SENATE BILL NO. 233 "An Act making appropriations for capital projects; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. CHERYL FRASCA, Director, Office of Management and Budget, Office of the Governor, stated this bill is the vehicle through which Governor Frank Murkowski has proposed to spend a portion of the $1.2 billion in unanticipated FY 2006 (FY 06) State revenue. Approximately $565,000,000, or half of that revenue, would be separately allocated to support FY 2007 (FY 07) K-12 education. She reminded the Committee that, in FY 2005, the Legislature had approved funding FY 06 Education expenses with unanticipated FY 05 revenue. Ms. Frasca continued that the Governor has also proposed to allocate approximately $400 million, or one-third, of the FY 06 unanticipated revenue to fund the Gas Pipeline Project. Ms. Frasca specified that this supplemental capital budget bill would allocate ten percent, or $130 million, of the FY 06 unanticipated revenue to support transportation and deferred maintenance expenses. Ms. Frasca stated that, of the entirety of the aforementioned proposals, the Administration would "view" this proposal as being the "more traditional way" of spending FY 06 additional revenues. She noted that "some others who cover the Legislature's deliberations" had "characterized" this legislation in that fashion. Ms. Frasca pointed out that department projects are being presented in this supplemental bill rather than being requested in the FY 07 capital budget because the funds are available in FY 06. This could be likened to the Legislature's decision last Session to expend unanticipated FY 05 revenue on transportation projects. Ms. Frasca stated that of the total $130 million expenditure being proposed in this bill, $86 million would be allocated for Department of Transportation and Public Facilities' transportation projects including $12 million for Seward Highway safety improvements. Funds for enforcement activities on that Highway would be requested separately. $44 million would be spent on deferred maintenance to address State facilities needs. Ms. Frasca pointed out that in years past, the Legislature exerted substantial efforts to catalog the backlog of deferred maintenance needs for school districts, local governments, and State facilities. This request would be limited to addressing State facilities needs, as the total need would exceed available funds. Ms. Frasca noted that representatives from the departments are in attendance and would be able to address Committee questions. Co-Chair Green surmised that Members might continue to question the need to address these projects with FY 06 funding. Except for the aforementioned Legislative action the previous Session, Supplemental Budgets have traditionally been utilized to fund "unanticipated" expenses rather than being a mechanism through which to spend "unanticipated revenue". 10:09:14 AM Senator Bunde concurred with Co-Chair Green's remarks and noted never before having experienced a supplemental capital budget bill during his 14-years as a Legislator. To that point, he asked whether such a budget had ever been presented. 10:09:33 AM Ms. Frasca responded that "perhaps its a question of structure". The supplemental bill that passed the Legislature the previous Session included appropriations that utilized FY 05 revenues. She noted that a project's effective date would dictate the fiscal year in which the project would be funded. The Administration opted to present the projects in a Supplemental bill since the effective dates would dictate the use of "current year revenues". There was no intent to imply that these were unanticipated needs. Senator Bunde opined that that would "expand the definition of supplemental a bit". From his point of view, the request must also be accompanied by a "pretty solid justification of need" rather than simply being requested because there was money available. "I think we can always find an excuse to spend money; we don't always find the needs." 10:10:53 AM Ms. Frasca stated that, as the projects are reviewed, the needs would become obvious; the requests are not "frivolous". The total departments deferred maintenance needs exceeded $700,000,000; 60 percent of which were University of Alaska needs. Through the use of a "threshold test of merit", the projects were "carved down significantly"." 10:11:31 AM Department of Administration Maintenance Projects for Facilities Outside the Public Building Fund $3,620,000 General Funds Reference No.: 41581 Category: General Government Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2011 Funding is necessary for continued maintenance of facilities outside the Public Building Fund. The group of facilities includes the Governor's House, 3rd floor of the Capitol Building, the Dimond Courthouse, the Archives/Records Center, the State Museum and Building Annex, and the Subport Building. All of these facilities are located in Juneau. On-Going Project 10:12:36 AM ERIC SWANSON, Director, Division of Administrative Services, Department of Administration, stated that this request would include major projects such as the structural and foundation work needs for the Archives and Museum Buildings and the water line replacement project for the Dimond Courthouse. Also included were smaller projects, such as the window replacements and generator replacements. Co-Chair Green communicated to Mr. Swanson that when the projects included in this request were compared to the "outside of the Public Building Fund" projects included in the $3.1 million FY 06 capital bill, it was found that six of the projects were duplicates. "That's a little troublesome." Mr. Swanson explained that the list could be characterized as a "snapshot in time", as the priorities of the list change from year to year. A project included last year could "drop off" the list this year were another project's needs to escalate. Nonetheless, the Department would review the list in order to avoid duplication. 