HOUSE FINANCE COMMITTEE March 8, 1999 1:47 P.M. TAPE HFC 99 - 39, Side 1. TAPE HFC 99 - 39, Side 2. TAPE HFC 99 - 40, Side 1. TAPE HFC 99 - 40, Side 2. TAPE HFC 99 - 41, Side 1. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:47 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 Representative Carl Morgan; Representative Kapsner; Nancy Slagle, Director, Division of Administrative Services, Department of Transportation; Nancy Slagle, Director, Division of Administrative Services, Kevin Brooks, Director, Division of Administrative Services, Department of Fish and Game; Annalee McConnell, Director, Office of Management and Budget, Office of the Governor; Nico Bus, Administrative Services Manager, Division of Support Services, Department of Natural Resources; Margaret Ugh, Commissioner; Janet Clark, Director, Division of Administrative Services, Department of Health and Social Services, Department of Corrections; Barbara Brink, Director, Public Defender Agency; Kenneth Bischoff, Director, Division of Administrative Services, Department of Transportation. . TESTIFIED VIA TELECONFERENCE Yvonne Chase, Director, Division of Community and Rural Development; Lamar Cotton, Deputy Commissioner, Department of Community and Regional Affairs; Percy Frisby, Director, Division of Energy, Department of Community and Regional Affairs. 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." AMENDMENTS Co-Chair Mulder provided members with proposed committee substitute, work draft 1-GH1023\H, 3/7/99 (copy on file). Co-Chair Therriault MOVED to ADOPT work draft 1-GH1023\H, 3/7/99. There being NO OBJECTION, it was so ordered. Co-Chair Therriault MOVED to ADOPT Amendment 1 (copy on file). He explained that the amendment would amend page 7 on line 23. Delete: 13,264,600 and 15,132,200 Insert: 13,921,500 and 14,475,300 Co-Chair Therriault explained that excess federal funds in the Temporary Assistance to Needy Families (TANF) account would be shifted to Daycare Assistance in the Department of Community and Regional Affairs. The amendment would limit the transfer of funds to the specific amount needed to fund the shortfall in the Chronic and Acute Medical Assistance program (CAMA) for FY 99. The proposed committee substitute made more of a shift than was necessary. In response to a question by Representative J. Davies, Co- Chair Therriault clarified that the amount needed is $1,145 million dollars. There being NO OBJECTION, Amendment 1 was adopted. Co-Chair Mulder MOVED to ADOPT Amendment 2a (copy on file). He explained that the amendment is a technical correction. The reduction proposed by the Department of Corrections was $35 thousand dollars, not $50 thousand dollars. The amendment would correct this error. There being NO OBJECTION, it was so ordered. Co-Chair Mulder MOVED to ADOPT Amendment 2b (copy on file). He explained that the amendment balances the Department of Transportation and Public Facilities section to account for the deletion of the former subsection 18(e), which would have authorized an increase of $100 thousand dollars in program receipts. In response to a question by Representative J. Davies, he explained that section 18(e) was the transfer of unused general fund program receipts to design and engineering. The amendment was introduced on the recommendation of Representative Williams. Representative J. Davies asked if the intent is to include the request in the FY00 operating budget. Representative Williams stated that the department indicated that the delay would not cause a problem. DENNY DEWITT, STAFF, CO-CHAIR MULDER explained that the amendment would be a net zero. He stated that it could be taken care of in the FY00 operating budget. Representative J. Davies questioned why it was included in the supplemental. Mr. Dewitt stated that his information was that the transfer could occur in FY00. Representative J. Davies questioned if plans would be delayed to the following summer. Mr. DeWitt did not think that there would be any delays. He stated that there were concerns that there would not be enough money in the Energy Fund, but that it had been resolved. NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION clarified that projects would be delayed if the funding is not approved. The Department of Transportation and Public Facilities would not be able to issue permits to utility companies and others that need the permits for construction purposes. The Department of Transportation and Public Facilities has authority for $330 thousand dollars for right-of-way permit issuance. They anticipate they need an additional $100 thousand dollars to cover spring work. Without the additional authorization permits would not be issued. Co-Chair Mulder maintained that the bill needs to be consistent. Representative J. Davies recommended that the change be made in the existing committee substitute. Representative Williams reiterated that his impression was that the department had enough money to finish this year's projects. Ms. Slagle clarified that the Department of Transportation and Public Facilities does not have enough authority to expend. They cannot generate revenues for the permit process without the expenditure authority. They cannot charge it to federal projects. She explained that, in the past, the department resolved the problem by transferring authority from within the department. The department's current budget structure does not allow transfers within the department. Co-Chair Mulder suggested that the amendment be adopted to make the bill consistent. He stressed that the misunderstanding can be clarified later. Representative Grussendorf recommended that the amendment be withdrawn. Co-Chair Mulder WITHDREW his motion to adopt Amendment 2b. Representative Austerman MOVED to ADOPT Amendment 3 (copy on file). He observed that Amendment 3 would add $500 thousand dollars in program receipts to the Department of Fish and Game for pink salmon pre-emergent fry sampling in the Kodiak Management Area. KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF FISH AND GAME