CS FOR SENATE BILL NO. 232(FIN) "An Act making appropriations, supplemental appropriations, and capital appropriations; amending appropriations and funding sources; making appropriations to capitalize funds; and providing for an effective date." Co-Chair Meyer MOVED to ADOPT work draft 24-GS2068\C, Bailey, 3/20/06, as the version of the bill before the committee. There being NO OBJECTION, it was so ordered. 1:44:10 PM SHARON KELLY, STAFF, CO-CHAIR CHENAULT, highlighted the differences between CSSB 232 the new House CS. She referred to a document called "Multi-year Agency Summary" (copy on file), which lists changes by department. She noted that the final "Total" column on the right lists an addition of $1 million to the Department of Administration for the telephone system replacement and stabilization, phase one. Under the Department of Commerce, Community and Economic Development, $250,000 has been added to the Arctic Winter Games. There have been no changes to the Department of Corrections. The Department of Education and Early Development had funds removed for Susitna Valley High School repairs, pending further discussion by the committee. There have been no changes to Department of Fish and Game or to the Office of the Governor. In the Department of Law there is a $700 change due to a typing error. Ms. Kelly related that there were no changes to the Department of Military and Veterans Affairs, the Department of Natural Resources, the Department of Transportation and Public Facilities, or to the Department of Revenue. Under Fund Capitalization, $301 million has been added, of which $300 million is to go to Alaska Housing Finance Corporation and $1 million is for the fund capitalization for the telephone system. Under the Public Education Fund, $350 million has been added with $300 million going to the Public Education Fund and about $50 million for a sweep from the general fund into the Public Education Fund at the end of the year. Ms. Kelly referred to two other documents for further detail, the "Transaction Comparison - FY 2007 Operating Budget - Senate Structure" and the "Project Detail by Agency - FY 2007 Capital Budget" (copies on file.) Ms. Kelly noted two other technical Fund Source Changes (Section 11) in HCS CSSB 232. Commercial Fisheries Entry Commission Receipts are substituted for the generic RSS code in the Department of Fish and Game, and Special Vehicle Registration Receipts are substituted for RSS in a DNR capital project. Ms. Kelly addressed several tracking changes regarding Vehicle Rental Tax Receipts, a new fund code, which are replacing certain General Funds. Co-Chair Meyer reported that half of the savings have been taken "off the table": $300 million has been put toward the Alaska Housing Fund (AHFC), and $300 million to the Public Education Fund, with the remaining $50-$80 million to be swept into the Public Education Fund. 1:48:33 PM Co-Chair Chenault spoke of the intent of taking $600 million off the table as savings for future budgets and capital projects. He emphasized the responsibility the legislature has to the citizens of Alaska if oil revenue decreases in future years. Representative Joule asked about the $300 million going into AHFC rather than into the Constitutional Budget Reserve (CBR). Co-Chair Meyer replied that the CBR was discussed as an option, but AHFC allows for more flexibility. The interest rates earned are about the same in AHFC as in the CBR. AHFC proposes to get a higher rate. The hope is to save money. 1:52:21 PM Representative Joule asked how the legislature could access those funds at a future date. Co-Chair Meyer replied it is set up as a sub-corporation within AHFC and, like any other fund, can be accessed. Representative Joule pointed out that funds drawn from the CBR allow for a discussion by the whole legislature about how the money gets spent. 1:54:05 PM Representative Stoltze MOVED to ADOPT Amendment A, 24- GS2068\S.1, Bailey, 3/20/06: Page 9, following line 13: Insert a new subsection to read: "(d) The sum of $3,850,000 is appropriated from the general fund to the major maintenance grant fund (AS 14.11.007) for payment as a grant under AS 14.11.015 for Susitna Valley High School roof replacement and structural and safety repairs." Co-Chair Meyer OBJECTED. Representative Stoltze explained that Amendment A is for $3.85 million for a roof replacement for Susitna Valley High School. He termed it a safety issue. The requested amount is 70 percent of the amount originally requested. 1:55:45 PM REPRESENTATIVE MARK NEWMAN, discussed the architect/engineer's report regarding the roof of Susitna Valley High School, which showed violations of code requirements, and ventilation and asbestos problems. The dollar amount requested is a reduction from the original $5.5 million proposed in the governor's budget. The matter is urgent and the work needs to start the day school is out, due to the short building season. He reported strong community support for this project. He spoke of the high expense to shovel the roof of the school. He termed it a savings to the state in the long run. Co-Chair Chenault noted that it costs about $3,000 a time to shovel the roof. Co-Chair Meyer added that it is closer to $3,600, each time, to shovel the roof. He did the math to show savings by not replacing the roof. He spoke of the 70/30 split on maintenance projects. He said he feels more apt to support this request now that this project is at 70 percent of the original amount requested. Representative Newman spoke of the damage heavy snows or an earthquake could cause. Co-Chair Meyer asked for assurance that the original architect or engineer not be used on this project. Representative Newman assured the co-chair that would not happen. Representative Foster spoke of his experience shoveling the roof of his school. Representative Newman described the slope of the roof and its bad design. He reiterated it is a time issue with the short construction season. 