JOINT HOUSE & SENATE FINANCE COMMITTEE MEETING January 21, 2004 1:43 P.M. TAPE HFC 04 - 8, Side A CALL TO ORDER Co-Chair Harris called the House Finance Committee meeting to order at 1:43 P.M. MEMBERS PRESENT HOUSE Representative John Harris, Co-Chair Representative Bill Williams, Co-Chair Representative Kevin Meyer, Vice-Chair Representative Mike Chenault Representative Eric Croft Representative Hugh Fate Representative Richard Foster Representative Mike Hawker Representative Carl Moses SENATE Senator Gary Wilken, Co-Chair Senator Fred Dyson Senator Lyman Hoffman Senator Donny Olson Senator Ben Stevens MEMBERS ABSENT Representative Reggie Joule Representative Bill Stoltze Senator Lyda Green, Co-Chair Senator Con Bunde, Vice-Chair ALSO PRESENT Senator Gary Stevens; Loren Leman, Lieutenant Governor, State of Alaska; Jeffrey Staser, Federal Co-Chair, Denali Commission; Yuri Morgan, Legislative Representative, Denali Commission PRESENT VIA TELECONFERENCE None GENERAL SUBJECT(S): OVERVIEW: DENALI COMMISSION  The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 23rd Legislative Session, contact 465- 2156. After the 23rd Legislative Session they will be available through the Legislative Library at 465-3808.   LOG SPEAKER DISCUSSION   TAPE HFC 04 - 8, SIDE A  000 Co-Chair Harris Convened the Joint House and Senate Finance Committee meeting at 1:43 P.M. to hear the overview presented by the Denali Commission.  DENALI COMMISSION  132 LOREN LEMAN, Provided a brief history of the Denali LIEUTENANT GOVERNOR, Commission. The Governor named the Lt. STATE OF ALASKA Governor to be the state Co-Chair of the Denali Commission. Mr. Staser is the counter-part as the federal Co-Chair. There are five other commissioners representing statewide entities in Alaska that have significant input in dealing with infrastructure needs. They are: · Alaska Federation of Natives · Associated General Contractors of Alaska · Alaska Municipal League · Organized Labor · University of Alaska. He added that the commission was established in 1998. In 1999, it was a $30 million dollar program. It has grown to the current level of $110 million dollars. The Commission is to be a collaborative effort between State and federal agencies. The staff is composed of people loaned from these other agencies. Yuri Morgan on the Denali Commission represents the Legislature.  423 Lieutenant Governor Continued, the investments to date have Leman been primarily in energy projects & primary health care facilities. The Commission has substantial investments in the work force training programs.  535 Lieutenant Governor The goal of the Commission is Leman sustainability. The investments made, need to be able to maintain themselves.  Communities need to demonstrate that they will be able to maintain their facilities.  602 Senator Wilken Noted that Senator Green would be late for the meeting.  619 JEFFREY STASER, Offered to answer questions of the FEDERAL CO-CHAIR, Committee. He applauded comments made by DENALI COMMISSION Lieutenant Governor Leman noting that he had captured the work of the Commission in a "nut-shell".  704 Co-Chair Harris Pointed out that Denali Commission projects should be self -sustainable and able to stand on their own. He inquired that process.  726 Mr. Staser Responded that the originally guidelines consist of making sure that any projects will be around for future generations. That is the philosophy of all the work of the Commission. Public dollars should not be invested without some sort of common sense & accountability in the future.  812 Mr. Staser Elaborated on "common sense". The draft investment policy determines what is sustainable. Referenced projects at Shishmaref and decided as a Commission that it would be more problematic to renovate an existing clinic than build a new one. The commissioners then discussed how the public would know that certain projects are sustainable.  917 Mr. Staser Sustainability has been described as a goal. That differs from affordability. The policy includes good faith & natural circumstance criteria that the Commission looks at. Each project is unique and includes those considerations.  958 Senator Wilken Asked about the future and the way in which the Denali Commission is funded by the federal government and is there a system by which the Commission is guaranteed on-going funding.  1030 Mr. Staser Responded that all agencies go through reauthorization hearing every six years. The Commission has recently been reauthorized. The funding streams come from five separate appropriations bills. · One comes from Trans Alaska Pipeline Liability Trust Fund · Currently legislation pending, the National Energy Bill, which will endow the Commission with royalties,  received from National Petroleum Reserve-Alaska Development, which is the federal share of royalties and that bill has not yet passed. The strength of the Commission is how credible they are with other state and federal agencies and nationally.  1200 Mr. Staser Assessed that Alaska has a unique tale to tell. There are unique challenges and the program is becoming stronger.  1309 Lieutenant Governor Added that the President's proposed base Leman budget funding is a small amount which has always been rebuilt in the U.S. Senate.  1354 Senator Wilken Clarified that there are four revenue- funding streams. · Grant funding with a maximum of six years before reauthorized · Pipeline Liability Fund · 20% of the federal governments 50% of rents and royalties from the NPRA would accrue as long as there is a Denali Commission · other federal agencies that the Denali Commission may be able to request funds from.  1451 Representative Voiced his appreciation for all the work Foster done by the Denali Commission in Western Alaska. He understood that initially, the intent of the Commission was repairs and then switched to health and safety and the clinics. He asked what the Commission would concentrate on in the next couple years.  