Testimony was heard from TOM WILLIAMS and ANNALEE MCCONNELL. SENATOR PARNELL MOVED Amendment #1. SENATOR ADAMS objected then withdrew his objection. There being no further objection, Amendment #1 was ADOPTED. Amendment #2 was not offered. Amendment #3 was held. SENATOR PARNELL MOVED Amendment #4. Without objection, Amendment #4 was ADOPTED. SB 136 was HELD for further consideration. SENATE BILL NO. 136 "An Act relating to the state budget and to appropriation bills." TOM WILLIAMS, Staff to Senate Finance Cochair Sharp, read the Sponsor Statement relating to SB 136 (copy on file). Following is an excerpt of the first and last paragraphs: "Senate Bill 136 was introduced to clarify current law, making it explicit that the Governor is required to present all three of his necessary budget bills on December 15 of each year --an operating budget bill, a capital budget bill, and a mental health program operating/capital budget bill. This legislation also conforms the general budget submission provisions of AS 37.07.020 to the requirement in AS 37.14.003(a) for a separate mental health program bill." MR. WILLIAMS added that, according to Legislative Finance, the last time a consolidated capital and operating budget bill was submitted to the legislature was in 1983 for FY 84. The practice since then has been to separate the bills which has led to substantial delays in submitting a capital budget. The presence of Senators Parnell and Donley was noted. SENATOR PARNELL stated he had amendments he would be offering. SENATOR ADAMS pointed out that the practice of separating budgets was not new, but had been the past practice of other governors regarding whether they were Republican or Democrat. He suggested that, for SB 136 to work, the session would need to be shortened. He supported voting for a ninety-day session in addition to SB 136. VICE-CHAIR PHILLIPS brought up amendments in the files. SENATOR PARNELL explained Amendment #1. It would change the due date for the governor's budget amendments from the 60th legislative day to the 45th day. It was a recommendation of the Legislative Finance Division and something he agreed with because in recent years, the first finance committee to move its budget has been ready to close out before the governor's amendments were provided. If the process could be moved up a little, the first house would be able to close out with all the budget amendments in hand rather than getting them up to the last moment. He MOVED the amendment, then WITHDREW his motion. SENATOR PARNELL continued by explaining Amendment #3. Currently, the Executive Budget Act requires the agencies to submit performance reports to the Office of Management and Budget. The amendment would say the performance reports would be available to the legislature. It would not be the budget numbers, simply the performance reports which cover how the agencies are accomplishing their mission and goals. SENATOR PARNELL next described Amendment #4, which specified January 10 that the summary of performance reports would be due. SENATOR ADAMS asked to hear the position of the administration. ANNALEE MCCONNELL, Director, Office of Management and Budget, testified that there were tremendous numbers of improvements that could be made in the budget process both on the executive and legislative sides. She was supportive of many of the things SB 136 would achieve. She was in the process of making major changes to the mechanics of the budget system which will allow more timely production of amendments and updates. In addition to automation, she was working toward drawing in other information not currently provided. She referred to past conferences with Senator Parnell, noting that areas such as performance measures and future trend information would be incorporated. MS. MCCONNELL claimed that difficulties exist because the budget system is poor from a mechanical standpoint. It is highly manual, diffuse, and has no ability to roll things up centrally. MS. MCCONNELL continued her testimony by pointing out that an updated six-year plan was recently delivered that would be helpful in the arena of capital budget timing. She suggested it would be a good focus for discussion over the interim. A six-year plan will make it possible to do each year's capital budget more easily because there will be a better overall sense of where the state is headed. MS. MCCONNELL had concerns with some provisions of the bill. One was that there had to be an identical bill between what was submitted on December 15 and January 15. Her reasoning was that life doesn't stop still just because there are deadlines and statutes. There were very few differences this year in the operating budget, but technical errors do occur. Another issue was that bringing the budget out in December gives the public notice, not just the legislature. If they were not allowed to make any changes between December and January, it would give a message that "we don't care what the public tells us about what's in the budget proposal." She didn't anticipate lots of changes, but minor adjustments may be needed and it wasn't a good idea to preclude those from being made. She acknowledged the governor had opportunity to provide amendments to the budget proposal. MS. MCCONNELL believed there were things that they could work out that would deal with the technical concerns and timing issues the Legislative Finance Division may have with preparation of their books. It was also her hope that if there was going to be a requirement that anytime something was presented that full back-up material be there, it would also apply to the court system and the legislature. She noted there were currently projects from the legislative branch that had no back-up and it has created problems trying to see whether things have met appropriation requirements. MS. MCCONNELL summarized her remarks by noting there were improvements that could be made in addition to other changes in the executive branch that would be warranted. She was willing to work with the committee to improve the budget process. VICE-CHAIR PHILLIPS asked if there was further testimony on SB 136. There being none, he stated the bill would be held. SENATOR PARNELL asked to take up the amendments he described earlier. SENATOR PARNELL MOVED Amendment #1. SENATOR ADAMS stated for clarification that it was a simple change from the current 60 days to 45 days. SENATOR PARNELL affirmed that was correct. He added that, according to his understanding from the Legislative Finance Division, when the session deadline was established at 120 days, the budget amendment deadlines were not changed. There was no objection, and so Amendment #1 was ADOPTED. VICE-CHAIR PHILLIPS inquired about Amendment #2. SENATOR PARNELL stated it had been withdrawn, and that he wanted to hold Amendment #3 until the next meeting. SENATOR PARNELL MOVED Amendment #4, regarding the date of the performance report summary. There being no objection, Amendment #4 was ADOPTED. VICE-CHAIR PHILLIPS stated SB 136 would be HELD to the next meeting. He brought up SB 126 next.