HOUSE FINANCE COMMITTEE February 23, 1999 1:40 P.M. TAPE HFC 99 - 27, Side 1. TAPE HFC 99 - 27, Side 2. TAPE HFC 99 - 28, Side 1. TAPE HFC 99 - 28, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:40 P.M. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Vice-Chair Bunde Representative Kohring Representative Austerman Representative Moses Representative J. Davies Representative Williams Representative G. Davis ALSO PRESENT Annalee McConnell, Director, Office of Management and Budget: Dan Spencer, Chief Budget Analyst, Office of Management and Budget; Senator Sean Parnell; Representative Lisa Murkowski; Carol Carroll, Director, Administrative Services Division, Department of Military and Veterans Affairs; Nico Bus, Director, Division of Administrative Services, Department of Natural Resources; Nancy Slagle, Director, Division of Administrative Services, Department of Transportation and Public Facilities; Major Randy Crawford, (Testified via Teleconference), Department of Public Safety, Anchorage. SUMMARY HB 77 An Act relating to the Joint Armed Services Committee, a permanent interim committee of the Alaska State Legislature; and providing for an effective date. HB 77 was HELD in Committee for further consideration. HB 100 An Act making and amending capital, supplemental, and other appropriations, and appropriations to capitalize funds; ratifying certain expenditures; and providing for an effective date. HB 100 was HELD in Committee for further consideration. SB 49 An Act relating to missions and measures to be applied to certain expenditures by the executive branch of state government and the University of Alaska from the state operating budget for the fiscal year ending June 30, 1999; and providing for an effective date. CSSB 49 (FIN) was reported out of Committee with "individual recommendations" and with a zero fiscal note by the Office of the Governor dated 2/8/99. SENATE BILL NO. 49 "An Act relating to missions and measures to be applied to certain expenditures by the executive branch of state government and the University of Alaska from the state operating budget for the fiscal year ending June 30, 1999; and providing for an effective date." SENATOR SEAN PARNELL commented that when the Legislature passed last year's operating budget (Sec. 31, Ch.137, SLA 1998), it passed missions and measures as intent language. That was the Legislature's effort to comply with its obligations related to results based budgeting as expressed in the Executive Budget Act. The Governor vetoed the missions and measures from the FY 99 operating budget bill. Senator Parnell pointed out that SB 49 would enact missions and measures into substantive law rather than through an appropriation bill. SB 49 would specifically apply only to the FY 1999 appropriations contained in the operating budget bill passed last year, Sec. 21, Ch. 137, SLA 1998. No new missions or measures have been implemented or drafted as part of the bill. He continued that minor changes had been made to last year's missions and measures and that all those changes were technical in nature. In the Senate Finance Committee, a new immunity section was added to Page 24, Section #2, at the request of Senator Adams. Senator Parnell concluded that it was time to provide the subcommittees a tool to implement Results Based Budgeting and hold departments accountable for spending. Co-Chair Therriault requested Senator Parnell to highlight the areas of change from last year's legislation. Senator Parnell noted that there are six areas of change. On Page 2, Lines 10-12, the information services date was changed. Page 5, Line 11 contains new language. The third change was to the section that referenced a community mental health program, which was deleted; Page 12, Lines 6-22, initially indicated only services available at McLaughlin not at the other youth correction facilities, and that language was changed. On Page 13, Line 6, a typo correction was made; Page 15, Line 8, a hyphen draft change, and lastly, the addition of the immunity section. Representative Grussendorf pointed out that the legislation was aimed at the current fiscal year, although, in the supplemental, many of these areas are not being funded. Senator Parnell noted that concern should be addressed in budget subcommittees. SB 49 would be applicable to the operating budget passed last year. The numbers are valid as they were passed, and will be adjusted in the appropriation bill. A companion bill in the future will pass with the operating budget and each subcommittee would then consider if a supplemental would be needed. Representative Grussendorf inquired if an allocation amount would need to be present because it would be a companion bill. Senator Parnell replied that it would, although, numbers should not be replaced from the original ones. Representative Grussendorf asked what would occur if there was a disagreement between the Legislature and the Governor regarding a goal or mission. Senator Parnell proposed that the Governor could always veto the bill. Representative G. Davis pointed out that the same detailed process of missions and measures which the Department of Public Safety went through last year, was not attempted this year. He noted the proposal does not fit with the current process that the subcommittee undertook and that the changes recommended are lengthy and would be not in amendment form at this time. He suggested that adequate verbiage would be necessary. Co-Chair Therriault asked Senator Parnell if he intended for the language to reflect changes and modifications that were in the mission statement from last year. Senator Parnell understood that each of the mission and measures came through the subcommittee process last year. The ones in the bill do need refinement, as they are a statement of what was passed last year. The intent this year is to produce new missions within the departments for each division and to refine existing measures. Representative Bunde asked if the FY 2000 budget would be accompanied with another bill such as SB 49. Senator Parnell stated that it would include the refinement plus the new missions as agreed to with the Administration. Representative G. Davis noted that Major Randy Crawford from the Department of Public Safety was online to clarify any questions regarding the Department of Public Safety's intent. MAJOR RANDY CRAWFORD, (TESTIFIED VIA TELECONFERANCE), DEPARTMENT OF PUBLIC SAFETY, ANCHORAGE, noted that Department of Public Safety was working on refinement information which would accompany the mission and measure statement for FY 2000 budget. