COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 3002(FIN) "An Act setting the compensation and certain benefits of certain public officials, officers, and employees not covered by collective bargaining agreements; and providing for an effective date." ANNALEE MCCONNELL, Director, Office of Management and Budget, Office of the Governor, testified that because of the confusion over the listing of salary and benefits provisions, changes were made to separate each branch of government and list their amounts individually. She detailed the committee substitute adopted by the House of Representatives. Section 1 - Outlines the amount needed to cover all the collective bargaining agreements for the executive branch and the salary and benefits adjustments for the non-covered state employees. This equals $20.3 million total funds for the executive branch. Funding sources are listed on page three. Ms. McConnell pointed out that the general fund portion of the legislation is covered by various reappropriations and utilizes other savings as outlined later in the bill. Section 1(d)(2) - Appropriates money into the marine highway system fund to cover that agency's portion of the increased costs. Section 2 - The court system totals over $1.1 million, all of which is general funds. Section 3 - The University of Alaska totals $6.4 million, of which over $5.1 million is general funds. Ms. McConnell noted that part of the increases for University employees is already covered in the University's $16.9 million budget request for FY 01. She added that this language includes employees covered in bargaining units and non-covered university employees. Section 4 - The legislature totals $634,000 general fund and provides that the lump sum payments only are paid to legislative employees and not to legislators. Section 5(a) - these items list the remainder of funds needed to cover the executive branch and non-covered employees increases. Subsections 1 through 7 - Remaining balances from the Department of Environmental Conservation water and sewer projects already completed that equal $150,000. Ms. McConnell commented that this reappropriation takes no money from any project, and that the funds would typically be available for reappropriation to other projects. Subsection 8 - Balance of $107,000 of capital appropriation for emergency housing originally Alaska Housing Finance Corporation (AHFC) corporate receipts that lapse at the end of the year. Section 5(b) - Various miscellaneous appropriations and reappropriations. Subsection 1 - The remaining $52,000 of the K-12 foundation formula from the current year. Ms. McConnell recalled there was an approximate $14 million lapse balance, which the legislature appropriated all but $52,000 for various purposes. Subsection 2 - Unused funds requested in the FY 00 supplemental budget to cover increased fuel prices for the Department of Transportation and Public Facilities equaling $82,000. Ms. McConnell explained that when the additional funds were appropriated, the fuel prices had raised dramatically. However, she stated, the gasoline prices have been reduced somewhat and ten-percent of the entire $820,000 appropriation was not needed. Section 5(c) - Investment Loss Trust Fund, further releases totaling $4,055,600, which would clear out the fund. Ms. McConnell relayed that it was previously projected there would be $2.3 million available for release from this fund, most of which had already been appropriated through the budget process to the Department of Transportation and Public Facilities and other agencies. She stated that the Department of Law had subsequently identified additional claims against the fund that the courts could release in the new few months, which in turn allow the reserves to be released. Section 5 (d) - Fish and Game Source Subsections 1 through 5 - The capital items Subsections 6 and 7 - conforming language Subsection 8 - completes the transaction of the fish and game funds into the general fund for the purpose of funding the employee contracts. Ms. McConnell reminded the Committee of the capital budget deliberations where commercial fisheries entry commission receipts were used in order to fund certain deferred maintenance projects within the department. She noted a balance of $900,000 remained in the fund after the appropriations. She explained that these funds would be used to replace general funds used for the deferred maintenance projects, thus freeing up general funds for the employee contracts. Section 5(e) - Medicaid Pro-Share appropriates $8,148,600 statutory designated program receipts through the complicated program. Ms. McConnell shared that the Office of Management and Budget has had recent success in persuading hospitals to participate in the Medicaid Pro-Share program. Section 5(f) - Longevity Bonus Program remainder of $1.4 million fast-track supplemental appropriation amounting to $818,000. Ms. McConnell reminded the Committee of the legislature's intent to fully fund the longevity bonus program with lapse funds from the Y2K readiness project. She noted that an additional general fund appropriation was made to cover any shortfall of Y2K funds. She stated that it was estimated that $1.4 million general funds would be necessary, however there were more Y2K funds lapsed than anticipated and only $612,000 general funds were utilized. Section 5(g) - Debt Service Offset incorporates the final debt reimbursement amounts submitted by school districts, which are $2 million lower than projected. Ms. McConnell added that with higher than projected revenues from the tobacco tax to appropriate to school debt reimbursement, the total reduction to the general fund appropriation is $4 million. Section 5(h) - Establishes immediate effective dates to ensure implementation this fiscal year. Senator Phillips asked why the additional savings using the Medicaid Pro-share funding source was not identified during the normal budget process. Ms. McConnell replied that the pro-share program has been "enormously complicated" and that the process has been expedited for implementation in 2001. She noted that portions of the program have taken effect already, thus increasing the savings. She added that the entire supplemental budget appropriation for Medicaid was not needed due to the implementation of this program and that further savings could still be realized after final determinations are made on June 30, 2000. She admitted that it has been known there would be savings, but that the amount of savings is still in question. Senator Phillips next asked if the administration planned for any supplemental requests to the FY 01 budget for items other than forest fires and emergencies. He feared that after these employee contracts are funded using the various funding sources, the administration would submit many requests for general funds to make up the shortfall. Ms. McConnell responded that compared to the previous year, formula programs more completely funded and would therefore not require supplemental appropriations. She added that Medicaid expenses cannot be precisely anticipated, and that the costs range from $400,000 to $4 million Senator Green referred to the language on page 6, lines 25 through 27, "The sum of $634,000 is appropriated from the general fund to the legislature for salary and benefit adjustments for legislators and employees of the legislature for the fiscal year ending June 30, 2001." She understood the legislators would not receive a salary increase and but wanted to know if there would be a benefit adjustment. Ms. McConnell replied this language relates to changes in health benefits but not the actual salary of legislators. Senator Adams offered a motion to report CS HB 3002 (FIN) am from Committee. Without objection, the bill MOVED from Committee. ## ADJOURNED Senator Torgerson recessed the meeting to the call of the Chair at 9:26 AM.