HOUSE FINANCE COMMITTEE March 6, 1999 2:00 P.M. TAPE HFC 99 - 38, Side 1. TAPE HFC 99 - 38, Side 2. CALL TO ORDER Co-Chair Mulder reconvened the House Finance Committee meeting, from 3/03/99, to order at 2:00 P.M. PRESENT Co-Chair Mulder Representative G. Davis Co-Chair Therriault Representative Grussendorf Vice-Chair Bunde Representative Foster Representative Austerman Representative Kohring Representative J. Davies Representative Williams participated via teleconference from Ketchikan. Representative Moses was absent from the meeting. ALSO PRESENT SUMMARY 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. 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 Mulder provided members with a spreadsheet summarizing proposed changes to HB 100 (copy on file). The proposed committee substitute was not available at the time of the meeting. He reviewed changes to HB 100 as detailed in the spreadsheet. He explained that $16.5 million dollars were allocated for FY99 supplementals in the spending plan. The spreadsheet begins with this assumption. MILITARY AND VETERANS AFFAIRS Co-Chair Mulder noted that the first change is in section 2. He clarified that $1.2 million dollars was deleted from the disaster appropriation for road washouts. He explained that the Department of Transportation and Public Facilities anticipates federal funding to replace this appropriation. If the funds are not received before the end of the fiscal year they will need to be reconciled. DEPARTMENT OF NATURAL RESOURCES Co-Chair Mulder noted that funding of $134.5 thousand dollars for repair of the Perseverance Trail was eliminated. He explained that the request was not funded in order to encourage the transfer of the trail to the city and borough of Juneau. Representative Grussendorf asked what incentive the city would have to take over the trail maintenance. Co-Chair Mulder stated that the city would have an incentive to take over the trail if it remains closed. Representative J. Davies asked who would be liable for the injuries on the trail. Co-Chair Mulder suggested that a closure sign would alleviate liability to the state. Representative Grussendorf did not think that a sign would prevent the state from being liable for injuries. Co-Chair Mulder expressed concern that winter maintenance of roads would be excluded while funding for a recreational trail repair was included. Representative G. Davis agreed with remarks by Co-Chair Mulder. MILITARY AND VETERANS AFFAIRS Co-Chair Mulder reviewed the Western Alaska Fisheries Disaster. He noted that the appropriation goes back to the 1997 fisheries disaster. The appropriation was made into a local community grant program in FY99 in order to qualify for federal funds. He stressed that because many of the improvements detailed within the 1997 disaster are capital projects they should be addressed in the capital matching grants program. He observed that there is a 6 to 1 match. The match was deleted from this appropriation and will be addressed in the capital budget. DEPARTMENT OF CORRECTIONS Co-Chair Mulder noted that the only modifications, made to the Department of Corrections, that the department does not support are the reductions in staffing at the Cook Inlet and the deletion of a VPSO parole pilot program. He noted that the pilot program has not been implemented. It would not reduce service. DEPARTMENT OF ADMINISTRATION Co-Chair Mulder discussed section 6(g) and (h). Pioneer home receipts were reflected as off budget in the Governor's proposal. These were reflected as general funds in the spreadsheet. The appropriation level would not change. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT Co-Chair Mulder explained that the allocation for Power Cost Equalization (PCE) was not approved. He stressed that the department continued to spend knowing that there would be a deficit. He emphasized that the fund would be depleted at a quicker rate if appropriations from the fund occur. He emphasized that they would continue to try to resolve the problem. DEPARTMENT OF REVENUE Co-Chair Mulder discussed debt service. He noted that the Governor proposed using an Alaska Housing Finance Corporation (AHFC) dividend for debt service. This $1,143.9 million dollar offset was denied. DEPARTMENT OF EDUCATION Co-Chair Mulder noted that the Education Foundation Formula was reduced by $4 million dollars. The Department of Education worked with the Committee to find funding. DEPARTMENT OF HEALTH AND SOCIAL SERVICES Co-Chair Mulder discussed the Chronic and Acute Medical Assistance program (CAMA). He noted that it would be fully funded. Co-Chair Therriault explained that the overall number is down slightly from $1.2 million dollars to $1,145. million dollars. The are additional federal Temporary