HOUSE FINANCE COMMITTEE MARCH 1, 1995 1:40 P.M. TAPE HFC 95 - 34, Side 2, #000 - end. TAPE HFC 95 - 35, Side 1, #000 - end. TAPE HFC 95 - 35, Side 2, #000 - end. TAPE HFC 95 - 36, Side 1, #000 - end. TAPE HFC 95 - 36, Side 2, #000 - #432. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 1:40 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 Nancy Slagle, Director, Division of Budget Review, Office of Management and Budget; Mike Greany, Director, Legislative Finance Division; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Arbe Williams, Director, Division of Administrative Services, Department of Labor; Guy Bell, Director, Division of Administrative Services, Department of Commerce and Economic Development; Nico Bus, Director, Division of Administrative Services, Department of Natural Resources; Ken Bischoff, Director, Division of Administrative Services, Department of Public Safety; Ron Lind, Director, Division of Administrative Services, Department of Transportation and Public Facilities; Gary Hayden, System Director, Marine Highway System, Department of Transportation and Public Facilities; Karl Ohls, Executive Director, Western Alaska Fisheries Development Association, Anchorage; Nels Anderson Jr., Executive Director, Bristol Bay Economic Development Corporation; Eugene Asicksik, Acting Executive Director, Norton Sound Economic Development Corporation; Ragnar Alstrom, Board Member, Yukon Delta Fisheries Development Association; Fred Phillip, Board Member, Coastal Villages Fishing Cooperative; Agafon Krukoff Jr., Executive Director, Central Bering Sea Fishermen's Association; Justine Gunderson, Secretary 1 Treasurer, Pribilof Island Fishermen; Michael Irwin, Commissioner, Department of Community and Regional Affairs; Representative John Davies; Senator Lyda Green; Karen Perdue, Commissioner, Department of Health and Social Services; Del Smith, Deputy Commissioner, Department of Public Safety; Joe Perkins, Commissioner, Department of Transportation and Public Facilities; Wendy Redman, Vice President for University Relations, University of Alaska; Brian Saylor, Director, Alaska Psychiatric Institute (API), Anchorage; Bob Baratko, Director, Division of Administrative Services, Department of Revenue; Jerry Shriner, Special Assistant, Office of the Commissioner, Department of Corrections. SUMMARY PRESENTATION BY THE WESTERN ALASKA COMMUNITY DEVELOPMENT QUOTA PROGRAM HB 137 An Act making supplemental appropriations for operating expenses of state government for fiscal year 1995; and providing for an effective date. HB 137 was HELD in Committee for further consideration. HB 178 An Act making supplemental and special appropriations for the expenses of state government; making and amending capital and operating appropriations; and providing for an effective date. HB 178 was HELD in Committee for further consideration. PRESENTATION BY THE WESTERN ALASKA COMMUNITY DEVELOPMENT QUOTA PROGRAM MICHAEL IRWIN, COMMISSIONER, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS, explained the Community Development Quota (CDQ) program. He remarked that the CDQ pollack program was instituted in December, 1992. The North Pacific Fisheries Management Council approved the CDQ program as part of the federal government's inshore/offshore allocation of pollack. He noted that by the time the CDQ pollack program sunsets later this year, it will have generated more than $80 million dollars revenue for those regions and will have created more than 800 jobs. In 1994, the Council approved a halibut/sablefish CDQ program which will be worth $3 million 2 dollars annually. Mr. Irwin stated that the CDQ pollack program is scheduled to sunset in December 1995 unless extended by the Council. The Knowles Administration strongly supports continuation of the program. The CDQ pollack program is a federal program overseen by three state agencies: the Department of Community & Regional Affairs, the Department of Fish and Game and the Department of Commerce and Economic Development. The National Marine Fisheries Service will provide the federal oversight. KARL OHLS, EXECUTIVE DIRECTOR, WESTERN ALASKA FISHERIES DEVELOPMENT ASSOCIATION (WAFDA), ANCHORAGE, introduced the directors of the CDQ programs throughout the State. He reiterated the number of jobs which have been created through the CDQ program for Western Alaska. The program has generated over $40 million dollars for those regions during the past 2.5 years. He provided the Committee with a packet of information regarding the program. [Attachment #1]. NELS ANDERSON JR, EXECUTIVE DIRECTOR, BRISTOL BAY ECONOMIC DEVELOPMENT CORPORATION (BBEDC), spoke to the success of the CDQ program in his area which began in May, 1993. He pointed out that the program has employed 194 people during the winter, which is unprecedented, as most employment occurs only in the summertime during the herring fishery. He added that Oceantrawl, Inc. is the partner of BBEDC. The corporation is currently diversifying the fishing industry for all the communities involved. Mr. Anderson spoke to the academic scholarships provided to local students through the program. JUSTINE GUNDERSON, SECRETARY TREASURER, ALEUTIAN PRIBILOF