HOUSE FINANCE COMMITTEE January 24, 1995 1:30 P.M. TAPE HFC 95-4, Side 1, #000 - end. TAPE HFC 95-4, Side 2, #000 - end. TAPE HFC 95-5, Side 1, #000 - end. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 1:34 p.m. PRESENT Co-Chair Hanley Representative Kohring Co-Chair Foster Representative Martin Representative Mulder Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Kelly ALSO PRESENT Representative Jerry Sanders; Representative Cynthia Toohey; Representative Alan Austerman; Representative Kim Elton; Representative John Davies; Representative Irene Nicholia; Representative Scott Ogan; Senator Lyda Green; Mike Irwin, Commissioner, Department of Community and Regional Affairs; Remond Henderson, Director, Division of Administrative Service, Department of Community and Regional Affairs; Arthur H. Snowden, II, Administrative Director, Alaska Court System; Willie Hensley, Commissioner, Department of Commerce and Economic Development; Guy Bell, Director of Administrative Services, Department of Commerce and Economic Development; Frank Rue, Acting Commissioner, Department of Fish and Game; Kevin Brooks, Director, Division of Administration, Department of Fish and Game; Frank Homan, Commissioner, Commercial Fisheries Entry Commission. SUMMARY AGENCY OVERVIEWS: Department of Community and Regional Affairs Alaska Court System Department of Commerce and Economic Development Department of Fish and Game (Copies of meeting tapes and handouts are on file with the 1 Legislative Finance Division. Contact #465-3795). DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Log # Discussion 031 MIKE IRWIN, COMMISSIONER, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS introduced staff. 052 REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS noted that the Department is composed of four divisions: * Municipal and Regional Assistance; * Administrative Services; * Community and Rural Development; and * Energy. Mr. Henderson provided members with a handout "Overview of the Department of Community and Regional Affairs (copy on file). He observed that page one provides a flow chart of the Department's divisions. 093 Mr. Henderson noted that the Division of Energy was created during the prior Legislature. He suggested that the transition has been relatively smooth. 114 Mr. Henderson informed members that the FY 96 budget will not contain significant changes in programs or organization from the FY 95 budget. 139 Co-Chair Hanley asked if the Department had taken a position on requests by the Alaska Municipal League. Commissioner Irwin replied that the Department has not yet formulated a position in regards to the requests by the Alaska Municipal League. 155 Co-Chair Hanley cautioned that repayment obligations for the FY 95 withdrawals from the Constitutional Budget Reserve Fund may effect the unappropriated balance in the Power Cost Equalization Fund. 170 Representative Martin noted that the previous administration suggested significant changes through increments and decrements within the Department. He expressed concern that Headstart grants were reduced while local government training was increased. 2 222 Mr. Henderson explained that there are no net increases. He emphasized that interagency transfers account for some of the increments and decrements. He pointed out that the reduction to Headstart grants were the result of the conclusion of funds from past capital budget appropriations. 240 Commissioner Irwin stated that he is in the process of reformulating priorities. He noted that the Department's priorities will reflect those of the Governor's. 274 Co-Chair Foster inquired into possible federal reductions in the Headstart Program. Mr. Henderson replied that federal funding levels were unknown. 285 Co-Chair Foster noted that the Headstart Program has been stable over the past several years. 300 Co-Chair Hanley inquired about the Bulk Fuel Program. Commissioner Irwin acknowledged that bulk fuel containment is a huge problem for the State. He stated that the Department is looking into models for the Program. 320 Co-Chair Foster noted that the Community Development Quota (CDQ) Program has been very successful. Commissioner Irwin agreed that the CDQ Program is a model for rural Alaska. He added that the Department is looking at restructuring to allow one position to work on the CDQ Program nearly full-time. 360 Representative Austerman asked if the Department anticipated a philosophical change from the previous administration regarding privatization. Commissioner Irwin had no position. 380 Representative Grussendorf questioned the status of the Senior Citizen Tax Relief Program. Mr. Henderson noted that legislation to allow local option did not pass. He anticipated that state funding would be at approximately 10 percent of the required amount for full funding. 390 Representative Kohring asked the status of the Sutton/Glenallen intertie. Commissioner Irwin assured him that dialogue with concerned citizens is proceeding. 423 Representative Brown asked if job training 3 programs would be redesigned. Commissioner Irwin noted that job training is an important part of welfare reform. 430 Representative Kelly inquired into the Department's long range plans. 450 Commissioner Irwin accentuated doing more with less through more efficient use of funding. 470 In response to a question by Representative Therriault, Commissioner Irwin noted that the Department first existed in the Governor's office in the early 1970's. 480 Co-Chair Hanley noted that Representative Kelly would chair the House Finance Subcommittee for the Department of Community and Regional Affairs. ALASKA COURT SYSTEM 490 ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM emphasized that the case load continues to grow. 500 Mr. Snowden testified as a member of the Criminal Justice Work Group. He reviewed the composition of the Group. He emphasized that the Group unanimously recommended that "real progress cannot be made in cost reduction unless the legislative and executive branches take meaningful steps to control alcohol." 