SENATE BILL NO. 363 An Act making appropriations for capital project matching grant funds and for capital projects; and providing for an effective date. Co-chair Pearce directed that review of capital budget projects be continued from an earlier meeting. She further directed attention to a spread sheet from the Office of Management and Budget showing capital requests by funding source. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS ROGER PATCH, Director of Installations, Dept. of Military and Veterans Affairs, came before committee. He explained that the first request relates to receipt and expenditure of $2 million in federal funds for upcoming major project designs. Projects have yet to be identified due to the change in mission of the Alaska National Guard and funding restrictions at the National Guard Bureau. However, projects will include aviation support facilities, federal scout armories, and maintenance shops. Senator Rieger inquired concerning backup information indicating that reimbursement will be required for the state's share of design costs at the time of construction. Mr. Patch explained that if the projects are for aviation support, federal scout armories, etc., they will be 100% federal. Should moneys be used for a state armory, the situation would be different. There are no state armories scheduled for design. Senator Rieger sought assurance that approval of the proposed request would not result in state liability for reimbursement. Mr. Patch voiced confidence that there would be no liability. The second request addresses the $5 million army national guard backlog in deferred maintenance. The instant request for $665.0 is 12.8% of the total. The backlog is the result of shortfalls in the operating budget. Funding at this time is critical in that it may mean the difference between repairing or replacing roofs, etc. The third request, $100.0, is in conjunction with the second in that it seeks funding for scheduled renewal and replacement of building components. In response to a question from Senator Kerttula, Mr. Patch acknowledged that much of the work contemplated by the second and third requests would be done by reserve units as well as regular guard members. Responding to a question from Co-chair Frank concerning the $5 million maintenance backlog, Mr. Patch explained that deferred maintenance for all state agencies results from shortfalls in the operating budget. Those shortfalls evidence both lack of inclusion of adequate maintenance dollars in the administration's budget and legislative failure to fund requests. The Co-chair asked for a breakdown of the backlog, including a list of projects and moneys that were cut from past operating budgets. Mr. Patch agreed to provide the information. He noted that deferred maintenance needs are growing at the rate of 15% to 20% per year. ALASKA COURT SYSTEM KIT DUKE, Facilities Manager, Alaska Court System, next came before committee. She explained that the court system capital budget consists of a $4.8 million request for funding needed to compete the court facility in Anchorage. She then provided background information on past funding for the project. Part of the current request represents the difference between the total $40 million cost of the project and FY 93 funding of $19.7 and FY 94 funding of $19.0. The balance will compensate for extra well drilling costs for the cooling system and cost overruns experienced when site excavation encountered hazardous materials. DEPARTMENT OF HEALTH AND SOCIAL SERVICES MARGARET LOWE, Commissioner, Dept. of Health and Social Services, and JANET CLARKE, Director, Division of Administrative Services, Dept. of Health and Social Services, came before committee. Ms. Clarke explained that the first of the department's four projects seeks $888.9 for department-wide renovation and repair. Approximately $800.0 is general funds. Renovation and repair will assist in management of 25 state-owned facilities and provide for safety and security upgrades, work at health clinics, drinking water at the Bethel facility, etc. Senator Rieger voiced need for details on specific projects. Ms. Clarke said that projects have not yet been prioritized. She advised that she could provide a verbal listing at this time and follow up with more specific information at a later date. She then cited need for the following work: 1. Juneau Health Center - Roof problem due to ice buildup. 2. Johnson Youth Center - Security concerns and problems with the exterior of the building 3. Sitka Health Center - Furnace replacement and refoofing. 4. Kodiak - Problems at the Griffin Building. 5. McLaughlin Youth Center - Ventilation 6. Assets Building, Anchorage - Roof completion. 7. Dillingham Health Center - Furnace, roof repairs, painting. 8. Bethel Youth Faciity - Exterior leakage. 