explained that they would be statutory designated program receipts. Co-Chair Therriault ascertained that there would be a negotiated contract signed with the individuals that are bringing the money to the table. Mr. Brooks agreed that there would be a written agreement. Representative Austerman MOVED to amend Amendment 3, add, "statutory designated". There being NO OBJECTION, it was so ordered. Representative Kohring questioned if the appropriation is an emergency. Representative Austerman explained that the fry must be counted at this point time. This is a management tool used to predict the salmon run. He noted concerns that more fry may have been killed by the extremely cold winter. The count is used to determine processing needs. The count is needed before the ice moves out and the spring thaw. The Department of Fish and Game indicated that they did not have enough authorization. There being NO OBJECTION, Amendment 3 was adopted as amended. Representative Foster MOVED to ADOPT Amendment 4 (copy on file). Section 16 page 10, line 10, Maintenance and Operations, Northern Region Highways and Aviation, is amended to add $ 235,650 increasing the total appropriation to $37,342,650 and the General Fund to $36,558,450 The increment is for manually opening the following roads spring of 1999. Taylor Highway $132,000 Boundary Spur 10,500 McCarthy Road 8,700 Nome/Teller Road 35,700 Nome/Council Road 34,700 Glacier Creek/Nome 10,100 Fairbanks Creek Rd. 3,950 Tofty Road/Manley; Eureka/Rampart REPRESENTATIVE CARL MORGAN spoke in support of Amendment 4. He read from written remarks. He express concerns over the opening of the Taylor highway. He noted that the Alaska portion of the Taylor highway is about 200 miles long and runs from Tok, through Chicken, Eagle, and Boundary. It connects to the top of the world highway in the Yukon Territory. The Department of Transportation and Public Facilities has outlined FY99 cost savings of $316,000 for not opening several highways this spring, including the Tayor, Denali, Copper River and Nome highways. He addressed the $142,500 thousand dollars cost savings proposed for the Taylor highway. He stated that reducing funds for snow removal creates life, health, safety and economic issues that far out way the cost savings. Representative Morgan noted that he traveled to his district and the people voiced their concerns regarding the delay in opening the Taylor Highway. He received numerous letters and phone calls. Representative Morgan noted that when the Governor brought forth his reductions for FY99, he stated that these reductions were targeted to areas, which would have minimum impact on the citizens of the state. He maintained that the costs to the residents, visitors and businesses of South Central Alaska far exceed the $142,500 cost savings. He asserted that the reduction is not a 'minimum impact' as stated by Commissioner Perkins. Representative Morgan emphasized that the delay would result in a significant loss to the tourism trade in the region and will adversely effect the efforts of businesses and individuals to promote the "top of the world" highway as an alternate route to the Alaska Highway. If the Taylor highway is not maintained as in the past, alternative measures for the tourism industry of flying passengers or canceling operations until June 1, could result in a potential revenue loss of $1.4 million dollars. The state will be responsible for the large buses and their passengers when the road proves hazardous, Representative Morgan noted that there are an estimated 80 permitted mines in the area. These miners will be impacted because they have only a small window of opportunity to acquire fuel and food for the mining season. They will be unable to reach their claims if they cannot haul their freight by April 1, losing the entire mining season. These communities are counting on the delivery of fuel, food and building materials and cannot wait until June 1, to receive them. Representative Morgan stressed that having Mother Nature take care of the Taylor highway opening may result in a road washout. The cost to repair the culverts/washouts would greatly exceed the estimated savings, Representative Morgan acknowledged the Legislature's and the Governor's commitment in covering the current year's shortfall, but concluded that the cost saving measures proposed by the governor should be done by other means. Representative Morgan read from a letter by Holland America (copy on file). This year we will begin our operation on the Taylor Highway May 19, Our capacity for this tour is 110 passengers in each direction. If the Taylor Highway is inaccessible we will be forced to fly passengers between Tok and Eagle. With the cost of chartering aircraft to fly 220 people between Tok and Eagle at $15,000 per day, we are looking at a total cost of $195,000. If in the future we could not depend on the Taylor Highway being maintained as in the past, and we were forced to cancel operations until June I our company could see a potential revenue loss of $1,478,620. This figure was calculated assuming 220 passengers traveling each day between Fairbanks and Dawson from May 19 to June 1. The price of the tour between Fairbanks and Dawson is $517 per person. Representative Morgan read from a letter by Marina Trudelle (copy on file). You see I am 16 years old and I work on the Yukon Queen. They are building another boat so that two coaches can come in. And if the road was closed then that would mean that I and others will be out of a job. so please can you take into consideration of keeping the roads nice for us to drive in. Representative Foster read provided members with a statement in support of Amendment 4 (copy on file). He stated that the Administration's decision to implement austerity measures by allowing rural roads to melt open rather than manually clearing them has serious impact. The first issue is that, if roads are not manually opened and instead allowed to melt off, culverts will still be frozen and there will be a larger number of washouts, which