10:14:35 AM Co-Chair Green asked whether this could be interpreted to mean that the funds allocated to the Department could be used "for anything"; the Department "would not be required to adhere to the list". Mr. Swanson clarified that while the Department does endeavor to adhere to "the overall list", the priority list would be affected by changes in facilities circumstances. He understood that communiqué in this regard had been provided. Co-Chair Green acknowledged that language to that effect had been provided. Nonetheless, she viewed the changing of priorities as being "problematic". Therefore, she asked that notification be provided when priorities change in order to prevent confusion about the request. Mr. Swanson stated that a review of the projects would be conducted. Public Building Fund Facilities Projects $5,500,000 General Funds Reference No.: 41583 Category: General Government Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2011 Funding is necessary for continued maintenance of state owned facilities that make up the group known as Public Building Fund Facilities. These facilities include the State Office Building, the Alaska Office Building, the Community Building, the Public Safety Building, and the Court Plaza Building (all located in Juneau), the Douglas Island Building (Douglas), the Atwood Building (Anchorage), and the Fairbanks Regional Office Building. On-Going Project Mr. Swanson reviewed the facilities that would be addressed by this request. 10:16:35 AM Co-Chair Green requested that notification about changes in this prioritization list also be communicated. She asked regarding the zero funding need anticipated for FY 07, as indicated on the project summary sheet. Mr. Swanson stated that that information was erroneous, as the Department has not of yet developed its FY 07 capital budget request. Co-Chair Green asked that the information be corrected. She assumed that the Department's FY 07 request would amount to approximately $3,000,000, which was the amount requested in FY 06. Mr. Swanson communicated that the information would be updated. 10:17:38 AM Co-Chair Wilken, observing that the Department of Administration's deferred maintenance requests amount to $9,120,000 and the Department of Transportation and Public Facilities' deferred maintenance request equates to $2,000,000, commented in regards to "the imbalance in the requests, as it was his understanding that they each operate approximately the same number of buildings. To that point, he requested that the departments' requests include facility's square footage and/or number of buildings. This would assist in clarifying the imbalance, and, in addition, might provide evidence to support increasing funding to the Department of Transportation and Public Facilities. 10:19:00 AM Co-Chair Green understood therefore that Co-Chair Wilken was suggesting that funding should be increased for the Department of Transportation and Public Facilities. Co-Chair Wilken responded that such decisions could be made following the receipt of the aforementioned information. 10:19:14 AM Senator Bunde requested that the Departments provide requests in order of priority. He assumed that the project backup material, as presented, is in "random order" as otherwise, it would imply that the replacement of the rock wall around the Alaska State Museum is a higher priority than replacing sewer lines. Co-Chair Green asked the Department whether the list accompanying the request was in order of priority. 10:19:59 AM Mr. Swanson clarified that non-public building fund and public building fund requests were presented in priority order. Co-Chair Green understood therefore that the number one Department of Administration priority would be the request regarding the Alaska State Museum. Mr. Swanson expressed that the number one priority for the Public Building Fund was the State Office Building and the number one priority for the non-public building fund was the State Museum annex. Senator Bunde puzzled over the fact that the State Museum rock wall replacement, listed as number ten on the non-public building fund priority list, outranked a roof replacement project. 