2:04:53 PM Representative Hawker said he would have been against the amendment if it had asked for 100 percent funding. He asked for assurance that the community would come up with the 30 percent still needed. Representative Newman spoke to the commitment made by his community. He noted problems with past bond proposals. He addressed up-coming ballot proposals. Representative Hawker asked for assurance for evidence of a public commitment before the bill reaches the House Floor. Representative Newman said he would try to get that information from the Mat-Su Assembly. 2:07:40 PM Representative Weyhrauch asked about the bond issues mentioned by Representative Newman. Representative Newman responded that last fall there were many proposals and that was overwhelming to voters. Representative Joule wondered if the project was on the Department of Education and Early Development's major maintenance list. Representative Newman replied that he contacted Department of Education and Early Development to see if it could be included. It did not meet the standards for emergency funding. They did approve 70 percent funding. Co-Chair Meyer said he was assured by comments made during the discussion and was convinced by Representative Newman's arguments. He WITHDREW his OBJECTION to adopt Amendment A. There being NO further OBJECTION, it was so ordered. 2:12:03 PM Co-Chair Chenault MOVED to ADOPT Amendment B, 24-GS2068\C.1, Bailey, 3/21/06: Page 7, line 22, following "appropriated": Insert "from the general fund" Page 7, line 25, following "appropriate": Insert "from the general fund" Representative Stoltze OBJECTED. Co-Chair Chenault stated that the amendment corrects a drafting error. Representative Stoltze WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. 2:12:30 PM Co-Chair Chenault MOVED to ADOPT Amendment C, 24-GS2068\C.2, Bailey, 3/21/06: Page 12, line 8, following "projects": Insert ",including financing expenses" Page 12, following line 22: Insert a new subsection to read: "(c) The appropriation made by sec. 12 of this Act lapses on June 30, 2016." Representative Stoltze OBJECTED. Ms. Kelly described the two changes in Amendment C. The first broadens a clause on page five to include financing expenses, which is the money that is being transferred to AHFC. The second change is to insert a lapse date on page 12. Representative Joule asked for a definition of lapse date. Ms. Kelly said that Department of Law recommended the change. Representative Joule asked what the affect would be. Ms. Kelly replied that the money would go back to the general fund on the lapse date. Representative Joule summarized that if these funds are not used, they would transfer back to the general fund in ten years. Representative Stoltze WITHDREW his objection. There being NO further OBJECTION, it was so ordered. 2:14:39 PM Representative Joule MOVED to ADOPT Amendment 1, which would add a new section: POWER COST EQUALIZATION. (a) The sum of %5,459,900 is appropriated from the general fund to the power cost equalization and rural electric capitalization fund (AS 42.45.100). (b) The sum of $5,817,900 is appropriated from the power cost equalization and rural electric capitalization fund (AS 42.45.100) to the Department of Commerce, Community, and Economic Development, Alaska Energy Authority power cost equalization, for full payment of power cost equalization under AS 42.45.110 for the fiscal year ending June 30, 2006. Representative Joule noted that rural Alaska is struggling with high fuel costs. He requested that this amount be restored and power cost equalization be fully funded. Co-Chair Chenault agreed that fuel costs have increased throughout Alaska, not just in rural Alaska. He brought up equity issues. He spoke against Amendment 1 and suggested that other methods would better address this issue. 2:19:27 PM Representative Hawker stated that he would vote against any amendment that deals with dedicating money for energy needs. He emphasized that he wants pressure to stay on the legislative body to put into place a community dividend or revenue sharing program to deal with this issue. He requested programs that would provide the maximum possible local control dominion over how the money might be spent. He spoke against Amendment 1 and in favor of "sharing of our vast resource wealth with communities". 2:21:04 PM Representative Kelly spoke as a former utility representative. He agreed that there is a problem and a need for energy assistance. He voiced concern that the supplemental budgets now look like budgets and are out of control. He related that funding for PCE was set last session with an awareness to high costs. This year's unsustainable supplemental makes last year's budgeting process meaningless. He spoke against Amendment 1. Representative Joule commented on the high kilowatt rates and low employment opportunities in rural areas. He maintained that Amendment 1 is needed until that changes. A roll call vote was taken on the motion to Adopt Amendment 1. IN FAVOR: Kerttula, Moses, Foster, Joule OPPOSED: Kelly, Stoltze, Weyhrauch, Hawker, Holm, Meyer, Chenault The MOTION FAILED (4-7). 