ISLAND DEVELOPMENT ASSOCIATION (APICDA), informed the Committee of the communities which comprise APICDA; Nelson Lagoon, St. George Island, Atka, Nikolski, and False Pass. The mission of APICDA is to develop stable local economies in the communities, and to foster education, training, and employment for local residents. She added, APICDA's private sector harvesting partners are Trident Seafoods Corporation, one of Alaska's largest shoreside processing companies and Starbound Partnership. The pollack CDQ fishing activities have resulted in little by-catch of salmon, crab, halibut, or herring. AGAFON KRUKOFF JR, EXECUTIVE DIRECTOR, CENTRAL BERING SEA FISHERMEN'S ASSOCIATION (CBSFA), stated that the program provided St. Paul $750 thousand dollars for work on the new boat harbor. The village also generated enough money to 3 become partners on a crab vessel. He added, this summer the village anticipates beginning construction on a marine service center. Mr. Krukoff concluded that the CDQ program has enabled the six groups in coastal Alaska to work as "key" participants in the fishing industry. FRED PHILLIP, BOARD MEMBER, COASTAL VILLAGES FISHING COOPERATIVE (CVFC), testified that CVFC's program consists of creating employment opportunities, developing local fisheries infrastructure and participation in the fisheries. The recruitment program covers all seventeen villages. He added, there are only minimal opportunities to base a fisheries economy on. The CDQ program provides a resource directly available to the CVFC region's villages. There are also opportunities available in the salmon, herring and halibut fisheries. Mr. Phillips explained that his cooperative believes that ownership and participation as a full-fledged company is necessary to meet the CDQ goal. EUGENE ASICKSIK, ACTING PRESIDENT, NORTON SOUND ECONOMIC DEVELOPMENT CORPORATION (NSEDC), said that NSEDC consisted of fifteen communities. NSEDC's partner is Glacier Fish Company, Inc. out of Seattle. The corporation is actively involved in purchasing herring jointly with their partner. The area has initiated the Norton Sound Crab Company. He concluded that NSEDC has an education and scholarship program and has sent and trained 138 villagers to Seward, Alaska, and also has provided over $100 thousand dollars in scholarships to local residents. RAGNAR ALSTROM, BOARD MEMBER, YUKON DELTA FISHERIES DEVELOPMENT ASSOCIATION (YDFDA), pointed out that the four villages which make up YDFDA have an extremely high unemployment rate. The villages consist of a young and exploding population. There are no jobs available in that area. The basic goal of YDFDA is to provide training and then find work. At this time, some village people work on factory trawlers. YDFDA has invested in building a small boat fleet which hopes to provide the heart of the program. YDFDA's goal is to work with a processor in the village of Emmonak. The small boat program was begun in May, 1994 with five boats; it is the intent that ten boats will be in line for summer, 1995. Mr. Ohls concluded that by the end 1993, the CDQ program accounted for eight percent of the economy in the regions of western Alaska. The goal of the program is to involve western Alaskans in all aspects of the CDQ fishing industry. Mr. Ohls acknowledged the support of the State offering his appreciation. Thus concluded the presentation by the Western Alaska 4 Community Development Quota program. (Tape Change, HFC 95-35, Side 1). HOUSE BILL 137 "An Act making supplemental appropriations for operating expenses of state government for fiscal year 1995; and providing for an effective date." HOUSE BILL 178 "An Act making supplemental and special appropriations for the expenses of state government; making and amending capital and operating appropriations; and providing for an effective date." DEPARTMENT OF HEALTH AND SOCIAL SERVICES NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, pointed out that Section #22 request for medical assistance of pharmaceutical for the Department's operating budget short fall. The Governor's request amount of $871.7 thousand dollars was zeroed out by the proposed House supplemental appropriation. JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stressed that $871.7 thousand dollars would be an expenditure shortfall this year. The Medicaid system works in such a way, if the claims are not paid this year, those claims will roll into the next budget. It will become an automatic shortfall next year. She added, the reduction would result in a like amount of federal receipts creating a $1.7 million dollar liability in FY96. Co-Chair Hanley noted that the House proposed supplemental appropriation funded Section #23 which would increase Indian Health Service Medicaid in the amount of $4 million dollars as recommended by the Governor. KAREN PERDUE, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, responded to Section #24, Governor's amended request in the amount of $483 thousand dollars which was zeroed out by the House supplemental request. The requested amount would cover the optional Medicaid services such as emergency adult dental, eye glasses, and chiropractic services. She suggested creating an alternative system such as the Oregon Plan as a way to manage costs for the Medicaid program. 