526 Mr. Snowden noted that the Group recommends increasing the state tax on alcohol, giving communities more flexibility on the local level, creating penalties for providing alcohol to a person on probation, requiring identification cards for all alcohol purchases that can be revoked upon conviction of an alcohol-related offense, and court mandated use of Antabuse. He cautioned that the use of Antabuse would need medical screening. 550 Mr. Snowden observed that increases in federal contributions will add 50 police officers to the Anchorage area. He pointed out that greater enforcement will result in an increased court caseload. He observed that passage of legislation requiring mandatory life sentencing (HB 38) would also increase court time. 4 570 Mr. Snowden referred to the State of Alaska, Department of Administration, Division of Personnel and Office of Equal Employment Opportunity, 1994 Salary Survey Report. He noted the report concluded that the total pay gap between non represented and represented employees is at least 6.2 percent. He quoted that the "State Personnel Act requires that the statutory pay plan `reflect the principle of like pay for like work' (AS 39.25.150(2)(b)." 596 Mr. Snowden emphasized that case delays are common. He noted that the delay for divorce cases is over a year. 614 Mr. Snowden requested that Alaska Court System personal services be reduced to 5.5 percent under- funding. 625 Mr. Snowden observed that funding for operations and maintenance of the Anchorage Court Building is a priority. 628 Mr. Snowden requested the addition of a labor relations specialist position to negotiate with newly formed employee union groups. 633 Mr. Snowden reiterated the need for deferred maintenance funding in the capital budget. 654 Mr. Snowden emphasized that the Court has experienced an increased workload due to levies of Permanent Fund Dividend checks. 665 In response to a question by Co-Chair Hanley, Mr. Snowden stated that the Alaska Court System is seeking an additional $3.0 million dollars. This figure did not include funding for reducing salary discrepancies. He acknowledged that legislation would be needed to address discrepancies in salary between unrepresented Alaska Court System employees and other represented state employees. (Tape Change, HFC 95-4, Side 2) 001 Mr. Snowden noted that Alaska Court System employees are the lowest paid state employees. 032 In response to a question by Co-Chair Foster, Mr. Snowden acknowledged that domestic violence cases have increased over the past 8 years. He 5 discussed social problems leading to an increased court load. 056 Representative Therriault expressed concern with the number of appeals. Mr. Snowden emphasized that all states have an appeal process. 098 Representative Therriault asked if there is a way to reduce the cost of state supported appeals. 116 Mr. Snowden noted that the Judicial Branch is not under the Executive Budget Act. 167 Mr. Snowden stated that a courtesy copy of the Alaska Court System's budget was presented to the Office of Management and Budget. 180 Mr. Snowden pointed out that the Anchorage Court House Building's debt service will be retired in 10 years. 199 Discussion pursued regarding the savings realized by the purchase of the Anchorage Court House Building. 214 Representative Parnell questioned the status of the Anchorage Office Space lawsuit. Mr. Snowden noted that the Trial Court ruled in favor of the State. An appeal is continuing. 232 Mr. Snowden anticipated that the Alaska Court System will occupy the building in January 1996. 250 Representative Therriault pointed out that the shift of a Fairbanks's district judge to full jurisdiction. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT 288 WILLIE HENSLEY, COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT gave a brief presentation of the Department's functions. He stressed that the Department's goal is to promote an active, healthy and expanding business community. He added that regulatory programs are managed to protect Alaskan consumers while at the same time minimizing government imposed barriers to business activity. Economic development programs are designed to develop, strengthen and diversify Alaska's economic base, increase employment opportunities and stimulate private enterprise. 6 301 Commissioner Hensley noted that the Department has eight divisions and nine independent agencies governed by boards and commissions. The Commissioner is on twelve boards and councils. 312 Commissioner Hensley noted that the Department's budget is still being developed. 332 GUY BELL, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT stressed that the Department's budget is revenue neutral. He emphasized that the Department of Commerce and Economic Development generates revenue through its regulatory functions. 365 Commissioner Hensley accentuated issues that need legislative attention. He noted that the Alaska Public Utilities Commission (APUC) will sunset without extending legislation. He added that the regulatory cost charge to utilities was repealed reverting APUC funding support to the General Fund. 377 Commissioner Hensley discussed the Governor's efforts to work with industry. He emphasized the need for good communication between industry and government. 420 Representative Mulder referred to FY 95 supplementals for the Alaska Tourism Marketing Council. Commissioner Hensley stated that the amount needed for the supplemental is undetermined. 434 Representative Mulder inquired into the possibility of establishing a broad based tax on the tourism industry. 450 Commissioner Hensley pointed out that the industry already participates extensively. 470 Representative Mulder encouraged Commissioner Hensley to work with the Alaska Tourism Marketing Council to enable it to be financially self- sustaining. 