SB 76 - STATE LONG-TERM PLANNING CHAIRMAN GREEN called the Senate State Affairs Committee to order at 3:35 p.m., and noted the presence of Senators Ward, Miller, Mackie and Green. She then brought SB 76 before the committee as the first order of business. Number 010 RICH VITALE, staff to Senator Parnell, expressed Senator Parnell's regrets that he was out of town and could not testify on the legislation. Mr. Vitale directed attention to a proposed CSSB 76(STA), version "K" which corrects a drafting error in version "H." On page 2, lines 18 through 26, a new subsection (e) has been added. He explained this is existing law and it was inadvertently left out of the previous draft. Mr. Vitale said SB 76 will enact results-based government to better serve Alaskans. It revises the Executive Budget Act to require the legislative and executive branches to more clearly focus on results for Alaskans through policies established by the Legislature and executed by the Governor. Specifically, the Legislature will establish policy by issuing mission statements and desired results for each state agency to achieve. To accomplish this, the Legislature will identify desired results, set priorities for each agency, assign accountability and require methods for measuring, reporting, and evaluating results. These results will be reported quarterly to the Legislature for continuity and effective oversight. The Governor, through the Office of Management and Budget (OMB), executes, coordinates, and manages each agency's efforts to achieve the Legislature's mission and desired results. The Governor shall also, through discussions with the public, its employees and management teams, make recommendations for future mission statements and desired results for consideration by the Legislature. Mr. Vitale said Senator Parnell respectfully requests the committee's support for SB 76 which will result in a new method of budgeting. Number 056 SENATOR MACKIE moved the adoption of CSSB 76(STA), version "K," as a working document. Hearing no objection, it was so ordered. Number 070 CHAIRMAN GREEN commented that the Executive Budget Act currently has the leeway to do something similar to what SB 76 proposes without new legislation. MR. VITALE agreed that it might be possible, but he said the committee substitute repeals a section in law, 090, which he understands has rarely been followed, and part of the problem has been that the Executive Budget Act has grown over time and compiled a lot of vague gray language that talks about doing this, but it doesn't give a coherent, logical step by step of how to do it. In the committee substitute they are attempting to streamline and consolidate the system so that it is more understandable of what's going on. CHAIRMAN GREEN noted AS 37.07.030 is repealed in the committee substitute, and she asked if the new functions that are comparable to those are included somewhere else in the bill. MR. VITALE clarified that Section 37.07.014 in Section 1 is a reenactment of 030. He added that is really the heart of what the bill is about. It addresses the responsibility of laying out what it means to do the type of results-based government they are looking for. Number 100 CHAIRMAN GREEN asked if without the passage of this legislation there would be any problem in implementing the new mission-based budget currently being worked on in the Finance Committee. MR. VITALE said he didn't think there would be a problem with implementing it, however, he thinks it sends a mixed message to the Executive Branch about the Legislature's intentions for setting policy and executing the policy. SENATOR MACKIE suggested that it might be a good idea to ask for a legal opinion on whether this is something that is needed. He asked how closely coordinated this legislation is with the leadership's direction or with the Finance Committee's leadership direction in terms of budget process options that are currently being reviewed. MR. VITALE replied that there have been discussions with the Finance co-chair's office and they have heard nothing that this would conflict with what they are trying to do. MR. VITALE pointed out the legislation also contains a repealing of one clause (AS 37.07.080(g)(2)) that was declared unconstitutional by the Supreme Court several years ago and has been left in statute. SENATOR MACKIE commented that he thinks there is some merit in the approach of wanting to see results in the budgeting process, but he questions if this type of thing can be legislated and if things such as mission statements, etc. belong in the Executive Budget Act. CHAIRMAN GREEN agreed with Senator Mackie, and she said she too has some questions and concerns with the concept. She suggested formulating these questions and perhaps getting some legal opinions on them. Number 197 SENATOR WARD inquired if the Legislature would issue mission statements to the numerous divisions in the departments. MR. VITALE acknowledged that it could be handled that way. He said the intent is to issue the mission statement to the department, but the option to issue a separate mission statement for a subunit is in the legislation. Number 235 JACK FARGNOLI, Senior Policy Analyst, Office of Management and Budget, stated OMB has no disagreement with the intent or purpose of the legislation, but he echoed Senator Macki's concern about results being legislated or placed in law. On the overall exercise of performance-based budgeting or results- based government, Mr. Fargnoli said OMB agrees with that being the desired end, and OMB has been working closely with the finance committees on these performance measurements, as well as working with Senator Parnell on this concept. Mr. Fargnoli pointed out that departments and agencies are oriented and obliged by law to follow statutory missions, and the question raised on the bill about issuing a mission statement, which the bill envisions happening either selectively or exhaustively, or somewhere in between, could cause a lot of confusion to agencies and programs as to how they would manage being responsible for filling those program purposes if their budgets were oriented and allocated according to a few measures or results that were specified in an appropriation bill. He said that has not been talked through, and he did know if anyone was proposing that all the missions of the many agencies be revisited by statute. Mr. Fargnoli said right now the statutory process, the budget process, and the Legislature's deliberative process provides many opportunities for input by the public, and OMB is concerned that if the legislation is implemented in its present form, which may or may not be the intent, it would tend to put some confusion into that process. In his closing comments, Mr. Fargnoli expressed OMB's willingness to work with the committee and Senator Parnell and to have full discussions on these issues. Number 280 CHAIRMAN GREEN asked Mr. Fargnoli if OMB plans to get an opinion or some information on the separation of powers issue. MR. FARGNOLI informed her that they had some discussion with the Department of Law on the issue, and they will ask that some commentary be provided to the committee. Number 328 There being no further testimony on SB 76, CHAIRMAN GREEN stated the legislation would be set aside.