5 Ms. Clarke addressed Section #25, Family and Youth Services, recommended funding by the Governor's amended request in the amount of $310.6 thousand dollars, whereas, the House recommended a funding level of $80 thousand dollars. Ms. Clarke stated that the Department had anticipated requesting additional authority for that spending through the Budget and Audit Committee. Ms. Clarke advised that the Department would propose a substantial increase in the FY96 budget to include four new probation officers. Ms. Clarke referenced Section #26, staffing increase for the client load at McLaughlin Youth Services, Governor's amended request in the amount of $580.5 thousand dollars, whereas, House recommended funding level of $460 thousand dollars. Co-Chair Hanley pointed out that the House had agreed to the amount requested by the Department to control the Tuberculosis outbreak and conduct epidemiological investigations in the amount of $342 thousand dollars as requested by the Governor in Section #27. Ms. Slagle pointed out Section #28 for additional funding for API in Anchorage; although the Governor's amended request was zeroed out by the House proposed supplemental request. Without the appropriate match, the Alaska Psychiatric Hospital will receive a $1.6 million dollar reduction. The federal match would have been a 50/50 percent. BRIAN SAYLOR, DIRECTOR, ALASKA PSYCHIATRIC HOSPITAL, ANCHORAGE, provided the Committee with a letter from the Alaska Mental Health Board. [Attachment #3]. He advised the prognosis without the fund source shift would be severe. The hospital requires $45 thousand dollars per day to operate. The alternatives would be to reduce the scope of the operations in order to accommodate the shortfall. The most dramatic scenario would be to lay off 240 employees at the hospital and curtail operations. New patients would not be admitted after April 25th. The second option would require all but court required treatment units to be closed. Commissioner Perdue remarked that the course outlined by Dr. Saylor was dramatic. She understood that the staff felt that they had guidance from the Governor's Office to proceed with a plan of action. The savings could not be made up in a month. She added that with further research, the Department could refine the approach. Representative Brown asked who would be impacted by not funding the request. Dr. 6 Saylor reported that there will be extensive planning for those discharged, although community services have been saturated. Without additional funds, the community can not accept more patients. The remaining patients at the hospital are at an intensity that exceeds the community resource possibilities. Commissioner Perdue expounded that every state has responsibility to create some type of facility to house psychiatric patients. She agreed that the role and size of API are important questions. Representative Brown questioned if providing such a hospital was a constitutional obligation of the State. Commissioner Perdue stressed that the hospital was a core function of the State. Co-Chair Hanley remarked that the State does have a responsibility to provide a service, although the manner in which that service is provided could be contracted out. Representative Brown asked if the Department had considered placing the requested funds into community services. Commissioner Perdue noted that possibility had not been considered in time for the supplemental funding. Ms. Clarke referenced Section #28, the Governor's amended request in the amount of $331 thousand dollars, in which the House recommended zero funding to cover the shortfall interagency receipts for Harborview Development Center. She remarked that this request unfunded would be more manageable than the API request in Section #27. Co-Chair Hanley pointed out that Section #29, judgments and claims was funded at the same level as requested by the Governor and the House in the amount of $410.2 thousand dollars. DEPARTMENT OF LABOR Co-Chair Hanley noted that the House supplemental request did not fund the $55.6 thousand dollar proposal from the Department for the statewide demographic information and analysis, Section #30. ARBE WILLIAMS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF LABOR, informed the Committee that without funding the proposed supplemental, an accurate census could not occur nor would there be a base for clear information for calculating reapportionment. There currently exists a six month window of opportunity provided by the federal government. The census bureau has been informed of the possible legislative attempt to reinstate the funding. She emphasized, with a July, 1995 funding, the window of opportunity would be closed and that there is not 7 extra money in the Department's budget to cover the necessary costs of the request. Ms. Williams pointed out that the Department does not anticipate further incremental funding requests for this component. (Tape Change HFC 95-35, Side 2). Representative Martin agreed that digitizing maps would save the State a lot of money. He emphasized how important it was to keep update census information considering the amount of time needed to generate the appropriate information. Co- Chair Hanley stated that there needs to be a commitment from the Legislature to provide the additional funding necessary in the FY96 budget if the supplemental is funded. Representative Martin noted that the Lt. Governor's Office supports the funding and would participate through the Division of Elections. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT GUY BELL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, stated that Section #31 as provided by the Governor's amended request would allocate $2.5 million dollars in order to restore television and newspaper advertising, although, the House zeroed out the funding request. He commented that the request would restore the Alaska Tourism Marketing Council budget to the FY94 funding level. He thought that the issue would effect long term tourism for Alaskans. Co-Chair Hanley disagreed stating that the decision had been a policy call of the current Governor. DEPARTMENT OF MILITARY AND VETERANS' AFFAIRS Co-Chair Hanley referenced Section #32 noting that the House zeroed out the Governor's amended request of $900 thousand dollars, indicating that when the costs are known, they will be paid. Representative Therriault noted that the requested costs are tied into fire suppression activity. He asked if the request was a reendowment of the disaster fund. Ms. Slagle explained that all but $100 thousand of that fund had been expended. If there are any disasters resulting from spring flooding between now and the end of the fiscal year, the money will not be available in the Disaster Relief Fund to handle the situation. She added, in the past, when there is no money available to cover disasters, a lapse fund was used to take care of the costs until the supplemental became available. This year the problem has resulted from the 8 balances of those funds being placed into the Constitutional Budget Reserve Fund. DEPARTMENT OF NATURAL RESOURCES NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF NATURAL RESOURCES, pointed out that Section suppression activities in the fiscal year ending June 30, 1994. Mr. Bus commented that when the budget for the fire suppression runs out, the option exists to declare a disaster. The first option would be to go to the Disaster Relief Fund. In 1994, DNR received $1 million dollars from that fund. In 1995, there were no longer funds available in that fund. DEPARTMENT OF PUBLIC SAFETY DEL SMITH, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY, spoke to Section #36, community jails, Governor's amended request in the amount of $682.4 thousand dollars, although, the House zeroed out the request. He commented that the task force made recommendations addressing major concerns on current funding of jails. The communities involved participated with the understanding that funding would improve once the standards had been established by the task force. Many of the community jails have threatened that if funding is not granted, they will close now or at the end of the fiscal year. Mr. Smith emphasized that prisoner housing is a State responsibility. Representative Brown inquired if an analysis had been performed of the cost effectiveness of maintaining those facilities. Mr. Smith replied that the State is liable to provide sufficient space. Currently, the prisoners are moved at the convenience of the Department rather than because of a necessary demand. Mr. Smith stated it was beneficial to the State to continue funding the facilities to house the prisoners. Without the facilities, more prisoners would be transferred. He added, to date there has not been a comprehensive study provided. Representative Grussendorf reiterated that legislation has been passed requiring jail time, at the same time contract funding is not being adequately provided to the municipalities. Representative Parnell reminded Committee members that last year the Legislature funded the required amount. He pointed out that each facility is now requesting more funding as a result of recommendations of the task force. He suggested addressing that concern in the FY96 9 operating budget. Representative Grussendorf pointed out that most of the communities were eased into the FY95 operating budget with the promise of supplemental funding made by the task force. Mr. Smith agreed with Representative Grussendorf. Co-Chair Hanley referenced Section #37, an arbitrator's award for the Alaska State Troopers, Governor's amended request in the amount of $200 thousand dollars, with the House requested amount of $191 thousand dollars. Representative Parnell stated that the $191 thousand dollar amount would be closer to the real cost due. Co-Chair Hanley addressed Section #38 for support and rescue operations for the civil air patrol, Governor's request amount of $156 thousand dollars, whereas, the House recommended amount was $23 thousand dollars. He noted the amount of proposed funding by the House would cover the insurance costs for the civil air patrol. Co-Chair Hanley pointed out that the House recommended providing the concealed weapons fiscal note in the amount of half that