ALASKA STATE LEGISLATURE
JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
October 29, 2003
1:35 p.m.
MEMBERS PRESENT
Representative Ralph Samuels, Chair
Representative Mike Hawker
Representative Vic Kohring (via teleconference)
Representative Reggie Joule, alternate
Senator Gene Therriault, Vice Chair (via teleconference)
Senator Ben Stevens
Senator Con Bunde
Senator Lyman Hoffman
OTHER LEGISLATORS PRESENT
Senator Jim Elkins (Appointee - Designee) (via teleconference)
MEMBERS ABSENT
Representative Beth Kerttula
Representative Bill Williams, alternate
Senator Gary Wilken
Senator Lyda Green, alternate
COMMITTEE CALENDAR
APPROVAL OF MINUTES
REVISED PROGRAM - LEGISLATIVE (RPLs)
EXECUTIVE SESSION
AUDIT REQUESTS
OTHER COMMITTEE BUSINESS
WITNESS REGISTER
CHERYL FRASCA, Director
Office of Management & Budget (OMB)
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Presented all the RPLs to the Joint
Committee on Legislative Budget and Audit.
STEVEN B. PORTER, Deputy Commissioner
Office of the Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to RPL 04-4-
1026.
KATHLEEN WAYNE, School Food Coordinator
Teaching and Learning Support
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to RPL [05]-
4-0685.
UNIDENTIFIED SPEAKER, Hydrologist
Division of Mining, Land and Water
Department of Natural Resources
POSITION STATEMENT: Answered questions pertaining to RPL 10-4-
5035.
KIP KNUDSON, Deputy Commissioner of Aviation
Office of the Commissioner
Department of Transportation & Public Facilities
Anchorage, Alaska
POSITION STATEMENT: Answered questions pertaining to RPL 25-4-
0046.
DAVID TEAL, Legislative Fiscal Analyst
Legislative Finance Division
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to RPL 04-4-
0127.
TINA CUNNING
State-Federal Issues Program Manager
Office of the Commissioner
Alaska Department of Fish & Game (ADF&G)
Anchorage, Alaska
POSITION STATEMENT: Answered questions pertaining to navigable
waters and RS 2477s.
DENNIS DeWITT, Special Staff Assistant
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Discussed the proposal to convert the
Palmer Pioneers' Home to a veterans' home.
ACTION NARRATIVE
TAPE 03-8, SIDE A
Number 0001
CHAIR RALPH SAMUELS called the Joint Committee on Legislative
Budget and Audit meeting to order at 1:35 p.m. Representatives
Samuels, Hawker, Kohring (via teleconference), and Joule and
Senators Therriault (via teleconference), Stevens, Bunde, and
Hoffman were present at the call to order. Representative
Berkowitz, Senator Olson, and Appointee Elkins (via
teleconference) were also in attendance.
APPROVAL OF MINUTES
Number 0115
REPRESENTATIVE HAWKER made a motion to approve the minutes of
August 26, 2003. There being no objection, the minutes from the
meeting of August 26, 2003, were approved as read.
REVISED PROGRAM - LEGISLATIVE (RPLs)
CHAIR SAMUELS announced that he would like to make the RPLs a
consent agenda in the interest of time.
Number 0121
REPRESENTATIVE HAWKER moved that the committee approve the
following RPLs: 02-4-0022; [03]-4-0139; 04-4-[1026]; 04-4-0127;
[05]-4-0685; 05-4-0703; 06-4-0161; 06-4-0166; [08-4-0076]; 08-4-
0078; 10-4-5035; 12-4-0114; 20-4-0045; 20-4-0046; and 25-4-6715.
CHERYL FRASCA, Director, Office of Management & Budget (OMB),
Office of the Governor, explained that several of the RPLs
before the committee relate to decisions that were made at the
time the budget was being reviewed for the veto process. After
the legislature adjourned, the [Governor's Office] learned of
the availability of federal funds. Therefore, in some
instances, for one-time projects, the governor made the decision
to veto the state funds so that the federal funds could be used
instead. In this case, the appropriation to the Department of
Administration for the Alaska Public Offices Commission for
electronic filings of various reports was vetoed so that the
federal funds could be used to complete the project.
REPRESENTATIVE HAWKER inquired as to the source of these federal
funds and whether these are restricted federal funds.