will lead to a loss of portions of the roadbed. Representative Foster stated that the second issue is that the delayed openings were not announced until this winter. Since these roads were already closed at the time of the announcement it did not allow miners and other persons with personal and commercial interests in the area an opportunity to have needed supplies on site so that the normal spring activities could be carried out. The fuel needed for mining operation is a prime example. The seasons are already short and delaying mobilization reduces the season seriously. Mining start-up costs are high and in a shortened season it is impossible to reach the point in production where a profit can be realized. The third issue is the economic impact on persons living in Nome and the outlying communities. The Nome/Teller road connects to the town of Teller and is also utilized by residents living in Brevig Mission, since materials are brought to Teller by road and then brought across the ice to Brevig Mission. This year for instance, the materials to rebuild the Brevig Mission store, which burned this winter, need to be brought to Teller by truck and brought across the ice to reduce costs and to speed construction of the new store. He observed that there would be an impact to tourism and the guided fishing industry in the Nome Region. Representative Foster emphasized that if roads are going to be allowed to melt open, this decision needs to be made in advance so that other arrangements can be made. He maintained that shortening the season substantially reduces profitability and discourages the economic development. Co-Chair Mulder acknowledged the Administration's efforts, but emphasized that there are unanticipated repercussions. He maintained that this reduction affects needed services in terms of road access. Representative Bunde asked if there have been emergency funds allocated to assist miners in moving their supplies during the winter. Ms. Slagle clarified that $50 thousand dollars was allocated to assist miners in getting their oil fuel to the 40 mile area while the road is still frozen. Co-Chair Mulder asked if the money could be used toward an earlier opening date. Ms. Slagle could not answer. Representative Bunde noted that miners would move their equipment from the road access to their mining sites with their own equipment. He questioned if the miners could use their own equipment to come further out to the Taylor Highway. He asked if the state has every let the road clear by nature. Ms. Slagle understood that the roads have been allowed to open up naturally in the past 15 years. She did not know the savings. Representative J. Davies noted that he had prepared a similar amendment (Amendment 7). It is identical to Amendment 4 except for the inclusion of the Kougarok Road in Nome. He asked if the Kougarok Road should be included in Amendment 4. Co-Chair Mulder suggested that the $50 thousand dollars that the department set aside for assistance to miners could be added to the appropriation in Amendment 4 in order to fund the opening of the Kougarok Road. Ms. Slagle stated that the funding should be sufficient to cover the roads in Amendment 4 and the Kougarok Road. Co-Chair Therriault suggested that the Kougarok Road be added to the list. He noted that identified roads in order to show how the total was reached, but that the Department of Transportation and Public Facilities would allocate the funding. Representative J. Davies MOVED to amend Amendment 4 by including the Kougarok Road/Nome Dexter Bypass. He explained that the funding level would remain the same. The additional $43 thousand dollar cost required to open the Kougarok Road would be shown and the projects prorated. He clarified that the numbers identified for the roads are allocation numbers not appropriation amounts. There being NO OBJECTION, it was so ordered. (Tape Change, HFC 99 - 39, Side 2) Co-Chair Therriault explained that he would support the amendment because areas were not allowed time to take action on the reduction. He suggested that the department's plan to delay openings should be addressed in subcommittee. He emphasized that residents need sufficient time to plan for closures. Representative J. Davies underscored that the Administration was pressured to find methods of reductions. He stressed that the roads foster economic activity in some areas. He emphasized that there are some instances where state services help the economy. Representative Bunde stated that he did not criticize the department for cutting services that did not traditionally exist and where major economic activity was not impacted. He expressed frustrations that there are individuals that pride themselves on their self-sufficiency and their ability to get along without services, do not pay taxes and are vocal in requesting state reductions, until the cuts come close to home. Co-Chair Mulder observed that there would still be a little over $80 thousand dollars in savings. Representative Kohring agreed that there are areas that should be fully funded. He stressed that road maintenance is a primary function of government. There being NO OBJECTION, Amendment 4 was adopted as amended. Representative Foster pointed out that if the miners use their own equipment to reach supplies that they could damaged the roads in areas where the road is not covered with ice. Representative Grussendorf MOVED to ADOPT Amendment 5 (copy on file). Amendment 5 would add a new section on page 4, line 6: DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS. The sum of $1,400,000 is appropriated from the power cost equalization and rural electric cavitalization fund (AS 42.45.100) to the Department of Community and Regional Affairs for the power cost equalization program for the fiscal year endine June 30, 1999. Co-Chair Therriault noted that the colder than usual winter affected the consumption of fuel. He pointed out that Power Cost Equalization (PCE) was underfunded in the FY99 budget. He noted that the shortfall would impact residents