Assistance to Needy Families (TANF) funds in the Department of Health and Social Services. These cannot be used to cover CAMA. The balance of TANF funds could be used to support childcare in Department of Community and Regional Affairs, which is part of the welfare reform effort. General funds would be freed by the use of TANF funding and general funds from the daycare program would be transferred back to Department of Health and Social Services. Co-Chair Therriault explained that the state has a balance of TANF funding with the federal government. Part of this is from the extra money the state of Alaska receives at the end of the three-year authorization period. Representative J. Davies noted that part of these monies have been used to support the increase demand in childcare, resulting from the Welfare to Work program. He asked if there would be sufficient funding to cover this need. Co- Chair Therriault acknowledged that some of the excess federal balance could have been used for something else. He stressed that CAMA funding is a pressing need. Co-Chair Mulder pointed out that the department has worked with the Committee on the transfer. Co-Chair Mulder observed that subsidized adoptions are being funded at the Governor's proposed level. He noted that there would be further discussions regarding this level. DEPARTMENT OF LAW Co-Chair Mulder noted that Item 13, oil and gas litigation would be revised. The Attorney General has identified an additional $82 thousand dollars in reductions from oil and gas litigation. The total reduction would be $182 thousand dollars. DEPARTMENT OF NATURAL RESOURCES Co-Chair Mulder explained that $62.7 thousand dollars of the $92 thousand dollar request for the Recorder's Office was approved to allow for hard costs. DEPARTMENT OF PUBLIC SAFETY Co-Chair Mulder noted that the request for Alaska State Trooper Detachments was brought down from $312 thousand dollars to $249.6 thousand dollars. He noted that the moving costs were excluded. He referred to the State Trooper Academy. Representative G. Davis noted that the authorized funding level anticipated eight additional troopers. The department anticipated hiring 17 positions. The additional new troopers have resulted in additional costs at the Academy. UNIVERSITY OF ALASKA Co-Chair Mulder explained that there were two $3.5 million dollar offsets that were non-general fund. He stated that there is a total $7 million dollar non-general fund authorization for Arctic Research. Co-Chair Mulder summarized that with the additional $1.2 million dollars from debt service and CAMA as a reduction, the total is $1.9 million dollars below a net zero. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Representative Grussendorf observed that there would be a 43 percent funding level for PCE without the appropriation. He noted it was not a particularly good economic year for many rural coastal areas. Representative Austerman noted that PCE administration decided to provide full funding through the winter and allow the reduction to occur in the summer when power service is down. Co-Chair Therriault stressed that if PCE is to be continued it would not be a continuation of the status quo. He did not support the department's decision to retain the spending level thinking that the difference would be appropriated later. He stressed the need to see changes to the program. Co-Chair Mulder noted that Mr. Cotton, Chairman of the Blue Ribbon Committee on Power Cost Equalization recommended that a mechanism be used to exclude some enterprises that otherwise might be taking advantage of PCE. He stressed the need for a long-term solution. Representative Kohring stated that plans are being advanced to phase out PCE and phase in an infrastructure that would reduce costs. Representative Austerman agreed that PCE might need to be phased out in the long term. He expressed concern that Representative Kohring's plan would destroy the Alaska Science and Technology Foundation. Representative Kohring emphasized that his plan would not spend the principle of the Alaska Science and Technology Foundation endowment. Co-Chair Mulder noted that delays in road openings were not addressed. He observed that the Department of Transportation and Public Facilities has submitted a schedule of road openings, the cost of opening the roads and the population that the roads serve. Co-Chair Mulder noted that there would be a three-quarter vote for the draw from the Constitutional Budget Reserve. Representative J. Davies observed that the Blue Ribbon Commission recommended unanimously that the PCE program be funded. There was not a unanimous agreement on the mechanism of the funding. HB 100 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 2:59 p.m. HFC 6 3/06/99