HOUSE FINANCE COMMITTEE April 7, 1999 1:50 P.M. TAPE HFC 99 - 64, Side 1. TAPE HFC 99 - 64, Side 2. TAPE HFC 99 - 65, Side 1. TAPE HFC 99 - 65, Side 2. TAPE HFC 99 - 66, Side 1. TAPE HFC 99 - 66, Side 2. CALL TO ORDER Co-Chair Mulder called the House Finance Committee meeting to order at 1:40 P.M. PRESENT Co-Chair Mulder Representative Foster Co-Chair Therriault Representative Grussendorf Vice Chair Bunde Representative Kohring Representative Austerman Representative Moses Representative J. Davies Representative Williams Representative G. Davis ALSO PRESENT Representative Ethan Berkowitz; Representative Sharon Cissna; Representative Allen Kemplen; Representative Tom Brice; Denny De Witt, Staff, Representative Eldon Mulder; David Teal, Director, Division of Legislative Finance; Karen Perdue, Commissioner, Department of Health and Social Services; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Ginger Blaisdell, Fiscal Analysts, Legislative Finance Division; Sharon Barton, Director, Division of Administrative Services, Department of Administration; Tom Lawson, Director, Division of Administrative Services, Department of Commerce and Economic Development; Nico Bus, Administrative Services Manager, Division of Support Services, Department of Natural Resources; Ken Taylor, Director, Division of Habitat, Department of Natural Resources; Dan Spencer, Chief Budget Analyst, Office of Management and Budget, Office of the Governor; Larry Persily, Special Assistant, Office of the Commissioner, Department of Revenue; Peter Bushre, Chief Financial Officer, Permanent Fund Corporation, Department of Revenue; Jim Kelly, Director of Communications, Permanent Fund Corporation, Department of Revenue; Annalee McConnell, Director, Office of Management and Budget, Office of the Governor. SUMMARY HB 50 An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17©, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. HB 50 was heard and HELD in Committee for further consideration. Amendments for the following budgets were considered: Department of Health and Social Services Military and Veterans Affairs Department of Fish and Game Department of Revenue Department of Education Department of Administration HB 51 An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date. HB 51 was heard and HELD in Committee for further consideration. HOUSE BILL NO. 50 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17©, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." HOUSE BILL NO. 51 "An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date." Co-Chair Therriault MOVED to adopt work draft 1-GH1020\G, Utermohle, 4/5/99, committee substitute for HB 50 and work draft 1-GH1021\D, Utermohle, 4/5/99, committee substitute for HB 51, as the working documents before the Committee. Representative J. Davies OBJECTED for the purpose of discussion. He inquired if the work draft would fund municipal assistance and revenue sharing. Co-Chair Mulder replied that the only deviation from the subcommittee recommendations to the draft committee substitute was the exclusion of revenue sharing and municipal assistance. Representative J. Davies objected to that deletion and requested that more discussion be heard regarding that concern. He then proceeded to WITHDRAW his OBJECTION to adoption of the work drafts. There being NO further OBJECTION, those versions of the bill were adopted as the working document. DEPARTMENT OF HEALTH AND SOCIAL SERVICES Co-Chair Therriault MOVED to adopt HSS #1. (Copy on File). The amendment would add $135.0 MHTAAR funds and $123.8 federal funds to the foster care special need component, add $200.0 MHTAAR funds and $50.0 federal funds to the subsidized adoptions and guardianship component and would add $100.0 MHTAAR funds to the residential child care component. Representative J. Davies OBJECTED for the purpose of to place on record his concern with the source of funds being used. Co-Chair Therriault explained that he had negotiated with Mental Health Trust representatives. They were willing to replace general fund cuts with Mental Health Trust funds in these three areas. Representative J. Davies WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment #1 was adopted. Co-Chair Therriault MOVED to adopt HSS #2. [Copy on File]. Representative J. Davies requested a description of the amendment. Co-Chair Therriault commented that amendment #2 was a zero general fund amendment that would supplant $390.4 thousand general fund dollars in the Project Succeed program and replace them with $390.4 thousand in MHTA funds. That would allow for $390.4 thousand dollars to be used to fund an increment for Village Based Mental Health and Substance Abuse Services. There being NO OBJECTION, HSS #2 was adopted. Co-Chair Therriault WITHDREW amendment HSS #3. [Copy on File]. There being NO OBJECTION, it was withdrawn. Representative J. Davies questioned if Committee members were discussing additional copies of pending committee substitutes. DENNY DEWITT, STAFF, REPRESENTATIVE ELDON MULDER, explained that the committee substitute for HB 51 was a rerun. It contained an error in the last two pages, which had not been received when the first copy was made. Inadvertently, copies from that were made for the public and staff. The correct work draft date should be dated 4/07/99. Representative Grussendorf questioned which version had the Committee just adopted. Co-Chair Therriault MOVED to adopt the committee substitute version dated 4/07/99, CS HB 51(FIN). Co-Chair Mulder noted that HB 50 would be unaffected by the proposed change. Co-Chair Therriault MOVED to adopt amendment HSS #4. [Copy on File]. Representative J. Davies OBJECTED for purposes of discussion. Co-Chair Therriault commented that the proposed fund source would delete $5,264.1 general fund receipts, inserting that amount to the general fund match, Alaska Temporary Assistance