HOUSE FINANCE COMMITTEE March 26, 1997 8:25 A.M. TAPE HFC 97-80, Side 1, #000 - end. TAPE HFC 97-80, Side 2, #000 - end. CALL TO ORDER Co-Chair Hanley called the House Finance Committee meeting to order at 8:25 a.m. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Moses Representative Foster Representative Mulder Representative Grussendorf ALSO PRESENT Representative Williams; Frank Rue, Commissioner, Department of Fish and Game; Bob Clasby, Director, Division of Commercial Fisheries; Tracy Crammer, Exxon Valdez Trust Council, Department of Fish and Game; Tom Wright, Staff, Representative Ivan, Ginny Fay, Alaska Environmental Lobby; Ginger Patton, Fiscal Analyst, Legislative Finance Division; Michelle Brown, Commissioner, Department of Environmental Conservation. SUMMARY HB 75 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; and providing for an effective date." HB 75 was HELD in Committee for further consideration. HB 76 "An Act making appropriations for the operating expenses of the state's integrated comprehensive mental health program; and providing for an effective date." HB 76 was HELD in Committee for further consideration. HOUSE BILL NO. 75 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; and providing for an effective date." AMENDMENTS DEPARTMENT OF FISH AND GAME DEPARTMENT OF ENVIRONMENTAL CONSERVATION DEPARTMENT OF FISH AND GAME Representative Moses MOVED to adopt Amendment FG-1 (copy on file). Co-Chair Hanley OBJECTED. The amendment would add $165 thousand dollars to the Department of Fish and Game, Commercial Fisheries Management and Development, Fisheries Development. Representative Moses maintained that the appropriation amount should be ten times greater. Representative Grussendorf spoke in support of Amendment FG-1. He pointed out that the fisheries industry is the state's largest employer. He stressed that the amendment will increase economic development opportunities. Representative Martin questioned if the fishing market is over- saturated and over-developed. He noted the amount of jobs that go to out-of-state workers. Representative Moses stated that some fisheries are under- developed. Representative Grussendorf pointed out that there are fisheries other than salmon. He asserted that the market can absorb additional product. FRANK RUE, ACTING COMMISSIONER, DEPARTMENT OF FISH AND GAME asserted that the answer to the salmon problem is to find new markets and expand current markets, not to cut back on the product. He maintained that a reduction in salmon management would make the state less competitive. BOB CLAUSBY, DIRECTOR, DIVISION OF COMMERCIAL FISHERIES observed that the amendment would impact Cook Inlet, Northern Peninsula, and Bristol Bay salmon. The amendment would also have an effect on projects by non-profits and federal agencies to rehabilitate areas with depressed salmon populations. He maintained that the low price of salmon is a short-term trend. He pointed out that pink salmon inventory is almost all gone. He asserted that, of all fishery resources, salmon provides the greatest benefits to Alaska's economy. Representative Martin asked why the salmon fisheries should be subsidized. Commissioner Rue emphasized that the program helps the Department manage for maximum yield of the species. He maintained that the salmon industry pays for itself. A roll call vote was taken on the MOTION to adopt Amendment FG-1. IN FAVOR: Davies, Grussendorf, Moses, Foster OPPOSED: Davis, Kelly, Kohring, Martin, Mulder, Therriault, Hanley The MOTION FAILED (4-7). Representative Grussendorf MOVED to adopt Amendment FG-2 (copy on file). Amendment FG-2 would add $115 thousand dollars to the Division of Subsistence. Representative Grussendorf noted that subsistence management is one of the biggest issues facing the state. He pointed out that the Division of Subsistence needs to develop baseline data. He noted the number of subsistence issues before the Board of Fish. He stressed that the Board of Fish will have to rule conservatively on subsistence issues if sufficient data is not available. Commissioner Rue pointed out that 40 percent of the Subsistence Division's general fund support has been eliminated. He stated that the amendment would allow the Boards of Fish to provide for subsistence opportunity without unduly restricting other opportunities. He stressed that the state system tries to accommodate all users. He stated that without good subsistence data other users may be unduly restricted, enough resource for subsistence may not be provided, and subsistence users may become disillusioned with the state system. He observed that disillusioned subsistence users will look to the federal government. Representative Foster observed that the Subsistence Division's Nome office was eliminated. He noted that the Division lacks a rural presence. Co-Chair Hanley explained that the intent of creating a Rural Subsistence BRU is to encourage a rural presences. Representative Grussendorf stressed the need to gain the support of rural users. Commissioner Rue emphasized that the Department's intent is to increase its rural presence. A roll call vote was taken on the MOTION to adopt Amendment FG-2. IN FAVOR: Foster, Davies, Grussendorf, Moses OPPOSED: Davis, Kohring, Martin, Mulder, Therriault, Hanley Representative Kelly was absent from the vote. The MOTION FAILED (4-6). Representative Foster MOVED to adopt Amendment FG-3 (copy on file). Amendment FG-3 as revised by Representative Foster would add $94.2 thousand dollars to the Rural Subsistence BRU and delete the same amount from the Office of the Commissioner. He noted that only 2 of 17 positions in the Subsistence Division are in rural areas of the state. TOM WRIGHT, STAFF, REPRESENTATIVE IVAN IVAN spoke in support of the amendment. Representative