9. Fairbanks Youth Facility - Renovation of space for a closed treatment unit. Senator Sharp referenced lack of funding for equipment for the Fairbanks Regional Health Center. He noted that the center is utilized to a great extent by individuals located outside the borough. He then advised that he would not provide discretionary moneys. The second project seeks $4,017.3 million for two projects relating to computer system development. The first involves the eligibility information system. The department has found a one-time, federal source of funds to use to match other federal funds. For FY 95, upgrades in the eligibility system will be totally federally funded. Moneys will be used to prolong the life of the system and increase user productivity. Of this $2.4 million project, $1.4 million will be devoted to productivity improvement since no new staff will be provided. Federally mandated reporting requirements for the JOBS program will require $800.0, and enhanced data retrieval and report capability will entail $200.0. In response to questions from Co-chair Pearce, Ms. Clarke advised of 17 computer projects, only two of which are included within the Governor's capital budget. She further noted that the original request of $2.8 for the eligibility information system was amended to $2.4. The entire amount reflects federal funds. The second project within the $4,017.3 request for computer system development relates to the division of family and youth services. Ms. Clarke next spoke to the $200.0 request for public health laboratory planning and design. She noted that the department has three labs located in Juneau, Anchorage, and Fairbanks. Studies of privatization and consolidation have been ongoing over the years. The most recent will provide comprehensive financial information. The department intends to return to the legislature next year with a financing proposal that could save lease costs and help build a consolidated public health lab. Consolidation would reduce staff needs associated with the existing three facilities. The $200.0 will complete the final portion of review. Discussion followed regarding possible contracting of lab services to private laboratories. Ms. Clarke told members that that review would be part of the ongoing study. She acknowledged that some work could be contracted, but it makes sense for the state to continue to conduct tests that are unprofitable for private labs or present risks private labs do not wish to assume. (Testing for tuberculosis was cited as an example.) Senator Kerttula voiced need for state monitoring of private contractors for both adequacy and accuracy. [Senator Kelly arrived at the meeting at this time.] Ms. Clarke explained that the final request has been part of the budget for the past five years. It seeks $1,032.5 million for API "stop-gap repair." API has a number of problems. It was recently visited by the fire marshal, OSHA, and individuals conducting an Americans With Disabilities Act survey. Surveys indicated "high dollar implications." Ms. Clarke referenced information submitted to the Office of Management and Budget which lists projects to be funded in priority order. The twenty-four-hour facility receives over 1,100 admissions per year. She stressed need to ensure the safety of both staff and patients. Stop-gap repairs have a five-year life. Discussion followed between Ms. Clarke and Co-chair Pearce regarding differences between the department request for capital funding and that actually provided by the Governor. Ms. Clarke agreed to provide a listing of projects to be completed in FY 95. Further discussion ensued regarding inspection of state facilities by local building officials and fire marshals. Ms. Clarke acknowledged that various state facilities have been under citation by local fire marshals. As long as the state continues to show marked progress toward satisfying deficiencies, no facilities have been closed. NEWTON CHASE, Chief of Facilities, Dept. of Health and Social Services, explained that, as a therapeutic environment, the greenhouse at API falls under a particular section of the code requiring a certain level of fire safety. The greenhouse does not comply. It is too combustible. An agreement has been reached with the local fire marshal that does not require removal of the greenhouse. Co-chair Pearce directed that committee attention revert to consideration of the remaining portion of the requested computer system development. Ms. Clarke noted that the EIS enhancement request was revised so that it could be funded entirely from federal moneys. End: SFC-94, #44, Side 2 Begin: SFC-94, #46, Side 1 Senator Rieger asked if the project included purchase of a mainframe. Ms. Clarke responded negatively. JAN HANSEN, Director, Division of Public Assistance, Dept. of Health and Social Services, explained that the capital budget contains no hardware purchases. Funding relates to programming enhancements to the EIS system to improve productivity or payment accuracy. The next computer project relates to the division of family and youth services. The U.S. Health and Human Services Department mandates quarterly data reporting for foster care and subsidized