HOUSE FINANCE COMMITTEE March 7, 2000 9:45 A.M. TAPE HFC 00 - 60, Side 1. TAPE HFC 00 - 60, Side 2. TAPE HFC 00 - 61, Side 1. CALL TO ORDER Co-Chair Mulder called the House Finance Committee meeting to order at 9:45 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 Representative Carl Morgan; Nancy Slagle, Director, Division of Administrative Services, Department of Transportation and Public Facilities; Joseph Perkins, Commissioner, Department of Transportation and Public Facilities; Larry LaBolle, Staff, Representative Foster. 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. AMENDMENTS HEARD: DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES 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. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES Representative Austerman MOVED to ADOPT DOT#1. [Copy on File]. Representative Grussendorf OBJECTED. Representative Austerman explained the amendment. DELETE BRU: Administration and Support Component: Commissioner's Office Delete $119.5 in general funds, the Deputy Commissioner Position. ADD BRU: Highway and Aviation Component Central Region Add $100.0 in general funds for the Kalsin Bay Maintenance Station, which would restores two heavy equipment operator maintenance positions. Two positions are required to safely and sufficiently operate this station. Restoration of these funds would allow for the adequate road maintenance on the Chiniak Highway from Middle Bay (Milepost 20) to Chiniak (Milepost 42). These positions would also restore service on the Pasagshak Highway from the "Y" (Milepost 00) to Narrow Cape Coast Guard Loran Station (Milepost 16). There are approximately 150-200 people living on these 2 road systems who are receiving limited service. Representative Austerman noted that there is limited road maintenance serving the Kodiak Launch Complex at Narrow Cape. Lack of service and response time has created a hardship for the industry in the transportation of delicate equipment to the launch site, and many of the vital support services to residents and the launch complex have also been severely impacted. ADD: BRU: Public Communication Services Component: Public Broadcasting -Radio Add $19.5 in general funds for Public Radio Representative Grussendorf agreed that there should be funding allocated for the road project, however, the deletion to the Office of the Commissioner would not be in the best interest for that Department. JOSEPH PERKINS, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, explained that last year's discussion with the House was a $1 million dollar cut to the budget to all maintenance stations. When the budget went to the Senate, the Department received an unallocated cut of $2 million more dollars. The total cut was in the amount of $3.8 million dollars which resulted in the closure of five stations. Co-Chair Mulder advised that the net reduction had been $1.2 million general fund dollars. Commissioner Perkins explained that the difference between last year's budget and the current one was $3.8 million general fund dollars. He reiterated that there was $3.8 million dollars less. NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, agreed with comments made by the Commissioner. She referenced a reduction which the Department had absorbed in the Capitol Budget last year in deferred maintenance areas. She stressed that work needs to be done in order to maintain these highways. Commissioner Perkins interjected that the cuts were taken from both from the capital and operational budget from the previous year. He re-emphasized the seriousness of the budget crisis existing within that Department. Co-Chair Mulder asked who requested the reclassification. Commissioner Perkins replied that reclassification had been part of the labor negotiations from a few years ago. The re-class study was run as a normal study and created an increase in costs. Commissioner Perkins shared the Committee's frustration, however pointed out that this budget will move from this Committee to the other Body, where more deductions will be made. Commissioner Perkins itemized the services provided by the Department. He referenced the impact of cutting the recommended jobs. Commissioner Perkins pointed out that the Department runs a $800 million dollar program. The maintenance program is run with eight authorized slots in the Commissioner's Office. The Subcommittee cut $100 thousand dollars out of that office. One of those slots is vacant and remains vacant so to be able to use in consideration of the vacancy factor. The cut proposed would be 20% to that Office. Commissioner Perkins emphasized the amount of work it takes for the current number of staff to run this State operation as recommended. He stressed that it can not be done with the proposed staff size. He outlined the roll of the Deputy Commissioner, which is a valuable position for the Department. He reiterated that the Department is as "thin as it can get" to do the management requested. Representative Williams spoke to agreements made at the Subcommittee level. He wanted these issues to be addressed and noted that the proposed reductions had been passed through the Office of the Commissioner. Representative Austerman countered that when the maintenance station was closed in Kodiak, there was no discussion. Co- Chair Mulder asked if the Kodiak station was closed. Commissioner Perkins replied that it is closed, however, there is a sand pile and loader in that location. He noted that there is no person assigned to that location at this time. Representative Austerman explained that currently, there is a man living in that area. Commissioner Perkins explained that for safety reasons, a station can not be open without two employees. He pointed out that this savings is also cutting down the overhead. The cuts proposed to the Subcommittee were cuts to the stations. Fixed costs are "killing" the Department. He reiterated that there are not enough people to do the work. He added that he intended to close maintenance stations this year to save the fixed costs. Representative Williams emphasized that the Subcommittee had attempted to address the concerns of the Department with no recourse to that agency. He noted that