Martin questioned the wisdom of reducing the Commissioner's staff. He pointed out that subsistence is a statewide issue. He asked why existing positions should not be transferred. Representative Grussendorf spoke in support of additional subsistence funding, but expressed concern with the funding source. He noted that the position that would be eliminated coordinates subsistence, salmon marketing and the hatcheries. The position also acts as a legislative liaison. Commissioner Rue spoke against the amendment. He stressed the need for a coordinated position on issues before the legislature. He stated that the function will need to be continued. He stressed that the amendment will have a ripple down effect in the Department. Co-Chair Hanley pointed out that there are other Departments that have less positions in their commissioner's office. Representative Grussendorf pointed out the importance of the Department of Fish and Game to the public. He maintained that, due to public input, the Department of Fish and Game needs a higher level of management than some other departments. Representative Grussendorf spoke in support of changing the funding source. Representative Kohring spoke in support of the amendment. A roll call vote was taken on the MOTION to adopt Amendment FG-3. IN FAVOR: Foster, Kelly, Kohring, Mulder, Therriault, Hanley OPPOSED: Davies, Davis, Grussendorf, Martin, Moses The MOTION PASSED (6-5). Representative Foster MOVED to adopt Amendment FG-4 on behalf of Representative Williams (copy on file). Amendment FG-4 would delete $96.1 thousand dollars for an assistant director in the Department of Fish and Game/Commercial Fisheries Management and Development; and add the same amount in Commercial Fisheries Management and Development/Special Projects for special projects relating to the Southeast sea urchin fishery. REPRESENTATIVE BILL WILLIAMS spoke in support of Amendment FG-4. He explained that the amendment will assist the Southeast sea urchin fishery. An assistant director's position would be deleted from Juneau. Commissioner Rue spoke in support of funding for the sea urchin fishery. He pointed out that the assistant director position has already been deleted. He stated that funding would have to come from another area of the Commercial Fisheries Management and Development component. He observed that this component was reduced by $500 thousand dollars in FY 98. (Tape Change, HFC 97-80, Side 2) Mr. Clausby emphasized the need to look at additional opportunities for funding new fisheries. He noted that there is a diver's task force addressing the issue of funding the sea urchin fisheries. He estimated that $150 thousand dollars a year is needed to manage the Southeast sea urchin fisheries. He expressed concerns that an existing program would be reduced to fund a new program. He observed that six senior positions have been cut in the past five years. He stressed that the management of subsistence, commercial and personal use fisheries is starting to unravel. He stated that more cuts in upper level management will result in serious consequences. Representative William noted that the Bering Sea/Bristol Bay king crab fisheries is open and requires additional funding. He noted that the Aleutians sea urchin fisheries could be developed. A roll call vote was taken on the MOTION to adopt Amendment FG-4. IN FAVOR: Davies, Grussendorf, Moses, Davis, Foster, Kelly, Kohring, Martin, Mulder, Therriault, Hanley OPPOSED: 0 The MOTION PASSED (11-0). DISCLOSURES Co-Chair Hanley disclosed that he commercial fishes in Bristol Bay. DEPARTMENT OF ENVIRONMENTAL CONSERVATION Representative Kohring noted that Amendment DEC-1 was proposed by the Governor. The amendment would approve $1,655.9 million dollars in Exxon Valdez Oil Settlement funds for projects approved by the Exxon Valdez Oil Spill Trustee Council. TRACY CRAMER, EXXON VALDEZ TRUSTEE COUNCIL explained that the Governor's budget included a front section appropriation to carry forward the RPL that was approved by the Legislative Budget and Audit Committee from August 1997 to June 30, 1998. She observed that the budget amendment deleted the front section carry-forward language and requested that the authority to receive and expand be included in the back section of the budget. She noted that the two projects addressed by the amendment are currently underway. The amendment would allow these projects to continue into fiscal year 98. Co-Chair Hanley observed that the intent is to move items to the back section in order to better track projects. GINNY FAY, SPECIAL ASSISTANT, DEPARTMENT OF ENVIRONMENTAL CONSERVATION discussed the projects contained in the amendment. She noted that the amendment continues a Kodiak Island Master Waste Management Plan to analyze waste entering the spill impacted area in order to measure impact and speed recover. The other project is the Chenega Shoreline Residual Oil Reduction project to remove residual oils from the beaches near the village of Chenega. Representative Kohring MOVED to adopt Amendment DEC-1 (copy on file). There being NO OBJECTION, it was so ordered. Representative Kohring explained that Amendment DEC-2 corrects a technical error (copy on file). GINGER PATTON, FISCAL ANALYSTS, LEGISLATIVE FINANCE DIVISION explained that the amendment corrects an error she made in recording the Subcommittee's reduction. Representative Davies summarized that the intent of the Subcommittee was to delete a position in the Animal Industries component. The fiscal analyst mistakenly made the deletion in the Seafood and Sanitation component. To correctly reflect the Subcommittee's action a position needs to be added back into the Seafood and Sanitation Inspection component and a position deleted from the Animal Industries component. Ms. Patton agreed