SENATE BILL NO. 175: An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date. Department of Community & Regional Affairs SENATOR GEORGE JACKO outlined subcommittee increments and decrements to the corrections of the FY94 operating budget for the Department of Community & Regional Affairs (copy of handout on file titled "Department of Community Regional Affairs-Agency Alternative" dated 4/1/93). He also outlined designated grants for DC&RA (copy on file titled "Department of Community & Regional Affairs, Designated Grants - FY88 to FY94 Proposed"). SENATOR JAY KERTTULA said that he understood that the deadline was past in the municipalities to disallow the seniors' homeowners property tax exemption. BRUCE GERAGHTY, Deputy Commissioner, Department of Community & Regional Affairs, affirmed that the deadline was past for 1993. Senator Kerttula said that local governments would have to provide funding for the exemption. Mr. Geraghty agreed that it would increase the local government contribution by 20 percent. CO-CHAIR STEVE FRANK said he had just been made aware of the situation and had not had time to consider it. Mr. Geraghty informed the committee that the Governor has proposed and the House has passed a bill for optional exemptions for municipalities. Senator Kerttula MOVED for adoption of amendment #1 in regard to Perseverance Theatre in the Designated Grants component (copy on file). Senator Jacko OBJECTED. Co-chair Frank asked for a show of hands. The motion FAILED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were opposed. Senator Kerttula was in support.) Senator Kerttula MOVED for adoption of amendment #2 in regard to "People Count" for adult education in Kenai (copy on file). Senator Jacko OBJECTED. Co-chair Frank asked for a show of hands. The motion FAILED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were opposed. Senator Kerttula was in support.) Senator Jacko MOVED for ADOPTION of amendment #3 in regard to municipal revenue sharing for DC&RA (copy on file). No objections being raised, it was ADOPTED. SENATOR TIM KELLY MOVED for ADOPTION of the letter of intent for DC&RA (copy on file). No objections being raised, it was ADOPTED. Senator Kelly MOVED for ADOPTION of subcommittee recommendations for the Department of Community & Regional Affairs budget into SB 175. No objections being raised, it was ADOPTED. University of Alaska NANCY SLAGLE, Fiscal Analyst, Legislative Finance Division, spoke to an earlier proposal to return the budget structure for the University of Alaska to the format of two years ago. The budget sheets would separate out program service areas by campus. She provided a marked up version of a Department of Fish & Game detail page for an example (copy of handout on file). Senator Kerttula asked if the same amount of detail would be provided to the legislature. Ms. Slagle answered affirmatively, and added that the University would have to explain changes, transfers, deletions, and provide comparisons from the past year. SENATOR STEVE RIEGER MOVED that each campus use project budgeting within the allocation for their campus, and that would be the format for the budget reporting for the next year. No objections being raised, it was ADOPTED. Department of Environmental Conservation Co-chair Frank outlined subcommittee increments and decrements to the corrections of the FY94 operating budget for the Department of Environmental Conservation (copy of handout on file titled "DEC FY94 Budget). End SFC-93 #46, Side 2 Begin SFC-93 #48, Side 1 Co-chair Frank submitted letters of intent numbered 1 through 5 (copies on file). In answer to Senator Kerttula, JOHN A. SANDOR, Commissioner, DEC, said that Alaska and Hawaii have authority to apply for an exemption to the low sulfur diesel fuel requirements that are imposed for the lower 48. Mr. Sandor said that the state exemption request had been submitted, and that it would not be feasible for Alaska to be in compliance with this requirement. In answer to Senator Rieger, Co-chair Frank said that because of reductions, DEC would have problems in three areas -- seafood inspections, sanitation, and bacterial testing at the Palmer Laboratory. Co-chair Frank said that the first letter of intent addressed seafood inspection and bacterial testing as priorities. Senator Kerttula agreed that seafood testing was needed. Senator Kelly MOVED for ADOPTION of the five letters of intent for DEC. No objections being raised, they were ADOPTED. Senator Kelly MOVED for ADOPTION of subcommittee recommendations for the Department of Environmental Conservation budget into SB 175. No objections being raised, it was ADOPTED. Senator Kelly MOVED for ADOPTION of a letter of intent for DEC and amended it to say that "at least" $600.0 of the $800.0 allocated to the Department of Military & Veterans Affairs, Division of Emergency Services, from the Department of Environmental Conservation for depots and corps be allocated to support the incident command center emergency preparation and planning support to state, federal and local governments (copy on file). No objections being raised, it was ADOPTED as amended. Announcement