adoptions. New legislation provided a 75% federal match for state systems. Of the requested $1.6 million, $400.0 would be general fund match. Co-chair Pearce noted that the original request was for $3.8 million. She then asked for a breakdown of how the $1.6 million provided by the Governor would be spent. Senator Kelly inquired concerning the number of social workers statewide. Ms. Clarke advised of 400. In response to a further question from the Senator concerning the number of personal computer purchases associated with the proposed enhancement, STEVE RICE, Data Processing Manager, Dept. of Health and Social Services, came before committee. He advised of need for an additional 125 personal computers to both replace old units and ensure that those who need a pc have access to one. Ms. Clarke clarified that, given the reduction between requested and provided funding, the department will have to review the number of units it will be able to purchase and still meet federal data reporting requirements. Actual purchase will probably be considerably less than 125. Senator Rieger voiced support for Dept. of Health and Social Services computer requests, stating his belief that the department has been "under computerized" for a long time. Support is further bolstered by the fact that the state will only pay one-quarter of the cost. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT CHRIS GATES, Director, Division of Economic Development, Dept. of Commerce and Economic Development, came before committee to speak to the department's $1.8 million request. He explained that $500.0 relates to continuation of the 13- year history of providing small economic development matching grants (up to $100.0) for municipalities and non- profits. The department has been able to generate a 3 to 1 match on available dollars. Co-chair Pearce asked if the department undertakes an entirely new selection process each year. Mr. Gates said that the program operates on a first come, first served basis. Operating changes for the coming year will request projects three times a year and evaluate them against one another to determine the highest and best use of limited moneys. The second increment consists of a $253.0 request for small business development centers. These moneys match federal SBA moneys on a one-to-one basis and allow the department to offer basic private sector business consulting to Alaskans in both rural and urban areas. This service was provided to over 4,300 clients, and 191 training programs were offered. Discussion followed regarding referral of individuals with tax problems to proper assistance. In the course of further discussion, Mr. Gates explained that the $253.0 in federal funding flows through the University small business development center. The small business development center program is an SBA sponsored activity through universities in all fifty states. Alaska makes extensive use of the program. The $183.0 increment funds assistance and counseling for federal contracts in Alaska. It is called a procurement technical assistance program. It is also administered through the University of Alaska, small business development center. Funding is a one-to-one match with the U.S. Department of Defense. The program provides assistance in dealing with federal regulations and getting through the maze of paperwork involved in bidding federal contracts. This year the program counseled 787 clients in government contracting, including state contracting. As a result, clients were awarded over $57 million in government contracts. Those awards would not have been made but for the direct assistance provided by the program. Co-chair Pearce voiced her understanding that, under the proposed budget, there would be no "buy Alaska" program. Mr. Gates concurred. The Co-chair inquired concerning the philosophy behind elimination of that program but inclusion of the small business development centers. NANCY SLAGLE, Director of Budget Review, Office of Management and Budget, voiced her understanding the "buy Alaska" program involved purely general funds while a match was available for small business development. Mr. Gates added that while there was no government match for "buy Alaska" funds, state moneys were matched with private moneys and in-kind services from the Anchorage Chamber and Anchorage Economic Development Corporation. Co-chair Frank said he recalled Legislative Budget and Audit Committee discussion of efforts to move the "buy Alaska" program entirely into the private sector. Mr. Gates advised that he had no knowledge of such discussion. He acknowledged that, due to lack of funding, the program would end. Co-chair Pearce asked about department ability to charge for small business assistance. She also asked that Mr. Gates review program records to determine how often the program serves the same client. Senator Sharp inquired concerning the number of business undertakings that proved to be viable. Mr. Gates agreed to provide the information. Discussion of