SENATE BILL NO. 46 "An Act making and amending appropriations, including capital appropriations and other appropriations; making appropriations to capitalize funds; and providing for an effective date." 3:38:43 PM Co-Chair Stedman discussed Housekeeping. He stated that this would be the sixth meeting on SB 46, which had been heard previously on February 21, March 15, March 16, March 17 and April 11. Senator Hoffman MOVED to ADOPT CSSB 46(FIN) Work Draft version 27-GS1740\S, 5/10/11 as a working document. Senator Stedman OBJECTED for discussion. }Miles Baker, Staff, Senator Bert Stedman{ discussed the changes in the committee substitute (CS). He stated that the CS added $107 million to the budget: · $51 million federal dollars · $50 million from the Alaska Capital Income Fund · $155 million from the general fund · The $155 would be offset by a reduction of $150 million of general obligation bond authority. Mr. Baker highlighted the primary changes found in the current bill version. He revealed that the bill contained $50 million in additional funds for the Alaska Housing Finance Corporation (AHFC) Weatherization Program, which brought the program total to $100 million, $75 million for low-income weatherization, and $25 million for the home rebate program. The governor's original request for the program had been $75 million. He pointed out the governor's FY 11 supplemental capital items, totaling $51.5 million, had been added to Sections 13 through 15 of the bill. Federal dollars constituted most of the funding, however, $1.7 million of the funds would come from the general fund. The bill would increase the savings deposits to the Constitutional Budget Reserve (CBR) by $500 million. The increase, located on Page 145, would enlarge the FY 11 surplus deposit from $300 million to $500 million and the FY 12 from $200 million to $500 million. 3:41:30 PM Mr. Baker referred to the document "2011 Legislature- Capital Budget Statewide Totals-Senate CS3 Structure" (copy on file). The net increase of $107 million in spending was reflected in reports 1(a) and 1(b), which compared the CS that had been adopted previously by the committee to the current bill. Reports 2(a), 2(b), and 2(c) compared the current CS with the governor's original request. Column 5 of Report 2(a) reflected the $778,264,000 difference in additional spending, but did not include savings deposits. Report 3, "Multi-year Agency Summary"(copy on file) broke down spending into 10 columns, each column representing a Section in the CS: · Column 1, Section 1: FY 12 Capital Budget · Column 2, Section 4: Energy projects · Column 3, Sections 7, 8, and 9: cruise ship tax projects · Column 4, Section 10: school infrastructure projects · Column 5: Language Section · Column 6: FY 12 supplemental · Column 7: total spending · Columns 8, 9, and 10: Operating Budget 3:44:43 PM Mr. Baker stated that two grants totaling $2.2 million had been added to Section 1, for the Department of Fish and Game. The first change could be found on page 56, line 10. The second could be found on page 56, line 24. He remarked that the items were added based on an agreement in the Conference Committee on the Operating Budget. The Senate version of the operating budget had included funding for both items in FY 12. An agreement had been made to concur with the House to remove the items and list them as three- year capital grants in SB 46. 3:46:02 PM Mr. Baker looked at Section 4, the energy Section. An additional $50 million had been added to the Weatherization Program based on discussions in committee and public testimony since the introduction of the previous CS. He noted that all of the energy projects and project amounts in Section 4 had remained unchanged. Structural changes had been made. Page 108, line 28 reflected the change of the appropriation title to read, "Energy Generation Projects." Intent language had been augmented from the previous bill concerning the 50 percent match requirement, and the expectation was that Alaska Energy Authority (AEA) would examine the appropriations and return to the legislature by February 2012 with reappropriation requests. The original intent of the language was to make clear the legislature's desire that the AEA manage the responsibility of vetting the energy projects. In the event that AEA found that any of the project amounts were not at 50 percent, they could return to the legislature with recommendations for the rebalancing of the appropriations in order to bring the state's investment up to 50 percent. Mr. Baker pointed out that the expectation that the AEA vet the programs and return to the legislature with recommendations had caused confusion. The previous language had asked AEA to use the statutory criteria of the renewable energy grant program as guidance in vetting the projects, while at the same time calling for the application of the 50 percent match requirement; the statutory criteria of the renewable energy grant program does not require a 50 percent match. The reappropriation language had been removed, and the 50 percent match language specific to generation projects had been retained. Transmission projects, most of which were Alaska Railbelt Cooperative Transmission and Electric Comapany (ARCTEC) Energy Projects, were listed as a separate appropriation on page 107, line 24. The appropriation was a single appropriation, with allocations. Under the new CS, the AEA would be given a lump sum for the ARCTEC projects, with recommended allocations; this would give AEA the flexibility to move the funds where necessary. Because the projects were transmission projects, they would not be restricted to the 50 percent match requirement. The appropriation total was higher than the previous CS because of the addition of "Association Soldotna to Nikiski Transmission Upgrade" (found on page 108, line 10). The ten ARCTEC projects totaled $96.5 million. Mr. Baker concluded the list of structural changes to Section 4. 