HOUSE FINANCE COMMITTEE March 6, 2000 9:50 A.M. TAPE HFC 00 - 56, Side 1. CALL TO ORDER Co-Chair Mulder called the House Finance Committee meeting to order at 9:50 A.M. PRESENT Co-Chair Mulder Representative Foster Co-Chair Therriault Representative Grussendorf Representative Austerman Representative Moses Representative Bunde Representative Phillips Representative J. Davies Representative Williams Representative G. Davis ALSO PRESENT Annalee McConnell, Director, Division of Management and Budget, Office of the Governor; Dwayne Peeples, Director, Division of Administrative Services, Department of Corrections; Chris Phillips, Director of Finance, Alaska Permanent Fund Corporation, Department of Revenue. SUMMARY HB 312 An Act making and amending appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17c, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. HB 312 was HEARD and HELD in Committee for further consideration. HB 313 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 313 was HEARD and HELD in Committee for further consideration. HOUSE BILL NO. 312 An Act making and amending appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making appropriations under art. IX, sec. 17c, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. HOUSE BILL NO. 313 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. AMENDMENTS: DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT DEPARTMENT OF REVENUE DEPARTMENT OF CORRECTIONS Co-Chair Mulder addressed the anticipated order which the amendment process would follow. Co-Chair Therriault MOVED to adopt the work draft committee substitutes, (HB 312) 1-LS1304\D, Utermohle, 3/1/00 and (HB 313) 1-LS1305\D, Utermohle, 3/1/0, as the versions before the Committee. There being NO OBJECTION, they were adopted. DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT Representative J. Davies MOVED to ADOPT Amendment Labor-1. ADD: Sec.__ (a) Subject to (b) of this section, the sum of $500,000 is appropriated from the general fund to the Department of Labor and Workforce Development, division of labor standards and safety, for occupational safety and health. (b) The appropriation made by (a) of this section is conditioned upon the failure to enact into law after passage during the Second Session of the 21st Alaska State Legislature a version of HB 378, relating to worker safety programs. Co-Chair Mulder OBJECTED for the purpose of discussion. Representative J. Davies explained the amendment. He stated that the appropriation would be subject to the passage of HB 378 or SB 272. Co-Chair Mulder inquired the anticipated support for HB 378. Representative J. Davies noted that the bill is fair and that the Administration and the State Minority are supporting it. Co-Chair Mulder pointed out that the Senate version is SB 272. Representative J. Davies MOVED to amend the proposed amendment by adding the language "SB 272". There being NO OBJECTION, the language to the amendment was adopted. Co-Chair Therriault suggested that the incentive would be lost if either of those bills were passed. Co-Chair Mulder agreed that the language could provide a strong incentive. He asked for Representative J. Davies support in passing either of the bills through the Legislature. Representative Austerman clarified that there are other options to address the proposed concern. Co-Chair Therriault OBJECTED to the amendment, stating that the leverage should not be given up yet. Representative J. Davies requested a commitment from the Majority that those bills pass "to fill the hole". Co-Chair Mulder advised that was part of the spending plan. Representative Austerman agreed. He pointed out that the Subcommittee did support the concept. Representative Grussendorf reminded members that each Body operates separately. He noted that if the bills did not pass, it would jeopardize these programs. Co-Chair Mulder responded that if there was a problem on the Senate side, he would place this into the capital reappropriation legislation or another bill. Representative J. Davies countered that if this amendment was adopted, then there would be an incentive to take this money off the table. Co-Chair Mulder reiterated that no one wants a hole to develop. A roll call vote was taken on the motion. IN FAVOR: J. Davies, Moses, Grussendorf OPPOSED: Bunde, G. Davis, Foster, Phillips, Williams, Austerman, Mulder, Therriault The MOTION FAILED (3-8). Representative J. Davies MOVED to ADOPT Amendment Labor-2: ADD: Sec.__ (a) Subject to (b) of this session, the sum of $1 million dollars is appropriated from the general fund to the Department of Labor and Workforce Development, division of workers' compensation. (b) The appropriation made by (a) of this session is effective upon the failure to enact into law after passage during the Second Session of the 21st Alaska State Legislature a version of HB 378, relating to workers' compensation. Representative J. Davies MOVED a technical change which would include HB 378 or SB 272. There being NO OBJECTION, the change was made to the amendment. Co-Chair Mulder OBJECTED to the amended Labor-2. A roll call vote was taken on the motion. IN FAVOR: J. Davies, Grussendorf, Moses OPPOSED: G. Davis, Foster, Phillips, Williams, Austerman, Bunde, Therriault, Mulder The MOTION FAILED (3-8). DEPARTMENT OF MILITARY & VETERANS AFFAIRS NO AMENDMENTS ALASKA COURT SYSTEM NO AMENDMENTS DEPARTMENT OF REVENUE Vice Chair Bunde MOVED to ADOPT Amendment REV-1: DELETE: Permanent Fund Corporation $8,189,900 Custody and Management fees INSERT: Permanent Fund Corporation $8,180,900 Custody and Management fees Representative J. Davies OBJECTED. Vice Chair Bunde explained that the amendment would help to more carefully track money management monies. The total amount would be $47,585,800 dollars. He added, it would track management fees versus operational costs. Representative Grussendorf advised that he had served on the Revenue Subcommittee for years and did not think that there was a need for the amendment. Vice Chair Bunde asked to hold the discussion until someone from the Department of Revenue could clarify regarding the concern. Co-Chair Mulder noted that there would be a net gain of $5 million dollars in management fees with passage of the amendment. Vice Chair Bunde WITHDREW the REV-1 until further clarification could be made through the Department. DEPARTMENT OF CORRECTIONS Representative J. Davies MOVED to