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, pointed out that the legislation would be applicable to FY99. She explained that the Administration was comfortable having a separate budget bill which accompanies the operating budget. She pointed out that there could be an issue during the last days of the session, when budget amount change substantially in Conference Committee if the correlating performance measures had not been changed. She suggested to notice the changes on Internet, which could indicate where the State was on performance issues and budget amounts. Representative Grussendorf asked the Conference Committee procedure for the year 2000. Co-Chair Therriault replied that last year, a cooperative system was used. Senator Parnell emphasized that SB 49 was a substantive bill, not an appropriation bill. If there are differences between the House and Senate, they would be worked out in the Conference Committee. Representative Foster MOVED to report CSSB 49 (FIN) out of Committee with individual recommendations and with the accompanying zero fiscal note. There being NO OBJECTION, it was so ordered. CSSB 49(FIN) was reported out of Committee with "individual recommendations" and with the accompanying zero fiscal note by the Office of the Governor dated 2/18/99. HOUSE BILL NO. 77 "An Act relating to the Joint Armed Services Committee, a permanent interim committee of the Alaska State Legislature; and providing for an effective date." REPRESENTATIVE LISA MURKOWSKI stated that Alaska is being considered as the site for deployment of a national missile defense system. The Pentagon and the Secretary of Defense recently stated that another round of base realignments and closures are forthcoming. Because of such challenges, Representative Murkowski noted she introduced HB 77. Representative Murkowski advised that HB 77 would replace the existing Joint Committee on Military Bases in Alaska which was established in Ch. 31, SLA 1998 with the Joint Armed Services Committee. Similarly, the Joint Armed Services Committee would have an existence longer than called for in the Uniform Rules, Rules 21(b) & (c). This would be a permanent interim committee so those members could be active year round. The committee would commence on July 1, 1999. The Legislative Council would provide administrative and other services to that committee. Representative Murkowski noted that the committee would provide a unified front with House, Senate, military and civilian members to monitor military topics relative to Alaska. Furthermore, it would review and encourage State policy, in order to ensure the continued well being and education of members of the armed forces in both active and reserve components. Representative Murkowski advised that military account for approximately $1.7 billion dollars of Alaska's economy. She stressed that it is imperative that the Legislature takes a leading role to monitor the economic impact of future military related events. She believed that the Joint Armed Services Committee could provide that focus. Co-Chair Therriault commented that the Senate Finance Committee (SFC) had placed a 10-year sunset on the legislation. Representative Murkowski replied that she had no objection to a 10-year sunset, although, less than that would create a problem when addressing the proposed closures. Co-Chair Therriault referenced the transition language on Page 5, Section #3, which would extend membership to the other committee. He pointed out that Representative Porter asked that language be removed in order that he could consider the make-up of the committee. Co-Chair Therriault referenced Page 4, Lines 20-21, and questioned what "well-being encouragement" would consist of. Representative Murkowski suggested such behavior would enhance the military feeling "welcome and accepted" in Alaska. She acknowledged that language could be "troublesome" as it is non-discript. Co-Chair Therriault offered to work with Representative Murkowski on changing that language. Representative Bunde suggested the referenced language could create a duplication of the work done by the Department of Military and Veterans Affairs. Representative Grussendorf asked if there had been discussion regarding the U.S. Coast Guard. Representative Murkowski replied that there was definitely discussion of the Coast Guard, and that the inclusion of the Coast Guard in HB 77 would make the legislation different from the formation of the Joint Military Bases Committee. One member would represent the Coast Guard. Co-Chair Therriault noted that in Southeast Alaska, the Coast Guard represents the military presence and that the State of Alaska has the largest Coast Guard support than any other state. Representative Murkowski commented that she agreed with the House Speaker that he should be the party responsible for appointing committee members. She did not oppose adding language to reflect that. Co-Chair Therriault pointed out that the fiscal note would need to be adjusted. He thought that the fiscal impact could be absorbed in the current level of funding in the Legislature's budget and that those costs must be adequately reflected. HB 77 was HELD in Committee for further consideration. (Tape Change HFC 99 - 27, Side 2). HOUSE BILL NO. 100 "An Act making and amending capital, supplemental, and other appropriations, and appropriations to capitalize funds; ratifying certain expenditures; and providing for an effective date." Co-Chair Therriault passed the gavel to Co-Chair Mulder. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, advised that the Governor's Office has worked diligently to bring the supplemental request down. As indicated by the spreadsheet, by addressing only the disasters, it still was not small enough to fit within last year's cap of $3.5 million dollars. She emphasized that there has been progress during the last six years, to bring the Supplemental Budget under control. However, with unusual circumstances and unanticipated expenditures, the amount held might not be sufficient. Co-Chair Mulder requested that updated information be provided to the Chairman's office and to the appropriate Subcommittee Chair offices. Ms. McConnell agreed to do so. Ms. McConnell addressed the "belt-tightening" measures being attempted by each department. She noted that the Governor had placed restrictions on departments in three areas: ? Hiring, ? Travel, and ? Purchasing, in the area of contractual services and supplies. In order for the departments to meet those numbers, each amount was itemized in the bill. The Governor is serious that the departments not exceed the lower amount proposed in the budget. Ms. McConnell pointed out that the supplemental was separated into categories of disasters, judgements and the Cleary related issues. Co-Chair Mulder inquired if the total increase proposed in the supplemental budget was $28 million dollars, offset by the $16.5 million dollars already provided for in the current year, and additionally, offset by $6.2 million dollar "belt tightening", with a net increment of $5.2 million. Ms. McConnell stated that was correct, although, indicating that the Cleary amount would change that number. Co-Chair Therriault asked if the Administration had requested that the departments link reductions to off set the increases which they were not able to get around. Ms. McConnell replied that the departments were instructed to absorb everything possible within the program. If the department was not capable of doing this internally, they were requested to look at other areas within the department where a delete could offset the proposed increase. Additionally, each department was instructed to " tighten" their belt. Co-Chair Mulder asked how the savings was determined. Ms. McConnell replied that the above mentioned three items were initially targeted. Following that, the Administration removed from the calculations all those areas which could not responsibly cutback such as 24-hour institutions and trooper detachments. Travel was then heavily targeted. DISASTERS DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS - #1 Ms. McConnell stated that the change is a request for a lapse date extension from 1999 to 2001. This change would recognize that federal funds received earlier were to be used to complete many projects. However, she pointed out that some of the projects were not finished during the designated allocation period. Co-Chair Mulder asked if those were appropriations in which the local community was required to make a match in order to receive the grant. Ms. McConnell replied that would be a portion of the responsibility. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS - #2 ? Southeast Rain/Wind Disaster ? Endicott Mountain Flood ? Western AK Fisheries Disaster Ms. McConnell spoke to the Western AK. Fisheries disaster. She provided members with a handout addressing the concern. [Copy on File]. Ms. McConnell pointed out that this had been the second year in a row with disastrous fish runs in Western Alaska. It has been suggested that El Nino created a condition of ocean warming, which created a situation so harsh that fewer numbers of fish spawned. The Office of the Governor began working with the federal government in order to educate them regarding the severity of the loss, comparing it to one of a crop failure from a drought. She emphasized that Alaska's "major crop" of fish was being affected. Following much discussion, the federal government understood Alaska's predicament and began the process of declaring a state disaster. The process begins with a Declaration of Disaster, at which time, the Administration assessed that $12 million dollars would be needed to respond to that disaster. The situation was addressed in several ways. The first was to work with the fishermen to restructure their loans. The program of individual and family grant assistance was started. A different approach was used, which established a limit of $1500 dollars per eligible person. In order to be eligible, a person would need to be directly connected to the fisheries as a permit holder, a crew license holder or a process worker. Ms. McConnell pointed out that the Administration chose not to be involved in the secondary effects. She emphasized how stringent the criteria requirement was. The fish runs had to be 50% less than the 10-year average. Ms. McConnell reiterated that the assistance consisted of $1500 dollars per individual who met the criteria (or a $5000 dollar cap per family). No cash was provided, but rather a vendor payment system was established to insure that the assistance went to basic essential living expenses such as