HOUSE FINANCE COMMITTEE March 26, 1996 8:30 A.M. TAPE HFC 96-92, Side 1, #000 - end. TAPE HFC 96-92, Side 2, #000 - end. TAPE HFC 96-93, Side 1, #000 - end. TAPE HFC 96-93, Side 2, #000 - end. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 8:30 a.m. PRESENT Co-Chair Hanley Representative Martin Co-Chair Foster Representative Mulder Representative Brown Representative Navarre Representative Grussendorf Representative Parnell Representative Kelly Representative Therriault Representative Kohring ALSO PRESENT Representative Kim Elton; Representative John Davies; Representative Irene Nicholia; Representative Don Long; Bob Cole, Director, Division of Administrative Services, Department of Corrections; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Nancy Slagle, Director, Division of Budget Review, Office of the Management and Budget, Office of the Governor. SUMMARY HB 230 An Act making appropriations to the Department of Education for support of kindergarten, primary, and secondary education and for community schools programs for fiscal year 1996 and fiscal year 1997; making appropriations from the constitutional budget reserve fund under art. IX, sec. 17(c), Constitution of the State of Alaska; and providing for an effective date. HB was HELD in Committee for further consideration. HB 412 An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making 1 appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. AMENDMENTS DEPARTMENT OF LABOR DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS UNIVERSITY OF ALASKA DEPARTMENT OF CORRECTIONS STATEWIDE HB 412 was HELD in Committee for further consideration. HB 413 An Act making appropriations for the operating expenses of the state's integrated comprehensive mental health program; and providing for an effective date. HB 413 was HELD in Committee for further discussion. HOUSE BILL NO. 230 "An Act making appropriations to the Department of Education for support of kindergarten, primary, and secondary education and for community schools programs for fiscal year 1996 and fiscal year 1997; making appropriations from the constitutional budget reserve fund under art. IX, sec. 17(c), Constitution of the State of Alaska; and providing for an effective date." Co-Chair Hanley provided members with a proposed committee substitute, #9-LS0396\M, 3/22/96 (copy on file). Representative Mulder MOVED to adopt Committee Substitute for HB 230 #9-LS0396\M, 3/22/96. There being NO OBJECTION, it was so ordered. Co-Chair Hanley explained that an amendment may be presented to include allocation provisions for single site schools. HOUSE BILL NO. 412 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget 2 reserve fund; and providing for an effective date." DEPARTMENT OF LABOR Representative Brown MOVED to adopt Amendment Labor-1 (copy on file). Representative Mulder OBJECTED. Representative Brown spoke in support of the amendment. Amendment Labor-1 would add $75.0 thousand dollars to a restore boiler/pressure vessel inspector position in Fairbanks. She noted that one out of five units inspected are found to have violations. She observed that the position generates fees. This position performs an average of 800 inspections annually. She emphasized the liability to the State for failure to perform inspections. She maintained that this reduction is too deep into the core functions of the State. Representative Brown asserted that subcommittee recommendations are $3.5 million dollars below caps assigned by the House Majority. She stated that there are no appropriate decrements remaining in the budget. She maintained that the remaining functions are necessary and essential. Co-Chair Hanley noted that subcommittee recommendations had not been adopted. Representative Brown WITHDREW her motion to adopt Amendment Labor-1. SUBCOMMITTEE RECOMMENDATIONS Representative Mulder MOVED to adopt all House Finance Subcommittee recommendations (copies on file). There being NO OBJECTION, it was so ordered. DEPARTMENT OF LABOR Representative Brown MOVED to adopt Amendment Labor-1. Representative Mulder OBJECTED. He noted that this reduction was proposed by the Governor. He stated that the Department indicated they thought that this function could be offset by the remaining positions. Representative Therriault noted that Amendment HSS-7 would also restore this position. Amendment HSS-7 would restore $75.0 thousand dollars for a boiler/pressure vessel inspector position with an equal decrement from the State Medical Examiners. JANET CLARK, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES discussed Amendment HSS-7. She stressed that the State Medical Examiner program 3 was previously known as the Postmortem program. She observed that bodies had been shipped to Anchorage from rural areas for autopsy. She noted that FY 95 is the first year that the program has been without a supplemental request. She stressed that a loss of a position in this program will result in higher contract costs. She noted that as a state employee witness fees are not paid to the medical examiner for testimony in cases regarding unexplained deaths. The Department of Law has saved approximately $80.0 thousand dollars from a reduction in witness fees. She maintained that the number of autopsies for unexplained deaths have been reduced. In