GENERAL SUBJECT(S): OVERVIEW: Department of Natural Resources Military and Veterans Affairs Department of Revenue The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 21st Legislative Session, contact 465-2156. After the 21st Legislative Session they will be available through the Legislative Library at 465- 3808. Time Meeting Convened: 1:36 p.m. Tape(s): HFC 99-4, Side 1 & 2 HFC 99-5, Side 1 PRESENT: X Representative G. Davis X Co-Chair Therriault X Representative Foster X Co-Chair Mulder X Representative Grussendorf X Representative Austerman X Representative Kohring X Representative Bunde X Representative Moses X Representative J. Davies X Representative Williams ALSO PRESENT: REPRESENTATIVE SMALLEY; REPRESENTATIVE MURKOWSKI; DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE; ADJUTANT GENERAL PHILLIP E. OATES, COMMISSIONER, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS; COLONEL GEORGE CANNELOS, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS; NICO BUS, ADMINSTRATIVE SERVICES MANAGER, DIVISION OF SUPPORT SERVICES, DEPARTMENT OF NATURAL RESOURCES AND MILITARY AND VETERANS AFFAIRS; CAROL CARROLL, DIRECTOR, DIVISION OF SUPPORT SERVICES, MILITARY AND VETERANS AFFAIRS AND DEPARTMENT OF NATURAL RESOURCES; JOHN T. SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES; WILSON L. CONDON, COMMISSIONER, DEPARTMENT OF REVENUE LOG SPEAKER DISCUSSION 000 BEGIN TAPE 4, SIDE 1 38 Co-Chair Mulder Convened the committee at 1:36 p.m. MILITARY AND VETERANS AFFAIRS 55 ADJUTANT GENERAL PHILLIP E. OATES, COMMISSIONER, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS Introduced staff of the Department of Military and Veterans Affairs. Provided members with an overview of the Department of Military and Veterans Affairs FY00 budget (see attached). 198 Commissioner Oates Jobs and economic development are spread throughout the state. 225 Commissioner Oates Reviewed the attachment, page 2. 311 Commissioner Oates Total impact of department is $245 million dollars each year. 353 Commissioner Oates Reviewed page 4. 361 Commissioner Oates Reviewed page 4a, Highlights. 445 Commissioner Oates Reviewed page 5, which demonstrated the impact of downsizing the department. 502 Commissioner Oates Reviewed page 6 of the attachment, Future Prospects of the Department of Military and Veterans Affairs. 561 Commissioner Oates Reviewed page 7, Organization. Noted that almost every position has a combination of state and federal funding. 709 Commissioner Oates Reviewed page 8, Army National Guard. 788 Commissioner Oates Reviewed page 9, Air National Guard. 809 Commissioner Oates Reviewed page 10, Emergency Services. 841 Commissioner Oates Reviewed page 11, Alaska Youth Challenge. 863 Commissioner Oates Reviewed page 12, Counter Drug Program, Alaska Naval Militia, and Office of Veteran Affairs. 880 Commissioner Oates Reviewed page 13. 949 Representative Foster Referred to page 7, asked for names of directors. 956 Commissioner Oates Named directors. 1018 Representative J. Davies Asked if page 7 contains net positions. 1032 Commissioner Oates Yes, net positions. Do not see a downsizing of the active air force. 1081 COLONEL GEORGE CANNELOS, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS Provided additional information on NORAD, page 7. 1107 Co-Chair Mulder Asked a question regarding state/federal support for the Challenge program. 1123 CAROL CARROLL, DIRECTOR, DIVISION OF SUPPORT SERVICES, MILITARY AND VETERANS AFFAIRS Explained that the program is funded 40 percent state and 60 percent federal. 1199 Co-Chair Mulder Asked status of the Office of Veterans Affairs. 1253 Commissioner Oates 1 new position funded in the Department of Military and Veterans Affairs is 100 percent state. 1277 Co-Chair Therriault Referred to page 14, adjustments. 1286 Ms. Carroll FY00 is $9,000 dollars above FY99. The difference is due to oil and hazardous waste funding that is being passed through the Department of Military and Veterans Affairs from the Department of Environmental Conservation. Further explained page 14. 1363 Co-Chair Mulder Noted that there is a fund shift to the capital budget. 1379 Ms. Carroll Federal funds are being shifted to the capital budget. 1403 Co-Chair Mulder Net result is one less position? 1435 Commissioner Oates There is a new position to work on Y2K issues. 