was perceived to be available. He pointed out that the entire Smart Start program has not being funded. Representative Grussendorf spoke in support of the amendment to the amendment. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Foster, Kelly, Moses OPPOSED: Mulder, Davis, Kohring, Martin, Hanley, Therriault The MOTION FAILED (5-6). A roll call vote was taken on the motion to adopt Amendment PS-8 as amended by Representative Davis. IN FAVOR: Davis, Foster, Kelly, Kohring, Martin, Mulder, Therriault, Hanley OPPOSED: Davies, Grussendorf, Moses The MOTION PASSED (8-3). Co-Chair Hanley suggested that the additional officers be placed in areas where the representation supports them. Representative Davies expressed concern that vacant positions in the Office of Public Advocacy and Permanent Fund not be held open due to a lack of funding. Representative Mulder expressed frustrations that actions by unions have not supported additional placement of officers. DEPARTMENT OF EDUCATION Representative Grussendorf MOVED to ADOPT Amendment DOE-10 (copy on file). Amendment DOE-10 would add $163.5 thousand dollars to the Alaska Postsecondary Education Commission for the State Educational Incentive Grant Program. He spoke in support of the amendment. Only 160 of 1,200 applicants would receive grants at the current funding level. This is a federally funded program. He expressed concern that federal funding would be lost without state participation. (Tape Change, HFC 98 -116, Side 1) Representative Kelly spoke against the amendment. Representative Davies spoke in support of the amendment. He emphasized that the grants go to low income students. Representative Kelly maintained that other grants and loans are available. Co-Chair Hanley spoke against the amendment. Representative Grussendorf reiterated that there are 1,200 students applying for the grants per year. Grants range from $100 to $1,500 hundred dollars. A $119 thousand dollar state match is needed to maintain the program. A roll call vote was taken on the motion. IN FAVOR: Davies, Foster, Grussendorf, Moses OPPOSED: Davis, Kelly, Kohring, Martin, Therriault, Hanley Representative Mulder was absent from the vote. The MOTION FAILED (4-6). Representative Kohring MOVED to Rescind the Committee's action in failing to adopt Amendment CRA-1 (copy on file). The amendment would delete $472.5 thousand dollars in federal funds for Community Development Assistance. Representative Grussendorf OBJECTED. He spoke against the motion. He pointed out that the funds are purely federal. A roll call vote was taken on the motion. IN FAVOR: Kelly, Kohring, Martin, Mulder, Therriault, Hanley OPPOSED: Davis, Davies, Foster, Grussendorf, Moses The MOTION PASSED (6-5). Representative Kohring MOVED to amend Amendment CRA-1 by reducing the deletion to $236.25 thousand dollars. There being NO OBJECTION, it was so ordered. Representative Kohring spoke in support of the amendment. He maintained that RuralCAP has not used the money appropriately. He asserted that the money has been spent on political purposes. He referred to an arts catalog. Representative Grussendorf spoke against the amendment. Representative Kelly stressed that an ombudsman report indicated that the catalog did not fulfill its goal to provide markets. Representative Martin pointed out that 80 percent of the grant for artists is going to administration. Representative Davies spoke against the amendment. He suggested that the funding could be put to better use in the future. Representative Grussendorf pointed out that the audit was based on activities in 1993 and 1994. He questioned if corrective actions have been taken. Representative Kohring observed that an attorney representing RuralCAP testified on subsistence. Representative Davies questioned if the attorney was funded from the money in question. A roll call vote was taken on the motion. IN FAVOR: Kelly, Kohring, Martin, Mulder, Davis, Therriault, Hanley OPPOSED: Grussendorf, Moses, Davies, Foster The MOTION PASSED (7-4). Representative Mulder MOVED to report CSHB 325 (FIN) and out of Committee. There being NO OBJECTION, it was so ordered. Representative Mulder MOVED to report CSHB 326 (FIN) out of Committee. There being NO OBJECTION, it was so ordered.