GENERAL SUBJECT(S): Time Meeting Convened: 1:35 P.M. Tape HFC 99 - 5, Side 1. Tape HFC 99 - 5, Side 2. Tape HFC 99 - 6, 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: DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE; DAN SPENCER, CHIEF FISCAL ANALYST, OFFICE OF MANAGEMENT AND BUDGET; JEFFREY BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT; MIKE IRWIN, COMMISSIONER, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS; REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS; TOM LAWSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT. LOG SPEAKER DISCUSSION 000 Tape 5, Side 1 Co-Chair Mulder Co-Chair Mulder convened the HFC meeting at 1:35 p.m. He stated that the budget for Department of Community and Regional Affairs would be chaired by Representative Austerman COMMISSIONER IRWIN COMMISSIONER, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Provided Committee members with a copy of the handout #1. He spoke to the job training program also called the STEP program and other programs administered by the federal government. With Welfare Reform, Department of Community and Regional Affairs has assumed many new responsibilities. Commissioner Irwin Continued speaking to the Division of Energy specifically for rural Alaska and other coastal zone management programs. Commissioner Irwin Spoke to the trend in reduction of General Fund dollars and the departments looking to new federal funding sources. Commissioner Irwin Department has cut General Fund dollars by +.The GF dollars for personal service costs has been decreased more than 30%; although the total budget has grown. Commissioner Irwin Highlighted the change inFY2000 budget and the ChildCare Grants increase. (referenced pg. 3 of handout #1.) Proposing increase to tobacco tax to help fund this grant program. Also, proposing, due to increased demand add 2.7dollars to childcare budget through the federal receipts. Commissioner Irwin In addition, $3.million expansion to the Head Start Program REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Reiterated the increase to the Child care programs. Co-Chair Mulder Questioned the status of power fund equalization Mr. Henderson Stated that there is taskforce looking at that funding issue. He noted that there is a $17 million dollar request. Co-Chair Mulder Asked how much money in the PCU at present time Mr. Henderson Stated that there is a projection of $3.5 million $ Co-Chair Mulder Asked how this worked in the Governors Plan DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET Explained that there would be a meeting with the Governor and that there have been no recommendations at this time. Co-Chair Mulder Thought this would count as less than a budget reduction if the PCE fund was gf Commissioner Irwin Noted that the recommendations would be done by Feb 8th. Several options before the Governor consider straight gf options 1019 Representative Bunde Asked why short falls are being covered by empty balances 1049 Mr. Spencer Explained that there are statutory provisions 1072 Co-Chair Mulder Asked how to follow that in the book of the PCE situation. 1095 Remond Henderson Explained how it was calculated for the determination. There is not complete funding for the determination. 1133 Dan Spencer Explained how the sources of recurring revenue occurred. 1158 Co-Chair Therriault Referenced the Head Start operations and the mix indicated 1177 Com Irwin Replied that it was the increase would come from a federal source. 1201 Mr. Henderson Stated that the federal funds for the program do not come through their department. 1226 Dan Spencer Explained the detailed budget books and based on the commission, there is not a $9 million dollar request at this time. The intent is that the Commission will make the recommendation. 1291 Representative G. Davis Pointed out theFY99 level and those in previous years the Office of the Governor had recommended reductions in those areas. 1326 Representative Austerman Employee positions 1340 Commissioner Irwin Explained the department's responsibilities for the North Star Borough that are now being assigned as new state employees. There are several new positions connected with the Welfare to Work efforts-three new positions and support staff. 1423 Remond Henderson Added three in the Energy Section 1440 Co-Chair Therriault Are they all federal funds 1450 Remond Henderson Understood that program was entirely federal funds 1473 Co-Chair Therriault Why returned to the department 1488 Commissioner Irwin Explained why program came back to the department 1510 He did not know the details of the program 1534 Representative Bunde Referenced the handout and asked about the total referenced GF funds 1560 Commissioner Irwin Explained revenue sharing grants and administration of the programs. They are totaled together which is helpful for the subcommittee 1604 Co-Chair Therriault Marine Safety funding 1616 Representative Foster Thought that the blue ribbon committee was not okay. He asked why support to that committee was so in adequate 1672 Commissioner Irwin The Department is working on this concern and is looking for a solution that will also be supported by the Governor and will not entail General Funding. 1711 Representative Foster Reiterated that the department does not have the needed sense of urgency. 1730 Co-Chair Therriault Pointed out that it only has 50% of the money needed to fund it. He did not know how to fund it from other than a gf source. 1765 Representative Austerman Asked if there would be a meeting before the subcommittee PCE meets. 1782 Commissioner Irwin Stated that PCE would meet before. 1800 Representative G. Davis Day Care Assistant would be the only place using those dollars 1818 Commissioner Irwin From the settlement. He did not know the total amount and how it would be spread throughout the entire administration budget. 1849 Co-Chair Therriault Requested a list of that spread HFC 99-5 Side 2 TAPE CHANGE JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT Spoke to attachment #3. Page two provides a quick overview of the budget. The request is for $54 million from all funding sources. He pointed out the amount from the general fund. Mr. Bush $30.8 million is funded from non- gf sources. 