Program component; delete $225.2 general fund program receipts, inserting that amount for tribal assistance component; and delete $675.0 general fund program receipts, inserting that amount for foster care base rate component. GINGER BLAISDELL, FISCAL ANALYST, LEGISLATIVE FINANCE DIVISION, explained the changes proposed with the implementation of the amendment. She acknowledged that the relationship between Child Support Enforcement Division (CSED) and the Alaska Temporary Assistance Program (ATAP) was confusing. CSED in Department of Revenue collects program receipts. Portions of those receipts are transferred to ATAP as fiscal reimbursement for federal contributions to temporary assistance for needy families, which becomes a negative gain for CSED. Ms. Blaisdell added that the amendment would leave the general fund programs receipts for Department of Revenue for CSED so that they could spend those receipts and met the match requirement for the federal portion. The Department of Health and Social Services would be directly funded with a general fund match. Representative J. Davies pointed out that the amendment does not speak to CSED. He pointed out that the program receipts which are being deleted are shown are program receipts in the Department of Health and Social Services. Ms. Blaisdell agreed, however, historically, it has been a direct general fund program receipt funding. There being NO continued OBJECTION to the amendment, HSS #4 was adopted. Co-Chair Therriault MOVED to adopt HSS #5. [Copy on File]. Representative J. Davies OBJECTED for purposes of clarification. Co-Chair Therriault explained that the amendment would delete $3 million federal receipt dollars and $2 million general fund dollars from the Medicaid Services component and insert $2 million general fund dollars to the University of Alaska for unallocated reductions and additions. Co-Chair Therriault noted that it appears that there will be a lapse in the Medicaid expenditures this year. He stated there is likelihood, given the current year's level of funding, there will be a general fund lapse and thought that the Department would have greater success in shifting services over to the Indian Health Service funding. Co- Chair Therriault agreed to work with the Department if supplemental funding was needed resulting from implementation of the amendment. KAREN PERDUE, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, agreed that there will be an "upturn" at the billing at the end of the year on facilities and providers. No one knows if funds will remain. The projection for this year budget is for 18 months, and reminded Committee members that there is room for margin. Commissioner Perdue appreciated that Co-Chair Therriault had given his approval that the Department would not be expected to go to the "Options" list if the funding was not sufficient. Every year, there are expenses, which are not budgeted. The Department tries very hard not to request approval for legislative supplemental funding. The Department does not want to make service or eligibility reductions. Commissioner Perdue acknowledged that the Department would have more flexibility by combining these two appropriations. She advised that the Chronic and Acute Medical Assistance (CAMA) program had been $400 thousand dollars underfunded and if the full Medicaid amount is not received, the Department might have to reduce some CAMA services. Representative Bunde reiterated that the reduction would not cause a reduction in services. Commissioner Perdue emphasized the need for the Legislature to work with the Department to guarantee that balance. Representative J. Davies questioned if a supplemental was required, would the Department still be able to capture federal receipts lost as a result of the amendment. Commissioner Perdue replied that the Department would continue to receive those funds, which are entitlement funds from the federal government. There being NO further OBJECTION, HSS #5 was adopted. Co-Chair Therriault MOVED to adopt amendment HSS #6. [Copy on File]. Representative J. Davies OBJECTED. Co-Chair Therriault explained that the increase in federal receipt authority to the Department of Health and Social Services would utilize federal funds from the Child Care Development Fund. The federal receipts would then be transferred to the Department of Community and Regional Affairs in order to replace general funds for the Day Care Assistance Program and the Head Start Program, which would create a net zero general fund increment. The amendment would insert $4.2 million federal receipts dollars. Child Care benefits component, delete $2.4 million general fund dollars, insert $2.4 million I/A receipt dollars for the Day Care Assistance program. Additionally, it would delete $1.8 million general fund dollars and insert $1.8 million I/A receipts dollars. Co-Chair Therriault continued, the amendment would delete $70 thousand general fund dollars from the Bureau of Vital Statistics component, Department of Health and Social Services and would insert $170 thousand general fund dollars into the Trade and Development component, Department of Commerce and Economic Development. JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, responded to Representative J. Davies question regarding the federal receipts. She noted that the federal funding was welfare dollars which the Department receives as a block grant. They are available and the Department is allowed to use up to a maximum of 30% in transfers to various areas. The proposed amendment will max out the transfers allowed by the Department. The funds are available now but the concern is for FY2002, at which time Congress might reauthorize the Welfare Reform Act. She emphasized that there could be a shortfall at that time. Representative J. Davies WITHDREW his OBJECTION. There being NO further OBJECTION, HSS #6 was adopted. Representative Bunde MOVED to adopt HSS #7. [Copy on File]. Representative J. Davies OBJECTED for the purpose of discussion. Co-Chair Therriault explained that the amendment would delete $197.3 general fund dollars from Public Assistance Administration; delete $326.4 general fund dollars from the Medical Assistance Administration; delete $40 general fund dollars from Family and Youth Services Management; delete $372.6 general fund dollars from Public Health Administrative Services; delete $164.2 thousand dollars from the Mental Health/Developmental Disabilities Administration; delete $24.0 general funds dollars from the Alaska Mental Health Board component; delete $5.0 general fund dollars from the Governor's Council on Disabilities and special education component; delete $16.8 general fund dollars for the Advisory Board on Alcoholism and Drug Abuse component and add $1,146.3 general fund dollars to an Unallocated Reduction component in the Department of Health and Social Services. Co-Chair Therriault commented that the amendment would undertake distribution of the annualized "belt tightening/austerity program" for an unallocated decrement to administrative components within Department of Health and Social Services. Commissioner Perdue advised that the Department's priority has been to focus on preserving formula programs. Each area cut will have impact to the Department. Representative J. Davies pointed out that would apply to both HB 50 and HB 51. Representative J. Davies WITHDREW his OBJECTION. There being NO further OBJECTIONS, amendment HSS #7 was adopted. Co-Chair Therriault MOVED to adopt HSS #8. [Copy in File]. Representative J. Davies OBJECTED for the purpose of discussion. Co-Chair Therriault explained that the amendment would delete $177.0 MHTAAR funds, Services for Seriously Emotionally Disturbed Youth component within the Department of Health and Social Services. The Alaska Mental Health Trust Authority reduced the scope and approved the use of Mental Health Trust Authority receipts for the increment funding the Children's Care Coordination Pilot Project. Representative J. Davies WITHDREW his OBJECTION. There being NO further OBJECTION, amendment HSS #8 was adopted. Representative J. Davies MOVED to adopt amendment HSS #9. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies explained that the amendment would add $489.9 thousand GF/MH dollars to the Alcohol and Drug Abuse Grants Component. He pointed out that Alaska has the highest fetal alcohol syndrome (FAS) rate in the nation. He emphasized that FAS and FAE are preventable. Commissioner Perdue agreed that both FAS and FAE are 100% preventable and if intervention can happen early, these children can be successful as adults. Representative Bunde commented that currently, there are programs available, which discourage pregnant women from using alcohol. Commissioner Perdue acknowledged that there are some programs in place, however, the State needs to address the time before the pregnancy begins and then again when the child is born. A roll call vote was taken on the motion to adopt HSS #9. IN FAVOR: Moses, J. Davies, Grussendorf OPPOSED: Kohring, Williams, Austerman, Bunde, G. Davis, Foster, Mulder, Therriault The MOTION FAILED (3-8). Representative J. Davies MOVED to adopt amendment HSS #10. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies MOVED an amendment to HSS #10, which would use only general funds in the amount of $850.0 thousand dollars for Substance Abuse Treatment for Women. There being NO OBJECTION to the change to the amendment, it was made. Representative J. Davies spoke to the amended HSS #10. He commented that the amendment would fund additional residential care for women who are either pregnant or who already have children and have an alcohol abuse problem. The main intent would allow these women to maintain custody of their children. (Tape Change HFC 99 - 64, Side 2). Commissioner Perdue pointed out that this intention is the #1 recommendation of the Alcohol Board to the Mental Health Trust. Co-Chair Therriault noted that there had been a $706 thousand dollar funding increase over last year's budget from federal funds received. He stated that it was his intent to work with trustees of the Mental Health Board in order to better respond to this need. Ms. Clarke responded that federal funding was available without a match. Commissioner Perdue noted that currently there is a waiting list. Once a person makes the decision to have treatment, the funding needs to be available immediately. It is proven that women will not leave dangerous situations without their children and that is why this treatment is so popular. Ms. Clarke commented that the federal funding was received as a competitive grant, which the State secured. General funds were to be used to expand the program to Bethel and some of the rural areas. A roll call vote was taken on the motion. IN FAVOR: Moses, J. Davies, Grussendorf OPPOSED: Williams, Austerman, Bunde, G. Davis, Foster, Kohring, Therriault, Mulder The MOTION FAILED (3-8). Representative J. Davies WITHDREW amendment HSS #11. [Copy on File]. Representative J. Davies MOVED to adopt amendment HSS #12. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies explained that the amendment would add $868.9 thousand general fund dollars to the foster care base rate caseload growth in the Department of Health and Social Services. Co-Chair Therriault commented that the Subcommittee had allowed a 6% increase to that component. Representative J. Davies replied that 6% was a conservative number, which would only address the low-end expected caseload growth rate. A roll call vote was taken on the motion. IN FAVOR: J. Davies, Grussendorf, Moses OPPOSED: Williams, Austerman, Bunde, G. Davis, Foster, Kohring, Mulder, Therriault The MOTION FAILED (3-8). Representative J. Davies MOVED to adopt amendment HSS #13. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies explained that the amendment would add $432.6 thousand general fund dollars for foster care special needs case growth within the Department of Health and Social Services. Co-Chair Therriault pointed out that the Governor's requested increment had been funded at 50%. He offered to continue working with the Mental Health Trustees. REPRESENTATIVE SHARON CISSNA spoke to concerns addressed in amendment HSS #13 and the high turnover of foster care parents. People loose much when taking care of special needs foster children and without adequate funding, the State will not be able to retain foster parents. Representative Cissna emphasized the financial importance of adequately funding foster care needs in the State. Representative Bunde suggested that many people make the choice to take on the added burdens associated with foster care parenting. He stated that this could not be a profit center for people. Representative J. Davies argued that this would not create a profit center. He stressed that the situation is for "special needs" children who seriously need attention. He stressed that these are "extra ordinary" burdens placed on being foster parents. He reiterated that there is a high turnover rate. Co-Chair Mulder asked the number of special needs foster children in the State. Commissioner Perdue discussed that there are about 2,000 children in custody, some of who receive, a special needs allowance. A roll call vote was taken on the motion. IN FAVOR: J. Davies, Grussendorf OPPOSED: Austerman, Bunde, G. Davis, Foster, Kohring, Williams, Therriault, Mulder Representative Moses was not present for the vote. The MOTION FAILED (2-8). Representative J. Davies MOVED to adopt HSS #14. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies explained that the amendment would add $1.769 million general fund dollars and $387.1 thousand federal dollars for front line social workers to the Department of Health and Social Services. The money would support an additional 28 social workers. Commissioner Perdue stressed that there is not enough staff to check on children in foster care homes. There was a murder in foster care home in Anchorage last year. She expressed her concern and advised that the State add resources to this area. A roll call vote was taken on the motion. IN FAVOR: J. Davies, Grussendorf OPPOSED: G. Davis, Foster, Kohring, Williams, Austerman, Therriualt Representative Bunde, Representative Moses and Co-Chair Mulder were not present for the vote. The MOTION FAILED (2-6). Representative J. Davies MOVED to adopt amendment HSS #15. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies explained that the amendment would add $361 thousand general fund dollars to the community DD grants for the Department of Health and Social Services. Co-Chair Therriault commented that the Governor had requested $965 thousand dollars and that the Subcommittee recommended $604, a 3% increase. He advised that in the past, the Mental Health Trust has funded the amount requested. Commissioner Perdue pointed out that wages for those people that provide the care has not increased in many years. Sometimes, the staff experiences up to 133% turnover rate. This is the first request for a pay raise for those employees caring for people with disabilities. A roll call vote was taken on the motion. IN FAVOR: J. Davies, Grussendorf, Moses OPPOSED: G. Davis, Foster, Kohring, Austerman, Bunde, Mulder, Therriault The MOTION FAILED (3-8). Representative J. Davies MOVED to adopt amendment HSS #16. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies explained that the amendment would add $3 million general fund dollars to the tobacco prevention and control component. Representative Bunde spoke in support of the amendment. He inquired where the funds would originate. Representative J. Davies reiterated that the State anticipates receiving $27 million dollars from the tobacco settlement. Co-Chair Therriault advised that the Governor had counted that money as a non-general fund source and that all of it had been spent in the Department of Health and Social Services budget. REPRESENTATIVE ALLEN KEMPLEN testified that money spent on public education is money spent on prevention. He stressed that spending zero money on such an important issue would be "short sighted" by the Legislature. Representative Grussendorf reiterated his support of the proposed use for the funds. Co-Chair Therriault interjected that the State does not have the allocation resources to begin new programs. Representative J. Davies reminded Committee members that tobacco represents the single largest preventative cause of death in the United States. It kills one Alaskan per day. He strongly urged the State to appropriate $3 million dollars to this war. Commissioner Perdue agreed that none of those funds had gone into tobacco control programs. She acknowledged that currently there exists a $695 million dollar settlement over the next twenty-five years. She stated that the Governor is committed to helping this program and emphasized that tobacco usage is a serious health problem. Commissioner Perdue requested that some vehicle be used to get information out to the schools and community organizations. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, Moses, Bunde, J. Davies OPPOSED: G. Davis, Foster, Kohring, Williams, Austerman, Therriault, Mulder The MOTION FAILED (4-7). ALASKA COURT SYSTEM Co-Chair Mulder pointed out that there were no amendments to the Court System proposed budget. (Tape Change, HFC 99 - 65, Side 1) DEPARTMENT OF MILITARY AND VETERANS AFFAIRS Representative J. Davies MOVED to ADOPT MVA #1 (copy on file). Co-Chair Mulder OBJECTED. Amendment MVA #1 would switch the fund source on an appropriation of $630.2 thousand dollars in Disaster Planning and Control from interagency receipts to general funds. Representative J. Davies noted that these activities have been previously funded through the Disaster Relief Fund. The Disaster Relief Fund's balance is currently zero. NICO BUS, ADMINISTRATIVE SERVICES MANAGER, DIVISION OF SUPPORT SERVICES, DEPARTMENT OF NATURAL RESOURCES explained that the request would maintain the status quo. This appropriation had been funded through the Disaster Relief Fund or through a supplemental. Co-Chair Mulder asked if the Administration offered an amendment. Mr. Bus stated that the Administration was considering an amendment, but did not offer one. Co-Chair Mulder pointed out that the request is in excess to the Governor's request. Mr. Bus clarified that during the past several years the Division of Emergency Services has been funded through interagency receipts from the Disaster Relief Fund. This is no longer an option. Co-Chair Mulder spoke against the amendment. He stressed the need to work in the framework of FY99. He acknowledged that it would be a difficult task for the department, but noted that there is $489 thousand general fund dollars, $1.5 million dollars in federal receipts and more than $500 thousand dollars in 470 funds remaining in the Disaster Planning component. Representative J. Davies pointed out that the request does not bring the total beyond the FY99 level. The funding would bring the amount to the FY99 level. Mr. Bus noted that general funds were appropriated in FY99 to support this function. Some of the federal funds are dependent on matching state funds. He stated that there would be a loss of approximately $1 million dollars due to the additional loss of federal funds. Co-Chair Mulder questioned if the $489 thousand dollar general fund match would be sufficient to receive the federal funds. Mr. Bus observed that that there are other programs being matched with $400 thousand dollars of the funds. Co-Chair Mulder maintained his opposition. He stated that he would work with the Administration. Representative J. Davies observed that the Administration thought that there would be funding through the Disaster Relief Fund. Representative J. Davies Withdrew Amendment 1. DEPARTMENT OF FISH AND GAME Vice-Chair Bunde MOVED to ADOPT Amendment FG-1 (copy on file). Representative J. Davies OBJECTED for the purpose of discussion. The amendment changes $269.6 thousand dollars from federal funds to the Fish and Game Fund. Vice-Chair Bunde explained that the amendment was at the request of the department with the concurrence of the Division of the Wildlife Conservation. The amendment would allow greater flexibility. Co-Chair Mulder stated that the department indicated that it would be an appropriate use of the Fish and Game Fund. There being NO OBJECTION, Amendment FG-1 was adopted. Representative Grussendorf MOVED to ADOPT Amendment FG-2. Representative Grussendorf explained that the amendment would add $75 thousand permanent fund receipt dollars to the Division of Habitat. He explained that the funding would support oil development permitting. There are seven areas that need permitting. The amendment uses a different funding source to get fish and game permits in place so that there are no delays. Vice-Chair Bunde acknowledged that the increment was deleted. He agreed that the money would be used for permits in the National Petroleum Reserve-Alaska (NPRA). He stated that the connection between the NPRA and permanent fund might be tenuous. Representative Grussendorf noted that $42 million dollars in permanent fund receipts have been used in the Department of Law, Department of Revenue and Department of Natural Resources. He maintained that it is an appropriate fund source. Co-Chair Mulder argued against the amendment. He did not support the funding source. Representative Kohring echoed the previous remarks. He added that there needs to be further budget reductions. KEN TAYLOR, DIRECTOR, DIVISION OF HABITAT, DEPARTMENT OF NATURAL RESOURCES explained that there are statutory designated program receipts from some of the oil companies on the North Slope. These funds are not used directly in the permitting process. In response to a question by Representative J. Davies, Mr. Taylor stated that they anticipate that participation in North Slope activities will increase. He anticipated that NPRA and North Star would increase the workload. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, Moses, Davies OPPOSED: Foster, Kohring, Williams, Austerman, Bunde, Mulder Representatives Therriault and Davis were absent from the vote. The MOTION FAILED (3-6). Representative Grussendorf MOVED to ADOPT Amendment FG-3 (copy on file). Vice-Chair Bunde OBJECTED. Representative Grussendorf explained that the amendment would add the funding: Southeast Region Fisheries $68.9 general funds Central Region Fisheries $83.0 general funds AYK Region Fisheries $65.8 general funds Westward Region Fisheries $90.4 general funds Headquarters Fisheries $64.1 general funds Fisheries Development $39.8 general funds He noted that reductions in the Division of Commercial Fisheries occurred in the herring fisheries. Vice-Chair Bunde spoke against the amendment. He stressed that the amendment would exceed the budgetary allocation. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, Moses, Williams, Austerman, Davies OPPOSED: Kohring, Bunde, Foster, Mulder Representatives Therriault and Davis were absent from the vote. The MOTION PASSED (5-4). Representative Kohring Moved to rescind the committee's action in adopting Amendment FG-3. Representative J. Davies OBJECTED. Representative Grussendorf spoke in support of Amendment 3. Co-Chair Mulder noted that the intent is to hold the Division at the FY99 level in order to respond to budgetary concerns. A roll call vote was taken on the motion to rescind Amendment FG-3. IN FAVOR: Kohring, Bunde, Davis, Foster, Mulder, Therriault OPPOSED: Davies, Grussendorf, Moses, Austerman, Williams The MOTION PASSED (6-5). Amendment FG-3 was again before the committee. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses, Austerman, Williams OPPOSED: Kohring, Bunde, Davis, Foster, Mulder, Therriault The MOTION FAILED (5-6). DEPARTMENT OF REVENUE Vice Chair Bunde MOVED to ADOPT Amendment Replacement REV-1: (copy on file). Child Support Enforcement DELETE $2,331.0 1004 General Fund INSERT $2,331.0 1005 General Fund / Program Receipts DELETE Lines 15 and 16 Intent Language Comment: This fund change will correct an inadvertent fund code classification from General Fund .to General Fund / Program Receipts. There is no difference in the total amount of general funds available to the Department of Revenue. Co-Chair Mulder noted that Amendment REV 1 would reclassify general funds to general fund program receipts. There being NO OBJECTION, Amendment REV 1A was adopted. Vice-Chair Bunde MOVED to ADOPT Amendment REV-1B. Insert on Page 37, following line 15 "The funds appropriated by this appropriation include so much, and no more, of the program receipts received during the fiscal year ending June 30, 2000, by the child support enforcement division as is necessary to provide the minimum match of state funds necessary to secure federal funding appropriated for the child support enforcement program in this section." GINGER BLAISDELL, FISCAL ANALYST, LEGISLATIVE FINANCE DIVISION explained that legislative legal counsel recommended that Amendment REV-1B be placed in the back (appropriation) section. The amendment would allow the department to utilize general fund program receipts to fill in shortfalls of federal incentive payments for indirect costs not received as cash. DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR explained that the intent is to make sure that the Child Support Enforcement Division can collect all of their federal receipts. Co-Chair Therriault noted that general fund spending would go up but that overall spending would not increase. In response to a question by Representative J. Davies, Ms. Blaisdell clarified that the match of state funds secures federal funds. Representative J. Davies MOVED to Amend the Amendment by changing "match" to "amount". There being NO OBJECTION, it was so ordered. There being NO OBJECTION, Amendment REV-1B was adopted as amended. Vice Chair Bunde MOVED to ADOPT Amendment REV-2 as amended (by the sponsor) to $233.4 thousand dollars. The amendment would change $233.4 thousand dollars in the Division of Oil and Gas Audit from general funds to permanent fund corporate receipts. LARRY PERSILY, SPECIAL ASSISTANT, DEPARTMENT OF REVENUE explained that this is the amount needed to run the royalty audit program. Representative Kohring stated that he did not feel comfortable with the use of permanent fund dollars. A roll call vote was taken on the motion. IN FAVOR: Williams, Bunde, Davies, Foster, Grussendorf, Moses, Mulder, Therriault OPPOSED: Kohring Representatives Davis and Austerman were absent from the vote. The MOTION FAILED (1-8). Representative Grussendorf MOVED to ADOPT Amendment REV-3. Vice-Chair Bunde OBJECTED. Representative Grussendorf noted that Amendment REV-3 would add $800 thousand dollars in corporate receipts to the Permanent Fund Corporation. He spoke in support of the amendment. JIM KELLY, DIRECTOR OF COMMUNICATIONS, PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE spoke in support of the amendment. He maintained that a $800 thousand dollar reduction would impact the Corporation's ability to produce profit. (Tape Change, HFC 99 - 65, Side 2) Vice-Chair Bunde was not convinced that a reduction in office expenditures would result in less income to the fund. He stressed that the Corporation has a large travel budget despite high quality teleconference equipment. He stressed that all aspects of state government are being requested to tighten their belts. He acknowledged that it is not general funds, but stressed that the people's money is being spent. Co-Chair Mulder asked how many people are working for the Corporation. PETER BUSHRE, CHIEF FINANCIAL OFFICER, PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE replied that 31 persons work for the Corporation. Co-Chair Mulder questioned how the reduction would be absorbed. Mr. Bushre stated that the Corporation has identified 29 ways that they could be more efficient. He acknowledged that travel could be reduced through videoconferences. He noted that their video conference budget was reduced. He stressed that the 29 measures for efficiencies would not add up to $800 thousand dollars. He maintained that the reduction would result in lower income on investments. Co-Chair Therriault clarified that as the fund increases their budget increases. Mr. Bushre observed that there are added costs as the fund grows. He pointed out that addition computer systems might be needed. Co-Chair Therriault noted that their budget was reduced in 1998. Mr. Bushre explained that the reductions were a result of consolidations. Co-Chair Therriault Moved to Amend Amendment REV-3, delete "$800" and insert "$500" thousand dollars. There being NO OBJECTION, it was so ordered. Co-Chair Mulder clarified that the net decrement is $300 thousand dollars. Mr. Bushre stated that the Corporation could live with a reduction of $300 thousand dollars. Representative Kohring OBJECTED to any use of the Permanent Fund. A roll call vote was taken on the motion. IN FAVOR: Austerman, Bunde, J. Davies, Davis, Foster, Grussendorf, Moses, Williams, Therriault, Mulder OPPOSED: Kohring The MOTION PASSED (10-1). DEPARTMENT OF EDUCATION Representative J. Davies MOVED to ADOPT Amendment ED-1 (copy on file). Co-Chair Mulder OBJECTED. Representative J. Davies explained that the amendment would add $100 thousand dollars to the Community Schools