ADOPT Amendment CORR-1. Co-Chair Mulder OBJECTED. ADD: Out of State Contracts BRU Out-of-state Contracts $1,000,000 GF Representative J. Davies explained that the Department's purchases contract beds at Central Arizona Detention Center (CADC) to manage the prisoner population at Alaska correctional centers within safe levels. A $1.0 million reduction will require the Department to reduce the contract with CADC by a total of 55 beds. If the Department experiences significant population growth during the fiscal year, the budget reduction may result in overcrowding of the State's correctional centers which threatens staff and inmate safety. In order to avoid this problem, the Department may need to request supplemental funding during the fiscal year to purchase additional beds to manage the population in accordance with national standards and court mandates. DWAYNE PEEPLES, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF CORRECTIONS, reiterated that there will be problems with population management in the next fiscal year. If the Department can not maintain the population within the existing facility, there will be a supplemental request. Co-Chair Mulder noted that the proposed budget is $1 million dollars below last year. He noted that there has been a slight growth in the prison population. Co-Chair Mulder asked the anticipated dollars lapsing from out-of-state contracts. Mr. Peeples noted that those figures would be available in the middle of March; it could be $1 million dollars or less. Co-Chair Mulder noted that the budget was based on no radical changes in the prison population. Representative J. Davies WITHDRW amendment CORR-1. Representative J. Davies MOVED to ADOPT Amendment CORR-2. Co-Chair Mulder OBJECTED. ADD: Administration and Operations BRU Institutions Directors Office Component $225.0 GFPR Representative J. Davies noted that the Department requested $225.0 additional General Fund Program Receipt authority to bill municipalities for incarcerating prisoners charged under local ordinances and housed in State facilities. He pointed out that the Subcommittee had recommended denying this request, which in effect eliminates the Department's ability to utilize these funds from local municipalities for operational expenses from incarcerating prisoners, charged under non-state statutes. The result of that action would be that the Department will continue to house these prisoners, but will not be able to utilize the receipts, which in turn will be subsidized at the expense of reducing other state-funded public safety services. Mr. Peeples explained that the program receipts are collected from the municipalities for housing prisoners arrested under local ordinances. The Department is population driven and with the out-of-state budget being reduced, more prisoners will be housed in State. The Department is requesting that these program receipts be added back into the budget for operational expenses. Co-Chair Mulder asked which municipalities would be assessed. Mr. Peeples replied that funds are collected from Anchorage, Fairbanks, Ketchikan and Juneau, and would be added back. Co-Chair Mulder recommended to the Subcommittee, not to add the requested amount because it would not be good business for the State to "give" money on one hand and then "take it away" on the other hand with the cuts to municipal sharing. He agreed with the concept of having users pay but recommended creating a better scheme. Representative J. Davies stated that this is not a radical departure from, but a continuation of an existing practice. He spoke to the pressure from the previous amendment, withdrawing inmates from Arizona, there is a more pressure to solve the problems. He believed that it would be better to grant receipt authority which would not change the fiscal gap. Without the authority, they can not collect the money. It is not contradictory to give money to the municipalities. He concluded that the decision should be made at the local level. Co-Chair Mulder responded that the way in which the budget is structured, it will be adjusting more people toward less costly housing and then transitioning them into the community earlier. He acknowledged that Arizona is the "shock absorber". A proposed growth is not addressed in this budget. Representative J. Davies MOVED to change the amendment to Statutory Designated Program Receipts (SDPR). Co-Chair Mulder countered that this funding is not SDTR but rather is General Fund receipts because it is a fee for a service. Representative J. Davies pointed out that any SDTR receipt is a receipt for a service. Co-Chair Mulder argued that this is not a contract and that a service is being provided. Mr. Peeples interjected that the State does function under contract arrangements with the municipalities. Representative G. Davis pointed out that Anchorage has municipal Courts. He asked if the other municipalities had municipal courts. Mr. Peeples thought that they did. Co-Chair Mulder inquired how much GFPR had been allowed in this category. Mr. Peeples offered to provide that information. Co-Chair Mulder reiterated that the request was an increment. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, commented that the amendment would be appropriate for the State to do as a contractual agreement. The amendment is directed at activities in which the State is housing prisoners. She added that the Courts are not technically Municipal Courts. Co-Chair Mulder corrected that this was originally a fee for service as proposed in the Governor's budget. Mr. Peeples replied that these were submitted as SDPR's. Co-Chair Mulder maintained his objection to the amendment, in order that there could continue to be consistency. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, Moses, J. Davies OPPOSED: Foster, Phillips, Williams, Austerman, Bunde, Mulder, Therriault Representative G. Davis was not present for the vote. The MOTION FAILED (3-7). DEPARTMENT OF REVENUE The Committee revisited amendment REV-1. CHRIS PHILLPS, DIRECTOR OF FINANCE, ALASKA PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE, stated that the amendment would present no problem to the Alaska Permanent Fund Corporation. Representative J. Davies WITHDREW his objection. There being NO further OBJECTIONS, REV-1 was adopted. HB 312 and HB 313 were HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 10:35 A.M. H.F.C. 8 3/06/00 A.M.