requested by the Governor. Representative Parnell stated that the number of positions hired has been less than anticipated. KEN BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF PUBLIC SAFETY, stated that the supplemental request was based on receipt of forty applications per day. During the past few months, the Department has received less than thirty applications per day. Co-Chair Hanley noted that the House proposed supplemental request had fully funded the Narco Task Force switch in funds in order to offset the shortfall of seized assets in the amount of $115 thousand dollars. Co-Chair Hanley referenced Section #66 and #67 stating that the House zeroed out the supplemental funding request. He stated that those requests could be addressed in the FY96 operating budget. Mr. Smith pointed out that the upgrade would provide better fire and building codes for the Homer and North Slope Borough jail. Co-Chair Hanley interjected that those codes have not been met for many years and that the increment could wait until the new fiscal year. Representative Brown clarified that both facilities were owned by the local municipalities. (Tape Change, HFC 95-36, Side 1). DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES 10 Ms. Slagle pointed out Section #41, Governor's amended request in the amount of $2.17 million dollars had been reduced by the House proposed supplemental request to $2 million dollars for snow removal for highways and aviation. Co-Chair Hanley noted suggestions made by the subcommittee to incorporate Sections #43 and #48, spring maintenance program. RON LIND, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, commented that it would help to have a guarantee that funds not used for snow removal could then be used for spring maintenance. Co-Chair Hanley remarked that Sections #28 - #33 were funded at the Governor's recommended level and carry over funds could be used in Section #34. He added, Section #49 and #50 were zeroed out by the House supplemental request for litigation costs. Mr. Lind stated that there currently is a bill which will provide "ratification" for these type costs, rather than an appropriation. Ms. Slagle advised that the expenditures have been made by the Department of Law and that the Legislature's approval will be required to release funds. Representative Grussendorf spoke to Section #52, Governor's amended request in the amount of $739.8 thousand dollars, whereas, the House proposed funding was zeroed out. He emphasized that the Alaska Marine Highway is a "road" for all Southeastern communities. GARY HAYDEN, SYSTEM DIRECTOR, MARINE HIGHWAY SYSTEM, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, reported that the supplemental request would cover costs related to the first eight months of the fiscal year. Revenues collected last year were down $500 thousand dollars from sales. Ridership has been down this winter. Additional service on the La Conte was provided in December and February. He stressed that the result of not providing the supplemental funding request will be less weeks of service during May and June. Representative Grussendorf pointed out that revenue would be lost by not having all vessels running during the tourist season. Co-Chair Foster understood that the $700 thousand dollars was expended and removed from a reserve account. Mr. Hayden explained at the end of the fiscal year, there will be no balance in the reserve account. The Department will be in deficit spending without the supplemental. Discussion followed between Representative Foster and Mr. Hayden regarding the reserve account. 11 Co-Chair Hanley asked how the service for FY96 would be affected without the allocation of the supplemental. Mr. Hayden replied that service will be reduced in Southeast Alaska to 290 days of service for the entire year. Representative Navarre pointed out that this would be the worst time of year to delay ferry scheduling. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Co-Chair Hanley explained that Sections #53 and #54 were zeroed out by the House supplemental funding. Section #53 would have extended the set-aside for rural development mini grant program; Section #54 would have provided an organizational grant for the City of Egegik. Ms. Slagle stated that in the past, the organizational grants were switched from the operating budget to the capital budget. The Department of Law noted that Section not receive the needed funding last year and recipients can not wait for the FY96 operating budget. DEPARTMENT OF CORRECTIONS Representative Mulder, Chair of the Corrections Subcommittee, referenced Section #55. The switch in funds would reflect program receipt shortfall-prisoner phones at the Cook Inlet Pre Trial. The Governor's amended request in the amount of $200 thousand dollars was zeroed out by the House proposed supplemental budget. Representative Brown discussed that the back-up for the request had resulted from a federal court decision. She stated that it was not the fault of the Department, but resulted from the Alaska Public Utilities Commission (APUC) decision occurring at the federal court level. Ms. Slagle agreed that the Department has been actively pursuing