and vendors. He spoke in support of the amendment and emphasized that the issue should be addressed at another time. Co-Chair Mulder questioned if the appropriation allowed a rateable reduction based upon the PCE funding level. PERCY FRISBY, DIRECTOR, DIVISION OF ENERGY, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS provided information via teleconference. He responded that the department has the authority to prorate PCE in years where funds are not available to fully fund the program. Co-Chair Mulder asked why the department went forward to spend more than was allocated. Mr. Frisby explained that PCE exceeded the $17 million dollar cap two years ago. Since that time PCE has been funded at 85 percent. The Division of Energy continued the 85 percent funding level. Representative Austerman asked where the hundred percent figure came from. Mr. Percy explained that full funding would be almost $23 million dollars. The amount was determined from monthly reports by participating communities. He explained that the number spent in the last fiscal year is used to estimate the next. Representative Foster spoke in support of the amendment. He observed that PCE has been short-funded for several years. He stressed the need to provide future funding for PCE. Representative Grussendorf referred to legislation passed in 1983, relating to PCE. He maintained that PCE should at least be funded at the 85 percent level. Representative Austerman stressed that he is willing to work on an endowment for Power Cost Equalization. He stressed that he did not approve of the department spending more than the amount that was appropriated by the legislature. Representative J. Davies stressed that the legislature did send a strong message that the ratable portion should be used. He noted that it is hard to anticipate all the costs and demand on the fund. He observed that there was a particularly cold winter. It was the third coldest winter on record in Fairbanks. He did not think that it was unreasonable to expect that PCE would be funded at 85 percent. He pointed out that the funding would come from the Power Cost Equalization Fund. Co-Chair Mulder pointed out that there would only be $9 million dollars in the account for the following year if the appropriation were approved. Representative Bunde acknowledged arguments that the state should do things that the people cannot do for themselves. He noted that energy is an area that is unclear as to how much the state should do. He stated that he reviewed gross bingo receipts in communities that are eligible for PCE in an attempt to identify disposal income. He observed that there were 40 communities that receive PCE that had gross bingo receipts in access of $1 million dollars. Some were as high as $6 million dollars. He questioned if the state should subsidize electrical costs in areas that have disposal income. In response to a question by Co-Chair Mulder, Mr. Percy stated that in January 1999, the division identified that an additional $1.7 million dollars would be needed. He noted that there was a decrease in fuel cost, but an increase in demand. Co-Chair Mulder asked if there were discussions last fall that there would be shortfalls. Mr. Percy stated that they did know that they would be short. Representative J. Davies questioned if the intent of the legislature was to fund PCE at 85 percent. Representative Austerman noted that his area receives a subsidy for their ferry service. The subsidy is adjusted during the slow time to pay for the rest of the year. There are times when the ferry is shut down. He felt that the amount should have been prorated when they realized there was a shortfall. Representative Grussendorf acknowledged concern with how the department handled the shortfall. He emphasized that rural Alaskans are the ones that will be impacted. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR stated that the expectation was that the 85 percent level would be reached. She noted other budget items were intentionally short-funded, such as leasing. She felt that it was appropriate to fund PCE at 85 percent and noted that it had been funded at 85 percent over the last few years. She noted that the PCE task force has made recommendations that would bring the cost down. She stressed that there is an opportunity to address the issue in order to find a long-term solution to PCE. The rate in rural Alaska is twice as high as in urban Alaska. She recommended using the PCE fund to keep things stable this year. Co-Chair Mulder asked if the Administration has decided which proposal would be supported. Ms. McConnell stated that options are being reviewed. She stressed that they need to check with those that will be affected to assess overall impact. She acknowledged that there is a need to scale back. Representative Kapsner spoke in support of Amendment #5. She observed that her communities have been hit be two consecutive fish disasters. Representative Foster stated that there are 30 villages in his district. He observed that winters are long and that there is not much social life. He noted that villagers use BINGO as a way to raise money. The money stays in those villages. Representative J. Davies questioned the meaning of 85 percent. He stressed that the average cost of power in urban Alaska is approximately .10 cents per kilowatt-hour. The cost of power in rural areas is approximately .30 cents with 100 percent power cost equalization. Mr. Percy clarified that the cost of power in Anchorage and Fairbanks is .10 cent per kilowatt-hour. The cost in rural Alaska is .32 cents a kilowatt-hour with 85 percent power cost equalization. Representative Foster clarified that rural residents pay the first ten and a half cents. The state pays the balance 95 percent, between ten and a half cents and fifty-four cents. Anything over .54 cents is not paid for by the state. He observed that the actual cost per kilowatt is approximately .40 to .50 cents. A roll call vote was taken on the motion to adopt Amendment 6. IN FAVOR: Davies, Foster, Grussendorf, Moses, Williams