Commissioner Perkin's office supplied the "proposed laundry list". Commissioner Perkins countered that the "body" of the list was not too far off. He proceeded to list the items the Department did to meet the budget caps. Representative Williams acknowledged that it was difficult to make reductions to that Department. He wished that this discussion had occurred at the Subcommittee level. Representative Grussendorf encouraged an unallocated cut "option" for the Commissioner. He stated that it would not be in the State's best interest to cut the Deputy Commissioner position in order to support the amendment. Co-Chair Mulder inquired the expected savings from closing the maintenance station in Kodiak. Ms. Slagle replied the savings would amount to about $100 thousand dollars. Commissioner Perkins interjected that five maintenance stations had been closed and he stated that he did not like making those closures. Co-Chair Mulder questioned how the road was being maintained. Commissioner Perkins replied that is happening out of the maintenance station in Kodiak and that the service level is less than it was before. Representative Austerman maintained that the maintenance level is not good enough and that Kodiak can not continue with that level having the boat launch and its condition. Representative J. Davies stressed that the fundamental issue is that when budgets are reduced, services drop off. He stressed that the action is not fair, and that the proposal is to place this "on the back" of the Commissioner. He disagreed that the Commissioner can do a good job with only three managers through his office. He emphasized that management is a responsible consideration and that the Department is expected to spend their money wisely. Representative J. Davies emphasized that is ludicrous given the size of that Department. Representative J. Davies MOVED to DIVIDE the question, addressing the DELETE and the two ADD's separately. There being NO OBJECTION, the amendment was divided into 1.1, 1.2 and 1.3. REPRESENTATIVE CARL MORGAN voiced his frustration regarding the impact statements provided by Department of Transportation and Public Facilities. He noted that the cuts proposed by the Department would heavily affect the Bush area, particularly his District, #36. (TAPE CHANGE, HFC 00 - 60, Side 2.) Representative G. Davis commented that there are problems in each district. He agreed that the essence of the amendment was good. He questioned the number of statewide area airports which would be affected. Representative G. Davis pointed out that he is protective of any cuts to road maintenance. He urged the Committee to reduce new construction and planning before touching road maintenance. Representative Foster commented that he did not support the division made by the amendment and noted that he objected. Representative Austerman asserted that he did not care where the money comes from but that it was imperative that the station be reopened. Representative Moses interjected that this request is a "glaring" example why the State should not be maintaining roads. Funding should be allocated to each region and then local governments can be responsible to maintain their roads. Representative Foster agreed. Representative Austerman requested that the amendment be HELD and addressed directly by the Department. Representative Austerman MOVED to HOLD the divided amendment. There being NO OBJECTION, the amendment was "tabled" for further consideration. . Representative Foster MOVED to ADOPT Amendment DOT-1A. [Copy on File]. Representative J. Davies OBJECTED for the purpose of discussion. DELETE: BRU: Highways and Aviation Component: Northern Highways and Aviation DELETE: $257.6 in general funds, Northern Highways and Aviation ADD: BRU (New): Statewide Highways Snowplowing & Winter Maintenance Component: Statewide Highways Snowplowing & Winter Maintenance ADD: Spring opening of Taylor Highway $132.0 McCarthy Road 8.7 Boundary Spur 10.5 Nome/Teller Road 35.7 Nome/Council Road 34.7 Kugarok Road 36.0 Representative Foster pointed out that the amendment would move funds currently in the recommended budget for Northern Region Highways and Aviation and would place them into a separate BRU so that the funds cannot be used for another purpose. For the last two fiscal years, spring opening for these and other roads had been eliminated so that funds could be used for other purposes. The amendment has necessitated adding funds in the Supplemental Budget for the opening of the roads to meet the needs of the tourist and mining industries. Representative Foster advised that all of these routes are of economic importance. The mining and tourist industries depend upon a scheduled opening of these roads for planning purposes. If roads are allowed to melt without some manual assistance, it is impossible to schedule tours or planned activities. He added that the economic impact of delayed openings is severe since both the mining and tourist industries have limited seasons. Shortening the season significantly reduces income for people dependent on these activities. Representative Foster concluded that in the case of Nome, to wait for the roads to melt will completely eliminate much of the bird watching activity which corresponds to the spring migrations of several species of birds that are normally found only in Asia. Representative Grussendorf spoke to moving some funds from the Northern component and consequences that could create. Commissioner Perkins pointed out that would be an additional cut to the Northern Region. Ms. Slagle explained that the Subcommittee had added $260 thousand dollars for aviation in the Northern region. That was offset by reductions to the Commissioner's Office, the Division of Administrative Services, information systems, and the support services in the three regional offices. The impact would be the elimination of 1.5 positions in the Commissioner's Office and 3 positions in the Division of Administrative Services. Representative J. Davies clarified that the money had been reallocated from within. Representative Morgan spoke in support of the amendment. He reminded members how much it costs to replace the culverts and wash outs in the road system. Commissioner