response to a question by Representative Parnell, Ms. Clark noted that some contractual costs are needed for autopsies in Ketchikan and to pay transportation costs. She stressed that the contractual line has been reduced. She reiterated that if the deputy medical examiner was deleted that the State would pay more than is saved in contractual costs. Co-Chair Hanley restated that the Department of Law saved $80.0 thousand dollars in witness costs. Representative Brown MOVED to amend Amendment LABOR-1 by adding a funding source; delete $30.0 thousand dollars from the Department of Health & Social Services, contractual line of the State Medical Examiner and $40.0 thousand dollars from the Department of Law, Civil Division, General Services. There being NO OBJECTION, it was so ordered. Representative Brown MOVED to adopt Amendment Labor-1 as amended. Representative Mulder OBJECTED. A roll call vote was taken on the MOTION to adopt Amendment Labor-1 as amended. IN FAVOR: Brown, Grussendorf, Navarre, Kelly, Parnell, Therriault, Foster, Hanley OPPOSED: Kohring, Mulder Representative Martin was absent from the vote. The MOTION PASSED (2-8). Representative Mulder disclosed that his wife is a lobbyist. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT Co-Chair Foster MOVED to adopt CED-1 (copy on file). Amendment CED-1 would add $300.0 thousand dollars for the Kotzebue Technical Center (KTC) by deleting $100.0 thousand dollars from the Office of the Governor, Contingency Fund; 4 $100.0 thousand dollars from the Division of Trade and Development, Department of Commerce and Economic Development; and $100.0 thousand dollars from the Office of the Ombudsman. Representative Navarre OBJECTED. He noted that he supports the increment but objected to reductions in the Department of Commerce and Economic Development and the Office of the Governor, Contingency Fund. Co-Chair Foster WITHDREW Amendment CED-1. Representative Grussendorf noted that he has a similar amendment. He expressed concern with the funding source. Co-Chair Hanley MOVED to adopt Amendment CED-2 (copy on file). He explained that the Governor reduced the Surety Fund in the Department of Commerce and Economic Development. The amendment would add $82.0 thousand dollars to the Surety Fund and delete $42.0 thousand dollars in general fund program receipts. There being NO OBJECTION, it was so ordered. Representative Grussendorf MOVED to adopt Amendment CED-3 (copy on file). Amendment CED-3 would change the funding source of $876.5 thousand dollars from general fund to general fund program receipts for the Division of Measurement and Standards, Department of Commerce and Economic Development; and add $843.6 thousand dollars for the Alaska Seafood Marketing Institute (ASMI). He emphasized that the reduction to ASMI takes money from export promotions. He stated that this money was reduced under the assumption that funding would be available through HB 397. He observed that the funding available through HB 397 is the result of the whitefish fisheries and should be spent on domestic programs. He observed that ASMI has requested to be held harmless in FY 97 in order to address problems resulting from the salmon glut. REPRESENTATIVE KIM ELTON spoke in support of Amendment CED- 3. He explained that ASMI receives federal funds which require a 15 percent cash match. In addition, ASMI receives processor and harvester assessments. A 3 percent assessment against the value of all the product landed at the dock is paid by processors to ASMI. Salmon harvesters are assessed 1 percent of the value of salmon harvested. The salmon harvester assessment is limited by statute to the domestic market. The processor assessment comes from all types of seafood. The processor assessment is not restricted by statute but has historically been spent on domestic markets. Co-Chair Hanley noted that he served on an ASMI subcommittee on export funding. He observed that federal funds are only 5 used for foreign markets. Representative Elton noted that the federal portion has been reduced to $4.0 million dollars. He added that federal foreign funding has to be matched by private funding. He noted that the total marketing program including the state and private match is $9.6 million dollars. Co-Chair Hanley noted that the match has been over appropriated in past budgets. Representative Kelly explained that the reduction was made under the assumption that ASMI can seek funding from other sources. He acknowledged that it would not be appropriate to use whitefish funding as a match for salmon marketing. He noted that there is $1.3 million dollars in HB 397. He observed that the on shore processing tax includes funding from salmon processing. He explained that the match could be funded from the on shore processing tax and replaced by whitefish funds. Representative Navarre spoke in support of Amendment CED-3. Representative Grussendorf maintained that the amendment represents a good investment for the State. Representative Mulder maintained that the amendment represents a direct subsidy to the commercial fishing industry. (Tape Change, HFC 96-92, Side 2) Representative Navarre noted that the State receives taxes from the fishing industry. He stressed that low salmon prices will result in a reduction in state revenues. Representative Elton pointed out that the cooperative marketing program is 95 percent paid by industry. He noted that at its conception the program was 90 percent state supported. He expressed concern that the lack of state support will result in the loss of the processor assessment. Processors can vote to eliminate the assessment in 1997. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley Representative Brown was absent from the vote. The MOTION FAILED (2-8). 6 Representative Navarre MOVED to adopt Amendment CED-4 (copy on file). Representative Mulder objected. Amendment CED-4 would add $80.7 thousand dollars for the Commissioner's Office, Department of Commerce and Economic Development. Representative Navarre noted that the Commissioner sits on 13 - 14 boards and a number of task forces. This amendment funds a special assistant responsible for the Marketing Alaska program. Representative Kelly noted that there were two development specialist positions in the Department to administer the Alaska Rural Development Assistance program (ARDOR). He pointed out that the ARDOR program was transferred to the Department of Community and Regional Affairs. The two support positions remained in Department of Commerce and Economic Development. He stated that one of these positions is working on the Marketing Alaska program. IN FAVOR: Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley Representative Brown was absent from the vote. The MOTION FAILED (2-8). Amendment CED-5 was HELD. Co-Chair Foster MOVED to adopt Amendment CED-1. REPRESENTATIVE DON LONG spoke in support of Amendment CED-1. He stressed the importance of training programs in his region. He pointed out that there is a high percentage of unemployment and individuals on state welfare programs. Representative Martin expressed support for KTC. He asked if funding could be transferred from the Chukchi Community College campus of the University of Alaska. Representative Long stressed the difference in curriculums and the importance of both forms of education. Representative Navarre MOVED to AMEND Amendment CED-1 by changing the funding source; delete the reductions of $100.0 thousand dollars from the Division of Trade and Development and Department of Commerce and Economic Development and $100.0 thousand dollars from the Office of the Ombudsman; and add a deletion of $200.0 thousand dollars from the Legislature, Operating Budget. Co-Chair Foster OBJECTED. Representative Navarre maintained that the legislative operating budget can be reduced this year. He noted that there is a new legislature coming in next year. He asserted 7 that the new legislature can adjust to the reduction. He argued that the legislative operating budget would be a better place to make a reduction then the Office of the Ombudsman or the Division of Trade and Development. Representative Grussendorf spoke in support of the amendment to the amendment. Co-Chair Foster WITHDREW his objection. There being NO OBJECTION, the amendment to the amendment was adopted. Representative Martin expressed interest in changing the funding source in Amendment CED-1 of $100.0 thousand dollars from the Office of the Governor to the Chukchi Community College. Co-Chair Hanley pointed out that the Governor's contingency fund still contains $150.0 thousand dollars. There being NO OBJECTION, Amendment CED-1 as amended was adopted. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Representative Grussendorf MOVED to adopt Amendment CRA-1. Representative Mulder OBJECTED. Amendment CRA-1 would add $80.0 thousand dollars to the Alaska Marine Safety Education Association (AMSE). Representative Grussendorf stressed that AMSE serves approximately 120 communities and instructs the public in regards to boating safety. Co-Chair Hanley noted that the program had been previously funded by the federal government. He observed that the issue will be addressed in legislation to come before the Committee. A roll call vote was taken on the MOTION to adopt Amendment CRA-1. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Parnell, Therriault, Foster, Hanley Representative Mulder was absent from the vote. The MOTION FAILED (3-7). DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT Representative Brown MOVED to adopt Amendment CED-5 (copy on file). Amendment CED-5 would appropriate $110.0 thousand dollars to the Department of Commerce and Economic Development to fund Alaska Public Lands Information Centers (APLIC). She emphasized that the state and federal 8 governments are in a partnership to provide information on state and federal lands. She observed that if the State does not continue its support the centers will only provide information about federal lands. The federal contribution is over $1.0 million dollars. The centers serve 250,000 visitors annually. The program has been in effect for 14 years. She maintained that the reduction is too deep. Representative Kelly emphasized that federal funding will not be jeopardized. Representative Brown maintained that the federal government will not pick up the State's portion. Information on state lands will not be provided. Co-Chair Hanley noted that the reduction was made in the Governor's proposed budget. A roll call vote was taken on the MOTION to adopt Amendment CED-5. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Representative Navarre MOVED to adopt Amendment CRA-2 (copy on file). Representative Kelly OBJECTED. Amendment CRA-2 would restore $161.0 thousand dollars for Alaska Legal Services. Representative Navarre noted that Alaska Legal Services primarily serves rural Alaska. Forty percent of their clientele are Alaskan Natives. He maintained that services will be reduced in rural areas of Alaska. Representative Kelly stressed that it is not the role of government to provide free civil legal services. He acknowledged the constitutional mandate to provide public defenders. Representative Brown argued that it is a function that should be funded adequately. She observed that between 60,000 and 70,000 Alaskans are living at the poverty level. She asserted that access to the court system is not possible without some form of subsidized help. Alaska Legal Services provides advise on divorce, adoption, child custody, landlord disputes, wills, unemployment and probates. She maintained that the legal system should be available to low income individuals. Offices have already been closed in Dillingham, Kodiak and Kotzebue. She observed that there are currently 483 open cases. 9 Representative Kelly noted that Alaska Legal Services receives over $1.0 million dollars in federal funds and other grants. He emphasized that there is plenty of money from other sources. REPRESENTATIVE IRENE NICHOLIA disagreed that Alaska Legal Services receives over a million dollars in federal funds. She observed that federal funds were cut. She added that the Nome office also closed. She stressed the importance of the service. Representative Parnell acknowledged the difficulty in cutting this service. He observed that as an Attorney, 14 percent of his legal services were provided for free to help low income individuals. He stressed that attorneys will have to help more to fill the need. Representative Brown commended Representative Parnell for his services to those in need. She questioned if seeking free counsel from private attorneys is a viable approach. She gave an example of a case served by Alaska Legal Services. A roll call vote was taken on the MOTION to adopt Amendment CRA-2. IN FAVOR: Brown, Grussendorf, Navarre, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Hanley The MOTION FAILED (4-7). UNIVERSITY OF ALASKA Representative Navarre MOVED to adopt Amendment UA-1 (copy on file). Representative Mulder OBJECTED. (Tape Change, HFC 96-93, Side 2) Amendment UA-1 would restore an unallocated budget reduction of $283,600 dollars to the University of Alaska. Representative Navarre explained that the amendment would fund salary increases that the University of Alaska has refused to honor. Representative Martin stressed that the House Finance Subcommittee addressed the issue. The Subcommittee turned down the request because of the broader issue of contract negotiations. Representative Grussendorf expressed support for the amendment. 10 In response to comments by Representative Martin, Representative Navarre clarified that the amendment would fund FY 97 negotiated salary costs. Co-Chair Hanley pointed out that the amendment cannot guarantee that the money will be spent by the University to fund the increase. He observed that an amendment will be offered to pull out salary increases due to contract negotiations in the FY 97 operating budget. Language will be offered for the front section to turn down all the contracts. He emphasized that if language turning down the contracts is not included that the agencies will have to absorb their cost. Representative Navarre estimated that if the University has to absorb contract costs that a disproportional amount will be taken from the outlying campuses. REPRESENTATIVE JOHN DAVIES spoke in support of the amendment. He stressed that the University contends that the negotiated contracts will not be funded unless there is explicit funding by the Legislature. He stated that explicit approval can be followed by an equal reduction. He disagreed with the removal of the contract costs. A roll call vote was taken on the MOTION to adopt Amendment UA-1. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). DEPARTMENT OF CORRECTIONS Representative Mulder MOVED to adopt Amendment DOC-1 (copy on file). He explained that the amendment will add back to the Department of Corrections $464.1 thousand dollars. It changes many of the specific reductions to unallocated reductions. This will allow the Department more flexibility. The amendment recommends a total budget for the Department of $137,919,800 million dollars, an increase of $9.9 thousand dollars over FY 96 Authorized. The FY 96 Authorized included carry forward of $2.4 million dollars from FY 95. He noted specific changes: * Administrative and Support funding is increased by $180.0 thousand dollars, no reductions are taken from the Parole Board; 11 * Funding for institutions is increased by $199.0 thousand dollars; * Correctional Industries is returned to the Institutions BRU; * Intent language is added requesting that the Department review perimeter guards, Cleary monitoring, educational coordinators and assistant superintendents to determine value and function; * Mental health nurses, educational contract services and coordinators, Correctional