2:25:03 PM Representative Joule MOVED to ADOPT Amendment 2, which would add a new section: The sum of $250.0 is appropriated from the general fund to the Department of Commerce, Community and Economic Development for payment as a grant under AS 37.05.315 to the City of Kaktovik for the participation of the city in support of the education efforts and promotion of opening the coastal plain of the Arctic National Wildlife Refuge (ANWR) for oil and gas exploration and development. Representative Stoltze OBJECTED. Representative Joule MOVED to AMEND Amendment 2 to change $250,000 to $40,000. There being NO OBJECTION, it was so ordered. Representative Joule spoke to Amendment 2. He noted that the city of Kaktovik serves as the gateway to ANWR and is critical in assuring policy makers that local residents support the opening of ANWR to responsible oil and gas development. The community has requested this amount for reimbursement for expenses. 2:27:32 PM Co-Chair Meyer asked how much was budgeted for this last year. Representative Joule responded about $100,000 split between Kaktovik city and native village. Representative Kelly commented in favor of Amendment 2. He stated appreciation for Kaktovik's support. Representative Foster spoke in favor of Amendment 2. He thanked Representative Joule for bringing forth the amendment to help this village. Co-Chair Chenault WITHDREW his OBJECTION to adopting Amendment 2. There being NO further OBJECTION, it was so ordered. 2:30:07 PM Representative Joule MOVED to ADOPT Amendment 3, which would add a new section: The sum of $8,800.0 general funds is appropriated to the Department of Health and Social Services, Division of Public Assistance, Energy Assistance Program for the fiscal years ending June 30, 2006 and June 30, 2007. Representative Chenault OBJECTED. Representative Joule explained that Amendment 3 would provide funds to low-income households throughout Alaska to offset the high costs of home heating. He presented statistics regarding the elderly and the poor. He shared that 26 states are providing this type of aid. He related how the increase in fuel costs and the decrease in buying power have changed significantly. He shared information about high costs in Kotzebue. He urged support for Amendment 3. Co-Chair Chenault MAINTAINED his OBJECTION. A roll call vote was taken on the motion to adopt Amendment 3. IN FAVOR: Joule, Kerttula, Moses, Foster OPPOSED: Kelly, Stoltze, Weyhrauch, Hawker, Holm, Chenault, Meyer The MOTION FAILED (4-7). 2:35:40 PM Representative Joule MOVED to ADOPT Amendment 4, which would add a new section: *Sec.___. BULK FUEL LOANS. The sum of $500,000 is appropriated from the general fund to the Department of Commerce, community and Economic Development, community advocacy, for emergency bulk fuel loans to small communities for the fiscal year ending June 30, 2006. Representative Stoltze OBJECTED. Representative Joule explained how the money would provide emergency bulk fuel loans to small communities. He shared statistics about the high costs of fuel in rural areas. He maintained that this is not a "give away", but rather a loan. He urged the committee to adopt the amendment. Representative Stoltze MAINTAINED his OBJECTION to the motion to adopt Amendment 3. Representative Joule spoke of revenue sharing for this year, not next year. He emphasized that this amendment is needed for FY 06. A roll call vote was taken on the motion. IN FAVOR: Kerttula, Moses, Foster, Joule OPPOSED: Stoltze, Weyhrauch, Hawker, Holm, Kelly, Chenault, Meyer The MOTION FAILED (4-7). 2:41:19 PM Representative Joule MOVED to ADOPT Amendment #5, which would add a new section: SMALL MUNICIPALITY ENERGY ASSISTANCE PROGRAM. The sum of $6,405,208.55 is appropriated from the general fund to the Department of Commerce, community, and Economic Development, Division of Community Advocacy, for grants under the small municipality energy assistance program, for the fiscal years ending June 30, 2006 and June 30, 2007, to the following cities and boroughs, for the repayment of any indebtedness of the city or borough to the bulk fuel revolving loan fund (AS 43.25) and for the purchase of fuel; the grants are to be in the amounts stated, based upon 2004 population, with cities and boroughs with up to 99 residents to receive $22,395,83, cities and boroughs with 100-600 residents to receive $44,791.67 and cities and boroughs with 601- 2,499 residents to receive $67,187.50. Representative Stoltze OBJECTED. Representative Joule explained that the amendment is a small municipal energy assistance program that provides grants for the repayment of any indebtedness to the bulk fuel revolving loan fund, and for purchasing fuel. Responding to a question by Co-Chair Chenault, Representative Joule clarified that these communities cannot apply for the bulk fuel program. Co-Chair Chenault asked how they then could have a debt to the bulk fuel revolving loan fund. MIKE BLACK, DIRECTOR, DIVISION OF COMMUNITY ADVOCACY, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, explained that the small municipality energy assistance program pertained only to municipalities and is a grant program. Amendment 4 applies to both municipalities and unincorporated communities and is a loan program. 2:45:10 PM Co-Chair Chenault still sought clarification about whether a municipality could borrow from one loan program and repay with the grant. Mr. Black noted that part of the conditions of the grant program last year were that outstanding loan balances would be retired to the Alaska Energy Authority revolving fuel oil loan. That condition is still in this proposal. He pointed out that that the revolving fuel loan is separate from the bulk fuel bridge loan program, and only applicable for communities not eligible for the other program. 2:46:33 PM A Roll Call Vote was taken on Amendment 5: Favor: Moses, Foster, Joule, Kerttula Opposed: Stoltze, Weyhrauch, Hawker, Holm, Kelly, Meyer, Chenault The MOTION FAILED (4-7). HCS SB 232 was heard and HELD in Committee for further consideration. 2:48:11 PM AT EASE. 3:08:57 PM