1554 Mr. Staser Clarified that the Commission begins with the bulk fuel storage tanks with an exit strategy. In collaboration with the energy program, there has been a health program created in the last two years as a part of health and human services. Total funds spent, 22% have gone into health projects. 61% have gone into energy projects. After the two main programs, projects drop off significantly.  1738 Mr. Staser Anticipates that with the bills drafted and introduced to Congress, the Commission will be involved with transportation in the future. The Commission is currently staffing that with Mr. Yuri Morgan, the State's representative who is responsible for  designing the transportation program. The next big item will be the access transportation arena.  1812 Representative Fate Commented on the economic development objectives in rural Alaska. He noted that economy between FY99 - FY03 and that FY04 continues to be low. He spoke to economic activity in rural Alaska.  1901 Mr. Staser Stated that everything depends on economic development. The private sector is "good" at that. The government is sometimes less effective. It is an essential partnership and government must create healthy infrastructure. State and Commission responsibilities are energy and then health and that the Commission will be getting more involved with economic development.  2019 Senator Ben Stevens Commented that 50 construction projects building rural health clinics is economic development. The health care industry is the fastest growing business in the State. He requested that the Denali provide an impact statement addressing the health care clinics and their relationship on demand of the general fund-spending match.  2135 Senator Ben Stevens stressed that the impacts should be known regarding future outcomes. The proposed project are good and yet it must be understood the long-term effect for Alaska.  2216 Mr. Staser Offered to provide that information.  2230 Lieutenant Governor Added that objective is important to the Leman Administration and that unfunded liabilities should not be created. Instead, the health care facilities should have the availability of better health care without increased liability costs to the State.  2304 Senator Ben Stevens Thought that there would be an increased cost to the State. He asked that the Commission demonstrate that this would be better care and service for better value.  2332 Lieutenant Governor Commented on the dedication he attended Leman for the new regional clinic. That clinic has better capacity than any in the past and provides better care without shipping people into Anchorage. He addressed staffing the facility.  2438 Senator Hoffman Noted the $32 million dollars earmarked for initiatives funding. He asked how they would be limited.  2457 Mr. Staser Responded that the earmarks are listed in the bill. What is listed are allocations of funds as a staff recommendation to the Commission. Example: Teacher Housing - recommended up to $10 million dollars and are looking for ways to partner with the State. The Commission does not want to compete with other housing projects unless to leverage added strength. Earmarks have been made through the congressional intent language. The Commission has the responsibility to each of the collective parties at the table.  2624 Senator Hoffman Asked if the allocations were required to be spent in that fiscal year.  2640 Mr. Staser Stated that normally the bills are passed with no-year language and authorized until spent. The Commission attempts to authorize the funds each year in order to demonstrate that there is a greater need. To date, all the money has been obligated each year.  2703 Co-Chair Harris Asked about local hire requirements in the rural areas.  2717 Lieutenant Governor Responded that one of the objectives is Leman for the locals to be hired for construction and training for on-going operations of the facilities. The manner in which the projects are designed will maximize the local hire and has been successful.  2822 Mr. Staser The reason that the Commission got involved with training was to guarantee that there is a local hire. Worked with the contractors to guarantee specific jobs.  2856 Mr. Staser Added that the University also supports local hire. That will keep salaries in State while maintaining services.  2930 Co-Chair Harris Acknowledged how important that is. He noted the joint chairmanship between federal and State government. He questioned the amount of cooperation in reference the State budget.  3011 Lieutenant Governor Commented that the goal is that there is Leman "a lot of cooperation". In the past year, it has improved greatly. At this time, there has been a lot of cooperation between the departments. Commissioner Blatchford and Commissioner Gilbertson have been supportive and they are the two most involved with the projects.  3227 Mr. Staser The legislature has had a "hands on"  since inception. The Commission attempts to understand and identify the priorities. He added that the Denali Commission has worked with the Legislative Budget and Audit Committee (LBA). The State continues to have a major roll in determining the priorities.  3249 Representative Reiterated his appreciation of the work Foster done by the Commission. He pointed out that in Western Alaska, there are only 142 State jobs. Of the 14 departments, there are none. The most important presence in Western Alaska is the Denali Commission. He emphasized that without the Denali Commission, western Alaska would be in dire straights.  3419 Lieutenant Governor Reminded Representative Foster of the Leman statewide presence in the Nome area. He added that the Denali Commission does have their annual report available on CD and accessible through the website with updated information on the Commission.  3521 Mr. Staser Concluded that if the Commission is working, everyone in the State is represented. All information is shared. He agreed that there are not enough people to travel statewide and that is why the collaboration is necessary.  3619 Co-Chair Harris ADJOURNMENT   The meeting was adjourned at 2:20 P.M.