HOUSE FINANCE COMMITTEE APRIL 19, 1995 8:35 A.M. TAPE HFC 95 - 86, Side 1, #000 - end. TAPE HFC 95 - 86, Side 2, #000 - #474. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 8:35 A.M. PRESENT Co-Chair Foster Representative Martin Representative Mulder Representative Kelly Representative Brown Representative Therriault Representative Grussendorf Representatives Hanley, Parnell and Navarre were not present for the meeting. ALSO PRESENT Representative Ivan Ivan; Annalee McConnell, Director, Office of the Director, Office of Management and Budget, Office of the Governor; Nancy Slagle, Director, Division of Budget Review, Office of Management and Budget; Joe Perkins, Commissioner, Department of Transportation and Public Facilities; Janet Kowalski, Chief of Planning, Division of Planning, Department of Transportation and Public Facilities; Sharon Barton, Director, Division of Administrative Services, Department of Administration; Mark Badger, Director, Division of Information Services, Department of Administration; Karen Morgan, Deputy Director/Administrative Services, Division of Information Services, Department of Administration; Michael McMullen, Acting Director, Division of Personnel, Department of Administration. SUMMARY HB 268 An Act making appropriations for capital project matching grant funds and to capitalize funds; making, amending, and repealing capital appropriations; and providing for an effective date. HB 268 was HELD in Committee for further consideration. 1 HOUSE BILL 268 "An Act making appropriations for capital project matching grant funds and to capitalize funds; making, amending, and repealing capital appropriations; and providing for an effective date." ANNALEE MCCONNELL, DIRECTOR, OFFICE OF THE DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, provided an overview of the proposed capital budget. Ms. McConnell explained that the budget was written from a fiscally responsible perspective. She continued that the Division identified specific areas: Kids and families public safety related items, health and safety issues such as village safe water issues etc., recommendations regarding the criminal justice system, transportation and development, and deferred maintenance. She indicated the total request would be in the amount of $135 million dollars. Ms. McConnell understood that amount was $35 million dollars above that amount the Legislature had budgeted. She urged Committee members to consider the proposal submitted by the Administration, pointing out that the allocation would emphasize matching federal dollars. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES JOE PERKINS, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF), reviewed DOTPF's portion of the capital budget request. He stated that the $1.5 million dollar portion of the DOTPF capital budget request would include emergency non-routine type repairs for ports, highways and facilities. Included in the request was $4 million dollars to address deferred maintenance. Additionally, $20 thousand dollars was allocated for federal transit administration grants. Those totals would provide $920 thousand dollars from federal government revenues. Commissioner Perkins continued, $100 thousand dollars of the request would be delegated to the Corp of Engineers in order to provide the necessary match money for activity authority. He added, $26 million dollars was requested for federal aid to highways, and an additional $5.5 million dollars for the federal aid to aviation programs. The total DOTPF request would be in the amount of $31.6 million dollars which would provide another $305 million dollars in federal funds. Commissioner Perkins summarized that few new projects have been recommended. The basic goal was to address maintenance in order to continue receipt of federal aid programs. 2 Commissioner Perkins responded to Representative Mulder's question regarding the list of projects. He stated that federal aid to highway projects had been derived from the State Transportation Improvement Program (STIP) required for approval by the federal government. Commissioner Perkins added, DOTPF is currently in the process of creating a number of long and short range plans. The first long range plan would address the next 20 year transportation and system needs within the State. Additionally, there will be a ten year plan to address more specific needs. That plan will match federal monies against those projects which need to be finished in the State. Commissioner Perkins continued, the six year plan will address the current "needs" of the State. That list consists of three priorities. He concluded that the three year plan would clarify federal requirements for the federal aid funds. Commissioner Perkins emphasized that the plans are important to the federal highways and to the people in the State who provide the construction and engineering; the plans provide information regarding specific projects. Representative Mulder asked if the projects scheduled in the current three year plan were the only ones which qualified. Commissioner Perkins responded that there were other projects which could be substituted for the current project recommendations. Commissioner Perkins advised the proposed federal level cuts to the Corps of Engineers budget will create the elimination of all maintenance activities on eighteen harbors in Alaska. At this time, the Corps of Engineers dredges entrance channels and repairs breakwaters. Representative Brown requested a breakdown of the Intermodel Surface Transportation Efficiency Act of 1990 (ISTEA) enhancements. JANET KOWALSKI, CHIEF OF PLANNING, DIVISION OF PLANNING, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, offered to provide that information to the Committee. She noted that there is an apportionment for the transportation enhancement money floor. Representative Brown questioned the allocation for the natural gas fleet. Ms. Kowalski replied the allocation would cover the municipal fleet and an air quality monitor. The Anchorage municipality has consistently violated the carbon monoxide standards. The funds would convert part of 3 the municipality's fleet into natural gas use. NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, distributed two handouts to Committee members: "Criminal Justice Information Systems Integration Summary of FY96 Phase I Projects" [Attachment #1] and "FY96 Requested Telecommunications Capital Projects" [Attachment #2]. FRONT SECTION OF HB 268 Ms. Slagle provided a sectional overview of HB 268. Representative Martin referenced Section #6 noting concern with DOTPF's accumulating revenue from uncompleted projects. Ms. Slagle reported that a project would have to qualify for the statutory definition of a capital project and that those funds would not be used for operating expenses. The original allocation to the community would require a match. Representative Martin asked if the accumulated interest could be used as a match amount. Ms. Slagle stated that the interest would not be adequate to cover the match portion. She added that depending on the size of the community, that amount would range between 5% and 30% percent. Representative Martin questioned the excess authority which DOTPF had accumulated over the years. Ms. Slagle explained that Sections #6 & #7 were the areas allowing the uncommitted matching fund dollars. The amount resulting from authorization over project costs is not available. She pointed out that at the beginning of each Legislative session, a Capital Project (CP 3) report is provided which lists all the projects available and their status. Representative Martin voiced concern in continuing to receive depleted federal funding. Ms. Slagle pointed out that Section #9 would correspond to the handouts #1 and #2. Representative Mulder referenced Section #9 asking if the $2 million dollars which the Department of Corrections received from the federal government would be used as part of that cost. Ms. Slagle stated that the $2 million dollars would cover costs for deferred maintenance needs. Representative Mulder pointed out that criminal justice concerns appeared to be that Department's highest priority. Ms. Slagle emphasized that both needs are important and should be addressed. Representative Therriault asked how the amount in Section calculated by determining the amount received last fiscal year and then what was accomplished with that revenue. 4 Representative Therriault referenced Section #11 and asked if those funds would be tied to the dormitory expansion. Ms. Slagle commented that a portion of those funds would be used for that purpose. Representative Brown questioned Section #11, the $4 million dollar allocation for the satellite communications project. Ms. Slagle responded that would be a portion of the $700 thousand dollar general fund request. She added, there is an additional $300 thousand dollars in general fund dollars and $2.1 million dollars for the same project. Representative Martin referenced Section #12 noting his concern that the amount did not indicate the interest accrued. Ms. Slagle stated that the amount identified would be the original appropriation. The language identifies "including accrued interest". Representative Mulder referenced Section #11 and Section dollars had been supported by the Mat-Su Borough. Ms. Slagle understood that the $9 million dollars did not go to the Mat-Su Borough. It was identified funding for the Ita Mitsu Kodak Company who would be opening up Wishbone Hill. Representative Mulder advised that the appropriation was intended to stimulate activity in the Mat-Su region. He felt it was inappropriate to take those funds without the borough's concurrence. (Tape Change, HFC 95-86, Side 2). Representative Martin suggested further discussion was needed regarding the Mat-Su Borough. He spoke against the borough receiving those funds without further consideration of the statewide needs. OFFICE OF THE GOVERNOR Representative Brown referenced the $1 million dollars allocation request from the Office of the Governor and asked for a list of projects that revenue would fund. Ms. Slagle replied that decision would come about through a committee process. There currently is an inventory available of the existing facilities including a priority listing. She offered to provide that list, noting that Jack Kreinheder in the Office of the Governor coordinated the process. Ms. Slagle advised that the total identified funding need would be in the amount of $40 million dollars. DEPARTMENT OF ADMINISTRATION 5 Ms. Slagle listed the requested allocations. Personnel records automation in the amount of $364 thousand dollars. Ms. Slagle noted the allocation would provide imaging of state employment applications. Representative Brown asked if the agencies would need special equipment to access the images. MICHAEL MCMULLEN, ACTING DIRECTOR, DIVISION OF PERSONNEL, DEPARTMENT OF ADMINISTRATION, replied that the information would be accessible through fax lines and that it would not require additional equipment. Representative Martin complained about the expense of upgrading the equipment. He pointed out that currently