10:21:31 AM Department of Corrections Deferred Maintenance, Renovation and Repair $2,500,000 General Funds Reference No.: 41925 Category: Public Protection Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2012 This project will provide funding for essential repair and renovation of electrical, mechanical, roofing, walls, fire/life safety, security, structural, food service, pavements and site drainage systems for all correctional facilities. This work is required to enable continued safe, secure and efficient operation of the 24-hour incarceration facilities. On-Going Project SHARLEEN GRIFFIN, Director, Division of Administrative Services, Department of Corrections, informed the Committee that, like the Department of Administration, the Department of Corrections' list of deferred maintenance needs is in priority order. In addition, the Department develops a six-year plan. Ms. Griffin affirmed that when a project on the list experiences an urgent need, it would be elevated on the list. An unanticipated failure might "bump" a project on the list. Ms. Griffin noted that the entirety of the projects included in this request are correctional facilities ranging between 20 and 40 years of age. The pump involved in the Palmer Medium Security facility sprinkler system repair is undersized for the sprinkler heads and is unable to pump water for 15 minutes. The water system repair needs at the Wildwood Correctional Center are similar to those of Palmer. The fire alarm system at the Juneau Lemon Creek Correctional Center is failing. The Spring Creek Correctional Center security fence must be enhanced and the fence alarm system must be replaced. The Highland Mountain Correctional Center is in need of roof and wall replacement as well as asbestos abatement. Numerous other projects are included in the Department's priority list. Senator Bunde noted that a list of the projects has not been provided. In response to a question from Co-Chair Green, Ms. Griffin responded that the Department would provide Members a copy of both the six-year plan and the deferred maintenance list in priority order. Co-Chair Green inquired to the reason for the elevated request levels depicted on the project summary for the out years 2008 and 2009. Ms. Griffin stated that the projections would include items on the Department's six-year plan such as deferred maintenance needs, repair and renovation projects, security operating systems, as well as fire and life safety issue projects. 10:26:06 AM Department of Education and Early Development 10:26:23 AM Mt. Edgecumbe High School Facility and Infrastructure Repairs and Upgrades $500,000 General Funds Reference No.: 41992 Category: Education Location: Sitka House Election District: Sitka/Wrangell/Petersburg Estimated Project Dates: 03/16/2006 - 06/30/2007 Upgrades and repairs to facility and infrastructure. EDDY JEANS, Director, Division of Finance, Department of Education and Early Development, explained that this request would address a leaking roof and asbestos abatement needs in the aging fire hall building currently being used as a storage facility for the Mt. Edgecumbe High School. The second project that would be addressed would be the floor replacement in the girl's dormitory. The receipt of the funds as requested would allow the dormitory work to be conducted this summer when the school is not in session. Co-Chair Green recalled that the school had been appropriated $2,500,000 last year for school repairs and maintenance needs. Mr. Jeans responded that the master plan developed for the school would include "tens of millions of dollars in repairs." An additional $2,500,000 would be requested in the FY 07 capital budget to provide for boiler replacement and other structural repairs. Co-Chair Green asked for information as to how this funding would be distributed to other areas of the State. Mr. Jeans clarified that this funding would be dedicated to the Mt. Edgecumbe School. The school is a State operated facility. Senator Stedman informed the Committee that, as Mt. Edgecumbe High School is included in his district, he had recently toured the facility. The storage building is a metal frame building that was constructed during World War II, and the asbestos coating the pipes has "literally collapsed" and is laying "inches thick on the ground." Everything in the building is ruined. Other buildings, while not in as bad a shape, also have asbestos issues. The issues at the storage building must be addressed. Department of Fish and Game 10:29:15 AM Deferred Maintenance, Renovation, Repair and Equipment $300,000 General Funds Reference No.: 30128 Category: Health/Human Services Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2010 This project will provide for repair, maintenance and renovation of department facilities statewide. On-Going Project TOM LAWSON, Director, Division of Administrative Services, Department of Fish and Game explained that this request would address several of the Department's deferred maintenance issues. The Department has facilities in more than 40 areas of the State including offices, bunkhouses, warehouses, workshops, laboratories, and other similar types of structures. Mr. Lawson noted that the Department manages a "running list" of its annual deferred maintenance needs. The FY 06 list included $3.4 million in project needs. The list is updated as projects are completed. 10:30:24 AM Senator Bunde requested that, rather than listing projects by region, the Department's list be depicted in priority order. Mr. Lawson concurred. 