SENATE BILL NO. 291 "An Act making supplemental and other appropriations; amending appropriations; and providing for an effective date." Co-Chair Mulder provided members with a proposed committee substitute, work draft 22-GS2102\B, 4/10/02, and accompanying spreadsheet (copy on file.) Representative Whitaker MOVED to ADOPT work draft 22- GS2102\B, 4/10/02. There being NO OBJECTION, it was so ordered. DENNY DEWITT, STAFF, REPRESENTATIVE ELDON MULDER, reviewed the legislation. He provided members with a spreadsheet detailing the changes contained in the committee substitute (copy on file). Section 1 Court System, Judicial Conduct, Legal Mr. Dewitt observed that section 1 authorizes legal fees in excess of the FY2001 supplemental in the amount is $6829.77. Section 2 Department of Community and Economic Development, Alaska Science & Technology Foundation, Idaho National Engineering and Environmental Laboratory Grant Mr. Dewitt noted that section 2 funds statutory designated program receipts for a contract for Alaska Business Research. Funds are available March 1, 2002. Section 3 Corrections, Palmer Correctional Center Mr. Dewitt noted that there is a problem with the water pump and well house, which the section would address. The request authorizes $172 thousand dollar general fund appropriation. The request was for other funds but the other body felt that general funds would be more secure. Section 4 Department of Health and Social Services, Medicaid Services, Medicaid Services Mr. Dewitt observed that the funds are need to complete the year. They are projected to run out April 16. Co-Chair Mulder noted that a lack of funding would result in a restriction of payments, which would result in a backlog. Section 5(a) Department of Transportation and Public Facilities, Marine Highway Stabilization Fund, Marine Highway Stabilization Fund Mr. Dewitt noted that the appropriation would address the FY02 deficit due to M/V Columbia fire and fuel cost increases. Section 6 Military and Veterans Affairs, Disaster Planning & Control Mr. Dewitt noted that section 6 appropriates $125 thousand dollars to cover costs to maintain the 24-hour State Emergency Coordination Center (SECC), the agency that coordinates all federal, state and local jurisdictional responses associated with any disaster or event. Section 7 Department of Natural Resources, CIP Mr. Dewitt observed that the section changes a capital improvement program in Kenai to reduce risks from wildfire. Section 8 Office of the Governor, Elections Mr. Dewitt noted that section 8 would cover costs for printing and mailing a Primary Election Voter Education Guide in time to explain the new law (shifted from the FY03 budget, which was amended). The $125 thousand dollars was taken out of the House budget when it was passed, with the expectations that it would be in the supplemental. Section 9 Department of Community and Economic Development, Power Cost Equalization & Rural Electrification Fund Mr. Dewitt explained that the amount was inadvertently omitted from the FY02 appropriation from the Power Cost Equalization Endowment fund to the Power Cost Equalization and Rural Electrification Fund. The section appropriates 3.5% of market value. Section 10 Department of Public Safety, State Troopers Mr. Dewitt noted that the section is for one-time costs associated with response to the September 11, 2001 events. Section 11 Legislature, Redistricting Board Mr. Dewitt observed that section 11 provides additional funds for personal services and board meeting. The Board has an additional $30 thousand dollars, which should cover the balance of the cost to redo their maps. Section 12 Department of Community and Economic Development, Qualified Trade Assoc. Contract Mr. Dewitt noted that section 12 appropriates $2 million dollars for additional tourism marketing efforts to mitigate the economic effects to Alaska from the September 11, 2001 terrorist attacks. The House sent a $6 million dollar appropriation to the Senate for the same purpose. Section 13(a)(1) - (4) Department of Transportation and Public Facilities Mr. Dewitt noted that there were a number of highway maintenance stations in disrepair. The funds would provide temporary rental and other costs of vacating the maintenance station due to imminent failure. Section 13(b) Department of Transportation and Public Facilities, Central Region CIP Mr. Dewitt noted that section 13 (b) is for the Anchorage Bowl - Long Range Transportation Plan Update for 2025. Federal funds would be moved forward, for immediate implementation. Section 13(c) Department of Transportation and Public Facilities, Southeast Region CIP Mr. Dewitt clarified that section 13 (c) changes the title from West