the $250.0 request for the Arctic Winter Games followed. Senator Kelly noted funding of the games in last year's budget as well, and he further noted that the games would not be held until next year. Co-chair Pearce reference correspondence in support from Senator Randy Phillips. DEPARTMENT OF NATURAL RESOURCES JEFF HARTMAN, Assistant Director, Support Services, Dept. of Natural Resources, came before committee together with RON SWANSON, Director, Division of Lands, and JIM McALLISTER, Regional Forester. Mr. Hartman directed attention to 13 projects and noted that they break down as follows: 4 for land, 4 for forestry and fire, 3 for parks, 1 for land record information services, and 1 for geological and geophysical services. The first seeks $45.0 for pollution assessment at the Isabel Pass pipeline construction camp. Co-chair Frank asked if the responsible party was accessible. Mr. Hartman responded that the owner is Alyeska. The department would use requested funding to assess the extent of contamination, determine what must be done, and require the responsible party to conduct cleanup. The track record on use of the site is cloudy. Mr. Swanson clarified that Alyeska is the responsible party. While the lease had often been subassigned, Alyeska has maintained responsibility for the site. Senator Kelly asked why DNR was undertaking the assessment rather than DEC. Mr. Swanson said that DNR would work with DEC. DNR is the state landowner. Co-chair Frank asked if the property remains under lease, and Mr. Swanson responded negatively. Mr. Swanson further explained that the department has been told, by workers at the site, that materials were buried. In response to a question from Co-chair Pearce, Mr. Swanson said that, under current lease provisions, certification that the site is clean must be provided prior to conclusion of the lease. The department is now contending with older leases, such as Isabel Pass, that did not contain that requirement. Co-chair Pearce suggested that the department should be able to demand that Alyeska clean the site without need for a $45.0 assessment. She then asked that additional information concerning the request be provided. Mr. Hartman explained that the $500.0 for multi-mission village work crews relates to a program to use trained fire fighting crews, on a contract basis with federal agencies, to conduct controlled burning and reduce the chance of a major fire. The project will also provide meaningful training for rural fire fighting crews. Federal agencies have agreed to fund up to 300 days of work. The plan is to use ten, sixteen-person crews for up to 21 days rotation. Funding is federal. In response to a question from Senator Kelly, Mr. McAllister said that the state does not use convict labor for fire fighting. Mr. Hartman stressed need for extensive training of fire fighters but advised that he would look into use of convicts for part of the effort. The $650.0 general fund request for land acquisition relates to the remaining 17-million acre selection to complete the 105-million acre state entitlement. Some of these lands have also been selected by Native corporations. The proposed project will resolve double selections and make the best choice in selection of the final 17 million acres. Mr. Swanson further explained that the $650.0 would fund two efforts. The first is GIS related and would cleanup selection data in order to make a final prioritization of the 17 million acres. The second component involves work with the federal government and native corporations to reduce the 17 million acres of dual selections. Co-chair Pearce asked for a breakdown of expenditure of the $650.0 versus the original request to the Governor. Department staff provided revised backup information for copying and distribution to members. The request for $450.0 in general funds for mental health land reconstitution reflects an ongoing program. This particular portion involves notation of status plats. Funding will be divided between the division of land and LRIS to identify conveyable original trust land and replacement land, record needed documentation, and enter the information into state status graphic records. Co-chair Pearce requested a breakout. Mr. Swanson added that the proposed project is based upon pending mental health trust legislation rather than continued implementation of Ch. 66. Co-chair Pearce asked if the capital budget request represents the fiscal note for SB 67. Mr. Hartman explained that capital funds relate to notation of records. Additional moneys will be needed for management of lands. That will be shown on the fiscal note. The $50.0 in general funds for fire equipment would replace old chain saws and fire pumps that are no longer safe and reliable. Funding would purchase 50 chain saws at $360 each, and 14 fire pumps at $2,300 each. The next $50.0 request would fund emergency repairs at the Wickersham House to replace the leaking roof, gutters, and trim. The state spent $300.0 on renovations to