HOUSE FINANCE COMMITTEE April 14, 1997 1:50 P.M. TAPE HFC 97-94, Side 1, #000 - end. TAPE HFC 97-94, Side 2, #000 - end. CALL TO ORDER Co-Chair Hanley called the House Finance Committee meeting to order at 1:50 p.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 Annalee McConnell, Director, Office of Management and Budget, Office of the Governor; Dan Spenser, Senior Analyst, Office of Management and Budget, Office of the Governor; Guy Bell, Director, Division of Administrative Services, Department of Commerce and Economic Development; Pat Ladner, Alaska Science and Technology Foundation; Janet Clark, Director, Division of Administrative Services, Department of Health and Social Services; Royce Weller, Analyst, Office of Management and Budget, Office of the Governor; SUMMARY SB 83 "An Act making an appropriation for management fees for the constitutional budget reserve fund (art. IX, sec. 17, Constitution of the State of Alaska); and providing for an effective date." HCS CSSB 83 (FIN) was reported out of Committee with a "do pass" recommendation. SENATE BILL NO. 83 "An Act making an appropriation for management fees for the constitutional budget reserve fund (art. IX, sec. 17, Constitution of the State of Alaska); and providing for an effective date." Members were provided with amendments 1 - 12 (copies on file). Co-Chair Hanley explained that Amendment 1 would appropriate a total of $300 thousand dollars to the Department of Natural Resources for the veterans' land discount program. He noted that $20 thousand dollars of this sum is earmarked for administrative costs. The Senate reduced this appropriation by $30 thousand dollars. This restores the appropriation to the Governor's requested level. Co-Chair Hanley MOVED to adopt Amendment 1. There being NO OBJECTION, it was so ordered. Co-Chair Hanley explained that Amendment 2 restores funding for fire suppression to the Governor's requested amount of $3,788,300 million dollars. The Senate reduced the appropriation by $120 thousand dollars. Co-Chair Hanley MOVED to adopt Amendment 2. There being NO OBJECTION, it was so ordered. Co-Chair Hanley explained that Amendment 3 would restore $100 thousand dollars for the Old Eagle School site. The Senate deleted this appropriation. Co-Chair Hanley summarized that failure to appropriate this amount could result in greater expense to the state. Co-Chair Hanley MOVED to adopt Amendment 3. There being NO OBJECTION, it was so ordered. Co-Chair Hanley explained that Amendment 4 would appropriate $115 thousand dollars for on going litigation costs of the Department of Fish and Game. The Department of Fish and Game will have to absorb this cost in their budget if it is not appropriated. Co-Chair Hanley MOVED to adopt Amendment 4. There being NO OBJECTION, it was so ordered. Co-Chair Hanley explained that Amendment 5 would split the difference between the House and Senate for the Public Defender Agency. The House version reflected the Governor's request. The Senate cut the request substantially. He acknowledged that the Senate would prefer that this funding not be restored. He observed that $85 thousand dollars would be added. Co-Chair Hanley MOVED to adopt Amendment 5. Representative Kohring noted that this item was reduced in the FY 97 budget to reflect the fact that Kotzebue voted to prohibit the sale and exportation of alcohol. There being NO OBJECTION, Amendment 5 was adopted. Co-Chair Hanley discussed Amendment 6. He explained that the House version of the supplemental, CSHB 113 (FIN), did not include the Governor's full leasing request of $993.7 thousand dollars. The Senate version, CSSB 83 (FIN)am, includes this amount. He observed that there is a $1.6 million dollar surplus from the longevity bonus grant appropriation available. The amendment would fully fund the leasing component using $1.3 million dollars of the surplus longevity bonus funds. In addition, $243.3 thousand dollars would be used for the settlement of ABBA, Inc v. State and $104 thousand dollars would be used for costs associated with adjudicatory claims relating to the Department of Environmental Conservation laboratory. Co-Chair Therriault summarized that the amendment is a reappropriation. Co-Chair Hanley noted that all three items would be fully funded using surplus longevity bonus funds. Co-Chair Therriault asked if FY 97 actual leasing costs have been determined. Co-Chair Hanley noted that the Committee has not received a leasing amendment. He explained that the supplemental contained the FY 98 lease funding level. He observed that the Administration has suggested that the FY 98 level is $1 million dollars short of the anticipated need. Co-Chair Hanley explained that the appropriation for longevity bonus payments is $1.6 million dollars more than is needed. Co-Chair Hanley MOVED to adopt Amendment 6. There being NO OBJECTION, it was so ordered. Co-Chair