Douglas Highway Extension to Gastineau Channel Second Crossing to match the federal project name. This is a change from the Senate version. Section 13(d)(1) Department of Transportation and Public Facilities, Central Region Highways and Aviation, Security and Emergency Access Routes in Anchorage Mr. Dewitt explained that section 13 (d) revises traffic patterns for enhanced security and emergency routing at the Port of Anchorage Access and access/egress from Elmendorf AFB and Ft. Richardson onto the Glenn Highway. Section 13(d)(2) (4) Department of Transportation and Public Facilities Mr. Dewitt explained that these sections fund liability premium increases as result of the September 11, 2001 terrorist attack. Section 13(e)(1)- (8) Department of Transportation and Public Facilities Mr. Dewitt noted that these sections increase the presence and visibility of law enforcement officers required by the federal government and authorizes the expenditure of federal funds. Section 13(f)(1) - (7) Department of Transportation and Public Facilities Mr. Dewitt explained that these sections are activities relative to the Anchorage and Fairbanks airports. Liability premium increases are authorized as result of the September 11, 2001 terrorist attack, along with security measures, which are funded through the International Airport Revenue Fund. Section 13(g) Department of Transportation and Public Facilities, Alaska Marine Highway System Mr. Dewitt noted that section 13 (g) allows funds to come out of the Alaska Marine Highway System Fund to pay for liability premium increases as result of the September 11, 2001 terrorist attack (See 5(b)). Section 13(h)(1) - (4) Department of Transportation and Public Facilities Mr. Dewitt explained that these sections are a mixture of federal funds and International Airport Revenue funds at Anchorage and Fairbanks airports. Section 14(a) University, System wide Small Planning, Design and Construction Mr. Dewitt noted that section 14(a) allows $800 thousand dollars in university receipts to be used at the Lena Point fisheries and ocean sciences laboratory. Section 14(b) University, CIP Mr. Dewitt explained that section 14 (b) allows a scope change for Sec 3, Ch 61, SLA 2001 to include UAA Heating, Ventilation, and Air Conditioning Piping Replacement Phases 1-4. Vice-Chair Bunde asked for more information on section 12. Mr. Dewitt observed that the funding would help increase marketing. He observed that the funding might not be in time to help with the current season. The funds are in addition to the $4.5 million dollars currently going into the tourism-marketing budget. TAPE HFC 02 - 80, Side A  In response to a question by Representative Lancaster, Mr. Dewitt observed that the funding was added in the proposed committee substitute. Discussion ensued regarding funding for tourism. The House legislation appropriated $6 million dollars. The legislation has not passed the Senate. The Senate did not provide additional funding for tourism. Representative Harris asked for further information regarding Power Cost Equalization. Mr. Dewitt noted that the statute would have 7 percent of the fund appropriated. He indicated that additional funding would be provided through another vehicle. Representative Lancaster referred to section 5 (a), fuel costs. Mr. Dewitt explained that the section appropriates funds related to fuel costs and the M/V Columbia fire. Representative Davies asked for more information the 7 percent funding for Power Cost Equalization. SARA FISHER-GOAD, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT testified via teleconference. She explained that the request was 7 percent from the Power Cost Equalization Endowment Fund. The legislation would appropriate 3.5 percent. The Fund is out of money; an additional amount is needed to meet the FY02 obligations. The additional $3.5 million dollars would provide funding through April. There is a $1.5 million dollar backlog for PCE payments. The full 7 percent is needed to meet FY02 obligations. Representative Lancaster noted that a pro rata amount was begun on June 1. Ms. Goad explained that the pro rata amount was to the appropriation of $15.7 million dollars. The issue before the Committee was the capitalization of the Fund. There was an error in the 7 percent appropriation to the Endowment Fund, which did not happen. They prorated to $15.7 million dollars, but there was not $15.7 million dollars in the Fund. The Fund is $7 million dollars short. She explained that the $1.1 million dollars was a supplemental request to fully fund the program for March through June, which would allow payments of 100 percent. The current pro rata is at 80 percent of the PCE level. The amount is