MS. FRASCA informed the committee that these are federal funds
that Congress approved for fiscal relief for the states. The
first $25 million was received in July and a second $25 million
will be received in October. She informed the committee that
the proposals in the [committee] packet total approximately $7
million and there is a balance of about $18 million for which no
decision has been made with regard to how those funds should be
used. These federal funds are unrestricted in the sense that
they can be available for any traditional public purpose in the
budget.
Number 0179
MS. FRASCA turned to RPL [03]-4-0139, which provides
approximately $259,000 for victim advocacy and $254,000 for two
special prosecutors in the Criminal Division of the Department
of Law. The source of this money is the same federal fund
source described earlier.
REPRESENTATIVE HAWKER asked if the two special prosecutors are
temporary [positions] or will these become a recurring budget
item.
MS. FRASCA said that the [federal] funds are temporary. The
outcome of applications for a number of federal grants should be
known in the next month or so. The aforementioned will answer
the question of whether other federal funds will be available
otherwise the Department of Law is evaluating [these two special
prosecutors] in the context of its fiscal year (FY) 2005 budget.
The Fairbanks [special] prosecutor is important because it's
dealing with domestic violence and sexual assault cases and thus
the need will continue. However, the department will have to
evaluate how to fund it in FY05. In further response to
Representative Hawker, Ms. Frasca explained that the purpose for
which the federal funds for victim advocacy will likely continue
in the future. Again, the department will have to evaluate that
in context of the FY05 budget. The legislature transferred the
grant monies to the Department of Law and the department viewed
the grant monies as a way to handle a $700,000 unallocated
reduction. However, that was determined not to be a "good way
to go."
SENATOR HOFFMAN asked if the two positions have already been
filled.
MS. FRASCA replied yes. In further response to Senator Hoffman,
Ms. Frasca informed the committee that a typical cost for a
prosecutor is about $114,000, which includes benefits, salaries,
and associated costs. She offered to provide the committee with
a detailed breakdown later.
Number 0213
MS. FRASCA continued with RPL 04-4-[1026], which is a request
for $750,000 in statutory designated program receipts (SDPR)
related to the Stranded Gas Development Act. This RPL is in
anticipation of a potential application being filed by one of
the three major sponsors for a potential gas line. Currently,
there is $750,000 in authority, but should an application be
received the law allows up to $1.5 million in statutory
designated receipts to do the work associated with an
application under the Stranded Gas Development Act. Therefore,
the [Department of Revenue] wants to be prepared to proceed if
an application is submitted.
SENATOR BEN STEVENS asked if there is any documentation
regarding how much [the Department of Revenue] has spent of the
FY04 appropriation.
MS. FRASCA deferred to Steven Porter, Deputy Commissioner,
Department of Revenue.
SENATOR BEN STEVENS related his understanding that the limit for
SDPRs was raised to $1.5 [million] and $750,000 for FY04 was
approved. Therefore, he surmised that [RPL 04-4-1026] is
forward funding FY05 into FY04.
MS. FRASCA agreed that it could be interpreted as such, but if
[the department] receives an application in FY04 $1.5 million
can be spent in FY04. Therefore, it would provide the ability
to receive the money from the applicant and expend it in FY04.
If the application doesn't come forward, [the department]
wouldn't spend the money because it wasn't paid.
SENATOR BEN STEVENS pointed out that the language in HB 16
specifies that when there is a limit in SDPRs, the state may
require reimbursable expenses from the project applicant.
Therefore, he inquired as to where those reimbursable expenses
go. Senator Ben Stevens acknowledged that the applicant would
reimburse the state for the expense of analyzing the
application. He inquired as to what would happen if no
application comes forward until May 2004 and thus there would
only be a month left to spend the $1.5 million.
Number 0259
STEVEN B. PORTER, Deputy Commissioner, Office of the
Commissioner, Department of Revenue, explained that these are
SDPRs, and therefore the money will come in from a third source.
In essence, the third source is the major oil companies. From a
practical standpoint, when an application is submitted separate
negotiations - a reimbursement agreement - will occur. The oil
companies may agree to pay up to $1.5 million. Mr. Porter
pointed out that the oil companies view this as a single
negotiation not as a FY04 or FY05 [negotiation]. Much of the
information and research necessary to negotiate a contract will
be needed in the first four to five months. Therefore, [the
department] may contract for research services to help negotiate
the contract. Mr. Porter said that Senator Ben Stevens was
correct that if an application isn't received until May, the
$1.5 million won't be spent by the end of the year.