OPPOSED: Davis, Kohring, Austerman, Bunde, Mulder, Therriault The MOTION FAILED (5-6). Representative Grussendorf MOVED to ADOPT Amendment 6 (copy on file). Co-Chair Therriault OBJECTED. Representative Grussendorf explained that the amendment would appropriate $11,997 thousand dollars for Perseverance Trail repairs. He noted that the legislature appropriate funding in the FY99 budget for trail repair with the condition that the trail be taken over by the city and borough of Juneau. The conditional language was rejected and the trail was later repaired through private donations. He observed that the current appropriation would repair another portion of the trail. He stressed that the trail needs to be repaired to prevent liability to the state of Alaska. Co-Chair Mulder observed that the legislature is interested in transferring the trail to the city. He noted that program receipt authority was considered as an encouragement. He emphasized that it is a local trail. He observed that the legislature is considering not plowing roads at the same time that an upgrade of a local access trail is being considered for funding. He emphasized that the two items are at different levels of priority. He stated that by not funding the repair a clear message is being sent that the legislature is sincere about the transfer and that it needs to happen. Representative J. Davies stressed that the appropriation would repair an existing park facility. He observed that the state maintains parks facilities in other areas. He questioned why this facility is being transferred when others are not being transferred to the local entities. (Tape Change, HFC 99 - 40, Side 1) Representative J. Davies spoke in support of the amendment. He emphasized the issue of state liability. Co-Chair Mulder noted that this is the second request in three years for repair to this trail. He observed that there is no fee associated with the trail. Representative Grussendorf reiterated concern over liability to the state of Alaska. Representative Bunde suggested that tort reform would protect the state from liability. He stressed the need to sort out wants from needs. Representative Austerman clarified that the trail is state owned. NICO BUS, ADMINISTRATIVE SERVICES MANAGER, DIVISION OF SUPPORT SERVICES, DEPARTMENT OF NATURAL RESOURCE explained that the trail is maintained by a nonprofit organization. There is no funding through the Department of Natural Resources. In response to a question by Co-Chair Therriault, Mr. Bus clarified that the request is part of the Department of Military and Veterans Affairs' emergencies services request. The Division of Emergency Services made a commitment to the Division of Parks to fix the infrastructure in the Division of Parks. Co-Chair Therriault asked if it is time critical. Mr. Bus explained that the request would allow the work to be down before the heavy use period. The request is for a new bridge on the Granite Creek Trail. The request is for general funds to be put into the Disaster Relief Fund to reimburse the Division of Parks. Representative J. Davies restated his understanding that the state would still have liability even if a sign were put up on the trail. He noted that there have been a number of disasters around the state where general funds were used to repair infrastructure. Representative Bunde disagreed that the state would be liable for use of a trail that is clearly hazardous. In response to a question by Representative Austerman, Mr. Bus clarified that there is a sizable bridge that needs to be replaced. The bridges were placed by the state Division of Parks. Representative Grussendorf suggested that a barrier would be needed to prevent liability. Representative Bunde reiterated that he did not believe the state would be liable. Representative Austerman stated that he was concern about the state's liability. Representative Williams suggested that the trail be shut down. Representative J. Davies responded that the state could spend $100 thousand dollars to build a barrier to keep people out when $135 thousand dollars would repair a recreational facility. A roll call vote was taken on the motion to adopt Amendment 6. IN FAVOR: Foster, Grussendorf, Moses, Austerman, Davies OPPOSED: Davis, Kohring, Williams, Bunde, Therriault, Mulder The MOTION FAILED (5-6). Representative J. Davies WITHDREW Amendment 7. Representative J. Davies MOVED to ADOPT Amendment 8 (copy on file). Page 1, Section 2. Disaster Relief Fund. Page 1, line 10 Delete "$11,997,000" Insert "$13,673,600" Page 1, line 13 Delete "$9,597,000" Insert "$11,273,600" Representative J. Davies explained that the amendment would restore the capital match for the Western Alaska fisheries disaster. He stated that requiring communities to use their FY00 matching grant funds would be the equivalent of requiring Anchorage to use municipal assistance and revenue sharing funds as a match to a disaster. REPRESENTATIVE KAPSNER observed that the appropriation was promised to the department and obligated Ms. McConnell stated that the Governor declared the Western Alaska fisheries a disaster. The legislature was informed that $1.5 million dollars would be spent to match the $7 million dollars in federal funds that were made available. She emphasized that Senator Stevens has secured $7 million dollars in federal aid. The Administration is trying to find alternatives. Some communities have provided matches to their projects. She maintained that the proposed committee substitute would prevent local communities from providing a match. The match is required for the federal funding. She stressed that the funding replaces wages that were lost in the fishing industry. Co-Chair Mulder noted that authority granted in FY99 would allow communities to provide the match. Ms. McConnell agreed that if money were available communities could provide the match. She stressed that communities have loss other revenues due to a turn down in the fisheries. She stated that the Administration is pursuing the possibility that communities