based on PCE levels set by the Regulatory Commission of Alaska. Representative Lancaster interjected that the amount is subject to interpretation on what is full funding: whether it is $15.7 million dollars total with or without fuel cost increases or new people on the program. The amount needs to be finalized. ADJUTANT GENERAL BG PHIL OATES, COMMISSIONER, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS provided information on requests by the department. He observed that there were several problems within the fast track supplemental. He noted that the department had many expenditures based on the attacks of September 11. The expenditures as they related to the Trans Alaska Pipeline, Valdez Airport and the Fox weigh station were communicated through teleconference to the House and Senate leadership. The decision was made that the threat was not worth the cost and that risk would be taken in these areas. He pointed out that although many of the areas where money has already been spent have been addressed, there are some areas that have not be covered. Three areas of concern remain. The first is the checkpoint for the Trans Alaska Pipeline. The Department of Public Safety and the Military and Veterans Affairs established the checkpoint for a total cost of $433.2 thousand dollars. The total includes the cost to call the Alaska State Defense Force up to state active duty and to administer the checkpoint. The cost to the Department of Public Safety was $288.2 thousand dollars. The cost to the Department of Military and Veterans Affairs was $145 thousand dollars. He noted that hours were expanded at the Fox weight station to 24/7 in order to fully inspect all the vehicles and cargo transiting the Trans Alaska Pipeline. He pointed out that there has been an attack on the pipeline. The checkpoints were established in response to calls from the White House. The United States Attorney General and the director of Homeland Security called the Governor and said that there was a threat against all infrastructure across the United States. They stressed that security needed to be improved. The leadership was notified and checkpoints established. Expanded use of the weigh station cost $42.2 thousand general fund dollars. Commissioner Oates discussed the Valdez airport expenditures. The Valdez airport was not qualified under federal funding. State funds were spent because the FBI, FAA, and Alaska Coast Guard commander were concerned with the level of security. Total expenditures were $542.3 thousand dollars. Commissioner Oates noted that legislation for homeland security has not moved. The funding [requested in homeland security legislation] has come out of the departments' existing budgets. He stressed that his department would be in a crisis to get to the end of the year. Recovery will be harder the longer they wait for funding. The money has already been spent and is coming out of existing budgets. Representative Lancaster questioned if the department has worked with ALESKA since 9/11/01. Commissioner Oates affirmed that he has worked with ALESKA. He emphasized that the pipeline has national and worldwide significances. He emphasized that there have been expenditures to increase security. The pipeline could be lost if the line was done for more than 10 days. In response to a question by Vice-Chair Bunde, Commissioner Oates clarified that the checkpoint is at the Yukon River. It is a critical point of vulnerability. The Fox weigh station is further south. The checkpoint was established to get situational awareness of who was up there. Every vehicle was stopped, identification was required, and cargo and the purpose of travel were logged. He noted that 8,849 commercial vehicles and 774 public vehicles were checked. Vice-Chair Bunde noted that there is a lot of road access to the pipeline and pointed out the difficulty of securing the entire pipeline. Commissioner Oates acknowledged the difficulty of securing the 700 plus mile pipeline, but pointed out that the most critical points in regards to the ability to repair is along the Yukon River bridge to the north. The key factor is how quick the pipeline could be repaired. The idea is to take risk in some areas but to decrease risk in areas difficult to repair within the 10-day window in which pressure could be lost. The protection of the Transatlantic Pipeline is the best in the United States, but is still inadequate. He emphasized the need for a presence to know who is there. Representative Harris questioned the affect of the added expenditure on the rest of the department's operations. Commissioner Oates explained that the Military and Veterans Affairs is requesting $145 thousand dollars. All discretionary maintenance