food, home heating fuel, electric, power and water sewer services. Ms. McConnell continued, the State began working with the federal government and ultimately secured $50 million dollars to be spread throughout the entire disaster area for several categories of activities. Ms. McConnell noted that the original $12 million dollars broke down into the following categories: ? $9 million dollars for family and grant assistance; ? Funding for delivery of fish to three communities which receive no commercial salmon and/or subsistence food. ? $40 thousand dollars for transporting emergency food aid from the federal government and distributed through food banks; ? $400 thousand dollars was set aside to address special social services such as crisis counseling. ? Additionally, $1.5 million dollars was set aside to match the $7 million dollar Magnuson-Stevens money in the prior year. ? Lastly, there were administrative expenses for distributing the monies. Ms. McConnell noted that the federal government has reimbursed the State $2.4 million dollars of the original $12 million dollars. She emphasized that if the State had not responded to this disaster, we would face other types of disaster expenditures such as emergency food supplies to be flown out during the winter or emergency fuel supplies flown out. She stressed that this was not only an economic disaster, but also a natural disaster. Co-Chair Mulder questioned the emergency living expenses of $8.1 million dollars. He noted that equated roughly to $1500 per individual. CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, replied that the $8.1 million dollars represented 6100 grants received and approved. Ms. McConnell clarified that 5500 applications were received some of which were applicable to entire families. In response to Co-Chair Mulder, Ms. Carroll commented that funds had been paid directly to the vendors, not to the individuals. Co-Chair Mulder understood that some vendors still have outstanding bills. Ms. Carroll noted that she had not received a lot of complaints from vendors not receiving their funds, although, there were instances that vendor's funds had to be corrected. Co-Chair Mulder asked if individuals had the authority to determine which vendors they wanted to use. Ms. Carroll explained that had been negotiated with each applicant. In response to Representative Bunde's inquiry regarding the ten-year average determination, Ms. McConnell explained that the requirement was that the fish run be no more than 50% of a ten-year average. If a community was in an area with less than 50% of runs and other employment opportunities existed, that community would not be included in the disaster area. In most of these areas, if the population is not able to get money from commercial fishing, there is usually no other income options. Representative Bunde questioned the State's minimum match requirement in order to receive Magnuson-Stevens $7 million dollars. Ms. McConnell replied it would cost Alaska $1.5 million dollars and that the nature of the assistance was directed by the federal government. The applications were completed for State aid the end of October, 1998. Current applications are for federal assistance ($18 million dollars) available for individual and family assistance. Representative Bunde asked about the chum salmon which had been flown into the Upper Yukon. Ms. McConnell corrected, noting that chums were flown into the villages of Hooper Bay, Scaman Bay and Chugiak and had been used for village food and that the fish flown into Upper Yukon had not been done with State funds. That project was entirely a volunteer operation and those salmon were used for sled dog food. Co-Chair Therriault asked if there was $18 million dollars still available in the federal program. Ms. McConnell replied that the State received two Magnuson-Stevens allocations. There was $7 million dollars under consideration in May, 1998, in which the Legislature did appropriate $125 thousand dollars to match the loan money. Additionally, $1.5 million dollars of that disaster money would be used to secure the rest of the money from the first federal declaration. Subsequently, the State received $50 million dollars from the federal budget just currently passed. $18 million dollars of that is to be used for family grant assistance. A portion of that money will be used to reimburse the State for the $4 million dollars spent. (Tape Change HFC 99 - 28, Side 1). Ms. McConnell emphasized that the State has been warned that it will be impossible to receive federal aid unless Alaska makes a contribution. Senator Stevens has stressed this need. Co-Chair Therriault asked what the requirement was to receive funds from the Magnuson-Stevens Act. Ms. McConnell offered to research that information. Co-Chair Therriault asked if the State had overspent or overmatched. Ms. McConnell believed the State had not overspent. The $1.5 million dollars was a match requirement for receiving the first $7 million a year ago. She did not know if the feds used a formula to make that determination or if it was a case by case scenario. Co-Chair Therriault asked why to date only a small portion of the monies had been expended. Ms. McConnell noted that given the timing of when the funds were available, most of the projects could not be undertaken during the last construction season because of the weather and have been postponed until the current construction season. That resulted from last year's funding and requires a non-federal contribution. Co-Chair Therriault referenced the Millers Reach fire where the average payment per household was $13 thousand dollars. He inquired what that funding was specifically allocated for. Ms. Carroll replied that funding was designated for