CO-CHAIR DRUE PEARCE announced an 8:00 a.m., April 5, 1993 meeting of the Senate Finance Committee with Jim Ayers, Alaska Marine Highway System, speaking to the new state ferry. Department of Fish & Game Co-Chair Pearce outlined subcommittee increments and decrements to the corrections of the FY94 operating budget for the Department of Fish & Game (copy of handout on file titled "Senate Finance committee, Proposed Budget Cuts for the Department of Fish & Game, 4/3/93"). In answer to Senator Kerttula, Co-chair Pearce said that the Moose Research Center has had 30 years to produce a moose pellet food, and that DF&G should go on to other projects. She said there is a chance that the federal government may continue this project. Discussion followed between Co-chair Pearce and Senator Kerttula regarding the location of the Moose Research Center and federal funding attached to it. Senator Kerttula MOVED for ADOPTION of amendment #1 in regard to Fred Division adding $170.0 for Kitoi Bay and Pillar Creek Hatcheries (copy on file). Commissioner Sandor spoke in support of the amendment and confirmed that there was no program receipt authority to receive funds from KRAA. Senator Jacko OBJECTED. Co-chair Frank asked for a show of hands. The motion FAILED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were opposed. Senator Kerttula was in support.) Senator Kerttula MOVED for ADOPTION of amendment #2 to restore funding for the Snettisham Hatchery (copy on file). Commissioner Sandor again supported this amendment and pointed out the importance of Snettisham Hatchery for all fisheries. Co-chair Frank asked for a show of hands. The motion FAILED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were opposed. Senator Kerttula was in support.) At Ease 1:52pm Reconvene 1:53pm Co-chair Pearce MOVED for ADOPTION of amendment #3 restoring the reduction of $36.6 general funds from the Division of Habitat and a $36.6 decrement made to the travel line item in the Division of Wildlife Conservation (copy of file). No objections being raised, it was ADOPTED. Co-chair Pearce MOVED for ADOPTION of the three letters of intent for DF&G (copy on file). No objections being raised, they were ADOPTED. Co-chair Pearce MOVED for ADOPTION of subcommittee recommendations for the Department of Fish & Game budget into SB 175. Senator Kerttula OBJECTED. Co-chair Frank asked for a show of hands. The motion CARRIED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were in support. Senator Kerttula was opposed.) Department of Commerce & Economic Development Co-chair Pearce outlined subcommittee increments and decrements to the corrections of the FY94 operating budget for the Department of Commerce & Economic Development (copy of handout on file titled "Department of Commerce and Economic Development" dated 4/3/93). Senator Kerttula asked if detail grants funds would be available to the committee, and specifically for Alaska Tourism Marketing Council (ATMC). Co-chair Pearce noted that the ATMC would receive an industry match increase over the Governor's recommendations. Co-chair Pearce MOVED for ADOPTION of subcommittee recommendations for the Department of Commerce & Economic Development budget into SB 175. No objections being raised, it was ADOPTED. At ease 2:30pm Reconvene 4:20pm Department of Natural Resources Co-chair Pearce outlined subcommittee increments and decrements to the corrections of the FY94 operating budget for the Department of Community & Regional Affairs (copy of handout on file titled "Department of Natural Resources"). End SFC-93 #48, Side 1 Begin SFC-93 #50, Side 1 Senator Kelly MOVED for ADOPTION of subcommittee recommendations for the Department of Commerce & Economic Development budget into SB 175 as amended. No objections being raised, it was ADOPTED. Senator Kelly MOVED for ADOPTION of the four letters of intent for DNR (copy on file). No objections being raised, they were ADOPTED. Senator Kelly MOVED for ADOPTION of amendments #1 and #2 by in regard to DNR budget changes to the Recorder's Office and Statewide Fire Suppression (copies on file). No objections being raised, they were ADOPTED. Alaska Court System SENATOR BERT SHARP outlined subcommittee increments and decrements to the corrections of the FY94 operating budget for the Alaska Court System (copy of handout on file titled "Alaska Courts System, FY 94 Budget - Senate Finance Sub- committee Work Draft, 4/3/93"). Senator Sharp MOVED for adoption of amendment #1 to restore $600.0 GF to a miscellaneous reduction in trial courts (copy on file). No objections being raised, it was ADOPTED. Senator Kerttula MOVED for ADOPTION of amendment #2 to restore a reduction of $1,540.1 to trial courts (copy on file). Senator Sharp OBJECTED. Co-chair Frank asked for a show of hands. The motion FAILED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were opposed. Senator Kerttula was in support.) Senator Sharp MOVED for ADOPTION of subcommittee recommendations for the Alaska Court System budget into SB 175 as amended. No objections being raised, it was ADOPTED. Governor Co-chair Frank outlined subcommittee decrements to the corrections of