MS. FRASCA, in response to Senator Ben Stevens, confirmed that
the authority to receive and spend [the SDPRs] would lapse and
would have to be reauthorized in FY05.
CHAIR SAMUELS interjected that one way or another the authority
would lapse.
SENATOR BEN STEVENS posed a situation in which FY04 is increased
to $1.5 million and asked, "What's going to say that we don't
come in for FY05, in the regular operating budget, to have
another $750[,000] in authority or even another $1.5 million in
authority?" The aforementioned situation could result in the
potential of $3 million in authorization for no projects.
MR. PORTER pointed out that the Stranded Gas Development Act
authorizes $1.5 million in SDPRs per applicant, which means the
money never comes from the state. He explained that contractors
will bill [the department] who will send the bill to the oil
industry which will then send a check to the state. Therefore,
there will never been any real dollars that the state will have
to allocate.
Number 0294
SENATOR HOFFMAN pointed out that in the Stranded Gas Development
Act there was an anticipated $750,000 in FY05. He asked if this
[RPL] would mean that the [need for $750,000 in FY05] would no
longer be required.
MR. PORTER said that one must view this in context of the oil
industry, which is willing to negotiate up to $1.5 million; the
oil industry doesn't view it in the context of fiscal years.
Therefore, if the entire $1.5 million is spent there would be no
requirement in the next year. In further response to Senator
Hoffman, Mr. Porter explained that if the contract is completed
and a contract is submitted in FY04, then the project would be
complete and the funds, totaling $876,500, wouldn't be necessary
in FY05. He related his assumption that portions of this
contract would move on into FY05 and the department would
continue to work on it.
REPRESENTATIVE HAWKER inquired as to what has changed since the
issuance of the fiscal note which initially broke the program
receipts into two fiscal years rather than placing those all in
the first year as it does now.
MR. PORTER explained that when the fiscal note was originally
drafted, the department contemplated drafting an agreement in
principle with subsequent negotiations for additional contract
terms. After talking with the oil and gas industry, the
discussion moved to a single contract and thus it changed the
way in which the state negotiates and the amount of money
necessary at the beginning of the process as well as the timing
of the consultants.
REPRESENTATIVE HAWKER surmised then that the position of the
administration and the Department of Revenue is that this
program receipt authority doesn't come with a spending
commitment unless the receipts are received. Therefore, the
department has greater latitude in negotiating any contract or
responding to any proposal that might come forward.
MR. PORTER replied yes.
Number 0333
MS. FRASCA moved on to RPL 04-40127, which is a $200,000 request
for the Alaska Natural Gas Development Authority (ANGDA) to
continue its work in developing a work plan and analyzing the
in-state benefits of a gas project. These are the same federal
funds that were described earlier. Ms. Frasca informed the
committee that there is an amendment to increase the amount to
$250,000 and the additional $50,000 would go to the Department
of Natural Resources to support its work with ANGDA.
SENATOR THERRIAULT informed the committee that he has been
involved in the development of this RPL and thus he encouraged
the committee to view it favorably. He noted that the ANGDA
board has related that it would like to proceed with the in-
state use benefits analysis, which he believes will be useful
information for the legislation in regard to the evaluation of
any project that proposes to monetize Alaska's natural gas
resource.
CHAIR SAMUELS announced that RPL 04-40127 will be pulled from
the consent agenda in light of the request for an amendment,
which will require a separate vote.
Number 0373
MS. FRASCA turned to RPL [05]-4-0685, which is a request for the
Department of Education & Early Development to increase its
authority to receive $3.5 million for the child nutrition
program. In the past, this program was located in the
Department of Education along with the childcare program and
this program was able to use the federal authority of the
childcare programs to cover the level of funding that they have
been spending each year. Towards the end of the last fiscal
year the childcare programs moved to the Department of Health
and Social Services as well as its federal authority.
Therefore, this program didn't have sufficient federal
authorization to receive the level of funding that the child
nutrition program needed. Now that the aforementioned has been
realized, it will be reflected appropriately in the FY05 budget.
Ms. Frasca informed the committee that the child nutrition
program has been growing about 2 percent each year.
SENATOR BUNDE inquired as to how this would be allocated to the
various school districts.
