HOUSE FINANCE COMMITTEE April 1, 1993 4:12 p.m. TAPE HFC 93-88, Side 1, #000 - end. TAPE HFC 93-88, Side 2, #000 - end. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 2:28 .m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf ALSO PRESENT Mike Greany, Director, Legislative Finance Division; Cheryl Frasca, Director, Division of Budget Review, Office of Management and Budget; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Kimberly Busch, Director, Division of Medical Assistance, Department of Health and Social Services; Jeff Morrison, Director, Administrative and Support Services, Department of Military and Veterans Affairs. SUMMARY INFORMATION HB 55 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." FORMULA PROGRAMS HOUSE BILL NO. 55 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." Co-Chair Larson provided members with a Committee Substitute for House Bill 55 (FIN), work draft 8-GH1038/O, dated 3/31/93 (copy on file). He presented members with a summary of formula funded programs contained in HB 55 (Attachment 1 1). FORMULA PROGRAMS DEPARTMENT OF ADMINISTRATION Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for the Longevity Bonus Program at the Governor's Amended FY 94 level ($69,584.2 million dollars). There being NO OBJECTION, it was so ordered. Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for Retirement and Benefits/EPORS at the Governor's Amended FY 94 level ($893.9 thousand dollars). There being NO OBJECTION, it was so ordered. Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for Leasing at the Governor's Amended FY 94 level ($26,484.9 million dollars). There being NO OBJECTION, it was so ordered. DEPARTMENT OF REVENUE Co-Chair Larson MOVED to INCORPORATE into HB 55 the front section, funding for Shared Taxes at the Governor's Amended FY 94 level ($19,085.0 million dollars). There being NO OBJECTION, it was so ordered. DEPARTMENT OF EDUCATION Co-Chair Larson observed that funding for Education is contained in HB 45. Funding for single site districts, not included in HB 45, is contained in the Department of Education's operating budget. DEPARTMENT OF HEALTH AND SOCIAL SERVICES Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for AFDC at the Governor's Amended FY 94 level ($56,800.4 million dollars). He noted that legislation is pending which would affect funding for AFDC (HB 67). MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE COMMITTEE pointed out that the Governor's Amended FY 94 budget can be used as a base. Funding can be added or subtracted through a fiscal note if the proposed legislation is enacted. Representative Brown noted that the legislation would reduce funding for AFDC. Representative Navarre suggested that funding should reflect the current statute. A change to the statutes should be reflected by a fiscal note. The Governor's Amended FY 94 2 level assumes that HB 67 will pass. Mr. Greany clarified that money would have to be added to the Governor's Amended FY 94 level to fully fund AFDC according to current statutes. Representative Navarre suggested that AFDC funding reflect action taken in CSHB 67 (FIN). Representative Grussendorf agreed with Representative Navarre's proposal. Co-Chair Larson observed that Adult Public Assistance would also be affected. Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for AFDC and Adult Public Assistance at the level proposed in CSHB 67 (FIN). There being NO OBJECTION, it was so ordered. Co-Chair Larson concluded that a shortfall in funding could be addressed in a FY 95 supplemental. Representative Martin expressed concern with funding of abortions in the General Relief component. Representative Martin suggested that state funding could be reduced to an increase in federal funding for abortions. CHERYL FRASCA, DIVISION DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR clarified that increased federal funding has been proposed. The state has not received an increase in funds at this time. Representative Martin MOVED to delete $300.0 thousand dollars from the Governor's Amended FY 94 level for General Relief. A roll call vote was taken on the motion. IN FAVOR: Hanley, Martin, Parnell, Therriault OPPOSED: Brown, Foster, Grussendorf, Hoffman, Navarre, Larson, MacLean The MOTION FAILED (4-7). There being NO OBJECTION, the Governor's Amended FY 94 level for General Relief was adopted. Representative Hanley provided members with Amendment 1 for formula programs in the Department of Health and Social Services (Attachment 2). He explained the amendment. Representative Hanley MOVED to ADOPT an increment of $400.0 thousand dollars in the Foster Care Component. There being NO OBJECTION, it was so ordered. Representative Hanley MOVED to ADOPT an increment of $340.0 thousand dollars to the Governor's Amended FY 94 level ($1,574.6 million dollars). There being NO OBJECTION, it 3 was so ordered. Representative Hanley MOVED to reduce Medical Assistance to $122,114.3 million dollars. There being NO OBJECTION, it was so ordered. Representative Hanley provided members with intent language for the Department of Health and Social Services which read, "The intent of the Legislature is that the Department of Health and Social Services provide all optional Medicaid services and that any shortfall in funding be absorbed by controlling the cost and growth of optional land mandatory Medicaid services, rather than the elimination of any services." Representative Brown asked if the Department would be able to control the cost and growth of Medicaid services. KIMBERLY BUSCH, DIRECTOR, DIVISION OF MEDICAL SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES stated that the Department would limit contracts for services such as eye glasses and durable medical equipment. Additional limits would be established. Representative Brown asked why limiting services would be preferable to dropping the lowest priority. Representative Hanley noted that some of the lowest priority services save funding. He maintained that greater flexibility will be provided. Co-Chair Larson reiterated the motion. There being NO OBJECTION, the intent language was adopted. Representative Therriault asked for information concerning the Social Services Grant Block. JANET CLARKE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES explained that Social Services Block Grants Offsets component represent federal funds. The Social Services Block Grant amount is not being reduced. Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for Health and Social Services Formulas, as contained on attachment 1, at the Governor's Amended FY 94 level. There being NO OBJECTION, it was so ordered. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for Power Cost Equalization at the Governor's Amended FY 94 level ($17,920.0 million dollars). Representative Navarre noted that CSHB 216 (FIN) would affect the funding. There being NO OBJECTION, it was so ordered. 4 Co-Chair Larson MOVED to INCORPORATE into HB 55, funding for Fisheries Enhancement Tax Receipts at the Governor's Amended FY 94 level ($7,189.9 million dollars). Mr. Greany clarified that the Fisheries Enhancement Tax Receipts have been adopted in the front section of HB 55. He observed that a specific dollar amount has not be adopted. The exact amount has been estimated. He compared the Fisheries Enhancement Tax to other shared taxes. There being NO OBJECTION, funding for Fisheries Enhancement Tax Receipts was included at the Governor's Amended FY 94 level ($7,189.9 million dollars). DEPARTMENT OF MILITARY AND VETERANS AFFAIRS Ms. Frasca provided members with a letter requesting $964.001 thousand dollars for National Guard Retirement (Attachment 3). Ms. Frasca explained attachment 3. (Tape Change, HFC 93-88, Side 2) Representative Foster MOVED to INCORPORATE into HB 55, funding for National Guard Retirement at the level requested in attachment 3 ($964,001.0). Representative Parnell asked for further information concerning the actuarial soundness of the retirement system. The National Guard Retirement component was HELD OPEN. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Co-Chair Larson suggested that Senior Citizen Tax Relief reflect action take by the Committee in CSHB 66 (FIN). Representative Brown thought that funds for the calendar year 1993 should be appropriated in FY 94. She stressed that municipalities will have to pay the 20 percent the state has provided. Municipal Revenue Sharing and Municipal Assistance were HELD OPEN. Ms. Frasca explained that Organizational Grant funding will be contained in the capital budget. Representative Navarre felt that the funding should be included in the operating or supplemental budget. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS JEFF MORRISON, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS discussed the actuarial soundness of the retirement system. In 1991, the system was at 41.7 percent. In 1989, the system was at 47.0 percent. He noted that both PERS and TRS systems are close to 100 5 percent funded. The National Guard Retirement System is currently 42.0 percent funded. Members continued to discuss the National Guard Retirement System. Representative Martin MOVED to INCORPORATE into HB 55, funding for National Guard Retirement at the level requested in attachment 3 ($964.0 thousand dollars). There being NO OBJECTION, it was so ordered. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Representative Navarre reiterated that the Senior Citizen's Tax Exemption is prorated. Representative Brown referred to the Renter's Rebate Program. Members discussed the affect of CSHB 66 (FIN) on the Senior Citizen's Tax Exemption Program. Co-Chair MacLean provided members with two handouts regarding municipal assistance and revenue sharing(Attachment 4 and 5). She explained the handouts. Attachment 5 demonstrated the affects of reductions to each community at 5, 10, 15, 20 and 25 percent. Co-Chair MacLean provided members with a handout detailing a 7 percent reduction to municipal assistance and revenue sharing (Attachment 6). Representative Grussendorf spoke in support of full funding for the programs. Co-Chair MacLean suggested a 7 percent reduction to the programs. Co-Chair MacLean MOVED to ADOPT a 7 percent reduction to the FY 93 level for revenue sharing and municipal assistance. She explained that $14.0 million dollars will be added to the Governor's proposed 25 percent reduction. Representative Navarre MOVED to AMEND the motion to fund revenue sharing and municipal assistance at the FY 93 level. Co-Chair MacLean OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Foster, Hoffman, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (3-7). Representative Hanley was absent for the vote. A roll call vote was taken on the motion to add $14 million dollars to fund revenue sharing and municipal assistance at a 7 percent reduction from the FY 93 level. 6 IN FAVOR: Brown, Foster, Hoffman, Martin, Navarre, Parnell, Therriault, MacLean, Larson OPPOSED: Grussendorf The MOTION PASSED (9-1). Representative Hanley was absent for the vote. FRONT SECTION Co-Chair Larson provided members with CSHB 55 (FIN) during a previous meeting (Attachment 7). Co-Chair Larson noted that section 11 was held open. Co-Chair Larson MOVED to INCORPORATE Section 11 into CSHB 55 (FIN). There being NO OBJECTION, it was so ordered. Section 13 was HELD OPEN. Representative Therriault noted that the funding source for section 22 (b) should be the Mitigation Account. Representative Brown asked that sections 21 and 22 be addressed at the same time. Co-Chair MacLean stated that $7.5 million dollars were appropriated to the Vessel Replacement Fund from the 470 Fund. An additional $7.5 million dollars is requested in the front section of HB 55. She noted that the capital budget contains $6.4 million dollars. Sections 21 and 22 were HELD OPEN. Representative Therriault noted that Mr. Greany had worked with the drafter to clarify that funding is not lapsed before appropriations are made. Mr. Greany discussed the drafting. Ms. Frasca assured members that the Administration understands the Legislature's intent. Representative Therriault suggested that a statutory reference be added to section 20 to clarify that the $26.7 million dollars is an appropriation of the surtax money in the General Fund. Mr. Greany explained that the balance of the Mitigation Account is $14 million dollars. HB 55 was HELD in Committee. ADJOURNMENT The meeting adjourned at 4:12 p.m. 7