1456 NICO BUS, ADMINSTRATIVE SERVICES MANAGER, DIVISION OF SUPPORT SERVICES, MILITARY AND VETERANS AFFAIRS Explained that there is one less position overall. Y2K will be paid from Governor's Office. Explained other position shifts. Commissioner Oates Explained leave. DEPARTMENT OF NATURAL RESOURCES 1530 JOHN T. SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES Reviewed Department of Natural Resources' FY00 budget. Commissioner Shively Noted that the economy has done reasonably well. Observed that the department has set goals and missions. 1620 Commissioner Shively Discussed Y2K. The department is in good shape in regards to preparations. Most of staff is in Anchorage. They will be moving to the Bank of America building 1670 Commissioner Shively Discussed electronic commerce. Receives information from industry. 1712 Commissioner Shively Discussed land sales. 1729 Commissioner Shively Discussed Recorder's Office. Workload has increased dramatically. New system is being developed. 1769 Commissioner Shively Discussed oil and gas leasing and sales. Cook inlet areawide sale is scheduled for April. 1823 Commissioner Shively Discussed timber sales. Timber sales have been small. Can't compete with federal supplies. 1849 Commissioner Shively Discussed mining sales. 1872 Commissioner Shively Discussed pipeline office. The state will be involved with TAPS negotiations. 1922 Commissioner Shively Discussed park user fees. They have increased approximately 5%. Deferred maintenance the biggest problem. 1934 Commissioner Shively First 3 agriculture parcels were sold this year. Other sales are expected. The state still owns agriculture businesses, such as the creamery. Need to look at privatizing. 1979 Commissioner Shively Asking for 4 major increments. One position each for Oil and Gas, staff for electronic commerce, mining and the Recorder's Office. Staff in the Recorder's Office would be funded from fees. 2047 Co-Chair Mulder Referred to the creamery Commissioner Shively No state funds in the creamery. 2088 Commissioner Shively Location in Anchorage is not good. 2117 Representative Bunde Expressed concern that the recorder's Office is having serious problems. Asked if there have been changes. 2179 Commissioner Shively Trying to make changes. Believe new system will be able to have verification with in 1 to 2 days. Discussed efficiencies in new system. 2268 Representative Bunde Questioned if Recorder's Office should be privatized. 2282 Representative G. Davis Referred to problems with new parks being manned. 2297 Commissioner Shively Problem that the department cannot manage them well. Hard time finding concessionaires. 2369 Co-Chair Mulder Set priorities for parks. Co-Chair Mulder Look at possible reductions for FY99? Commissioner Shively Need to keep in mind that the department's budget has had decreases while the department has increased. Recommended that statutes need to be repealed if reductions are going to occur. Commissioner Shively In response to a question by Co-Chair Therriault stated that they would have a list of recommendations for reductions by next week. 178 Co-Chair Therriault Noted that the Department of Natural Resources has been good about making suggestions for possible reductions. 232 Representative Williams Asked if the Administration had looked at combining agencies? Commissioner Shively Pointed out that the Department of Natural Resources manages, other agencies do permitting. Noted that it is difficult for government to give its overseeing responsibility to private industry. Private sector has been helpful in funding studies regarding forestry. 456 Representative Williams Emphasized that discussions with private landowners indicated that they could take over some of the state's functions. 479 Representative Williams Asked information on Totem park in Ketchikan. Noted that the Totem park is in competition with the private sector. Commissioner Shively Stressed that all parks compete with the private sector. 630 Representative Kohring Suggested that revenue could be generated through land sales. Noted that the Mat- Su has 2 percent of its land in the private sector. Wants to identify lands that can be offered as land sales. 763 Commissioner Shively Land has to be appraised because state is tasked with getting fair market value. Expensive to the state to provide public sector with land since they are accompanied by demands for roads and other services. 815 Representative Bunde Have they considered what can be done to meet the immediate short fall? 873 Commissioner Shively The Department of Natural Resources is driven by personnel costs. If personnel are laid off there will be delays or things would not be done. Cannot see substantial reductions without laying off persons. 