anything lost except the house itself, such as clothing, food, tools, etc. Representative Austerman noted that he was having difficulty following the total disaster dollars being discussed. Ms. McConnell explained that $7 million was the total received from last year's federal aid. The Legislature did not approve general funds for that. The Administration had requested $1.5 million dollars as the general fund match to receive the $7 million dollars. The Legislature did approve a small portion of that request for loans, but not the entire match. The expectation was that local communities could come up with the remainder. Ultimately, that was impossible. Representative Austerman asked if the $50 million dollars was the total for this year and last year. Ms. McConnell stated that it did not include the $7 million from last year. A portion of that $50 million dollars was how the State was able to reduce the original $12 million disaster amount to $9.6 million dollars. Representative Austerman asked if there was a breakdown of how the $50 million dollars would be handled. Ms. McConnell replied that there was in the material previously submitted to the Legislative Budget and Audit Committee (LBA). She offered to provide that information to House Finance Committee members. Ms. McConnell reiterated that the State would not have been able to secure the $50 million for assistance if State money had not been contributed. Representative Austerman questioned how the Federal Emergency Management Agency (FEMA) had become involved. Ms. McConnell stated that they were involved in the organization of the program. FEMA was designated by the White House to be the agency to bring together all the other federal agencies in order that the $50 million dollars is managed. Representative Austerman asked for a breakdown of "other monies". Ms. McConnell noted: ? $10 million dollars of low income Home Energy Assistance money; and ? $400 thousand dollars in the Department of Agriculture for emergency food aid. These monies are tied to the fishery disaster. Representative Austerman asked the length of time that the Administration would extend the disaster concept. Ms. McConnell replied that the Administration has not yet formulated a recommendation on how to address that concern. She acknowledged that how to assess a situation in which a disaster occurs over many months or years is an issue that does need to be discussed. Co-Chair Mulder advised that he had directed each of the subcommittee chairs to address their piece of that puzzle. He noted that Representative Bunde would take the lead and be the person to review the Western fisheries disaster. Representative Williams asked how much of the $50 million dollars had been obligated. Ms. McConnell stated that a substantial part of that money would not come through the State; it will be going directly through the Federal Economic Development Administration to projects in various communities. That agency is currently in the process of evaluating which projects to fund. After the State receives the federal reimbursement, we will have expended $9.6 million dollars. The State will be reimbursed for $2.4 million dollars of State funds, which are anticipated soon. Representative Grussendorf pointed out that the fisheries disaster has caused people to loose their livelihood. Representative Bunde questioned when does a natural disaster become an economic disaster, and how long will it be supported if it becomes a continuing natural trend. Representative G. Davis agreed that at this time, the State is looking at funding commercial fishing. He questioned how that would be handled in a long-term commercial disaster. Representative Grussendorf pointed out that in the past, the State has subsidized oil companies to allow them to continue to conduct business. Co-Chair Mulder questioned how much money would be required from the State to secure the federal money. Ms. McConnell replied that the State disaster was declared with $12 million dollars. Portions of those funds were reimbursed. Co-Chair Mulder asked if the Legislature were to deny the $1.5 million dollar match of last year, would that endanger the $50 million dollars. Ms. McConnell commented that she did not know if that would endanger the $50 million dollars, but, it would definitely mean that the State would not receive the $7 million dollars. She also added, the issue is not whether the communities are willing to make the match, the issue is whether they have the money to do it. The effect of not having a fish run has strongly affected the local treasuries. In response to Representative Austerman, Ms. McConnell acknowledged that this situation is very different from an economic disaster, beginning with the fact that we do not have fish. These are the differences between a loss of price and loss of market. The result is an economic disaster. Representative Austerman noted his surprise that the situation had been tied to the El Nino condition. Representative Bunde requested a list of communities involved in the subsidies. Co-Chair Therriault asked if the communities where the fish had been transported to, had been given the option to purchase food in the local stores. He believed that could generate local sales tax which would be more helpful to the local treasury. Ms. McConnell stressed that these people had no commercial income and they were in need of a basic food supply. She noted that she was surprised that the request for fish was lower than anticipated and that the families took only the minimum that they needed. Co-Chair Mulder asked the combined population of the affected villages. Representative Foster responded that it was approximately 2500 residents. (Tape Change HFC 99 - 28, Side 2). Representative