Program. Co-Chair Mulder stated that he supports the program, but that the reduction was necessary. Representative Grussendorf pointed out that there are millions if not billions of dollars tied up in school buildings. He stressed that the facilities are only used for 9 months but need to be maintained all year. He maintained that the investment is well spent. Co-Chair Therriault pointed out that the state has paid for the majority of construction, maintenance, and utility costs. He stressed that users can support their program in the schools. He noted that K-12 education is being supported at full level. Representative J. Davies recommended that the request be transferred to general fund program receipts. He noted that the cost could be supported for a .10 to .50 cent fee. Representative G. Davis maintained that users are willing to pay for the use of the schools. He expressed support for the program. Co-Chair Mulder noted that the state only pays a fraction of its overall cost. Local school districts pay the majority of the program. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses OPPOSED: G. Davis, Foster, Kohring, Williams, Therriault, Mulder Representatives Kohring and Austerman were absent from the vote. The MOTION FAILED (3-6). DEPARTMENT OF ADMINISTRATION Representative G. Davis MOVED to ADOPT Amendment AD-A (copy on file). Representative Grussendorf OBJECTED for the purpose of discussion. Delete: Department of Administration Public Communications Satellite Infrastructure $444.0 GF Delete: Commerce and Economic Development Executive Administration and Development Trade and Development $200.0 GF Japan and Korea Trade Offices Department of Administration Public Communication Public Broadcasting -TV $644.0 GF Explanation This provides funding for government supported TV and reduces insurance funding that has been determined unnecessary in the satellite infrastructure. It also puts the Korean trade office contract at $151.0 and the Japan trade office at a level of $400.0 (150.0 trade/250 tourism) Representative G. Davis noted the concerns by testifiers during the Committee's public hearings. The amendment would transfer $444 thousand dollars from the satellite infrastructure to the public broadcasting component. Representative Grussendorf asked for more information. SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF ADMINISTRATION explained that funding would utilize money that had been earmarked for insurance coverage. Co-Chair Mulder emphasized that the amendment recognizes the priority of providing a state match to federal funding. He noted that the resulting reduction would be $200 thousand dollars. Ms. Barton clarified that there would be a $400 thousand dollar corresponding reduction of federal funds. TOM LAWSON, DIRECTOR, DIVISION OF ADMINISTRATION, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT clarified that there is no pending reduction to the oversea office. The amendment would represent a 40 percent reduction in the Korea office. Staff would be reduced from three to one positions. It may require a move to a smaller office. Market intelligence would be reduced. The leasing cost of the Tokyo office is $100 thousand dollars. That Tokyo office might need to be closed. Co-Chair Therriault stated that there was discussion on the subcommittee level on how to coordinate the two offices. In response to a question by Vice-Chair Bunde, Mr. Lawson noted that contracts are up for renewal this fiscal year. Mr. Lawson noted that the offices might need to be closed. Co-Chair Therriault stated that it would be his intent to maintain a $400 thousand dollar marketing effort through a fiscal note in other legislation. Mr. Lawson noted the difficulty of "marrying the money" between the tourism international effort and the trade effort. Representative J. Davies Moved to Amend Amendment AD-A by increasing the deletion from the Trade and Development component to $350 thousand dollars and adding an additional $150 thousand dollars to the Public Broadcasting component (total of $794 thousand dollars). He noted that the intent is to capture an addition $300 thousand dollars in federal funds. Co-Chair Therriault noted that there is language in the statutes requiring a Alaskan presence in Korea and Japan. Representative J. Davies stated that if the budget is going to be reduced that he would prefer that public broadcasting in the state be supported before the oversees marketing effort. Vice-Chair Bunde agreed that the cuts should fall furthest from "our front steps". Vice-Chair Bunde maintained that the trade offices are not very productive and emphasized the positive affect of public broadcasting. Representative Grussendorf spoke in support of the amendment. He noted that public broadcasting is federally funded. He stressed that the University of Alaska uses the service for outreach classes. Representative Austerman emphasized that there needs to be a prioritization of the budget. He spoke in support of the amendment. He noted that public broadcasting reaches the majority of Alaskans. A roll call vote was taken on the motion to amend Amendment AD-A. IN FAVOR: J. Davies, Foster, Grussendorf, Moses, Austerman, Bunde OPPOSED: G. Davis, Kohring, Williams, Mulder, Therriault The MOTION PASSED (6-5). Representative G. Davis noted that the match could be provided through contributions. Vice Chair Bunde added that public support needs to grow. (Tape Change, HFC 99 -66, Side 1) Representative Kohring OBJECTED. He was not convinced that public television is an essential service. He stated that if it is the intent of the Legislature to delete the component it should be done all at once. A roll call vote was taken on the motion. IN FAVOR: Austerman, Bunde, J. Davies, Davis, Foster, Grussendorf, Moses, Williams, Therriault, Mulder OPPOSED: Kohring The MOTION PASSED (10-1). Representative J. Davies