Officers III and most assistant superintendents have not been specifically eliminated; * Funding is increased for Community Corrections by $84.5 thousand dollars; * CRC beds are returned to the Community Corrections BRU but remain a separate component; and * Funding for a day reporting project remains unfunded. Representative Mulder noted that the amendment retains elimination of several positions that are either unfilled or are attached to programs that will not continues. Representative Brown noted that the Department of Corrections' budget is still $450.0 thousand dollars below the House Majority's recommended cap. She asked if $80.0 thousand dollars for inmate health care is funded. Representative Mulder explained that there is a no specific recommended reduction within inmate health care. There is an unallocated reduction of $1,741 million dollars from institutions as a whole. The Department is requested not to add new positions. He noted that the Department is requested to reallocate existing PCNs in order to have a more accurate PCN count. BOB COLE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF CORRECTIONS stated that the Department will have to make unallocated reductions. He noted areas of concern to the Department: * Elimination of a special assistant in the Commissioner's Office; 12 * Elimination of the assistant superintendent at Highland Mountain Correctional Center; * Elimination of a $334.7 thousand dollar request to fund a day reporting center; and * A $241.0 reduction for Point McKenzie expansion. Representative Brown questioned the Legislature's legal authority to eliminate specific positions. NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR stated that the Legislature does not appropriate positions. The Legislature appropriates funding for the operation of the State. The Administration uses the funds and creates positions. Representative Brown expressed concerns regarding the proposed elimination of the special assistant in the Commissioner's Office and the assistant superintendent at Highland Mountain Correctional facility. She asked if the Department has the ability to fund these positions. Ms. Slagle stated that the Department can create positions based on the funding level. Representative Mulder referred to the assistant superintendent at the Highland Mountain Correctional facility. He noted that Highland Mountain is a 300 bed facility. There are two assistant superintendents, one supervises the women's beds and one the men's. He noted that there are 64 - 66 women inmates. There being NO OBJECTION, Amendment DOC-1 was adopted. Representative Brown WITHDREW Amendment DOC-2 (copy on file). Representative Navarre MOVED to adopt Amendment DOC-3 (copy on file). Representative Mulder OBJECTED. Representative Navarre explained that the amendment would reduce the Governor's request by $2.0 million dollars. He pointed out that this is the cap level recommended by the House Majority. The reduction would be unallocated. He stressed that an unallocated reduction will maximize the Department's management authority and provide flexibility. Representative Mulder spoke against the amendment. He stressed that the Subcommittee recommendation is above the FY 96 authorized amount. He maintained that the proposed 13 funding level is realistic and addresses public safety concerns. Representative Navarre noted that prison population is growing at a rate of 8 - 10 percent a year. He emphasized the need to allow management to address this growth. A roll call vote was taken on the MOTION to adopt Amendment DOC-3. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). In response to a question by Representative Brown, Representative Mulder agreed that Amendment DOC-1 includes the Governor's request for $80.0 thousand dollars to fund two psychiatric nurses. The PCN's for these positions are not included but the Department can convert other PCN's or establish new ones. Representative Brown WITHDREW Amendment DOC-4 (copy on file). In response to a question by Representative Brown, Representative Mulder noted that inmate programs reflect the Governor's requested amount. Representative Brown noted that Amendment DOC-1 states that the educational coordinators are where they are supposed to be. She observed that Amendment DOC-5 (copy on file) would reinstate educational coordinators. She noted that these positions provide adult basic education. Representative Mulder noted that Cook Inlet Correctional Center is contracting for a educational coordinator. This positions will remain in the contractual line. Several facilities have two educational coordinators. He emphasized that the Subcommittee recommends that these be reviewed to see if a savings can be realized through contracting services. He stressed that the Subcommittee is not recommending that these positions be deleted. Representative Brown WITHDREW Amendment DOC-5 (copy on file). Representative Brown noted that the Highland Mountain assistant superintendent is not funded. Representative Mulder stressed that the recommendation for elimination of this position came from the prison guards. Representative Brown noted that other reductions are 14 unallocated. She questioned why the Highland Mountain assistant superintendent was identified for elimination. She maintained