3:51:57 PM Mr. Baker referred to page 129 of the CS. The current bill reflected an additional $200 million in savings, in addition to statutory budget reserve deposits. The savings were accomplished in four Sections of the bill. Section 16 made available an additional $49 million for previously approved certificates of participation (which was state revenue bonding), $25 million for the Anchorage Jail, and $24 million for the Alaska Psychiatric Institute. The intent was to pay off the most significant debt shouldered by the state. The language was intended to make funds available that would otherwise been required in the operating budget to pay down the debts. Report 3, Column 9, reflected the change. Section 24 (page 133, line 29 through page 133, line 13), depicted the use of the 2008 Transportation General Obligation Bonds and replacement of the $150 million bonding authority with general funds. The bill included contingencies from the State Bond Committee that required that the bond committee verify the amounts. 3:54:58 PM Mr. Baker stated that Section 22 was a new addition to the legislation. page 131, line 27, reflected the approximately $8 million to be appropriated to the Department of Health and Social Services for the Low Income Energy Assistance Program (LIHEAP). The roughly $8 million of FY 12 operating funds would replace federal dollars that had been cut from the program. Sub-Section (a) reflected a $3.3 million dollar appropriation to be used for grants to tribal entities for energy assistance under AS 47.25.626 for the fiscal year ending June 30, 2012. Sub-Section (b) listed the $4.6 million for the regular energy assistance program grants for the fiscal year ending June 30, 2012. 3:56:22 PM Mr. Baker looked to Page 130, which reflected additions to Section 19. Sub-Section (c) was a $30 million dollar appropriation form the general fund to the Alaska Housing Capital Corporation account. The Alaska Housing Capital Corporation is a savings account set up within the Alaska Housing Finance Corporation (AHFC), with the intended purpose of capital spending. The current balance of the account was approximately $370 million. The additional $30 million dollars would bring the account to $400 million. line, 14, Sub-Section (d) stated after the $30 million was transferred and added to the account, the account be used to fund postsecondary scholarship programs at a later date. The language in the sub-Section would earmark funding for the postsecondary scholarship program. 3:57:42 PM Mr. Baker continued to page 143, Section 39, titled "Reappropriaton of Legislative Appropriations." Sub-Section (b) had been changed to read: The unexpected and unobligated balance, not to exceed $750,000, of the appropriation made in sec. 1, ch. 12, SLA 2009, page 44, line 29 (Budget and Audit Committee - $19,501,800) is reappropriated to the Legislative Council to conduct for the legislature an independent third-party scientific and multidisciplinary study of the potential large mine development in the Bristol Bay drainage for the fiscal years ending June 30, 2011, June 30, 2012, and June 30, 2013. The $450,000 for the expansion of the study of mine development in the state had been moved and added to the amount that would be reappropriated to the Legislative Council for a system-wide redesign of BASIS, the legislative document management system. 3:59:04 PM Mr. Baker returned to page 145, which detailed changes to the savings deposits. The nonseverability language in Section 49 had been changed to read: Notwithstanding AS 01.10.030, in the event that a court of competent jurisdiction finds the contingency in sec. 48(a) of this Act is invalid, then the contingency in sec. 48(a) of this Act is not severable from the appropriations made in sec. 4 of this Act if (1) the governor has vetoed, weather by striking or reducing, any appropriation in sec. 4 of this Act; and (2) the legislature, by action or inaction, has failed to override all vetoes of, including reductions to, appropriations made in sec. 4 of this Act in the time and manner allowed under art. ii, sec. 16 Constitution of the State of Alaska. Mr. Baker stated that the language was necessary to protect against a third party delaying the appropriations from going into effect. He furthered that the language spoke to the concern that the issue would remain unresolved legally if the governor chose to veto an item in Section 4, and the legislature overrode the veto. 4:00:59 PM Co-Chair Stedman WITHDREW his OBJECTION. There being NO further OBJECTION CSSB 46(FIN) was ADOPTED as a working document. Co-Chair Hoffman MOVED to REPORT CSSB 46(FIN) out of committee with individual recommendations. There being NO OBJECTION it was so ordered. CSSB 46 (FIN) was REPORTED out of committee with a "do pass" recommendation. 4:01:42 PM