HOUSE FINANCE COMMITTEE FEBRUARY 10, 1997 1:40 P.M. TAPE HFC 97 - 21, Side 1, #000 - #630. CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 1:40 P.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Grussendorf Representative Foster Representative Mulder Representative Moses was not present for the meeting. ALSO PRESENT Dan Spencer, Budget Analyst, Budget Review, Office of Management and Budget, Office of the Governor; Ken Bischoff, Director, Division of Administrative Services, Department of Public Safety; Keith Kelton, Director, Division of Facility Construction & Operation, Department of Environmental Conservation; Garrey Peska, Alaska State Hospital and Nursing Home Association (ASHNHA), Juneau; Betty Martin, Comptroller, Treasury Division, Department of Revenue. SUMMARY HB 102 An Act abolishing the Alaska Medical Facility Authority; and providing for an effective date. HB 102 was HELD in Committee for further discussion. HB 103 An Act repealing certain state funds and accounts and boards, limitations, and programs related to those funds and accounts; and providing for an effective date. HB 103 was HELD in Committee for further discussion. HB 104 An Act repealing the search and rescue fund; relating to expenditures for search and rescue activities; and providing for an effective date. 1 HB 104 was HELD in Committee for further discussion. HB 105 An Act relating to the unorganized borough national forest receipts program; and providing for an effective date. HB 105 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Community and Regional Affairs. HB 106 An Act relating to the municipal assistance program and the organization grant program; and providing for an effective date. HB 106 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Community and Regional Affairs. HB 107 An Act relating to water quality enhancement and water supply, wastewater, and solid waste systems grants; and providing for an effective date. HB 107 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Environmental Conservation. HB 108 An Act relating to the crime victim compensation program; and providing for an effective date. HB 108 was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Public Safety. CO-CHAIR GENE THERRIAULT explained that the packet of bills before the Committee had been consolidated as a result of work provided by Representative Martin as Chair of the Legislative Budget and Audit Committee (LBA). DAN SPENCER, BUDGET ANALYST, BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET (OMB), OFFICE OF THE GOVERNOR, advised that OMB foresaw only one problem with the proposed legislation, Section #1 of HB 104. Mr. Spencer added, OMB has spoken with each department regarding the legislation's impact. Also, the Department of Administration, Division of Finance has been consulted. Representative John Davies commented that he had written a 2 letter to each departmental commissioner regarding the legislative impacts. He indicated that a number of affected divisions had not been consulted. HB 104 had not been included on the original list and he requested that it be held in Committee until response was received from that Department. Co-Chair Therriault noted that it was his intent to report the bills out of Committee, although, if the Committee needed additional time to consider some of the legislation, action could be postponed until the following meeting. #HB104 HOUSE BILL 104 "An Act repealing the search and rescue fund; relating to expenditures for search and rescue activities; and providing for an effective date." Co-Chair Therriault stated that search and rescue activities are appropriated directly from the General Fund and not through the Search and Rescue Fund. That fund has remained empty and inactive. The legislation would remove the fund from statutes, as well as reference to the fund. KEN BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF PUBLIC SAFETY, encouraged the deletion of Section #1, which would make the legislation apply to all funding sources. In the Search and Rescue BRU component, there remains $280 thousand General Fund dollars, which would be subject to the limit imposed through the legislation. Many search and rescues exceed $2500 dollars. The Department's manual has established that individual personal in the field are authorized to spend up to $2500 dollars and then would be responsible to contact the person next in command to make additional spending decisions. Seldom do approvals go through to the Commissioner. Mr. Bischoff reiterated that the Department would prefer not to have the Commissioner in the loop of approval. Co-Chair Therriault asked if the Department was operating "around" the Search and Rescue Fund in order to avoid a limitation being imposed. Mr. Bischoff explained that the way a limitation was constructed, it would have applied to appropriations from the Search and Rescue Funds. The Department did not apply the limitation to straight general fund appropriations that were outside the realm of the fund. That action would be controlled through Department policy. The Department requests that all the language in Section #1 be deleted. Representative J. Davies MOVED to insert language on Page 1, Line 11, Section #2, "and AS 18.60.140". That language would delete Section #1. There being NO OBJECTION, it was adopted. 3 Co-Chair Therriault noted that if Section AS 18.60.140 and 145 were combined, HB 104 could be rolled over into HB 103. He recommended that Legal Services be consulted on that matter. Representative Grussendorf pointed out that the intent of the original language, allowed contributions and donations to the fund. Mr. Bischoff responded that a contribution would be distributed to a legislative revised program through action of the Legislative Budget and Audit Committee. Representative J. Davies requested the bill be held for additional clarification. HB 104 was HELD in Committee for further discussion. HOUSE BILL 108 "An Act relating to the crime victim compensation program; and providing for an effective date." Co-Chair Therriault stated that the Crime Victim Compensation Program had not received allocations from the fund established by statute. The inactive account was cleared by changing reference from "fund" to "program". Representative J. Davies added that both the Department and Division which the proposed legislation would affect agreed that passage of the legislation would not adversely affect them. Mr. Bischoff interjected that the Department was supportive of passage of HB 108. Representative Mulder MOVED to report HB 108 out of Committee with individual recommendations and with the accompanying fiscal note. HB 108 was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Public Safety. HOUSE BILL 107 "An Act relating to water quality enhancement and water supply, wastewater, and solid waste systems grants; and providing for an effective date." Co-Chair Therriault explained that the proposed legislation would remove from statutes the Water Quality Enhancement