that the there are administrative duties that must be performed. Representative Mulder reiterated that there are two assistant superintendents at Highland Mountain. Representative Brown pointed out that Highland Mountain is performing long term rehabilitation. Mr. Cole spoke in support of retaining the assistant superintendent position at the Highland Mountain Correctional facility. He noted that the women's campus has an active programing component. He stressed that the institution is largely run as two separate operations. Representative Brown stressed the need to allow the Department to manage effectively. Representative Mulder stated that the position will be deleted by the action of adopting Amendment DOC-1. He acknowledged that the Department could create the position again. He stressed that there are higher priorities. Representative Brown noted that the Department of Corrections has historically under served women. She stressed that this position is the women's superintendent. Representative Brown MOVED to adopt amended Amendment DOC-6 (copy on file). Amendment DOC-6 as amended would delete language in Amendment DOC-1 that would identify the Highland Mountain assistant superintendent position for elimination. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). (Tape Change, HFC 96-93, Side 1) Representative Brown referred to data and word processing. She emphasized the importance of these functions. She observed that a request authorizing federal funding to up grade the information system was not included in the operating budget. She expressed concern that the funding will not be included in the limited capital projects improvement legislation. Representative Mulder agreed with the need to revamp the Department of Corrections' information system. He maintained that it is appropriate to show the federal 15 funding in the capital budget. He noted that they are one time positions. He did not want the positions built into the operating base. He emphasized that federal funds can be added in the capital budget. Mr. Cole clarified that the three micro-network technician specialist positions will need to be retained in future budgets. Federal funding was located to retain these three positions for FY 97. The three analyst programmer positions that were deleted from the general fund portion of the Department's request are budgeted as interagency receipts. He explained that this would allow funding to be transferred from the Department of Public Safety if federal funding is received or allow the Department to bill internally. He noted that it is unlikely that funding will be located for the three deleted analyst programmer positions. In response to a question by Representative Brown, Representative Mulder clarified that the classification officer's position in the Office of Commissioner was restored. STATEWIDE Co-Chair Hanley noted that Municipal Assistance and State Revenue Sharing were not included in the House Finance Subcommittees' reports. He observed that Amendment Statewide-1 (copy on file) would include the Governor's proposed funding level for Municipal Assistance ($29,402.3 million dollars), State Revenue Sharing ($24,170.0 million dollars) and the Renters' Equivalency Rebate program ($300.0). He noted that the Governor's proposal reduces Municipal Assistance and State Revenue Sharing by 8 percent. The Senior Citizens' Property Tax Exemption was not funded in the FY 97 request. The Senior Citizens' Property Tax Exemption was funded at $1,163.0 million dollars in FY 96. Representative Martin MOVED to adopt Amendment Statewide-1. There being NO OBJECTION, it was so ordered. Co-Chair Hanley observed that after discussions with the Administration some on going capital appropriations were transferred to the operating budget. He noted that the inclusion of these items in the operating budget have created confusion. Amendment Statewide-2 would deny transfers of capital items to the operating budget. He noted that these items will be discussed in the capital budget. Representative Martin MOVED to adopt Amendment Statewide-2. Representative Navarre OBJECTED for purposes of discussion. 16 He observed that items were originally transferred from the operating budget to the capital budget in order to show reductions in the operating budget. He pointed out that the largest percentage of these items are for deferred maintenance in the Department of Transportation and Public Facilities. He stressed that these projects should be retained in the operating budget. He expressed concern that there will not be sufficient funding in the capital budget. He noted that deferred maintenance costs should be funded on an annual basis. Representative Brown maintained that the Department of Law's litigation budget should be in the operating budget. Co- Chair Hanley noted that specific cases under litigation by the Department of Law were transferred because they were not expected to continue past a specific amount of time. The concern was that these costs would become part of the Department's base. Co-Chair Hanley acknowledged that debate needs to continue regarding the appropriate funding source for these items. Representative Navarre WITHDREW his objection. Amendment Statewide-2 was adopted. ADJOURNMENT The meeting adjourned at 11:00 a.m. 17