the request. Due to APUC and ramifications encountered in that situation, it was not implemented. JERRY SHRINER, SPECIAL ASSISTANT, OFFICE OF THE COMMISSIONER, DEPARTMENT OF CORRECTIONS, repeated that negotiations had been in process for many years. He noted, they currently are complete. Representative Mulder referenced Section #56, Governor's amended request to facilitate a transfer component from Public Safety for Community Jails in the amount of $39.3 thousand dollars which was zeroed out by the House proposed supplemental request. Section #57, a proposed amount to cover the Cleary contempt of court fines in the amount of $750 thousand dollars was 12 fully funded by the House proposed supplemental funding. Representative Martin stated that the Legislature had not been in contempt of court. He recommended that the fee not be paid. Representative Navarre stated that the Department was held in contempt of court because the Legislature had not adequately funded the needs of the Department. Representative Mulder stated that Section #58, Governor's amended request amount of $457 thousand dollars for personnel legal actions was zeroed out by the House proposed supplemental funding. He added, once the final award had been made, the funding would be provided. UNIVERSITY OF ALASKA Representative Martin, Subcommittee Chair, stated that Section #59, Governor's amended request in the amount of $130 thousand dollars for snow and ice removal was zeroed out by the House proposed supplemental. WENDY REDMAN, VICE PRESIDENT FOR UNIVERSITY RELATIONS, UNIVERSITY OF ALASKA, pointed out that the University rarely requests supplemental funding except for snow removal. She voiced her surprise and confusion in the declined funding. Ms. Redman addressed Sections #68 & #69 for the Butrovich Building panel removal and replacement. She noted that the Governor's requested amounts had been zeroed out by the House proposed supplemental funding. She asserted that the building is not finished and now it is on the deferred maintenance list. The money must be "in hand" before ordering the panels in a timely fashion so they could be placed this building season. To arrive on time, they must be ordered by the middle of March. Representative Brown questioned how much additional funding would be needed to make the building usable. Representative Therriault interjected that the paneling should be replaced this year before that damage causes additional deterioration. (Tape HFC 95-36, Side 2). Following discussion of Committee members regarding the snow removal concern, Representative Kohring asked if the individual sections of panel could create a safety concern. Ms. Redman replied that the panels are a major concern as they are falling off the sides of the building. The panels were made defectively, and have since been corroding out of the nuts keeping them in tact. REPRESENTATIVE JOHN DAVIES commented that one of the panels 13 had fallen which caused injury to a maintenance worker. He added that in order to avoid rainfall from coming into the building, the top row of panels were left on the building creating continual hazards. DEPARTMENT OF REVENUE Co-Chair Hanley referenced Section #64, Governor's amended request for senior housing to match an Housing and Urban Development (HUD) allocation level for the Alaska Housing Finance Corporation (AHFC) in the amount of $1.8 million dollars. This amount was zeroed out by the House proposed supplemental funding. Ms. Slagle explained that there is a timing constraint for AHFC on the availability of those funds. That match money is required for an ongoing project in Barrow and Saxman. The federal money will not be available for one year. Co-Chair Hanley stated that $8 million dollars had been funded for the project last year. BOB BARATKO, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE, explained that AHFC had based that request on an estimate provided by HUD. HUD did not have it's final numbers for the State until after the budget was approved for AHFC. After the $8.2 million dollar budget was approved, HUD refined the numbers and came up with an additional funding that the State would need to provide the match. Representative Martin recommended the request be a part of the FY96 Capital Budget. Mr. Baratko advised that the funds were needed now in order to match funding time, stating that it would take time to allow for the construction. Representative Brown advised that AHFC was under the Executive Budget Act and that they should receive approval to access federal dollars. She urged that the request be considered. Representative Kohring supported the intent of AHFC and funding that section. DEPARTMENT OF PUBLIC SAFETY Ms. Slagle referenced Section #65, Governor's amended request in the amount of $41.6 thousand dollars to replace the roof at Civil Air Patrol (CAP) Merril Field hangar. Funding had been zeroed out by the House proposed supplemental request. Representative Brown asked if the State owned the space or if CAP leased the facility. Ms. Slagle replied that CAP owned the facility, and pointed out that there were safety hazards by not providing the work. ADJOURNMENT The meeting adjourned at 5:05 P.M.