that can provide the match might share with others. She did not know if this were possible under the federal program. In response to a question by Co-Chair Therriault, Ms. McConnell clarified that she did not know if the ability of communities to make the match would be affected by the proposed committee substitute. Co-Chair Therriault referred to the Community Matching Grants Capital program. He noted that communities receiving money could carry forward a balance. He asked if there are any carry-forward balances in the Municipal Matching program that could be used to make the match. Ms. McConnell emphasized that communities would be asked to give up job opportunities that were provided under the matching grant program. She emphasized that two jobs cannot be made out of one pot of money. She reiterated that $1.5 million state dollars would leverage $7 million federal dollars. Co-Chair Therriault stressed that communities are being asked to pick and chose between programs. Ms. McConnell stressed that disasters have been treated differently. She noted that Kenai was not asked to give up its capital matching grant projects after the South Central flood in order to provide the match for federal disaster funds. She added that this is not how the Miller's Reach fire disaster was handled. She noted that the villages have limited resources. This is outside of the normal capital budget area. Co-Chair Therriault stated that there is a difference between physical and economic disasters. Co-Chair Mulder agreed with Co-Chair Therriault. He reviewed some of the projects that would be funded. He maintained that the projects in question belong in the capital budget. Ms. McConnell stressed that it is dangerous to say that a collapse in fisheries that comes from weather conditions is not a disaster. She compared the fisheries disaster to a draught. The federal government directed that the projects be capital in nature. Representative J. Davies stated that he would agree that the funding should go in the capital budget if there were new funds available. He did not think it would be fair to require these areas to be singled out. Co-Chair Mulder asked if the option of using the Capital Matching Grant program was discussed and supported by the Administration during the previous session. Ms. McConnell clarified that the legislature made it clear that there would be no general funds for these projects. The Administration made its best effort to provide funding. She noted that Bethel and Dillingham have provided matches. She stressed that the Administration did not indicate that they would be able to find alternative funding for the match. She stressed that there is not a lot of cash in the villages to be used as matching funds without sacrificing other projects that are going to produce jobs. Co-Chair Therriault asked if an effort was made to compare the jobs that would be created under projects in this appropriation to what would be created under the Capital Matching Grant program. He emphasized that communities would get more for their capital matching grants if they are used to leverage federal dollars through the disaster funding. Ms. McConnell stated that the Department of Community and Regional Affairs worked with villages, but that there are few villages that store up their matching grants. Co-Chair Therriault noted that in the case of a Midwestern draught the relief would go to the individual farmer. He did not think that a direct comparison could be made to a Midwestern crop failure due to draught. Ms. McConnell noted that the future federal aid for the disaster would be configured differently. Federal relief in FY00 would come as direct aid to those affected. Representative Foster asked if a match was requested during the collapse of the timber industry. Ms. McConnell stated that there was not a match requirement for relief to the Southeast timber industry. She reviewed job creation relating to the Southeast timber industry. Representative Williams pointed out that federal relief for the Southeast timber industry did not go through the state. Representative Bunde noted that fisheries run in cycles. He asked if the Administration has given thought to when a natural disaster becomes normal economic activity. Ms. McConnell stated that they Administration have not resolved the issue of future years. She explained that communities were turned down if their impact was due to low prices or lack of market. Only communities affected by a warming of waters were included. Representative Kapsner questioned if funding is going to economic diversification. She observed that one village has a 77 percent below poverty level while 55 percent of the community is involved in the fisheries industry. Ms. McConnell stated that the second round of federal aid do is structured more toward economic diversification. Projects in the first year of relief were selected because they could provide cash assistance in the form of wages. Representative Austerman noted there are problems with the fisheries in his area. He found it difficult to classify the salmon downturn as an economic disaster. (Tape Change, HFC 99 - 40, Side 2) Representative Kohring stressed that relief should come from private and non-profit assistance. A roll call vote was taken on the motion to adopt Amendment 8. IN FAVOR: Foster, Grussendorf, Moses, Davies OPPOSED: Austerman, Bunde, Davis, Kohring, Williams, Mulder, Therriault The MOTION FAILED (4-7). Co-Chair Mulder commented on Amendment 8. He stressed that the Legislature and Administration still need to come to terms with the definition of "natural disaster". He observed that the Legislature is not in step with the current Administration. Representative J. Davies MOVED to ADOPT Amendment 9 (copy on file). Co-Chair Mulder OBJECTED. Section 5, add a new subsection (Z) "The sum of $170,000 is appropriated from the general fund to the Department of Corrections, division of institutions, for staffing related costs at the Cook Inlet Correctional Center for the fiscal year ending June 30, 