917 Co-Chair Therriault Increase in the Agricultural Development? Mr. Bus Increases are in the Land Development Center. Representative Foster Noted that prices for minerals are down. 995 Commissioner Shively Trying to help mining through programs. Pointing out that the state has long term resources. 1046 Representative Williams How far are they with the Spruce Bark beetle task force recommendations 1075 Commissioner Shively They are cooperating with industry. The federal government is not inclined to assist through harvesting. 1112 Representative Austerman Anything being done to stop the spread? 1140 Commissioner Shively Did not know. DEPARTMENT OF REVENUE 1214 WILSON L. CONDON, COMMISSIONER, DEPARTMENT OF REVENUE Introduced the Department of Revenue. Noted that most Department of Revenue operations raise more money than they spend. Commissioner Condon Discussed responsibilities. The Child Support Enforcement Division needs to modify the funding source for the state match. Welfare reform has reduced federal Child Support Enforcement Division payments. Commissioner Condon Need to correct oversight that left the Treasury Division short funded. 1358 Commissioner Condon Reviewed requests for FY00. Noted that the $12.5 million dollar general fund would pay for a lot of operations. 1433 Commissioner Condon Discussed the Child Support Enforcement Division. Most states use federal incentive money equal to 12.9 percent of total welfare payments. 1519 Commissioner Condon State of Alaska uses incentive money and general fund money to provide state match for the Child Support Enforcement Division. Welfare money is used in other areas. 1556 Commissioner Condon The welfare reform program has been successful. The state has recaptured funding through the Child Support Enforcement Division. This has reduced the incentive program, but not reduced the overall workload. The total amount of cases has increased. Discussed the Department of Revenue's proposal to shift funding to welfare incentive payments. 1660 Commissioner Condon Discussed the budget of the Division of Treasury. The division was expected to receive $500 thousand dollars from the Constitutional Budget Reserve. The money was not appropriated. There is a shortfall of $500 thousand dollars in FY99. 1729 Commissioner Condon Required installing new computer system in the Child Support Enforcement Division to comply with federal requirements. The FY00 budget contains a $200 thousand dollar increment to fund. 1784 Co-Chair Mulder Result of not funding Treasury Division? Commissioner Condon The Treasury Division would have to be shut down in mid March. 1810 Co-Chair Mulder Asked for further explanation of funding proposal for the Child Support Enforcement Division. Commissioner Condon Use money collected back from non- custodial parents. Money is not being used for the public assistant program. 1882 Co-Chair Mulder Is there more than one formula? Can the formula be changed? 1901 Commissioner Condon Discussed options for funding match. 1943 Representative Bunde More information on Treasury funding. Commissioner Condon Explained that it was passed by House, but failed to pass the Senate. Representative Bunde Asked if the Administration had considered attaching a fee for Child Support Enforcement Division collections. Commissioner Condon The administration is looking at that possibility. 2006 Representative Bunde Asked if they had tracked compensation between divisions and corporations. 2020 Commissioner Condon There is some difference between compensation in corporations and divisions. 2040 Representative J. Davies Does the department have a preference as to where funds come from Commissioner Condon No. 2087 Commissioner Condon The state gets about one-quarter of the funds collected for CSED. 2133 Commissioner Condon Explained how child support payments are collected. 2210 Co-Chair Mulder Asked status of Governor's interactive program. Commissioner Condon Should be available next week. Co-Chair Mulder Has he been directed to look at reduction scenarios. 2254 Commissioner Condon Discussions have occurred. Emphasized that program costs most take into account whether they are bringing in more revenue than they are costing. 2329 Co-Chair Mulder Adjourned at 3:06 p.m. HOUSE FINANCE COMMITTEE LOG NOTES 1/25/99 HFC 7 1/25/99