SENATE BILL NO. 256 "An Act making supplemental appropriations, capital appropriations, reappropriations, and other appropriations; amending certain appropriations; ratifying certain expenditures; making appropriations to capitalize funds; and providing for an effective date." Co-Chair Hoffman reconvened the meeting back to order to address the CS 256/O before the committee. TIM GRUSSENDORF, STAFF, SENATE FINANCE COMMITTEE, presented an overview of changes to the FY 08 Supplemental requests. He indicated that the first four changes came at the request of the Governor. Section 1-3 AA GGU Labor and Workforce Development Occupational Safety and Health Reverse the fund source change for this component in the GGU supplemental, sections 1 -3. Current projections indicate that the program will be able to absorb the increase without the fund source change due to unexpected vacancies. $0.0 Section 1-3 AA GGU Transportation Central Region Highways and Aviation Reverse the fund source change for this component in the GGU supplemental, sections 1 - 3. Current revenue projections for FY08 are sufficient to fund $300 in this allocation. $0.0 Section 1-3 AA GGU Transportation Northern Region Highways and Aviation Reverse the fund source change for this component in the GGU supplemental, sections 1 - 3. This fund source conversion is no longer needed in FY08 due to position vacancies. $0.0 Mr. Grussendorf reported that the above three can absorb these increases, without the fund source change, due to unexpected vacancies. Section 1-3 AA Statewide SU Supervisory Unit The tentative Supervisory Unit agreement calls for a wage increase of 5.5% and a health insurance increase of $16 from $835 per month to $851 per month. $10,441.0 Mr. Grussendorf explained that $6.3 million has been added in and is expected to be ratified on March 12, 2008. There is language in Section 1 that says if the agreement is not ratified on March 12, this funding will not be there. Section Commerce Revenue Sharing New 2/29 $180 million for revenue sharing $180,000.0 Mr. Grussendorf noted that there has been an addition of $30 million, from $150 million to $180 million. Section Fund Capitalization New 2/29 Statutory Budget Reserve Appropriate $1 billion of the FY08 surplus to the Statutory Budget Reserve $1,000,000.0 Section Fund Capitalization New 2/29 Constitutional Budget Reserve Appropriate $2.6 billion of the FY08 surplus to the CBR $2,6000,000.0 Section Fund Capitalization New 3/2 CBR Intent Language It is the intent of the legislature that the Department of Revenue invest the assets of the constitutional budget reserve fund (art. IX, sec. 17, Constitution of the State of Alaska), in a manner maximizing the long term earnings of the fund while meeting the minimum liquidity requirements of the state. $0.0 Section Fund Capitalization New 3/2 CBR Intent Language Add CBR Intent language clarifying that the CBR deposit is a repayment to the CBR. $0.0 Mr. Grussendorf commented that the two Fund Capitalizations added CBR intent language that made it clear that the legislature wanted to invest this money and it is a repayment to the CBR by the Legislature, repaying half of the states debt. Section 14(b) Health and Social Services Front Line Social Workers Unanticipated one-time telephone purchase and installation costs related to new Anchorage lease. Move is planned for early March, 2008. $320.6 Section 7-9 Health and Social Services Behavioral Health Medicaid Services Projected excess authorization based on expenditures through January 2008. ($6,963.1) Section 7-9 Health and Social Services Medicaid Services Projected excess authorization based on expenditures through January 2008. ($46,548.5) Section 7-9 Health and Social Services Adult Public Assistance Projected excess authorization due to decrease in average payments since recipients have higher incomes. ($700.0) Section 7-9 Health and Social Services Senior and Disabilities Medicaid Services Projected excess authorization based on expenditures through January 2008. ($1,654.4) Mr. Grussendorf noted that the Health and Social Services reductions made by the Governor were projected excess authorization based on expenditures through January 2008. The legislature agreed to take on these reductions. Section 7-9 Law Oil, Gas and Mining This amendment reduces the original supplemental request for from $1,750,000 to $1,250,000. The Department of Natural Resources contract for financial analysis of the TransCanada proposal came in less than anticipated, at $2.5 million rather than $3.0 million. ($500.0) Mr. Grussendorf indicated that the Department of Law and the Governor submitted this reduction of $500,000 and the Legislature agreed to make the deduction Section 7-9 Public Safety Modified AST Detachments Increased trooper move costs $425.0, dispatch contracts with Kodiak and Wasilla (MatCom) $420.3, lease costs $60.6, fuel/utility costs $236.2, vehicle costs $610.9, and facilities maintenance costs $25.5. FY09 increments are: trooper move travel $425.0; lease $60.6; fuel/utility $164.9; and vehicle $113.9. Removed lease and maintenance costs increases from supplemental request--Total reduction is $86.1.  $1,692.4 Section 7-9 Public Safety Modified Alaska Wildlife Troopers Increased fuel/utility $70.8, vehicle $288.6 and facilities maintenance $17.1 costs. FY09 increments are: fuel/utility $38.6; vehicle $145.3. Removed facilities maintenance costs increases from supplemental request--Total reduction is $17.1.   $359.4 10:56:03 AM Section 7-9 Public Safety Modified AK Wildlife Troopers Aircraft Enforcement Increased fuel/utility $95.2 and lease $80.2. FY09 increments are: fuel/utility $151.1 and lease,$80.2. Removed lease costs increases from supplemental request--Total reduction is $80.2   $95.2 Section 7-9 Public Safety AK Wildlife Troopers Marine Enforcement Increased fuel/utility costs. FY09 increment is $66.0. $41.6 Section 7-9 Public Safety Training Academy Increased fuel/utility $5.2 and vehicle $11.6 costs. FY09 increment for fuel/utility costs is $8.2. $16.8 Section 7-9 Public Safety Administrative Services Increased fuel/utility $2.6, lease $9.2, and vehicle $2.2 costs. FY09 increment is $9.2 for office lease costs. Removed lease costs increases from supplemental request--Total reduction is $9.2  $4.8   Section 7-9 Public Safety Laboratory Services Increased fuel/utility $15.5 and vehicle $8.9 costs. FY09 increments are: fuel/utility $21.0 and vehicle $4.3. $24.4 Section 7-9 Public Safety Fire Service Training Increased fuel/utility $8.3 and vehicle $9.4 costs. FY09 fuel/utility cost increment is $9.6. $17.7 Section 7-9 Public Safety Fire Prevention Operations RSS shortfall from building plan review fees. Division would like to make this into a straight GF operation since revenues vary drastically. Included in the FY09 budget at the same level of $220.0 Additional travel of $50.0 for building life safety inspections and to provide inspections in rural locations. Funded in FY09 at $105.0. Increased fuel/utility $8.3 and vehicle $4.8 costs. FY09 fuel/utility cost increment is $4.5. Removed funding replacing RSS shortfall from building plan review fees--Total reduction is $268.2  $13.1 Section 7-9 Public Safety Rural Trooper Housing Rural housing costs of $244.2 due to unrealized SDPR including leases without rent contribution at Selawik and for Bethel commons. Increased fuel and utility costs of $92.7. FY09 fuel/utility cost increment is $147.1. $92.7 Section 7-9 Public Safety Alcoholic Beverage Control Board Increased vehicle costs. FY09 increment is $1.9. $4.3 Mr. Grussendorf commented that in the Public Safety Department, the supplementals were modified to increase in fuel/utility increment amounts, but removed many other funding requests. Section 7-9 Public Safety Judicial Services - Anchorage Amendment reduces amount of supplemental request from $620.3 to $477.6 since the Court Service Officer positions won't be filled until March. ($142.7) Mr. Grussendorf indicated that the General Fund was reduced by the request of the Governor. Section 15(j) Transportation Surface Transportation Program Correct the total for Sec. 1, Ch. 61, SLA 2001, Page 35, line 19 from $485,506,000 to $485,506,482 based on the allocation requested in HB343, Sec. 15(k). $0.5 Mr. Grussendorf explained the change was due to a technical error, based on the allocation in HB343. 10:59:26 AM Section Transportation New 3/3 Capital Restored Vetoed Capital Projects $1,471.6 Mr. Grussendorf explained that the legislature was removing the $50 million place-holder and inserted the vetoed capital projects for $51, 479,000. The projects are in the new CS. Section Transportation Airport Improvement Program - Appropriation The FY08 Airport Improvement Program appropriation increases by $4,350.0 due to the allocation change below: Sec 4, Ch 30, SLA 2007, Pg 105, Ln 27 $0.0 Section Transportation Airport Improvement Program - Allocation New: Petersburg: Airport Runway Safety Area The project is expected to be advertised in April. The project will involve runway work that will result in the airport being closed for a few weeks and the timing for this work is critical to minimize the impact of the construction closure on the community and the airlines. Funding this project in the supplemental will enable the department to move forward as soon as Airport Improvement Program discretionary funds are available. $0.0 Mr. Grussendorf commented that the Governor requested to have this in the fast track due to timing for the Petersburg