the FY94 operating budget for the Governor (copy of handout on file titled "Governor - FY94 Budget, General Funds Only"). He said that the Governor's office had been asked to take a 5 percent budget cut. Senator Kelly MOVED for ADOPTION of subcommittee recommendations for the Office of Governor's budget into SB 175. No objections being raised, it was ADOPTED. At Ease 4:05pm Reconvene 4:30pm Legislature Co-chair Frank outlined subcommittee decrements to the corrections of the FY94 operating budget for the Legislature (copy of handout on file titled "Legislature - FY94 Operating Budget"). Senator Kelly MOVED for ADOPTION of subcommittee recommendations for the Legislature's budget into SB 175. Senator Kerttula OBJECTED. Co-chair Frank asked for a show of hands. The motion CARRIED on a vote of 6 to 1. (Senators Frank, Jacko, Kelly, Pearce, Rieger, and Sharp were in support. Senator Kerttula was opposed.) At Ease 6:05pm Reconvene 6:06pm Front Section to SB 175 Co-chair Frank invited Mike Greany and Nancy Slagle, Fiscal Analysts, Legislative Finance Division, to join the committee at the table and speak to the front section of SB 175. Senator Kerttula MOVED to adopt the front section of SB 175 for a working document. No objections being raised, it was ADOPTED. MIKE GREANY said that Sec. 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10 are sections that appear from year to year in the operating budget and no changes were required. NANCY SLAGLE spoke to Sec. 11 and said that legal counsel had suggested that after (AS 37.15.430), on page 3, line 2, the words "to the state bond committee for payment of debt service" be added. Co-chair Frank MOVED for ADOPTION of an amendment to Sec. 11 to reflect legal counsel's suggested language. No objections being raised, it was ADOPTED. Mr. Greany explained that Sec. 12 appropriated funds for debt payment for the City of Seward - a recreational facility, City of Kenai - court house facility, etc. Mr. Greany said that Sec. 13 appropriated funds for payment of debt service and trustee fees on state general obligation bonds. Ms. Slagle outlined the following sections: Sec. 14 (a) and (b) was recommended by Legislative Fiance to be deleted since it is in HB 45. Co-chair Pearce MOVED for the deletion of Sec. 14 (a) and (b) from page 3, lines 14 through 18. No objections being raised, Sec. 14 was DELETED. Sec. 15 would allocate funding for the permanent fund dividend. Sec. 16 appropriates funds to offset the inflation on the principle of the permanent fund. Ms. Slagle said that recommended language has been suggested by legal counsel. Senator Kerttula MOVED for ADOPTION of an amendment to Sec. 16, page 3, line 23, to reflect legal counsel's suggested language. No objections being raised, it was ADOPTED. Sec. 17 spoke to the interest earned during FY94 on revenue before it was deposited to the permanent fund. Sec. 18 spoke to the amount required to be deposited in the permanent fund. Sec. 19 appropriates the lapsing balance of the employment assistance and training program account to the unemployment compensation fund. End SFC-93 #50, Side 1 Begin SFC-93 #52, Side 1 Sec. 20 appropriates the Alaska Housing Finance Corporation and the earnings related to the various payments and receipts to the Alaska Housing finance revolving fund. Mr. Greany pointed out that the actual budgetary authority is within the appropriate place in the budget in the Alaska Housing finance component under the Department of Revenue. Sec. 21, page 4, line 28, appropriates to the general fund from the commercial fishing revolving loan fund. Ms. Slagle said that Legislative Finance recommends it be reduced by $200.0. The new number would be $4,802,800. This amount of $200.0 was used as an additional fund source for the Department of Commerce operating budget proposal which has been adopted by the subcommittee. Senator Kerttula MOVED to amend Sec. 21, page 4, line 29, by reducing the amount to "$4,802,800," and also to change line 27 to read "$4,802,800." No objections being raised, it was ADOPTED. Senator Kerttula MOVED amendment #1 for Sec. 21, page 4, line 30, to delete the agricultural revolving loan fund in the amount of $1,500.0 (copy on file). No objections being raised, it was DELETED. (Discussion and motion to amend Sec. 21 was held later in the meeting.) Sec. 22 appropriates the 5 cents per barrel surcharge to the oil and hazardous substance release response fund. Ms. Slagle said that Legislative Finance recommended that the number be reduced from $26,800.0 to $26,700.0 to reflect the forecast by the Department of Revenue. Mr. Greany pointed out that the House already had taken this action. Senator Kerttula MOVED that page 4, line 31, be amended to read "$26,700,000." No objections being raised, it was ADOPTED. Sec. 23 appropriates the balance of the oil and hazardous substance release mitigation account to the oil and hazardous substance release response fund. In answer to Co- chair Pearce, Ms. Slagle said the balance in the account was approximately $12.7. She explained the funds come from penalties and fines levied related to oil spills, and said that there was