Hanley explained that Amendment 7 would appropriate $200 thousand dollars for emergency communications equipment to the Department of Health & Social Services. He observed that this item was included in the Governor's original request. Co-Chair Hanley MOVED to adopt Amendment 7. There being NO OBJECTION, it was so ordered. Representative Martin explained that Amendment 8 would grant $50 thousand dollars to the Department of Military and Veterans Affairs to work with the Air Force Association on a statewide celebration of the 50th university of the United States Air Force in Alaska. He observed that the total cost is $250 thousand dollars. Private enterprise, the federal government and state and local governments are participating. Representative Martin MOVED to adopt Amendment 8. There being NO OBJECTION, it was so ordered. Representative Foster MOVED to adopt Amendment 9. He explained that Amendment 9 would increase the appropriation for an aeromagnetic study to identify natural gas deposits in the Holitna Basin from $650 thousand dollars to $800 thousand dollars. Co-Chair Hanley observed that this project was added in the Senate. He noted that the project was included in the proposed FY 98 capital budget. Inclusion in the supplemental budget would allow the project to start earlier. Co-Chair Therriault noted that the amendment augments existing projects. Co-Chair Hanley noted that there have been previous appropriations for similar projects in the capital budget. There being NO OBJECTION, Amendment 9 was adopted. Co-Chair Hanley discussed Amendment 10. He noted that the Mental Health Trust Authority has been working with the Department of Health & Social Services on the relocation of a mental health center in Aniak. The amendment would appropriate $43.5 thousand dollars in mental health trust authority receipts. Co-Chair Hanley MOVED to adopt Amendment 10. There being NO OBJECTION, it was so ordered. Co-Chair Hanley discussed Amendment 11. He noted that the amendment would appropriate $550 thousand dollars to the Department of Community and Regional Affairs for payment as a grant to Arctic Power for education efforts to open the Costal Plain of the Arctic National Wildlife Refuge for oil and gas exploration and production. The amendment also appropriates $100 thousand dollars to the Office of the Governor to promote development on the North Slope. This would continue the efforts of Arctic Power as a capital project. In FY 97, some of this money was used for oil and gas development. The Administration's request appropriated $50 thousand dollars less to Arctic Power and $50 thousand dollars more to the Office of the Governor. Co-Chair Hanley MOVED to adopt Amendment 11. There being NO OBJECTION, it was so ordered. Amendment 12 by Representative Kelly was withdrawn. The amendment would have included funding for the Fairbanks Youth Facility. Co- Chair Hanley observed that the amendment would appropriate funding for security measures. He noted that the Senate included funding for security measures at the McLaughlin Youth Center. He stressed that additional information is needed. He stated that he would consider both proposals during the capital process. Co-Chair Hanley MOVED to delete Section (k) on page 5, line 22. This deletes the sum of $838.8 thousand dollars to the Department of Health & Social Services for improved security at the McLaughlin Youth Center. He stressed that the number of juvenile beds needs to be considered. He reiterated that security and additional bed needs will be considered during the capital process. There being NO OBJECTION, it was so ordered. Representative Martin referred to Section 2, page 2. He observed that Section 2 dedicates $5 million dollars from the Alaska Science and Technology Foundation and $5 million dollars in corporate receipts to the Aerospace Development Corporation. Co-Chair Hanley stressed that the Alaska Science and Technology Foundation funding is contingent on receipt of $18 million dollars from the federal government. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR explained that the appropriation would still be contingent on receipt of $18 million dollars in federal proceeds. ROYCE WELLER, ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR observed that the corporate receipts could be Air Force receipts or earnings from the endowment. He clarified that $5 million dollars in Air Force receipts were already approved by the Legislative Budget and Audit Committee. The appropriation contains an additional $5 million dollars in corporate receipt authorization to allow the Aerospace Development Corporation to secure additional funds. Co-Chair Therriault understood that corporate receipts from the Air Force could only be used for specific construction of the launch complex. He added that the total project cost is $28 million dollars. Co-Chair Therriault clarified that the