that the Animal Industries component is over- funded by $101 thousand dollars. Co-Chair Hanley pointed out that the $101. thousand dollars deletion in the Animal Industries component should not be represented by brackets. Representative Kohring MOVED to Amend, Amendment DEC-2, by reducing the reduction to $50.6 thousand dollars and to reinstate an inspector position. He explained that the facility operator has estimated that the position could be operated part-time. BARBARA FRANK, BUDGET ANALYST, DEPARTMENT OF ENVIRONMENTAL CONSERVATION explained that the FDA requires that an inspector be present during processing. She noted that the operator will only be able to operate when the inspector is on site. She clarified that the amendment addresses a slaughtering facility. Co-Chair Therriault noted that animals are slaughtered in batches. Ms. Frank noted that the Department's calculation was based on the operator's estimate of production. She added that the Department has to pay for time the position spends in training. There being NO OBJECTION, the amendment to Amendment DEC-2 was adopted. There being NO OBJECTION, Amendment DEC-2 was adopted as amended. Co-Chair Therriault MOVED to adopt Amendment DEC-3 (copy on file). Amendment DEC-3 would add $199 thousand general fund dollars and $264.7 thousand dollars in general fund program receipts to the Department of Environmental Conservation, Environmental Health, Solid Waste. He explained that the intention is to retain state primacy in the solid waste program. He observed that dumping facilities would be more expensive to operate under the management of the federal Environmental Protection Agency. Representative Kohring OBJECTED for purposes of discussion. He emphasized the need to make major reductions in the state's operating budget. He observed that the Subcommittee reduced this component by $800 thousand dollars. After discussions with the Department it was ascertained that the state could not administer the program with the remaining funding. The Subcommittee then voted to delete the remaining funding. MICHELLE BROWN, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION agreed that the state could not run the program with a $800 thousand dollar reduction. She stated that additional funding contained in Amendment DEC-3 and proposed by other amendments may allow the state to argue for state primacy. Representative Kohring suggested that the program be run out of program receipts. He noted that municipalities would have to pay for the program. Co-Chair Hanley observed that the federal government will take over the program if state funding is eliminated. He stressed that the federal government does not have the flexibility that the Department of Environmental Conservation would have. He estimated that communities would pay substantially more for the program if it is managed by the federal government. He added that the program also manages rural sanitation. He observed that urban communities would pay to support rural communities. He stated that a mixed approach would be more equitable. Representative Kohring spoke in support of a mixed approach, utilizing program receipts. Co-Chair Therriault observed that the Department can only assess fees to urban landfills. He stressed that if the program is only supported by fees, then urban rates will go up to support facilities in rural areas. He maintained that the state can negotiate with the federal government to maintain primacy. In response to a question by Representative Grussendorf, Commissioner Brown explained that the state does not have a hazardous waste program. The state assists communities in the operation of household hazardous waste pick-ups. She noted that if the state's solid waste program is eliminated that communities will have to abide by federal standards. She observed that no state has ever not run a solid waste program. She noted that citizen suits could occur if the state's program is eliminated. If the program is reduced there would be a reduced effort toward community household waste removal. She added that the program regulates industrial waste. She explained that the federal government would not regulate industrial waste. Industrial waste will not be regulated if the state's program is eliminated. Co-Chair Hanley observed that the intent is to provide enough funding to allow the retention of state primacy. Representative Kohring stressed that the effect of federal regulation of the solid waste program is unknown. He questioned the effect of federal regulation of the hazardous waste program. Commissioner Brown stated that federal regulation of the hazardous waste program has resulted in more enforcement and less technical assistance. The cost to operators has increased. She reiterated that less flexible federal standards will result in an increase in cost to the communities. Representative Kohring maintained that the program should be paid by the users of the program. He spoke in support of Amendment DEC- 3 as part of a phase-out approach. There being NO OBJECTION, Amendment DEC-3 was adopted. Co-Chair Therriault MOVED to adopt Amendment DEC-4 (copy on file). He explained that funding was received from the Alaska Pulp Company for clean-up at the Sitka mill site. This funding was deposited into the Mitigation Account and expended from the Oil/Hazardous Prevention/Response Fund. He observed that this has freed general funds to be used for Community Health/EMS grants. Co-Chair Therriault MOVED to AMEND Amendment DEC-4 by transferring $226.3 thousand dollars from EMS grants to Environmental Health Solid Waste. There being NO OBJECTION, it was so ordered. There being NO OBJECTION, Amendment DEC-4 was adopted as amended. HB 75 and HB 76 were HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 10:02 a.m.