Foster added that the village stores do not keep a large surplus of food supplies. Ms. McConnell noted that the Red Cross had undertaken emergency food deliveries. She added that under the circumstances, the project was cost effective. Ms. McConnell pointed out that in past years, there was a budget for disaster funding with annual appropriations. That no longer exists. Representative Foster echoed the concern, pointing out that in previous years, budget cut backs have come from the disaster fund, knowing that a supplemental would cover those expenditures. NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS AND DEPARTMENT OF NATURAL RESOURCES, addressed the other two disasters listed in Section #2. Last year in October, there was a major rainstorm in Southeast Alaska with over six inches of rain in a 24-hour period. The Governor declared a State disaster in the Borough of Haines and the City and Borough of Juneau. The request for $2.7 million dollars was to be used for road washout. The nature of the expenditure was for emergency repairs for the roads and highway. Representative Williams asked how much had been used for the Fritz Cove portion of the storm repair. Mr. Bus replied that the amount of money approved to the Department of Transportation and Public Facilities was $1.3 million dollars, to be used for various road projects. The Department is working with the Federal Highway Administration (FHA) to get supplemental funding. Co-Chair Therriault asked if the Department of Transportation and Public Facilities repaired the roads rather than the local municipalities doing that work. Mr. Bus pointed out that it was a natural disaster and qualified under the State's criteria for emergency relief. NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, added that FHA has specific guidelines on what they cover under an emergency response. They consider anything out of the normal operation of maintaining a road or building a road, caused by heavy maintenance, to be considered normal. Anything that is "extra-ordinary" or causes serious damage, they provide guidelines for assistance. Those guidelines are what the Department responded to for specific repair work caused by the disaster. FHA will not cover less than a $500 thousand dollar aggregate amount. Representative Austerman asked if the costs had not been associated with a "disaster", would they be coming through the Legislature as a supplemental request. Ms. Slagle replied that they would, but that a disaster situation helps Department of Transportation and Public Facilities go to the federal government to try to receive assistance. Co-Chair Mulder asked if Fritz Cove road was a State or local road. Mr. Bus replied that it was a State road and the responsibility of Department of Transportation and Public Facilities. Representative Moses noted that most roads in the municipalities are state roads. DEPARTMENT OF NATURAL RESOURCES - #3 Nico Bus stated that the fire suppression disaster request was in the amount of $7 million dollars. Co-Chair Therriault advised that Department of Natural Resources had delivered two memo's indicating itemized information on fire suppression. Mr. Bus stated that the $7 million dollars would cover expenditures to date for the period July 1st through December 31st and the fixed costs of the Department for this upcoming summer's activity. It does not include the price of suppressed fires in May and June. Co-Chair Therriault asked the total fire expenditure for last year. Mr. Bus listed the three most expensive fires: ? Carter Lake fire which started in FY98 and went into FY99, expanded from a military base; ? Tok fires which amounted to about $500 thousand dollar to a $1 million dollar expenditure; ? Several Skagway fires which cost the State a substantial amount of money. ? He added that there were over 523 incidents of fires costing less than $50 thousand dollars each. Co-Chair Mulder questioned when a fire starts on federal land, who is responsible for putting it out. Mr. Bus explained in the State of Alaska, the way in which fires are fought is that the State is divided in half. The upper half of the State, fires are fought by Bureau of Land Management (BLM) and in the bottom portion, where most communities and people live, are fought by the State. When a fire starts, the resources are pooled between the two agencies. Ultimately, the party that pays is the landowner. He acknowledged that this is a complex system. Representative Austerman asked what the "fixed" costs were. Mr. Bus explained that like a fire hall, manpower and equipment must be ready. In wildlife fires, this is addressed with contracts with various aviation vendors. The State must contract with vendors in January to guarantee that they will be available during summer fire activity. The fixed costs pay for those contracting fees. Representative Austerman asked why those costs are not included in the Department of Natural Resources operating budget. Co-Chair Therriault commented that the fire season crosses fiscal years, consequently, it was shifted to the supplemental budget. Mr. Bus added, the Department of Natural Resources has basically two operations. One is the regular maintenance operation including mining and forestry type concerns; fire suppression is more of an emergency response which is kept separate. He noted that portion of the budget is a big expense. It is isolated as strictly emergency response and kept separate. That portion requires about $4.5 million dollars in fixed costs and with the additional costs of dealing with the fires. He added, those costs average approximately $10 million general fund dollars per year. HB 100 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 4:20 P.M. H.F.C. 16 2/23/99