not a statutory amount that needed to left in the account. Ms. Slagle said that this section has been in the bill the past several years. Co-chair Pearce confirmed that there would be about $6M going into the '470' fund. Sec. 24 appropriates the unexpended balance of the oil and hazardous substance release response fund for spill reserve. In answer to Co-chair Pearce, Ms. Slagle said that the balance in the spill reserve account was approximately $23M. Discussion followed between Co-chair Pearce, Ms. Slagle, Mr. Greany, and Ms. Stonkus regarding the oil spill response fund, reserve fund, and the '470 fund. Mr. Greany explained that Sec. 24 moved money that was in the '470' fund into the spill reserve, which more specifically outlines where the money can be used. In answer to Co-chair Pearce, Mr. Greany said the 5 cents a barrel was connected to the '470' fund. Co-chair Frank announced that Sec. 24 would be held until later in the meeting. Later in the meeting, Co-chair Pearce MOVED that Sec. 24, page 5, lines 5 through 8 be deleted. No objections being raised, it was DELETED. Sec. 25 would reflect appropriations to the Department of Law and Revenue for legal and audit activities involving oil and gas revenue. In previous years this has been in the back section of the budget, but this year the Governor's office placed it in the front section. Sec. 26 appropriates funds to the Department of Natural Resources for costs associated with fire suppression. Ms. Slagle said that Legislative Finance recommends that Sec. 26 be deleted since this has been put in the back section of the budget. Senator Kelly MOVED to delete Sec. 26, page 5, lines 18 through 20. No objections being raised, Sec. 26 was DELETED. Sec. 27 appropriates the disaster relief fund and has been in the back section in past years. This year the Governor's office placed it in the front section. Sec. 28 appropriates funds to the information services fund for the Department of Administration. Ms. Slagle said that Legislative Finance recommends that page 5, line 28, should read "General fund - $2,311,600", line 29 should remain the same, and line 30 should read "Inter-agency receipts - $20,265,100," which would change the total on line 25 to "$22,631,700." Senator Kerttula MOVED to amend Sec. 28, lines 25 through 30, to reflect the recommendation by Legislative Finance. No objections being raised, it was ADOPTED. Sec. 29 appropriates money from the general fund to the Alaska Marine Highway System fund. Ms. Slagle said that Legislative Finance recommends the sum be reduced to "$28,329,200" to reflect the action taken by the Department of Transportation & Public Facilities subcommittee. Co- chair Frank MOVED that Sec. 29, page 5, line 31, be amended to read "$28,329,200." No objections being raised, it was ADOPTED. Sec. 30 appropriates money to the fisheries enhancement revolving fund. Sec. 31 appropriates money from the mental health trust income account to the general fund for statewide indirect cost recovery related to mental health programs. Ms. Slagle said that Legislative Finance recommends the sum be reduced to $871,400 to reflect the action taken by the Department of Health & Social Services subcommittee. Senator Kerttula questioned this reduction. Co-chair Frank said that there was an increase in DD grants in the DH&SS budget. Senator Kelly MOVED that Sec. 31, page 6, line 5, be amended to read "$871,400" (copy on file). No objections being raised, it was ADOPTED. Sec. 32 appropriates money from the oil and hazardous substance release mitigation account to the storage tank assistance fund. Ms. Slagle said that Legislative Finance recommends a reduction to $5,691,500. Senator Kelly asked for clarification of this appropriation. Discussion followed between Ms. Slagle, Mr. Greany, Ms. Stonkus, Senator Kelly, Co-chairs Frank and Pearce, in regard to the '470' fund, spill reserve, and mitigation fund. Co-chair Frank MOVED that Sec. 32, page 6, line 8, be changed to read "$5,691,500." No objections being raised, it was ADOPTED. Sec. 33 appropriates any funds not expended in FY93 by the Safety Advisory Council to be used for the Governor's 1994 safety conference. Sec. 34 refunds local governments their share of taxes and fees collected under various programs. Mr. Greany said that this section has been used for several years. Sec. 35 appropriates the salmon enhancement tax to the Department of Commerce and Economic Development. Sec. 36 allows the use of funds in the statutory budget reserve fund in case revenues are short. Sec. 37 provides for the lapse date. At Ease 6:45pm Reconvene 6:55pm Sec. 21 discussion was held at this time. Amendment #1 by Senator Kerttula was ADOPTED. (See detail in Sec. 21 above.) Sec. 24 was deleted at this time. (See detail in Sec. 24 above.) Co-chair Pearce MOVED to adopt the amended front section of SB 175. No objections being raised, it was ADOPTED. Co-chair Pearce MOVED for passage of CSSB 175(FIN) with individual recommendations. No objections being raised, CSSB 175(FIN) was REPORTED OUT of committee as amended. ADJOURNMENT The afternoon meeting was recessed at approximately 7:00 p.m.