MS. FRASCA related that the amount is allocated by eligible
children within a school district, a childcare center, or
nonprofit organizations. Therefore, there is no list as to how
this $3.5 million will be allocated to all the schools.
SENATOR BUNDE pointed out that the community of Hope is in the
Kenai School District and many children in Hope have expressed
the desire to have a hot lunch. Therefore, he inquired as to
the chance that some of this money would go to the Kenai School
District.
KATHLEEN WAYNE, School Food Coordinator, Teaching and Learning
Support, Department of Education and Early Development (EED),
said that she is familiar with the Hope school wanting to
participate in the district's national school lunch program.
She emphasized that it would be the district's decision
regarding whether that school will participate in the federal
[hot lunch] program.
SENATOR BUNDE asked if the Kenai School District would receive
funds so that the Hope school could talk to the district about
this.
MS. WAYNE explained that these are entitlement funds for which
there is no cap and thus the department reimburses from the
previous number of meals served to eligible children.
Therefore, if the district decides to allow the Hope school to
participate in this program, the department would reimburse the
school district for the meals it served.
Number 0420
REPRESENTATIVE HAWKER inquired as to the criteria used to
determine an eligible child.
MS. WAYNE answered that the criteria is federal income
application information. In Alaska, [a qualifying income] would
be 185 percent of the poverty level. Households would have to
apply through the school district, which determines the
eligibility.
SENATOR BEN STEVENS turned to the fiscal analysis and surmised
that [the legislature] is creating authority to receive $3.5
million in a new department, which he assumed would be in the
Department of Health and Social Services. However, he pointed
out that he didn't see a reduction in the receipt authority in
EED, which is the department from which the program has left.
MS. FRASCA explained that the [administration] hasn't proposed
to reduce the federal authority in the Department of Health and
Social Services, although she offered to analyze it in order to
determine whether the Department of Health and Social Services
had excess authority from the child nutrition program that it
previously managed.
SENATOR BEN STEVENS requested seeing that transfer of authority
and the impact of the shifting.
Number 0469
MS. FRASCA continued with RPL 05-4-0703, which is a request to
expend $1,653,000 of the one-time federal funds in order to
begin improvements at Mount Edgecumbe High School. The goal is
to increase the number of students that can attend Mount
Edgecumbe High School. This is viewed as an opportunity to
provide more educational opportunities at Mount Edgecumbe,
especially in light of the No Child Left Behind Act. She noted
that the desire is to build upon a facility that has shown
success. This funding would provide 65-80 more beds in the dorm
and five to six new classrooms. In response to Representative
Joule, Ms. Frasca related her belief that such action would
bring Mt. Edgecumbe's enrollment to over 400. She noted that
currently, Mt. Edgecumbe is only able to accept one of every two
applications received.
SENATOR THERRIAULT referred to the legislative fiscal analyst's
comments that specify that the governor originally reduced the
request amount to $1 million and the legislature further reduced
it to $.5 million. He inquired as to the dynamic of that
further reduction by the legislature. Was it caused by the
drive to reduce the overall general fund expenditures, he asked.
MS. FRASCA said she would yield to the legislature with regard
to why it reduced one of the governor's appropriations. In this
case, there is access to federal funds whereas before state
funds were being requested. She noted that the department has
requested funding for classrooms and renovations, although those
requests haven't always been passed on to the legislature.
Therefore, there is demand with regard to balancing the
priorities the legislature had at the end of session.
SENATOR THERRIAULT expressed the need to be careful when
reversing a decision made by the full legislature.
MS. FRASCA interjected that there has been deferred maintenance
needs and some of the funding requested has been used for that,
although the requests haven't been as much as is necessary.
Therefore, any increment would be a "good thing."
SENATOR HOFFMAN commented that he didn't believe [approval of
this RPL] would reverse the action because it's looking at a
different revenue source. He recalled that the original request
was for general funds while this requests using federal tax
relief funds.
SENATOR BEN STEVENS surmised that this RPL would use $500,000
from the Alaska Student Loan Corporation dividend plus $1.65
million from the new federal fund. Therefore, the project
totals about $2.1 million.
MS. FRASCA clarified that the $500,000 from the Alaska Student
Loan Corporation was already appropriated this last session.
The total project would require about another $6 million.