and Water Supply, Wastewater, and Solid Waste Systems Fund. The 4 fund is empty and has not been used to make appropriations to the program. KEITH KELTON, DIRECTOR, DIVISION OF FACILITY CONSTRUCTION & OPERATION, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, noted that the Department would not object to passage of the proposed legislation. The Department initially thought there could be a conflict in receiving federal authority to establish an Alaska Safe Water Drinking Fund. Upon further investigation, there would be no conflict to create that fund with passage of this legislation. Representative J. Davies asked how the fund would be established. Mr. Kelton replied, another statute created two years ago, AS 46.03.036, specifically authorizes the Department to administer that program. Representative Mulder MOVED to report HB 107 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 107 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Environmental Conservation (DEC). HOUSE BILL 105 "An Act relating to the unorganized borough national forest receipts program; and providing for an effective date." Co-Chair Therriault stated that there is no anticipated use for the Unorganized Borough National Forest Receipts Fund. Federal appropriations for the program go directly into the General Fund, leaving the special account inactive and empty. Passage of this legislation would clear the unused account from Statutes, by changing the reference from "fund" to "program". Mr. Spencer advised that the Department of Community and Regional Affairs (DCRA) was in support of HB 105. Representative Martin MOVED to report HB 105 out of Committee with individual recommendations and with the accompanying fiscal note. HB 105 was reported out of Committee with a "do pass" recommendation and with a zero fiscal noted by the Department of Community and Regional Affairs. HOUSE BILL 106 5 "An Act relating to the municipal assistance program and the organization grant program; and providing for an effective date." Co-Chair Therriault noted that although these programs remain operative, the Municipal Assistance and Organization Grant Funds are inactive and empty. Legislation would clear the "fund"(s) from statutes, and refer only to the "program"(s). Mr. Spencer noted that the Department of Community and Regional Affairs (DCRA) was in support of passage of HB 106. Representative Martin MOVED to report HB 106 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 106 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Community and Regional Affairs. HOUSE BILL 103 "An Act repealing certain state funds and accounts and boards, limitations, and programs related to those funds and accounts; and providing for an effective date." Mr. Spencer acknowledged that the proposed committee substitute (CS) had addressed the concerns of the Administration. Co-Chair Hanley MOVED that the work draft, CS HB 103 (FIN), Committee. There being NO OBJECTION, it was adopted. Co-Chair Therriault noted that the Administration's concern was to language on Page #5, Line #5, repealing AS 47.37.045. The Department recommended deleting the fund and leaving grant authority in the bill. The remaining section addresses grants to the juvenile justice package. Representative J. Davies requested that the legislation be held in order to determine the impact of rolling HB 104 into it. CS HB 103 (FIN) was HELD in Committee for further discussion. HOUSE BILL 102 6 "An Act abolishing the Alaska Medical Facility Authority; and providing for an effective date." Co-Chair Therriault noted that the legislation would follow up with last year's SB 136, which transferred the balance remaining in the Alaska Medical Facilities Authority Fund to the General Fund, thus, closing out all accounts pertaining to the Authority. By repealing AS 18.26, the obsolete Alaska Medical Facility Authority would be cleared from the Statutes. Mr. Spencer stated that the Department of Revenue (DOR) did not oppose the proposed legislation. GARREY PESKA, ALASKA STATE HOSPITAL AND NURSING HOME ASSOCIATION (ASHNHA), JUNEAU, noted that ASHNHA members request that HB 102 not be passed from Committee and that the Alaska Medical Facilities Authority not be abolished. The Authority was established in 1978 for the purpose of selling tax exempt revenue bonds with the proceeds being used for medical facility construction and improvements. Mr. Peska stated that in the past, the Authority had provided financing for two projects through bond sales. One was for the purchase of Careage North and the other was for remodeling Fairbanks Memorial Hospital; since then, there has been no activity in the Authority. Leaving the Authority on the "books" would provide a mechanism for selling tax exempt revenue bonds to finance medical facility construction and improvements in the future. Some facilities are municipally owned and they can sell revenue bonds through the municipalities and the State Municipal Bond Bank. Other non profit facilities that are not municipally owned could use this Authority for that purpose. He emphasized, there is no compelling reason to abolish the Authority. He continued, the Department of Revenue has stated that if bonds are sold by the Authority, they are not general or moral obligations of the State. They are secured by lease payments on medical facilities mortgaged to the Authority which would not impact the State's bond rating. Representative Mulder asked what communities might take advantage of the services offered. Mr. Peska replied that one good example would be St. Ann's Care Center in Juneau, a private, non profit care center, not affiliated with the municipality. The Authority would be the only mechanism available to sell tax exempt bonds to keep their costs down. 7 Co-Chair Therriault suggested that the municipality could loan out their bonding authority. Mr. Peska stated that would not be possible for any private, non profit medical facility. Co-Chair Therriault asked if there would be costs associated to the State for the Authority. BETTY MARTIN, COMPTROLLER, TREASURY DIVISION, DEPARTMENT OF REVENUE, advised that there would be no costs incurred until there was money in the fund. A one percent (1%) charge of the outstanding bonds would be collected each year for the medical facility. Co-Chair Therriault acknowledged that unless Committee members were compelled to move the legislation, he did not think it was essential to move HB 102 forward with the remaining legislation, given the possibility that the medical community could need that privilege in the future. Co-Chair Hanley requested that research be provided to determine if other avenues exist for the tax exempt financing. HB 102 was HELD in Committee for further discussion. Co-Chair Therriault distributed a work draft handout, #0- LS042\E, Chenoweth, 2/03/97, and memo from the University of Alaska with the suggested language on the management of UA Endowment Trust Funds. [Copy on file]. ADJOURNMENT The meeting adjourned at 2:20 P.M. 8