would be withheld without the appropriation, which would increase future costs. Contracts to keep on water and heat or to do emergency repairs would remain. He observed that funding was provided in the supplemental for the State Emergency Coordination Center, an emergency transportation of blood to the lower 48 states and provide required state security at airports during the attacks. Co-Chair Mulder MOVED to ADOPT Amendment 1. Vice-Chair Bunde OBJECTED. Co-Chair Mulder observed that the amendment would require a 30 percent match from the Alaska Tourism Industry Association (ATIA) by June 30, 2002. The lapse date would be extended to June 30, 2003. Vice-Chair Bunde spoke against the amendment. He maintained that [additional funding to support the tourism industry in the aftermath of 9/11/02] would send the wrong message in terms of the fiscal gap. He stressed that the match level should be higher. Representative Hudson questioned if the Alaska Travel Industry Association would be able to meet the 30 percent match. TINA LINDGREN, PRESIDENT, ALASKA TRAVEL INDUSTRY ASSOCIATION, JUNEAU, stated that the ATIA would be able to meet the match. The match would be about $1 million dollars. Co-Chair Mulder noted that there was $4.5 million dollars in the FY02 budget for tourism marketing. The total budget would be approximately $6 million dollars. Representative Croft questioned if the match date should be changed to the end of this fiscal year. Representative John Davies clarified that the 30 percent match would be to the $2 million dollar supplemental grant by the end of FY02. Ms. Lindren noted that the ATIA has already met the required match for the FY02 appropriation. Representative Croft questioned why the appropriation goes to FY03, while the match is due by June 30, 2002. Co-Chair Mulder responded that the intent is to provide for a match. The ATIA indicated that they could make the match in the time allocated. Vice-Chair Bunde MOVED to ADOPT Amendment 1B: Delete funding for the Alaska Travel Industry Association. He stressed the need to reduce the budget. Representative Lancaster spoke in support of the legislation. Co-Chair Williams spoke in opposition to the amendment. He stated that the appropriation sends the message that the legislature is attempting to help an industry in need. He observed that state support for the tourism industry has been reduced. He acknowledged that the cruise ship industry has improved, but emphasized that the amount of money being spent off ships has been reduced. A roll call vote was taken on the motion. IN FAVOR: Moses, Bunde, Croft, Lancaster OPPOSED: Whitaker, Davies, Harris, Hudson, Mulder, Williams Representative Foster was absent from the vote. The MOTION FAILED (4-6). Representative Harris MOVED to ADOPT Amendment 2. He explained that the amendment would appropriate $145 thousand dollars for the Department of Military and Veterans Affairs, for costs to maintain a temporary checkpoint at the Yukon River Bridge. Representative John Davies spoke in support of the amendment. He noted that there was a great deal of concern following September 11, 2001 regarding the security of the pipeline. Vice-Chair Bunde OBJECTED. He noted that other departments had made expenditures, which they have been asked to absorb. A roll call vote was taken on the motion. IN FAVOR: Croft, Davies, Harris, Hudson, Lancaster, Moses, Whitaker, Williams OPPOSED: Bunde, Mulder Representative Foster was absent from the vote. The MOTION PASSED (8-2). Co-Chair Williams MOVED to ADOPT Amendment 3. He explained that the amendment would raise the appropriation for the Alaska Marine Highway System to $2,038.500 dollars. He observed that increased fuel costs and the fire on the M/V Columbia were not under the department's control. He noted that $2.8 million dollars were requested. Vice-Chair Bunde spoke against the amendment. Representative Whitaker spoke in support. He pointed out that the cost of fuel increased and that the money is needed for operations. Representative Harris questioned if the amendment would address the issue of reduced service. Representative Hudson affirmed that the appropriation would affect service; without the funds ships would be laid up and paid passengers turned away. Co-Chair Mulder observed that the total amount needed is approximately $2.8 million dollars. He stated that he anticipated additional funding could be in the next supplemental legislation. The amendment would allow some security. Representative Croft questioned if service to Cordova would be affected. Representative Lancaster stated that he would support the legislation but noted that he did not think that the department did a good job in estimating fuel