124 Mr. Bush Page 16 - annual pie chart and the departments slice of the ttl general fund budget. .39% Mr. Bush Approximately 2/3 of the budget goes to the tourism budget. Trade and Development is another piece of the budget. Of the $7.8gf dollars only 2.6% goes to administrative services. Generally, endowment earnings are used. 267 Mr. Bush Historical trend for the department - Page 18. In1990, the Department was a bread even agency. At the time, the department is a revenue-generating agency. Increasing reliance from other funding sources. 330 Co-Chair Therriault Example of other gf funding sources 344 Jeff Bush Insurance premium tax; licensees Mr. Bush Changes to budget by reducing costs to the Commissioner office. Relying more on fees paid to agency. The Commissioner is paid for out of the general fund. Mr. Bush The second change is a transfer of the Intl Trade program and still operating in the Department of Commerce and Economic Development and the funds are RSA'd back. 480 Mr. Bush Increase to the data processing staff - change #3 Mr. Bush Converted from the Wang to the Oracle. The Department has many activities that require the requested positions. Those positions will need a manager and are proposing a DP manager funded through inter agency receipts. 571 Co-Chair Therriault Is this a new effort 578 Jeff Bush Program receipts would have to increase fees to cover increased costs. It is not a direct link. The cost of something this small would be quite small. 625 Co-Chair Therriault Asked the level of discussion with the user groups 644 Jeff Bush Replied that there are more complaints for lack of service that there is for a raise of fees. License fees have been reduced over the current year. Better accounting system. 75%of complaints are due to reductions; lack of service. 745 Representative G. Davis Thought that the language shows that the current computer system will cost a lot more to operate. 790 Jeff Bush Replied that the department is not doing a good job in data base management. Need resources to reconvert the current system. 828 Mr. Bush Banking securities adding an examiner. The department is experiencing a tremendous growth. Alaska Native Corporation proxy authority. No new staff since the 1980's and are requesting 1 staff member to help with the growth. Mr. Bush The Department of Law services and Department of Commerce and Economic Development have to hire one another. Department of Commerce and Economic Development now must hire the Department of Law to represent that Department. The estimate is $45 thousand dollars would cover that cost. A hearing officer can not represent the Department. 1014 Mr. Bush $40 thousand dollar increment for a hearing officer support. Historically, Occupational license fees paid that position. The auditor, the department is requesting that banking pay its fair share of those expenses. 1065 Mr. Bush APUC is requesting 9 new positions. To handle the growth in that caseload which is 81% above the four-year average. 1100 Co-Chair Therriault Pointed out automatically charged back 1113 Representative Bunde Charging back for services? 1140 Jeff Bush Pointed out that the agency collects much more than those costs. Their receipts have doubled in the past ten years. Those filings have increased dramatically. Are currently overly collecting 1186 Representative Williams Commented on the fiscal gap and the requested increases. He asked for the Department to provide a spending plan and possible transfer of services to Department of Natural Resources . 1261 Jeff Bush Referenced the handout; Page 17 which show all the saving money options. Reductions below those considered would be detrimental to the Department 1303 Representative Williams Data processing additions - are they necessary 1319 Jeff Bush 1345 TOM LAWSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT Pointed out that there currently 5 staff serving the entire department. The Wang system was not Y2K compliant. The bottom line is that the needs of the banking, insurance people need more info on line. Things have changed and there are now internet demands. Would like to have the increments without using general funds. 1413 Representative G. Davis New program is costing more to operate. He pointed out that the licensing and fees and the increase and how it affects the public. He questioned the problem. 1465 Representative Kohring Questioned the comments of Rep Williams. He asked about the Division of Tourism. HFC 99-6, Side 1 TAPE CHANGE 000 Mr. Bush Replied that the Department is expending a lot of time and energy addressing the concern with tourism and industry. Department of Commerce and Economic Development supports last years legislation and are trying to determine a direction to take with the Industry. 154 Representative Kohring Asked if there was statutory authority and past legislation 182 Jeff Bush There are aspects that of that area. 315 Mr. Bush Continued 330 Co-Chair Therriault Asked where the generic marketing of the State could be cut down 370 Mr. Bush Pointed out that the agency was cut seven years ago eliminating much marketing. That total budget was $5.2 million dollars 404 Co-Chair Therriault Noted that Princess and Holland America market mystic of state consolidated efforts 442 Representative Foster Stated that in Bush Alaska do not have any Department of Commerce and Economic Development employees. He spoke against fees for Bush Area as they put business out of business. Do not adjust the user fees. 600 Representative Austerman Added that one quarter of the state employees have been pulled out of rural Alaska. 650 Co-Chair Therriault Stated that Co-Chair Mulder had asked that he chair the Department of Commerce and Economic Development Subcommittee. 671 Co-Chair Therriault Adjourned the meeting at 2:55 P.M. HOUSE FINANCE COMMITTEE LOG NOTES January 26, 1999 H.F.C. 8 1/26/99