the building, last year. Estimates for roofing costs are based on experience from recent renovations. The $250.0 for the land status geographic information system funds year four of a five-year project to change this data base from manual to digital format. Alaska has approximately 8,000 townships and 17,000 maps. The project has already digitized 4,330 townships. In the remaining two years, the project will be completed. Once information is digitized, it will be available to resource managers and make mapping projects easier and more useful. Co-chair Pearce noted that the original request was cut from $575.0 to $250.0. Mr. Hartman advised of a $217.0 carryover and total availability of $525.0 for the year. Two positions have been eliminated, but the department believes it can complete the project in two years. End: SFC-94, #46, Side 1 Begin: SFC-94, #46, Side 2 The $225.0 general fund request for the geological mineral inventory relates to airborne aeromagnetic investigation of promising mineral deposits. This work has, in the past, been done in conjunction with Native corporations. That approach will be taken this year. Work is to be done in the Circle and Bonnifield districts. When complete, the inventory will provide files of likely sites for development. Most of the cost is for helicopter time. The $300.0 general fund request for the forest practices act will fund seven projects and public hearings. The contract will be with the University of Alaska, Fairbanks, institute of northern forestry. It will assess protection of the environment, reforestation, etc. Co-chair Pearce said that not much has happened since passage of the act. She then asked what the department intends to study. Jim McAllister explained that the forest practices act was primarily designed to address timber harvests on private lands. The proposed project will assess water quality protection measures in the act and associated regulations. In response to questions from Co-chair Frank, Mr. McAllister acknowledged that most harvest has occurred in coastal areas of Southeast, Prince William Sound, and on the Kenai. Requirement for the assessment was built into the forest practices act. Discussion followed regarding contracting of services and involvement of the University. Senator Kerttula voiced concern over putting more moneys into studies than the state receives for the trees. Co-chair Frank asked why funding for the geological mineral inventory was cut from $1.5 million to $225.0 while funding for research under the forest practices act was only reduced from $350.0 to $300.0. Mr. Hartman explained that forecasted sales for timber, $12 million, are the largest the state has experienced. The $100.0 in general funds for the forest resource inventory would provide for phase II of the Tanana Valley inventory. Discussion of need for computers followed between Mr. Hartman and Senator Kelly. Co-chair Frank noted reduction from $700.0 to $100.0 and asked what the department intended to do for $100.0. Mr. McAllister explained that it would continue inventory of hardwoods in the Tanana Valley. Discussion followed concerning beetle outbreaks. The $640.0 in federal funds for national historic preservation will be used to acquire, stabilize, and restore properties listed in the national register of historic places. Sites are selected by the nine-member historical commission. Mr. Hartman advised of a 60/40 match. Co-chair Pearce noted that no state funds are indicated. FRED FISHER, Fiscal Analyst, Legislative Finance Division, advised that grantees provide the match. Mr. Hartman said he would provide additional information. Discussion followed regarding ownership of the historical sites. Co-chair Pearce asked that department staff double check the source of matching moneys. The $500.0 in federal funds for land and water conservation grants reflects a 50/50 match for recreational water projects. Co-chair Pearce asked for further explanation of the source of matching funds. Senator Kelly inquired concerning the 12% surcharge. Mr. Hartman explained that the 12% represents indirect costs for management of the program. The $400.0 in general funds for RS2477 assertions and mapping represents the second year of a two-year project. The department has identified approximately 1,500 trails, access rights-of-way, etc. There is disagreement between federal agencies and the state concerning width and whether or not they satisfy statute 2477. Requested funding will prepare cases for litigation to resolve these issues. Access to the patchwork of state ownership is extremely important for development. Senator Kelly voiced his understanding that this would be the last year the state will have to fund 2477 projects and associated staff positions. Mr. Swanson concurred. He noted, however, potential litigation costs in the future. Co-chair Pearce advised that review of SB 363 capital projects would continue at a subsequent meeting. ADJOURNMENT The meeting was adjourned at approximately 8:40 p.m.