Number 0570
REPRESENTATIVE HAWKER said that he isn't familiar with the six-
year master plan for Mt. Edgecumbe. He inquired as to how this
plan fits into the overall issue of dealing with the cost of
education delivery in rural Alaska.
MS. FRASCA deferred to the Department of Education & Early
Development, but offered to provide Representative Hawker with a
copy of Mt. Edgecumbe's six-year plan.
REPRESENTATIVE HAWKER inquired as to the consequences of
deferring action on this RPL.
MS. FRASCA answered that she believes it would be okay given
that she understands there will be a meeting in mid-December.
However, the governor wanted Mt. Edgecumbe to be open for new
students next fall.
CHAIR SAMUELS asked if the money requested in the RPL would
result in an increase in potential enrollment at Mt. Edgecumbe.
He specifically asked how much money is necessary to finish
classrooms and dormitories.
MS. FRASCA replied that it would require the additional monies.
This request is really for planning, design, and some
renovations. The expansion will require the additional funds.
REPRESENTATIVE HAWKER echoed Senator Therriault's earlier
concern with regard to this action overriding decisions made by
the larger body.
Number 0625
SENATOR HOFFMAN pointed out that this committee has the ability
to take action on behalf of the legislature during the interim.
The above concern could be said of any of the RPLs, all of which
could be tabled and dealt with by the full legislature. In
defense of this appropriation, Senator Hoffman remarked that it
is significant in regard to its impact on additional students
entering the Mt. Edgecumbe School, which is a successful program
for Alaska Native children.
SENATOR THERRIAULT commented that he merely wants the committee
to know that it might reverse the legislature's earlier action.
Senator Therriault related his understanding that this funding
request would address the deferred maintenance. He asked if
this funding request would start this next capital expansion.
MS. FRASCA clarified that about $675,000 would be for
renovations. The balance of the money is primarily for planning
and design of the additional dorm renovation and classroom
expansion. Although waiting until the December meeting to
approve this RPL would be okay, it would be unfortunate if [the
December meeting] is delayed [until] the legislative session in
which case the RPL would be a capital budget process and thus
not [completed] until May. In the aforementioned scenario, much
time is lost in realizing the ultimate goal of expanding the
facility.
SENATOR THERRIAULT turned to the legislative fiscal analyst's
comment which says, "The remaining $978,000 requested in this
RPL will fund renovation and classroom expansion of Building
297." He specified that he didn't want to create a situation in
which the footings are poured and rebar is in and the project
stops. Therefore, he asked if this RPL would just move to the
design of the new part.
MS. FRASCA explained that the new part would be only the
planning and design related to the classroom expansion.
Number 0693
REPRESENTATIVE JOULE agreed that reviewing the six-year plan
would be helpful, as would actually going to the school. He
suggested having the next meeting there. He expressed his hope
that the committee would approve this RPL.
REPRESENTATIVE HAWKER commented that he anticipates entering
next session with a preliminary budget deficit in excess of
about $600 million. This RPL seems to be the first step in
spending about $8 million and he noted his hesitation in second-
guessing the education budget subcommittees of both bodies that
had concurred with a slowing of this project.
REPRESENTATIVE JOULE said that he didn't believe that the budget
subcommittees take up capital issues. Since this issue is a
capital issue, he said he didn't believe the subcommittees even
had that discussion.
TAPE 03-8, SIDE B
MS. FRASCA moved on to [RPL 06-4-0161], which would provide
funds to the Department of Health and Social Services for
programs for co-occurring disorders. This [funding] will
provide [services] over five years and no state general funds
are required. An additional $825,000 will be requested in the
FY05 budget as a result of this grant.
Number 0765
MS. FRASCA continued with RPL 06-6-0166, which is a request for
$110,000 of the one-time federal fiscal relief dollars. This
RPL is related to a project that was included in the capital
budget and was approved by the legislature. Through the veto
process, the funding was deleted so that the state could save
its dollars and, instead, use the federal funds to repair the
Fairbanks Public Health Center.
MS. FRASCA explained that RPL 08-4-0076 is a request for $2.9
million of an additional distribution of the one-time federal
fiscal relief dollars. This funding would go to small
municipalities so that each would receive a minimum of $40,000,
which would help transition with the veto of the monies with
which the state shares with local governments throughout the
state. The communities are listed in the attachment.