Alaska Industrial Development and Export Authority (AIDEA) has withdrawn from the project due to expected financing from the federal government. Alaska Science and Technology Foundation funding will not be released until receipt of federal funding. Ms. McConnell provided members with additional amendments by the Administration as contained in a memorandum to the House Finance Committee (copy on file). She noted that a number of the Administration's concerns were addressed by the adoption of previous amendments. She noted that funds were partially restored to the Public Defender Agency. She emphasized that this component is still under-funded. Ms. McConnell observed that the House Finance Committee utilized surplus funding from the longevity bonus grants program. She stated that the Administration proposed to use this funding to offset the needed supplemental increase for the Public Defender Agency and to fund the power cost equalization appropriation. Ms. McConnell discussed the Administration's amendment for Public Assistance: * Delete sections 10(f) and 10(g), DEPARTMENT OF HEALTH AND SOCIAL SERVICES, reduction of $300,000 to Public Assistance Admin/Eligibility determination. * Add to sec. 10, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, a new subsection as follows: The unexpended and unobligated balance of the appropriation made in sec. 30, ch. 117 SLA 1996, page 31, line 18 (Public Assistance Administration, $39,769,900) lapses into the general fund on June 30, 1998. Ms. McConnell observed that the Senate deleted $300 thousand dollars from the Division of Public Assistance. She noted that 19 field staff positions would be eliminated in FY 98. She asked that the lapse date be extended to allow this funding to be used in FY 98. Representative Martin noted that the federal government is anticipating a 20 to 40 percent reduction in welfare programs. JANET CLARK, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES acknowledged that many states have had decreases in cash payments for public assistance. She emphasized that many of these states have experienced large increases in child care and work programs. She stressed that there has been a reduction in the cash benefit side of the state's welfare reform budget. The state's welfare reform program begins July 1, 1997. Co-Chair Hanley stated that he preferred to wait until the Conference Committee on the Operating Budget meets to decided if funding should be extended. Ms. McConnell noted that the Administration requests that sections 11 and 13 be amendment to reflect additional judgments and claims: * Amend sec. 11(b), DEPARTMENT OF LAW, judgments and claims, at page 6 line 10 as follows: General fund [$1,347,589] $ 1,532,3 14 This reflects two additional claims relating to McCabe v. State. * Amend sec. 13, MISCELLANEOUS CLAIMS, at page 7 line 11 as follows: Transportation and Public Facilities [903] 928 This reflects an additional miscellaneous claim submitted by the Department of Transportation and Public Facilities. Ms. McConnell discussed conditional language adopted by the Senate regarding transfer of the Perseverance Trail to the City and Borough of Juneau. The Administration would delete this language and add a new section as follows: * Delete sec. 14(b), Perseverance Trail with conditional language. * Add new sec. 15(m), DEPARTMENT OF NATURAL RESOURCES, as follows: (m) The sum of $120,000 is appropriated from the general fund to the Department of Natural Resources for emergency repairs to the Perseverance Trail. Ms. McConnell observed that this is identical to the language in HB 113 as passed by the House. This removes the conditional language added by the Senate requiring the City and Borough of Juneau to take over the trail. She maintained that, "as with our roads, it's not appropriate to insist that a local government take over a trail when we know there are major repairs still needed." She stressed that it is unfair to ask communities to take over maintenance if conditions are unsafe. Representative Grussendorf spoke in support of the Administration's request. He observed that there is a several hundred foot drop on Perseverance Trail. He MOVED to delete the conditional language on page 7, lines 17 -23. He emphasized that the city of Juneau would also be required to take over maintenance of several other trails. Ms. McConnell expressed support for intent language directing the Administration to talk to communities about local control of trails and roads. (Tape Change, HFC 97-94, Side 2) Representative Mulder spoke against the deletion. He stressed that there are very few state operated trails within cities. He maintained that the conditional language is needed as a "hammer". Ms. McConnell emphasized that the trail is a state liability. She observed that someone has died on the trail. If the City does not take over the trail the liability will rest with