Perkins replied that the cost of fixing the roads will not be that much. The total road portion would not be lost. He stated that it would keep the roads softer for longer by doing the work. Commissioner Perkins pointed out that this would be the least impact for cutting. He commented that he did not support any of the cuts. The Commissioner cautioned the Committee of cuts to the administrative side of the Department. Representative Phillips spoke about the reality of not opening the Nome-Council Road. She emphasized that the Committee can not do that to the road system throughout the State; it would take Alaska back to the 1950's. Representative Williams emphasized that the Department agreed to this in the Subcommittee. He noted that other areas were cut to fund this for the overtime and snow removal costs. He indicated that he did not agree to "unallocated" cuts. Representative J. Davies agreed that concerns voiced before the Committee were legitimate. He commented that the action recommended by the Committee is in effect an unallocated reduction. He questioned where the reductions would come from. Representative J. Davies noted that the problem is that the Committee is establishing priorities that do not encompass the whole picture. There are issues of maintenance throughout the State which are not being addressed. He noted that he could not support the proposed amendment, as it does not address the entire road system. He emphasized that priorities are established by usage. In response to Representative J. Davies' question, Commissioner Perkins stated that the impact would be to the information services and the procurement division. He stressed that he did not know the total impact. It is difficult to assess the impact. Representative J. Davies asked if the amendment would place specific roads on a pedestal. Commissioner Perkins agreed that there are certain roads each year that will be chosen as the "important ones". Representative Williams responded that when the add on was placed in, the Subcommittee was considering the "laundry list" submitted by the Department. Ms. Slagle acknowledged that the Department did work with the Subcommittee Chair. She advised that in the Subcommittee report, Representative Williams made the decisions as to what to include and what not to include. The Subcommittee report, it specifically states that the Subcommittee did reallocate funds from the Commissioner's Office, upper management, and from support services to help open up rural roads. Representative Williams defended his position in determining where the cuts should be taken from within the Department. Vice Chair Bunde acknowledged that there are consequences to the behavior taken by the Legislature. He reminded members that people do not want taxes, however, want their roads plowed. He spoke to the reallocations that have been made. (TAPE CHANGE, HFC 00 - 61, Side 1) Representative Grussendorf asked how the decisions could be made, which would shift the impact of the funding cuts. He recommended an infusion of cash to the Department. He stressed that it can not come through the Administrative Services Division. A roll call vote was taken on the motion. IN FAVOR: Phillips, Williams, Austerman, Bunde, G. Davis, Foster, Mulder OPPOSED: J. Davies, Grussendorf, Moses, Therriault The MOTION PASSED (7-4). Representative J. Davies WITHDREW Amendment DOT-1B. [Copy on File.] Representative J. Davies MOVED to ADOPT Amendment DOT-2. [Copy on File]. Representative Williams OBJECTED. Representative J. Davies explained the amendment. DELETE: Administration and Support Southeast Region Support Services $2,103,000 ADD: Administration and Support Southeast Region Support Services $2,135,000 Representative J. Davies stressed that without funding this amendment; there will be complaints from vendors. He maintained that the Department of Transportation and Public Facilities has been cut too much to be accountable for all the services expected. Representative Williams responded that the administrative reductions were discussed with the Department. There currently are 32 positions located in the Southeast Region. He indicated that there had been discussion and that there had been no objection. Representative J. Davies observed that the reduction may be the least "objectionable", however, he stressed that there will be consequences from such a reduction. Representative Williams acknowledged that the Department did not like the reduction. Ms. Slagle pointed out that without the amendment, there will be an impact to the procurement position and provided examples of services that would be impacted. Ms. Slagle commented that this would be a one-position reduction. She noted that the Department had not agreed to the change. There were no administrative cuts included on the list submitted by the Department. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses OPPOSED: Austerman, Davis, Foster, Phillips, Williams, Therriault Co-Chair Mulder and Vice Chair Bunde were not present for the vote. The MOTION FAILED (3-6). Representative J. Davies MOVED to ADOPT Amendment DOT-3. [Copy on File]. Representative Williams OBJECTED. DELETE: Administration and Support Northern Region Support Services $1,005,60 ADD: Administration and Support Northern Region Support Services $1,062,600 Ms. Slagle commented on the impact of the amendment which would create a 17% reduction to the procurement staff in the Northern Region. Representative J. Davies pointed out that without that funding, road maintenance will be slowed down. Representative Williams noted that he intended to propose an amendment to add $20 thousand Capital Improvement Projects (CIP) receipts dollars. Representative J. Davies WITHDREW DOT-3. Co-Chair Therriault noted that DOT-3(a) would replace the previously discussed amendment. [Copy on File]. The amendment would be in the amount of $30 thousand CIP receipt dollars. ADD: BRU: Regional Support Services Component: Northern Region Support Services $30CIP Receipts Representative Williams MOVED to adopt DOT-3(a). There being NO OBJECTION, it was adopted. HB 312 and HB 313 were HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 11:50 A.M. H.F.C. 11 3/07/00 a.m.