1999." MARGARGET PUGH, COMMISSIONER, DEPARTMENT OF CORRECTIONS, explained that the amendment would restore $170 thousand dollars to the Cook Inlet Correctional Unit. She explained that the original supplemental request was reduced due to a reduction in last quarter's prison population. Co-Chair Mulder acknowledged that the Institution was funded a bit below their FY99 request, but emphasized that overall prison population was decreased by at least 600 prisoners, which were sent out of state last year. Tent camps were also used to alleviate overcrowding. This cost in access of $10 million dollars. He maintained that the overhead at institutions should have been diminished with the reduction of prisoners. He felt that the department had a comfortable cushion and should have the ability to deal with the situation. Representative J. Davies pointed out that they were funded below the national norm. The original request was reduced. He noted that $170 thousand dollars is needed to cover the expected overtime levels. Commissioner Pugh clarified that there are 13 institutions within the system. She stated that the department has not been able to identify an alternate funding source for the supplemental request. Co-Chair Mulder acknowledged that the budget was short funded by $2 million dollars. He clarified that the short funding was directly attributable to anticipated reductions from inmates sent out-of-state. He emphasized that other institutions had reduced populations. Commissioner Pugh clarified that a reduction in population was already factored into their FY99 request for in-state institutions. A roll call vote was taken on the motion to adopt Amendment 9. IN FAVOR: Grussendorf, Moses, Davies OPPOSED: Kohring, Williams, Austerman, Davis, Foster, Therriault, Mulder Representative Bunde was absent from the vote. The MOTION FAILED(3-7). Representative J. Davies MOVED to ADOPT Amendment 10 (copy on file). Co-Chair Mulder OBJECTED. Section 5(c) The sum of "$3,130,000" [$3,050,0001 is appropriated from the general fund to the Department of Corrections, division of institutions, for increased costs associated with out-of-state contract beds for the fiscal year ending June 30, 1999. Commissioner Pugh repeated that the department has managed to reduce their total supplemental request by over $1 million dollars. This request is for $80 thousand dollars. Co-Chair Mulder observed that the request relates is for an additional probation officer that was not approved by the legislature. The department hired two hearing officers, although only one was authorized in the FY99 budget. He spoke against the request. He emphasized that the issue would be evaluated in the full operating budget. Representative J. Davies spoke in support of the amendment. Commissioner Pugh clarified that probation officers, in the institutions, act as case managers. They have a lot of paper work associated with release. They are responsible for making arrangements for release and for monitoring security and treatment programs. Representative J. Davies stated that the caseload is unacceptably high. Co-Chair Mulder pointed out that the bulk of work occurs prior to release. He noted that probation officers have been increased over the last years. A roll call vote was taken on the motion to adopt Amendment 10. IN FAVOR: Grussendorf, Moses, Davies OPPOSED: Kohring, Williams, Austerman, Davis, Foster, Therriault, Mulder Representative Bunde was absent from the vote. The MOTION FAILED (3-7). Representative J. Davies MOVED to ADOPT Amendment 11 (copy on file). Amendment 11 would delete on page 13, lines 10 - 11. This amendment would delete the repeal of Section 24 (VPSO Parole Supervision Pilot Program). Commissioner Pugh stated that the program has potential for the future. It will allow the department to contract for a VPSO pilot program training in probation duties. Co-Chair Mulder stated was brought forth by his office as an effort to increase the outreach in rural Alaska. It is difficult to release individuals into their home communities without supervision. The program would allow VPSO officers to help with the transition. He noted that the program has not been begun. Representative J. Davies spoke in support of the amendment. A roll call vote was taken on the motion to adopt Amendment 11. IN FAVOR: Grussendorf, Davies OPPOSED: Austerman, Davis, Foster, Kohring, Williams, Mulder, Therriault Representatives Bunde and Moses were absent from the vote. The MOTION FAILED (2-7). Representative Foster expressed concern with the loss of a probation office in Nome. Representative J. Davies MOVED to ADOPT Amendment 12 (copy on file). Co-Chair Therriault OBJECTED. Section 12, on page 8, line 12 Amended to read "*Sec 12. Department of Natural Resources. The sum of $78,270 is" Representative J. Davies explained that the amendment would fund program service aides in the Fairbanks and Anchorage Recorder's Office. Co-Chair Mulder clarified that there were three portions to the request for funding in the Recorder's Office. Two of the portions relate to fixed costs. The other portion relates to personal services. The proposed committee substitute covered the fixed costs. Representative Kohring questioned why the reduction was recommended. He observed that the personal services would be funded through program receipts. Co-Chair Mulder responded that the program receipts are deposited into the General Fund. He noted that the Recorder's Office receives receipts in access of the amount needed to operate the program. He pointed out that the budget gap would be increased if the appropriation is approved. Representative Austerman stressed that there needs to be improvements in the system used by the Recorder's Office to record documents. Representative J. Davies spoke in support of the amendment. He stressed that the Recorder's Office is purchasing equipment to allow them to reduce the backlog. He noted that the funding is for temporary hires. The intent is to reduce the delay to the private sector. Representative Austerman maintained that