MS. FRASCA turned to RPL 08-4-0078, which is a request for $5.2
million in federal dollars that are received through the Denali
Commission. This funding would provide grants to eight
communities for multi-use facilities. The state has received
authority in this fiscal year for almost $2.5 million for
similar facilities in three communities. Therefore, this RPL
will allow the funds to be passed through the Denali Commission
to the communities listed.
Number 0791
MS. FRASCA addressed RPL 10-4-5035, which is a request for the
Department of Natural Resources to receive $45,000 in statutory
designated program receipts from the Tuluksak Native Community.
This will fund river stream gaging.
SENATOR BUNDE surmised that this RPL is in regard to concerns
about floods.
UNIDENTIFIED SPEAKER, Hydrologist, Division of Mining, Land and
Water, Department of Natural Resources, clarified that this RPL
isn't concerning floods rather it's for base-line data
collection. The [Tuluksak Native Community] is working on a
water and sewer project as well as further development of the
village. There has been little stream gaging at the location of
the community.
MS. FRASCA moved on to RPL 12-4-0114, which requests a little
over $1 million for the Department of Public Safety. Again, the
source of these funds are the one-time federal fiscal relief
dollars. Furthermore, this is another example in which the
governor vetoed funds in order to save state funds so that these
federal funds could be used. These funds would repair the roof
of the Department of Public Safety's building in Fairbanks.
This is another deferred maintenance project.
SENATOR HOFFMAN inquired as to [the total amount used of these
one-time federal fiscal relief dollars] in terms of these RPLs
and previous action. He also inquired as to the amount left out
of the $50 million. He further asked if the funds left would go
through the regular budgetary process.
MS. FRASCA responded that about $18 million of these one-time
federal fiscal relief dollars remain and for which there has
been no proposal. Furthermore, there hasn't even been
discussion regarding what will be proposed. If there is money
remaining during session, then it would go through the regular
budget process. Otherwise, there may be some requests in
December.
Number 0820
MS. FRASCA turned to RPL 20-4-0045, which is a request for
regular federal funds in the amount of $703,500 for the Serious
and Violent Offender Reentry program under the Department of
Corrections. This program is primarily for Southeast and Yukon
regions of the state. The emphasis of the program is the
reentry of the prisoner [back in to society], specifically in
rural communities.
CHAIR SAMUELS announced that RPL 20-4-0045 would be pulled from
the consent agenda because it's no longer going through the
Department of Administration but rather through the Division of
Probation and Parole, Department of Corrections.
MS. FRASCA continued with RPL 20-4-0046, which is also a request
for the Department of Corrections. This RPL is a $125,000
request for a federal grant for sex offender risk management
programs that are pilot programs for offenders once discharged
into community probation or supervision. The pilot program
would be in Bethel and surrounding villages. This funding would
provide additional staff and support in the Bethel area.
CHAIR SAMUELS asked if one could assume that use of these funds
will illustrate whether or not the program works.
MS. FRASCA agreed that such an assumption could be made. She
then turned to RPL 25-4-6715, which is a request for $6.5
million for the Department of Transportation & Public Facilities
for the Ted Stevens Anchorage International Airport. Funding
from the Federal Aviation Administration (FAA) was received for
a warm storage facility. This project had previously been
approved when the airport was going to use airport bond
proceeds, but instead these federal funds have been received.
These federal funds aren't part of the [one-time federal fiscal
relief funds] that the state received.
Number 0856
KIP KNUDSON, Deputy Commissioner of Aviation, Office of the
Commissioner, Department of Transportation & Public Facilities,
informed the committee that the total bond savings should amount
to about $7.7 million. He specified that these are non-AMT
bonds, which will be used toward public construction. With
regard to whether these funds could be redirected to the
terminal project, Mr. Knudson said that is unlikely. Mr.
Knudson related that it's the desire of the signatory airlines
and the international airport system that these funds be used to
lower a future non-AMT bond. There is a non-AMT bond scheduled
for approximately $58 million in 2007. In response to Chair
Samuels, Mr. Knudson confirmed that the bond money saved won't
be spent on anything that doesn't go through the regular
process.
REPRESENTATIVE HAWKER inquired as to why the related bonds
wouldn't be defeased.
MR. KNUDSON said that defeasing doesn't appeal to the
commissioner of the Department of Transportation & Public
Facilities because it isn't perceived as a good action in the
bond market and there are related fees. Furthermore, since
there will be regular issue of bonds in the future, it seems
simpler to reduce a future [bond].