MOVED to ADOPT Amendment AD-1 (copy on file). Representative G. Davis OBJECTED. Amendment AD-1 would add $9 hundred dollars in general funds, $111.1 in general fund program receipts and $563.9 thousand dollars in interagency receipts for the Alaska Professional Development Institute. Representative J. Davies explained that the amendment would provide training and help the department be more efficient and avoid mistakes. He emphasized that most of the funding is interagency receipts. Ms. Barton stressed that it is hard to imagine an agency with 14,000 employees without a training arm. She stated that being promoted into jobs that require them to obtain additional training awards good performance by employees. She stressed that it is an essential component of state government. She maintained that the state would spend more money without the component. Representative G. Davis stated that the reduction would not eliminate training. He pointed out that the reduction is in interagency receipts. He stressed that the intent was to look at components that could be taken off the table. Representative Grussendorf stressed that the centralization of training allows a standardized approach. Representative J. Davies maintained that it is cost effective to have centralized training. He maintained that decentralization would result in greater costs. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses OPPOSED: Foster, Kohring, Williams, Austerman, G. Davis, Mulder, Therriault Representative Bunde was absent from the vote. The MOTION FAILED (3-7). Representative J. Davies MOVED to ADOPT Amendment AD-2 (copy on file). Representative G. Davis OBJECTED. Amendment AD-2 would restore a reduction of $50 thousand general fund dollars to the Alaska Public Offices Commission (APOC). Representative J. Davies maintained that APOC could barely keep up with the present workload. The reduction would result in a staff loss of 10 to 15 percent. Representative G. Davis spoke against the amendment. He maintained that efficiencies could be accomplished. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses, Austerman OPPOSED: Kohring, Williams, G. Davis, Foster, Therriault, Mulder Representative Bunde was absent from the vote. The MOTION FAILED (4-6). Representative Grussendorf MOVED to ADOPT Amendment AD-3 (copy on file). Co-Chair Mulder OBJECTED. Representative Grussendorf explained that the amendment would restore a $514 thousand dollar reduction in pioneer home receipts. He stressed that the facilities operate 24-hours a day, every day of the year. Co-Chair Mulder spoke against the amendment. He pointed out that general fund program receipts count the same as general funds. Representative Grussendorf stressed that the mission of the pioneer homes has changed over the last 5-6 years. He noted that the residents have aged and there is a greater need for supervision and care. Representative J. Davies observed that the receipts come from the residents and their families. He emphasized that the receipts are earmarked as a fee for services. He questioned why it would not fit within the category of statutory designated program receipts. Co-Chair Mulder noted that the receipts do not fall into the statutory designated program receipts category. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf OPPOSED: Bunde, G. Davis, Foster, Kohring, Williams, Austerman, Therriault, Mulder Representative Moses was absent from the vote. The MOTION FAILED (2-8). Representative Grussendorf MOVED to ADOPT Amendment AD-4 (copy on file). Representative G. Davis OBJECTED. Representative Grussendorf explained that the amendment would restore $2.4 million general fund dollars in the Longevity Bonus grants component. Co-Chair Mulder noted that it is not the intent of the Committee to short-fund longevity bonus grants. He stated that he would entertain a supplemental request. Representative G. Davis agreed that the intent would be to seek supplemental funding if needed. Co-Chair Mulder stressed that he would anticipate a supplemental if there is short funding. Representative Grussendorf Withdrew the amendment. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR explained that a statutory change is needed before the program can be made based on income. Representative J. Davies MOVED to ADOPT Amendment AD-5 (copy on file). Amendment AD-5 would restore a reduction of $296.8 thousand general fund dollars and $123.8 thousand dollars in interagency receipts for the Citizens Foster Care Review Panel. Representative G. Davis spoke against the amendment. He reiterated that the intent was to identify whole components that could be eliminated. He maintained that the state could live without the component. Vice-Chair Bunde observed that he was the author of the legislation that created the Citizens Foster Review Board. Representative Grussendorf spoke in support of the amendment. Co-Chair Therriault believed that there could be a way to get the review at a lower cost. Representative J. Davies emphasized that it is a citizen's review panel. Volunteers spend time to address complaints. Ms. Barton spoke in support of the amendment. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Bunde OPPOSED: Davis, Foster, Kohring, Williams, Austerman, Mulder, Therriault Representative Moses was absent from the vote. The MOTION FAILED (3-7). Representative Grussendorf WITHDREW Amendment AD-6. Representative Williams WITHDRW Amendment AD-7. (Tape Change, HFC 99 -66, Side 2) Co-Chair Mulder Vice-Chair Bunde MOVED to authorize the Division of Legislative Finance to make needed technical changes. Representative J. Davies OBJECTED for purpose of discussion. Mr. Teal noted that the Division could not make fund source or substantive changes. There being NO OBJECTION, the motion was adopted. HB 50 and HB 51 were HELD in Committee. ADJOURNMENT The meeting adjourned at 6:15 P.M.