costs. Co-Chair Mulder noted that he would not object to the amendment and pointed out that the M/V Columbia fire was in the nature of an emergency. KURT PARKAN, DEPUTY COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES stated that the department would have to see how the $600 thousand dollar restoration would affect the overall impact. He noted that the department provided the Committee with impacts of a $1.4 million dollar reduction. The restoration of $600 thousand dollars would help considerably but he could not speak to which vessel would be brought back on. Impacts were stated for the M/V Bartlett in Prince William Sound, the M/V Aurora and the M/V Malaspina in Southeast, as well as holding open vacant positions for shore side employees. He added that the additional amount would minimize impacts to service. Representative Harris noted that the concern in Cordova is that the fishing season is about to begin. He referred to the proposed schedule and expressed concern that reductions in service could adversely impact the fisheries. Vice-Chair Bunde stressed that if government is reduced that new and creative ways would be found at less cost. A roll call vote was taken on the motion. IN FAVOR: Croft, Davies, Moses, Harris, Hudson, Lancaster, Whitaker, Williams OPPOSED: Bunde, Mulder Representative John Davies MOVED to ADOPT Amendment 4: delete "$135 thousand dollars" and insert "$423.2 thousand dollars" for the Department of Public Safety to cover their costs for the Yukon River checkpoint. Commissioner Oates maintained that the expenditure came as the result of a call from the White House and is "absolutely justified." The funds have been expended and the checkpoint is now closed. Co-Chair Mulder OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Harris, Moses, Croft, Davies OPPOSED: Hudson, Lancaster, Whitaker, Bunde, Mulder Representatives Williams and Foster were absent from the vote. The MOTION FAILED (4-5).   TAPE HFC 02 - 80, Side B Representative Croft MOVED to ADOPT Amendment 5. He explained that the amendment would add the sum of $26.4 million dollars for the University of Alaska. He expressed concern that progress at the University would be reduced without additional funding and pointed out that there would be limited opportunities to add money to their budget. The amendment would be a general fund appropriation and would add an increase of $16.9 million dollars, which would allow them to overcome $9.4 million dollars in fixed costs, of which the majority is for contract increases. Representative Whitaker MOVED to AMEND Amendment 5, by deleting "26.4" and inserting "$16.9" million dollars. Co- Chair Mulder OBJECTED. Representative Whitaker spoke in support of the amendment. He noted that the University's request of $16.9 million dollars was reasonable. There has been significant momentum associated with the University of Alaska. Co-Chair Mulder WITHDREW his OBJECTION. Representative Harris observed that the $16.9 million dollars would be in addition to the current appropriation. Co-Chair Mulder explained that $4.4 million dollars in one time funding sources were utilized in FY02. The FY03 appropriation substituted general funds. The total amount for the university would be $219 million dollars. The University requested an increase of $16.9 million dollars plus an additional general fund appropriation of $4.4 million dollars to replace the one-time funds. The amendment mirrors the request by the University of Alaska. There being NO OBJECTION, the amendment to the amendment was adopted. Co-Chair Mulder maintained his objection. He acknowledged the intent but maintained that the supplemental is not the right place or time for the appropriation to go forward. He felt that there would be other opportunities to help the University and pointed out that the appropriation would "blow the lid" off of the attempt to hold the line on spending. A roll call vote was taken on the motion. IN FAVOR: Croft, Davies, Whitaker OPPOSED: Bunde, Harris, Hudson, Lancaster, Moses, Williams, Mulder Representative Foster was absent from the vote. The MOTION FAILED (3-7). Representative John Davies MOVED to ADOPT Amendment 6: increase the appropriation for Power Cost Equalization (PCE) from 3.5 percent to 7 percent ($7.622 million dollars). He spoke in support of the amendment. Representative Harris clarified that the Senate funded PCE at $3.5 million dollars. The legislature committed to fund PCE at 7 percent. Co-Chair Mulder agreed and acknowledged that it was an oversight. Co-Chair Mulder WITHDREW his OBJECTION. Representative Hudson MOVED to report CSHB 291 (FIN) out of Committee. HCS CSSB 291 (FIN) was REPORTED out of Committee with "no recommendation."