airport runway and safety areas. Co-Chair Stedman MOVED to ADOPT Committee Substitute SC 256(FIN)\O as the working document before this committee. There being NO OBJECTION, work draft CSSB 256(FIN)\O was adopted. AT EASE: 11:00:36 AM RECONVENED: 11:01:23 AM Co-Chair Stedman MOVED to ADOPT Amendment #1: Page 77, lines 8-12: Delete all material Page 77, line 13: Re-letter subsection "(c)", subsection "(b)" Page 77, following line 24: Insert a new bill section to read: "*Sec. 18. DEPARTMENT OF REVENUE. The amount necessary to pay the first five ports of call their share of the tax collected under AS 43.52.220 during calendar year 2007 is appropriated from the commercial vessel passenger tax account (AS 43.52.230(a)) to the Department of Revenue for payments under the provisions as AS 43.52.230(b), during the fiscal year ending June 30, 2008." Co-Chair Hoffman OBJECTED for discussion purposes. Co-Chair Stedman explained that Amendment #1 was a technical change due to the fact that the Commercial Vessel Passenger Tax account is not under the Department of Environmental Conservation but collected by the Department of Revenue. He continued that the Port of Call payments are made by the Department of Revenue not the Department of Environmental Conservation. Co-Chair Hoffman WITHDREW his OBJECTION. Senator Olson asked for the names of five ports listed on page 77, Section 16, line 8. Co-Chair Stedman listed the ports as Ketchikan, Juneau, Skagway, Sitka and other major ports. There being no further OBJECTION Amendment #1 was ADOPTED. 11:03:20 AM Senator Thomas explained the changes to Amendment #2. The amendment changes page 83, line 3, removing $5 million and inserting $25 million. This would even-up the situation with the hatcheries, making an opportunity for a long-term fix. Co-Chair Hoffman MOVED to ADOPT Amendment #2: Page 83m Line 3 Delete $5,000,000 Insert: $25,000,000 There being NO OBJECTION, it was so ordered. Senator Dyson MOVED to ADOPT Amendment #3: Delete Line 28, Page 56 through Line 2, Page 57. Co-Chair Hoffman OBJECTED for discussion purposes. Senator Dyson believed that Line 28 on page 56 through Line 2 on Page 57 be deleted as it is more appropriate in the capital budget but not the supplemental budget. Co-Chair Hoffman MAINTAINED his OBJECTION. Co-Chair Hoffman believed that the $300 million will address about eighty percent of the homes in the State of Alaska. He anticipated that it will cover approximately forty-five thousand homes eligible for this program. He stressed that it did not make sense to have the amount of savings, estimated at $2.6 billion, and not address the energy needs of Alaskans. Co-Chair Stedman remarked that there is actually $3.6 billion available along with another possible $1.5 to $2 billion in revenue to be collected between January and June, 2008, due to the price of oil. He agreed that if there was this substantial amount to be put into savings, then aggressive steps should be taken to lower the energy demands throughout the state. Senator Dyson believed that although he agreed with the idea of supplementing the energy needs, he thought it would be inappropriate to put it into the supplemental budget. A roll call vote was taken on the motion. IN FAVOR: Dyson OPPOSED: Elton, Huggins, Olson, Thomas, Hoffman, Stedman The MOTION FAILED (1-6). Senator Dyson MOVED to ADOPT Amendment #4. Page 51 Delete Lines 7 through 11. Page 52 Delete Lines 15 through 17 Page 52, Amend Line 21 as follows: *****Total Budget***** $1,096,330 [$51,096,330] Page 53, Amend Lines 5 & 6 as follows: 1004 Unrestricted General Fund Receipts $68,929,700[118,929,700] ***Total General Funds*** $18,929,700[$118,929,700] Co-Chair Hoffman OBJECTED for discussion purposes. Senator Dyson reiterated his previous argument that he approved all the appropriations made in the capital budget but he did not believe the included items belonged in the supplemental budget. He commented that this was a betrayal of the public process. Co-Chair Hoffman MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Dyson OPPOSED: Elton, Huggins, Olson, Thomas, Hoffman, Stedman The MOTION FAILED (1-6). Karen Rehfeld, Director, Office of Management and Budget thanked the committee for their consideration of the amendments and looked forward to continuing to work through the process. 11:10:46 AM Co-Chair Stedman MOVED to REPORT SB 256 out of Committee with individual recommendations and the accompanying fiscal note. Senator Dyson OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Elton, Huggins, Olson, Thomas, Hoffman, Stedman OPPOSED: Dyson The MOTION PASSED (6-1). CSSB 256 (FIN) was REPORTED out of Committee with the accompanying fiscal note and individual recommendations. AT EASE: 11:11:34 AM RECONVENED: 11:11:47 AM