10:30:49 AM Fairbanks Infrastructure Renewal and Replacement $150,000 General Funds Reference No. 39885 Category: Health/Human Services Location: Fairbanks Areawide Election District: Fairbanks Areawide Estimated Project Dates: 03/15/2006 - 06/30/2010 Funds are requested to design and relocate the small wildlife research laboratory in the Fairbanks office away from the existing office space, and to remodel the existing lab space into additional workspaces that could be used to lessen the overcrowding in the facility. One-Time Project Mr. Lawson stated that this request would allow for the construction of a separate building to house a small wildlife research laboratory in the Fairbanks areas. The existing laboratory is attached to a regional office building. The smells generated by the laboratory activities permeate the office. In addition, the current office facility is at capacity. The construction of a separate laboratory would serve two purposes: it would negate the concern about the smells and would allow the office space to be expanded. Department of Health and Social Services 10:32:29 AM Deferred Maintenance, Renovation, Repair and Equipment $1,100,000 $ 100,000 Federal Receipts $1,000,000 G/F Match Reference No.: 31862 Category: Health/Human Services Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2009 This request is for deferred maintenance projects for 29 Department maintained facilities including health centers, youth facilities and behavioral health facilities statewide with a combined replacement value of $158.0 million. Funds would be used for immediate and critical renewal, repair, replacement and equipment needs in state-owned facilities along with selected leased facilities. This request does not include the deferred maintenance needs for the Pioneer Homes, or for recently constructed facilities, including the new Alaska Psychiatric Institute (API), the Anchorage Public Health Lab and Office of the State Medical Examiner, or the Ketchikan, Kenai, or Nome Youth Facility. JANET CLARKE, Assistant Commissioner, Finance and Management Services, Department of Health and Social Services, informed the Committee that this request would address the deferred maintenance needs for the entirety of the Department's facilities other than the Pioneer Homes. She alerted the Committee to the fact that the Department would not be presenting any deferred maintenance project requests in the FY 2007 capital budget. Ms. Clarke noted that a list of prioritized projects is included with the backup material for this request. In addition, a separate handout titled "FY07 Deferred Maintenance Capital Request Representative Photos" [copy on file] would provide photographs of some of the specific projects included in this request. The Department's number one and number two priority concerns, as depicted in the handout, would be to replace obsolete building controls in both the Fairbanks Health Center and the Ketchikan Health Center with modern digital controls. Ms. Clarke noted that the fourth item on the priority project would be to cover an outdoor walkway at the McLaughlin Youth Center. Other projects would include replacing building water system pipes, exterior painting, outside siding replacement, and interior wall repairs. The pictures are presented in order to reflect the severity of the needs. Pioneer Homes Deferred Maintenance, Renovation, Repair and Equipment $2,000,000 General Funds Reference No.: 37934 Category: Housing/Social Services Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2009 This request is for deferred maintenance projects for Pioneer Homes statewide, including immediate and critical renewal, repair, replacement and equipment needs. The Department is responsible for operating and maintaining the six Pioneer Homes throughout the state. Locations include Ketchikan, Sitka, Juneau, Anchorage, Palmer, and Fairbanks. On-Going Project Ms. Clarke reiterated that this request would allow for deferred maintenance needs at the six Pioneer Homes in the State. Again, there would be no request in the FY 07 capital budget for deferred maintenance needs for these facilities. The back-up material includes a prioritized listing of needs. A handout titled "FY2007 Deferred Maintenance Capital Request Pioneers' Homes - Representative Photos" [copy on file] presents pictures of the various Pioneer Home needs. The number one priority would be the fire alarm and system replacement at the Fairbanks Pioneer Home. The system is failing and replacement parts are difficult to locate. The number four priority on the list is the Sitka Pioneer Home, which is the oldest of the six Pioneer Homes. Heating valves are failing and must be replaced. The number six item on the priority list would be the lighting upgrades for the Anchorage Pioneer Home. This is a large request. The ballasts are failing and the associated smells and drips are creating health hazards. Other projects would include duct cleaning at the Ketchikan Pioneer Home; ceiling replacements at the Ketchikan Pioneer Home; and 26 bathroom upgrades at the Fairbanks Pioneer Home. These projects are important in order to address safety concerns, equipment failures, senior citizen accessibility needs, or to meet building codes. 10:39:30 AM Priority 14: Anchorage Pioneer Home Glass Replacement (411,250) Most of the exterior glazing panels of the original building have lost their seal. There is now moisture in between the panes and causes the windows to fogged up. Moisture in the panes often incurs mold growth, which can affect indoor air quality. This project will replace panels and weather stripping on all exterior windows. Ms. Clarke pointed out that the seals are failing in all of the windows in the facility. Moisture and mold are being experienced as a result. This is dangerous in a 24-hour senior citizen facility. The panels must be replaced and weather stripping would be required on all the exterior windows. Senator Stedman stated that were this issue the result of defective windows, a manufacturer's commercial guarantee might apply to this project. Ms. Clarke voiced that this would be further investigated. 