CHAIR SAMUELS related his understanding that the bond money can
be spent on whatever, the [department] doesn't have to go
through on a future bond issue.
MR. KNUDSON said that the cash would be in a bank account, but
the [department] wouldn't have the authority from the
legislature to spend it.
REPRESENTATIVE JOULE surmised then that in order to spend it,
the department would have to approach the legislature.
MR. KNUDSON replied yes. Mr. Knudson informed the committee
that as part of a deal with the signatory airlines, $58 million
worth of planned projects was deferred and the department
doesn't have legislative authority for those projects at this
time. Therefore, when those bonds are needed, the department
will approach the legislature in order to obtain the authority
to spend those bonds and increase the bonding cap.
REPRESENTATIVE HAWKER moved to pull RPL 04-4-0127 for purposes
of an amendment and RPL 20-4-0045 for purposes of clarification.
CHAIR SAMUELS asked if there was objection to all the RPLs,
except the above two that were pulled.
Number 0905
SENATOR BEN STEVENS objected for discussion purposes. He turned
to the RPLs with the funding from the temporary federal fiscal
relief and expressed concern that of the seven requests, six
seem to be discretionary spending. These funds are being used
under a different mechanism than used for [the RPLs] presented
at the last meeting. Senator Ben Stevens commented that for the
next $18 million [in federal fiscal relief funds] he wanted to
know that it won't be a lot of discretionary projects that this
committee is directed to approve without legislative action.
Senator Ben Stevens expressed his discomfort with this and said
he would be very uncomfortable doing it with the remaining $18
million [in federal fiscal relief funds].
MS. FRASCA pointed out that three of the [RPLs that would
receive federal fiscal relief funds] were capital projects that
were approved by the legislature.
SENATOR BEN STEVENS acknowledged that and highlighted that those
were vetoed in conjunction with a mass of capital projects that
were vetoed. He noted that he classifies those capital projects
as discretionary projects.
CHAIR SAMUELS said he wanted to echo Senator Ben Stevens'
concerns. He added that this is unusual for the governor to
receive [unrestricted] funds when the legislature is the
appropriating body.
SENATOR HOFFMAN noted that he has similar concerns.
SENATOR BEN STEVENS removed his objection.
MS. FRASCA pointed out that with RPL 04-4-0127, the committee
could approve it as it is and approve the RPL to address the
other $50,000 for the Department of Natural Resources.
DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance
Division, explained that RPL 04-4-0127 can't simply be amended
because it is going to a different department and is a different
appropriation. Therefore, a separate RPL is necessary.
CHAIR SAMUELS, upon hearing no objection, announced that the
following RPLs were approved: 02-4-0022, [03]-4-0139, 04-4-
1026, [05]-4-0685, 05-4-0703, 06-4-0161, 06-4-0166, 08-4-0076,
08-4-0078, 10-4-5035, 12-4-0114, 20-4-0046, and 25-4-6715.
REPRESENTATIVE HAWKER moved that the committee approve RPL 04-4-
0127 as standing because the amendment will be handled with a
separate RPL. There being no objection, RPL 04-4-0127 was
approved.
REPRESENTATIVE HAWKER moved that the committee approve RPL 10-4-
5037.
MS. FRASCA explained that RPL 10-4-5037 would add [$50,000] to
the $200,000 going to the Natural Gas Development Authority.
The $200,000 goes to the Department of Revenue to support its
work plan and analysis of in-state benefits. The additional
$50,000 will go to the Department of Natural Resources to
support its participation in the aforementioned work plan and
analysis.
There being no objection, RPL 10-4-5037 was approved.
CHAIR SAMUELS turned attention to RPL 20-4-0045 and clarified
that the appropriation to the Department of Administration has
been changed to the Division of Probation and Parole in the
Department of Corrections.
REPRESENTATIVE HAWKER moved that the committee approve RPL 20-4-
0045, as amended. There being no objection, RPL 20-4-0045 was
approved.
REPRESENTATIVE HAWKER made a motion to move to executive session
for the purpose of discussing confidential audit reports under
AS 24.20.301. There being no objection, the committee went into
executive session.
[Upon reconvening, the tape counter numbers begin at zero.]
REPRESENTATIVE HAWKER made a motion to move the committee back
into regular, open session. There being no objection, the
committee was brought back into regular session.
