HOUSE BILL NO. 365 "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." Co-Chair Meyer MOVED to ADOPT the work draft for HB 365, labeled 24-GH2033\I, Bailey, 3/13/06, as the version of the bill before the committee. There being NO OBJECTION, it was so ordered. HOUSE BILL NO. 366 "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." Co-Chair Meyer MOVED to ADOPT the work draft for HB 366, labeled 24-GH2035\G, Bailey, 3/13/06, as the version of the bill before the committee. There being NO OBJECTION, it was so ordered. 1:43:28 PM Co-Chair Chenault summarized the committee substitutes for the budget bills. He related that the total general fund reductions by House Committees to the operating bill are $82,341.7 million from the numbers section and $32,758.4 million from the language sections, which total $115,100.1 million in general funds. This comparison assumes the committee will eventually appropriate $90 million more for K-12 education. Language making that appropriation is not currently in the committee substitute, but is expected to appear as a fiscal note attached to a bill increasing the base student allocation. Agency summary reports dated March 14 show a reduction of $205 million from the governor's request. Those reports, while technically more accurate than the $115 million reduction shown in the March 13 reports, distort the expected outcome of the budget process. SHARON KELLY, STAFF, CO-CHAIR CHENAULT, shared the process used to arrive at the new committee substitutes. The House Finance subcommittees were appointed and they reviewed the th governor's bill plus all operation amendments up to the 45 th included: one was a reduction of $2.3 million to Marine Transportation for a reduction of fast ferry service, and another was a reduction of $1.3 million to the Senior Care Fund. Two amendments that were received last week relating to Corrections salary and benefits are not included because they would have delayed drafting of the bill. Ms. Kelly reported that the subcommittees closed out and made recommendations to the full House Finance Committee. These recommendations were rolled into this committee substitute along with some adjustments made by the co-chair. Some of those adjustments include: fuel increases were deleted for consistency with the rest of the budget; new programs not requested in the governor's bill were removed, but may be considered later through the amendment process; technical adjustments recommended by Legislative Finance were made to adjust the position count correctly; some funding changes were made to allow for sustainability and full utilization of funding sources such as business license receipts, Commercial Fisheries Entry Commission (CFEC), vehicle rental tax, criminal fines, and the commercial loan fund. Ms. Kelly addressed some additions of general fund to correct some modified adjusted base problems in the Department of Fish and Game and in the Department of Military and Veterans Affairs. There were also other small reductions. The Health, Education, and Social Services subcommittee cut $10 million more than is reflected on the CS. The co-chair moved this amount from the language section of the Senior Care Fund over to the numbers section. The Senior Care Fund will lapse next year. Federal fund authority was reestablished in the Department of Fish and Game and in the Department of Public Safety. If those funds do become available those departments will not have to go to Legislative Budget and Audit for approval. 1:47:55 PM Ms. Kelly related that in the language section of the budget some reordering changes were made. Senior Care was moved to the numbers section and some deletions were taken. Power Cost Equalization was funded at FY 06 levels. Education funding is included in the language section, excluding the $656,000,000 of FY 06 funds the governor is proposing to use. The $90 million amount for education will be addressed in another vehicle. There are also $565 million of FY 06 funds that the governor is proposing to use to fund the FY 07 education budget. Ms. Kelly pointed out that there are two agency summaries, one dated March 13, which show the actions of the subcommittee and co-chairs, and one dated March 14, which also shows the $90 million for education reduction since it is not included in the bill. 1:48:33 PM Ms. Kelly addressed one change to the Mental Health bill. The item removed was $550,000 for the Department of Natural Resources' Mental Health Land Trust Development, which comes from Mental Health Trust Receipts. Information regarding these bills will be on the Legislative Finance web site. Co-Chair Chenault explained that the process would be to accept the committee substitutes today and then take public testimony on Thursday through Saturday. The deadline for amendments will be on Monday at 5:00. He stated that the committee would take up amendments on Tuesday and Wednesday with the intention of passing the bill out no later than Thursday. He requested that those proposing amendments for more money should stipulate where the money will come from in the budget. CHB 365 and CS HB 366 were heard and HELD in Committee for further consideration. Co-Chair Meyer took over as chair of the committee. 1:51:15 PM