482 Commissioner Hensley noted the difficulty in developing an acceptable formula for taxing the industry. 489 Representative Martin emphasized the need for less 7 in-kind services and a greater cash contribution. He suggested that tourism councils be combined. 518 Representative Martin referred to the Enhancement Tax. He noted that a greater portion of the tax is returned to local governments. He emphasized the need to recoup the State's investment. 525 Representative Martin expressed concern with the increase in the Department's administrative costs contained in the Hickel budget. 540 Mr. Bell noted that Governor Knowles' budget for the Department of Commerce and Economic Development's will be ready in February. 550 Representative Brown referred to the MarkAir request for AIDEA support. 575 Commissioner Hensley emphasized the number of jobs provided by MarkAir. 580 At the request of Representative Therriault, Mr. Bell provided members with a flow chart of the Department's divisions (copy on file). 593 Representative Kohring noted the need for diversification and long range planning. He emphasized that the State contains untapped resources. 602 Commissioner Hensley acknowledged the need to ensure utilization of the State's resource potential. 640 Commissioner Hensley discussed areas the administration can explore for further development. 650 Representative Austerman expressed concern that reductions to the Alaska Tourism Marketing Council has resulted in a reduction of the State's advertising effort. He stressed that industry is willing to assume a greater portion of the effort. He referred to the fishing industry as an example of industry effort. (Tape Change, HFC 95-5, Side 1) DEPARTMENT OF FISH AND GAME 001 FRANK RUE, ACTING COMMISSIONER, DEPARTMENT OF FISH 8 AND GAME discussed the process of selecting a commissioner. He introduced staff. 041 Acting Commissioner Rue noted that the Department's job is to improve the state's resources and to protect, manage and maintain the fishery resource. 098 Acting Commissioner Rue noted that the Department's divisions have been reduced from nine to six. 126 Acting Commissioner Rue stressed that the Department's general fund dollars have been reduced by over 20 percent during the past four years. 134 Acting Commissioner Rue accentuated that no significant changes are anticipated. He emphasized the Department's challenge to meet its basic responsibilities. 158 Acting Commissioner Rue reviewed issues of national and international concern effecting the Department. 170 Acting Commissioner Rue suggested that increased management of the State's shellfish resource may result in additional revenues. 200 Co-Chair Foster noted that the Department uses and maintains aircraft. 233 KEVIN BROOKS, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF FISH AND GAME emphasized that the Department has continued to use charter services in addition to department aircraft. He noted that the majority of aircraft used to enforce fish and game regulations are maintained by the Department of Public Safety. 250 Mr. Brooks clarified that state personal are covered in case of death or injury while on state duty. 273 Acting Commissioner Rue explained that some increments and decrements in the Department's budget reflect the transfer of state hatcheries to the private sector. 300 Mr. Brooks noted that the Divisions of Fisheries Rehabilitation and Economic Development (FRED) and 9 Commercial Fisheries (COMFish) were realigned to the Division of Commercial Fisheries Management and Development. 320 Discussion pursued regarding the Fish and Game Fund. 331 Representative Mulder asked for advise in extending management of Alaska waters from the three to fifty mile limit. Acting Commissioner Rue promised to research possibilities. 357 FRANK HOMAN, COMMISSIONER, COMMERCIAL FISHERIES ENTRY COMMISSION noted that legislation was passed in the previous session allowing the Division of Loans to finance tax obligation of limited entry permit holders to the IRS. He observed that there is significant demand for the program. He clarified that recipients must pledge their permit to the State as security and must be current with the IRS. 380 Representative Grussendorf queried if the budget would adequately reflect the amount needed to protect the resource. Acting Commissioner Rue assured him that the budget would contain adequate funding to protect the resource. 394 Representative Grussendorf inquired into the possibility of encouraging regional advisory input. 410 Acting Commissioner Rue did not anticipate that the activity of the Advisory Boards would increase. 415 Acting Commissioner Rue noted that the Department employs 700 full and approximately 700 seasonal employees. 429 Co-Chair Foster asked if the Department actively recruits local hires. Mr. Brooks assured him that the Department actively pursues local hires for seasonal employees. 446 Representative Davies expressed concern that research needed to assure a healthy interior fisheries continues. 452 Acting Commissioner Rue acknowledged the need to increase research into the Fall Chum Salmon crash. 10 465 Representative Ogan noted problems in his district concerning the Deshka River. 500 Acting Commissioner Rue emphasized the Department's intention to release Sockeye Salmon into the Susitna River system. 513 Co-Chair Hanley noted that the House Finance Subcommittee on the Department of Fish and Game will address funding from the Fish and Game Fund. Co-Chair Hanley is the Subcommittee Chair. 516 Representative Navarre pointed out that the fisheries in his district are heavily used by sport fisherman. He indicated that the Kenai area needs further attention from the Department. 527 Representative Kohring stressed the importance of maintaining the sustained use principle. He noted that the fishing industry is important to his district. ADJOURNMENT The meeting adjourned at 3:34 p.m. 11