a $17 million dollars balance remains available in service funds. He recommended using those funds first. Ms. Slagle advised that those funds are within an internal service fund that supports the computer network. She explained that maintaining the central equipment and processing everyday activities consume that amount. Representative Martin reiterated that there was a balance at the end of the year of $17 million dollars. Ms. Slagle stated that there was an appropriation of $1.46 million dollars specifically from that fund to provide equipment needed for replacement in order to maintain that system. Representative Brown asked the legal restrictions on the use of the Information Services Fund (ISF). She proposed more of those funds being used in lieu of general funds as proposed. Ms. Slagle advised that fund provided specific services for the agencies. SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF ADMINISTRATION, clarified that the $17 million dollar balance remaining in the ISF was composed of a major portion of the value of assets and equipment, whereas, the cash in that fund amounts to $2 million dollars. She pointed out that the $17 million dollar figure thus was deceptive. Ms. Barton advised that the money could be spent for depreciation and replacement of equipment for the statewide network. She added, special funding would not be appropriate to fund from the ISF. Representative Martin questioned the increase to information projects. Ms. Barton replied that the State has a lot of "catching up" to do in order to keep up with the efficient 6 use of technology currently available. Ms. Slagle pointed out that there is a lot of federal money available which mandates upgraded equipment. Representative Martin stressed that the federal government is broke, and suggested that the State should not try to match federal dollars which might not in reality be available. Ms. Slagle continued. Overhaul of State personnel management system request in the amount of $325 thousand dollars. Ms. Barton noted that the original personnel act which had been written at the time of statehood currently is no longer appropriate. There have been many changes in technology and needs resulting in a system which can no longer assure the maximum payback on the $1.1 billion dollars spent each year on personnel services. She added that the systems are out- moded and out-dated. Ms. Barton explained that the requested amount would allow for further expertise in order to sort through the old system's inefficiencies. Statewide information services equipment replacement request in the amount of $4.446 million dollars. Ms. Slagle pointed out the request related specifically to the Division of Information Services and the refurbishment of the equipment needed to maintain that system. Statewide consolidated data network request in the amount of $457 thousand dollars. Representative Brown inquired why the entire amount needed to complete the project had not been requested. She emphasized that the request should be a high priority. KAREN MORGAN, DEPUTY DIRECTOR/ADMINISTRATIVE SERVICES, DIVISION OF INFORMATION SERVICES, DEPARTMENT OF ADMINISTRATION, stated that a request for full funding had been submitted, although the Department and the Administration decided that there were other priorities within the Department which needed to be met. The original amount to fully fund the project was $3.1 million dollars, some of which has been funded from a capital request received by the Department of Labor in a previous year. She concluded that there will be an additional funding request placed next year. Retirement and benefits electronic imaging and automation request in the amount of $997 thousand dollars. 7 Ms. Slagle ascertained that the request would provide for the management of documentation and employment history records. Statewide satellite communication project request in the amount of $2.4 million dollars. Ms. Slagle noted the request would provide for the remainder of a large project undertaken by the Department. Representative Brown noted that she had requested that the Department provide for an amount of funding in which they would need to create a single broadcast signal. She thought the request exceeded that proposal. MARK BADGER, DIRECTOR, DIVISION OF INFORMATION SERVICES, DEPARTMENT OF ADMINISTRATION, agreed that a modest approach would provide the flexibility for the infrastructure. Although, he added, the current request could be used for more items of concern. He noted that in the long run, this request would reduce the cost of providing services and would require less satellite space while carrying more data. Representative Brown asked the source of the $700 thousand dollars in gifts and grants. Mr. Badger replied currently, when anything is done within State government toward telecommunications, the State looks at ways to partner with the federal government or private providers to pay for a portion of that cost. It is hoped that funds will be generated from donations, gifts and grants from private providers and other interested institutions. KOAHNIC broadcasting matching grant request in the amount of $140 thousand dollars. Ms. Slagle commented the allocation would provide the first urban American radio station in the United States. She added that the station would broadcast to the Anchorage, Mat-Su, and the Kenai Peninsula areas. The requested amount would provide for a match to be received from federal funds and private contributions. HB 268 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 9:50 A.M. 8