the problem should be addressed in the FY00 budget. He pointed out that the supplemental is for crisis items. He did not consider the workload at the Recorder's Office to be a crisis. Representative J. Davies maintained that the supplemental is not just about authorizing items in crisis. He emphasized that the supplemental allows fine tuning because it is impossible to forecast some items. Mr. Bus clarified that the Department of Natural Resources does not control the workload. The additional positions would stimulate the economy and result in more revenues to the general fund. He stressed that funding would be through program receipts. Four temporary people were hired in September to help with the backlog. Documents were waiting for up to five months. The money has already been spent. The positions were hired for six months. Representative Grussendorf noted that the cost of each position is approximately $8 thousand dollars. He stressed that the request would be funded through program receipts. He stressed that miners need to have their claims recorded in addition to having their roads plowed. He pointed out that it is a consumer service. Representative J. Davies observed that the state would probably take in less money as a result of not hiring these temporary positions. Representative Kohring stated that if money were going to be put back in, it should be straight across the board. Representative Kohring MOVED to amend Amendment 12 to reinstate full funding for the request at $92 thousand dollars. There being NO OBJECTION, it was so ordered. There being NO OBJECTION, Amendment 12 was adopted as amended. Representative J. Davies WITHDREW Amendment 13 (copy on file). Co-Chair Therriault MOVED to ADOPT Amendment 14 (copy on file). Amendment 14 would increase other funds authorization for the Public Assistance Administration to $41,090,100 million dollars. Co-Chair Therriault observed that the authorization to accept federal funds in the childcare benefits component had to be increased to allow acceptance of federal Temporary Assistance to Needy Families (TANF) funds. JANET CLARK, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES added that the amendment also clarifies corrects a mistake in the Public Assistance Administration component. She explained that the reduction that the department suggested in the grants line of the Public Assistance Administration should have been $30 thousand dollars. There being NO OBJECTION, Amendment 14 was adopted. Co-Chair Mulder MOVED to ADOPT Amendment 15 (copy on file). Page 13 Line 2 & 3 Delete: "NOT TO EXCEED $700,000,001," Insert: ", not to exceed 900,000,001," Co-Chair Mulder explained that the amendment would increase the authority for the draw from the Constitutional Budget Reserve from $700 million to $900 million dollars. Representative J. Davies stated that the amount would have to be revisited in May 1999. Co-Chair Mulder agreed and stated that it would be included in the final appropriation. Representative J. Davies suggested the amount be adjusted later. Representative J. Davies OBJECTED. He spoke against the amendment. A roll call vote was taken on the motion to adopt Amendment 15. IN FAVOR: Grussendorf, Davies OPPOSED: Austerman, Davis, Foster, Kohring, Williams, Mulder, Therriault Representatives Bunde and Moses were absent from the vote. The MOTION FAILED (2-6). Ms. McConnell clarified that the Department of Transportation and Public Facilities will not receive federal funding for their request of $1,513,800 million dollars if the federal Emergency Response Fund is not replenished. If the request is not funded the Department of Transportation and Public Facilities will bring an amendment to the Committee for funding. DEPARTMENT OF ADMINISTRATION BARBARA BRINK, DIRECTOR, PUBLIC DEFENDER AGENCY discussed the agency's request for additional office space. She explained that there are 14 additional positions. (Tape Change, HFC 99 - 41, Side 1) Ms. Brink emphasized that the agency only has a total of 36 employees. She stated that she had been looking for office space for the past four years. She pointed out that it would be expensive to locate office space in another building. She noted that office space became available on the floor above. She stressed that the location saves money, since they can share the receptionist and library. She stressed that there would be a cost savings. She emphasized that the agency will still be crowed and cramped. She pointed out that the agency has become more efficient DEPARTMENT OF PUBLIC SAFETY Representative G. Davis questioned if the Department of Public Safety considered not training all of the officers. KENNETH BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION clarified that the intent was to train necessary new troopers not to keep the Academy open. He noted that there is a large number of retiring troopers. He stressed that there are moving costs associated with replacing retiring troopers. He noted that there were 258 authorized positions. The legislature provided funding for 8 new troopers. Co-Chair Mulder asked if the department hired 17 new troopers. Mr. Bischoff confirmed that the department planned to employ 17 additional troopers. Co-Chair Therriault asked how replacement of retiring troopers is decided. Mr. Bischoff explained that it varies with bargaining units. The Public Safety Employees Association has a seniority list. When positions open the department is required to bid the open slots. Any employee can submit a bid. Co-Chair Therriault noted that an officer could be move from Barrow to Ketchikan due to the system of seniority. Mr. Bischoff explained that there is more control on the management level. Co-Chair Mulder emphasized that the legislature has not cut trooper positions. Representative Foster expressed his frustrations in his inability to find Department of Public Safety personnel to contact in regards to a missing child. He attempted to locate help on a Saturday. HB 100 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 5:05 p.m. HFC 2 3/08/99