the state. Representative Martin spoke in support of a letter of intent. He emphasized that legislation cannot be written through an appropriation bill. A roll call vote was taken on the MOTION to delete the conditional language on lines 17 - 23, page 7. IN FAVOR: Grussendorf OPPOSED: Moses, Davis, Foster, Kelly, Kohring, Martin, Mulder, Hanley Co-Chair Therriault and Representative Davies were absent from the vote. The MOTION FAILED (1-8). Co-Chair Hanley MOVED to adopt the amendment to Section 11(b): * Amend sec. 11(b), DEPARTMENT OF LAW, judgments and claims, at page 6 line 10 as follows: General fund [$1,347,589] $ 1,532,3 14 There being NO OBJECTION, it was so ordered. Co-Chair Hanley MOVED to adopt the amendment to Section 13: * Amend sec. 13, MISCELLANEOUS CLAIMS, at page 7 line 11 as follows: Transportation and Public Facilities [903] 928 There being NO OBJECTION, it was so ordered. PAT LADNER, ALASKA SCIENCE AND TECHNOLOGY FOUNDATION testified via the teleconference network in regards to section 2. He agreed that the $5 million dollar appropriation from the Foundation to the Alaska Aerospace Development Corporation Revolving Loan Fund would be contingent on the federal appropriation. Mr. Ladner explained that the additional authorization for $5 million dollars in corporate receipts would cover the interest earned on the federal appropriation and other funding, and any additional grants or contracts that may be received. He clarified that a $4.9 million dollar grant was received from NASA. This amount has already been approved through the Legislative Budget and Audit Committee. He noted that the Kodiak Launch project's total cost is estimated at $28 million dollars. Additional authorization of $5 million corporate receipt dollars was added. Co-Chair Hanley expressed concern with the addition authorization of $5 million corporate receipt dollars. Mr. Ladner stressed that the Kodiak Launch project does not require the additional $5 million dollars in corporate receipts. Co-Chair Hanley MOVED to delete $5 million dollars in corporate receipt authorization on page 2, line 23 and reflect the deletion in line 17 by reducing "$28" million dollars and inserting "23" million dollars. He observed that the Foundation can go to the Legislative Budget and Audit Committee for additional authorization. Ms. McConnell noted that the Senate has developed language for the operating budget that would restrict authorization by the Legislative Budget and Audit Committee. Co-Chair Hanley acknowledged that this issue needs to be addressed. There being NO OBJECTION, $5 million dollars in corporate receipt authorization was deleted on page 2, line 23 and reflected in line 17. Co-Chair Hanley provided members with a letter from the Department of Commerce and Economic Development, dated 4/8/97 (copy on file). The letter requests that an additional section be adopted to add $300 thousand dollars in federal receipts from the United States Department of Commerce to the State Department of Commerce and Economic Development to capitalize the Small Business Economic Development Revolving Loan Fund. Ms. McConnell spoke in support of the amendment. She observed that the money is available. No additional match is needed. Co-Chair Hanley MOVED to adopt an amendment of an additional section to add $300 thousand dollars in federal receipts from the United States Department of Commerce to the State Department of Commerce and Economic Development to capitalize the Small Business Economic Development Revolving Loan Fund. There being NO OBJECTION, it was so ordered. Ms. McConnell clarified that the Administration's request for Arctic Power was $495 thousand dollars. Ms. McConnell expressed concern that the appropriation in to Section 5, page 3 would be for FY 97.. She observed that Section 5 appropriates $1 million dollars in federal receipts for contract beds in community residential centers and out-of-state contract beds. The Administration requested that this appropriation be spent in FY 98. She observed that this amount will have to be spent in two months. Representative Mulder explained that the intent is to make a stronger case that the federal funds would not be used to supplant general funds. The federal funds can be used for the purchase of new beds. Ms. McConnell stressed that the Administration's preference is to extend the appropriation through FY 98. Representative Mulder noted that federal funds were used in the FY 98 budget for the purchase of new beds. The appropriation will be used to purchase new beds in FY 97 that will be continued with federal funding in FY 98. Representative Martin MOVED to report HCS CSSB 83 (FIN) out of Committee with individual recommendations. There being NO OBJECTION, it was so ordered. HCS CSSB 83 (FIN) was reported out of Committee with a "do pass" recommendation. ADJOURNMENT The meeting adjourned at 3:20 p.m.