10:40:19 AM Senator Bunde appreciated having the projects listed by priority. Continuing, he questioned the reason that the Anchorage Pioneer Home Exterior Planter Repairs for $329,000 was ranked higher than the Anchorage Pioneer Home Reseal Highlights request for $32,900. Ms. Clarke replied that further information in this regard would be provided. It could be that the planters are located on the roof, and, as a consequence, might be creating further problems. 10:41:22 AM Safety and Surveillance for Pioneer Homes, Juvenile Detention Facilities, and Public Health Facilities $898,300 $ 33,000 Fed Recpts $150,000 G/F Match $715,300 Gen Fund Reference No.: AMD41456 Category: Health/Human Services Location: Statewide Election District: Statewide Estimated Project Dates: 03/15/2006 - 06/30/2009 Project provides for critical security and surveillance upgrades to Health and Social Services facilities statewide. State Match Required One-Time Project Amendment Ms. Clarke informed the Committee that there is growing concern about the safety of residents and visitors at the Pioneer Homes. For example, cars have been broken into. Therefore, the Department has, for the first time, determined that such things as surveillance cameras should be installed at the Anchorage, Palmer and Ketchikan Pioneer Homes in order to ensure a safe environment. Ms. Clarke continued that this request has been amended to correct the inadvertent omission of some of the juvenile justice center projects. The projects that would be advanced by this request would include such things as installing a security fence at the Kenai Peninsula Youth Facility. No fence currently exists at that facility and issues involving facility residents are occurring. Other projects would include the installation of a detention camera near the entrance of the McLaughlin Youth Center as well as electronic locks, finger print scanners, and other security cameras. Security cameras would also be installed at the Fairbanks and Mat-Su Juvenile Centers. A security fence would also be installed at Mat-Su. Security enhancements would also be implemented at the Johnson Youth Center. Ms. Clarke stated that security projects would also be required at the Division of Vital Statistics to insure that such things as birth records are secure. These upgrades would be required in order to comply with federal Homeland Security regulations. Security and confidentially concerns would also be addressed at the Fairbanks Health Center. Ketchikan Pioneer Home Roof Replacement $532,000 Gen Fund Reference No.: 41369 Category: Health/Human Services Location: Ketchikan Election District: Ketchikan Estimated Project Dates: 03/15/2006 - 06/30/2009 The Ketchikan Pioneer Home was built in 1981. The original roof is failing in numerous areas and needs to be replaced. A roofing consultant was hired to investigate and analyze options for repairing the existing leaks. Based on age, condition, and the labor that would be required to repair the areas that are leaking, the consultant's recommendation is to replace the roof with a new single-ply membrane system. Replacement of the roof would involve replacing the existing membrane with a more durable membrane and a smooth paver surface. The greenhouse, which is on the roof, would also need to be replaced with a new polycarbonate panel design. Funds would be used for construction and management of the project. Phased-Underway Ms. Clarke referred the Committee to a Department handout titled "SB 233 Ketchikan Pioneer Home Roof Replacement" [copy on file] that provides pictures of the needs. A visitor to the facility would observe there being catch-buckets scattered around the facility due to the roof leaks. This issue must be addressed. The fact that there is a greenhouse on the roof of the facility has increased the cost of the project. The pictures reflect eroded siding, fasteners that are failing, and the leaks from the greenhouse. The project is extensive. 10:45:35 AM Senator Stedman stated that the State would benefit by a decision "not to hire Arizona architects" to design buildings in rainforests. Designing buildings with atriums and placing greenhouses on flat roofs is impractical in this climate. Fairbanks Youth Facility Building Improvements $500,000 Gen Fund Reference No.: 41339 Category: Health/Human Services Location: Fairbanks Areawide Election District: Fairbanks Areawide Estimated Project Dates: 03/15/2006 - 06/30/2009 This request would provide for the reconfiguration of the Fairbanks Youth Facility to allow for maximum use of the existing area. The reconfiguration would allow for more useable space without increasing the square footage of the facility. Phased-New Project Ms. Clarke stated that this request would change the configuration of some portions of the interior of the Fairbanks Youth Facility, thereby making it a more efficient facility. Approximately one-half of a multi-purpose room would be reconfigured to allow for additional storage space with a stairway and additional office space. AT EASE 10:46:44 AM / 10:46:54 AM Co-Chair Green noted that the remainder of Department requests would be addressed at the subsequent Committee meeting [NOTE: The overviews of the additional projects included in this bill were provided3 at the February 9, 2006 Committee meeting.]