AUDIT REQUESTS
REPRESENTATIVE HAWKER made a motion for the audit report on the
Department of Community & Economic Development Board of
Certified Real Estate Appraiser to be released to the public for
response. There being no objection, it was so ordered.
REPRESENTATIVE HAWKER made a motion for the preliminary audits
be released to the appropriate agencies, which are the
Commission on Aging, Department of Health and Social Services;
Behavioral Health, Department of Health and Social Services;
Board of Dispensing Opticians, Department of Community &
Economic Development; Real Estate Commission, Department of
Community & Economic Development; Guides and Transporters,
Department of Community & Economic Development; Probation
Officer Transfer Analysis, Department of Transportation & Public
Facilities. There being no objection, it was so ordered.
OTHER COMMITTEE BUSINESS
CHAIR SAMUELS reminded the committee that at the previous
meeting the committee gave the chair the authority to enter into
a contract with the Alaska Department of Fish & Game and the
Department of Natural Resources regarding navigable waters and
RS 2477s. Chair Samuels informed the committee that one
navigable waters case has been solved and there has been
movement with federal legislation. The state has moved forward
with the Black River case.
TINA CUNNING, State-Federal Issues Program Manager, Office of
the Commissioner, Alaska Department of Fish & Game (ADF&G), in
response to Senator Hoffman, specified that the Black River
[flows into] the Porcupine River. The (indisc.) and Black
Rivers were the three originally filed.
The committee took a brief at-ease.
Number 0041
DENNIS DeWITT, Special Staff Assistant, Office of the Governor,
informed the committee that he has been working on the proposal
to convert the Palmer Pioneers' Home to a veterans' home. The
report done by the McDowell Group specified three alternatives.
One alternative was the construction of a facility, which was
found to be outside [the state's] economic ability. Another
alternative was the conversion of "Wings", which was found to be
outside [the state's] managerial and financial ability. The
third alternative was the conversion of an [existing] home. As
a result of the study, the U.S. Department of Veterans Affairs
(VA) was invited to Alaska in order to review the feasibility of
converting the Palmer Pioneers' Home. The VA was very excited
about the potential of this conversion. The proposal before the
committee would develop the information necessary for the final
grant application allowing the conversion. Mr. DeWitt informed
the committee that 25 percent of those in the home need not
qualify as veterans. Furthermore, the state would have full
flexibility with regard to the admission criteria for that 25
percent. The intent is to maintain the current admission
criteria for pioneers' homes.
MR. DeWITT noted that the discussion with the VA brought up the
notion of transition as did the McDowell Group study, which
suggested a three-year transition. He noted that the transition
period was unexpected because the federal government had said
they wouldn't suggest a time-limited transition but rather a
transition based on the length of time those in the home are in
the veterans' beds. Therefore, federal legal counsel is
discussing whether federal legislation is required to accomplish
the aforementioned. The transition issue will assure that no
pioneer will be displaced and provides a much longer period in
which to transition to a full veterans' home. He related the
[administration's] belief that if a second request for proposals
(RFP) moves toward the information for final application, it
would be complete by about April 15th. If the aforementioned
occurs, then hopefully by the fall of next year [the Palmer
Pioneers' Home] can begin operation as a veterans' home.
CHAIR SAMUELS mentioned that he met with VA representatives who
said that the other options became less and less tenable when
reviewing the details. The [McDowell Group] study didn't do
justice to the actual costs and operational concerns [of the
VA]. Therefore, the conversion of the Palmer Pioneers' Home was
cause for excitement. Chair Samuels said that the process is at
the point at which a motion is necessary to authorize the chair
to put together a committee to work with the administration and
the VA to develop an RFP in order to start the design phase of
the project.
REPRESENTATIVE JOULE inquired as to how many VA beds the 75
percent would equate.
MR. DeWITT estimated that there would be 58 VA beds and 22 non-
VA beds.
CHAIR SAMUELS noted that there has been discussion that some
residents in the pioneers' homes may be eligible for VA benefits
and don't know it. Therefore, the administration and the VA
will work with everyone to create the least disruption possible.
Number 0135
SENATOR THERRIAULT recalled that when the original money for
this was made available to the committee, some money was
specifically held to take this second step. Therefore, with the
results of the McDowell Group study and the discussions with the
VA, it's appropriate to move forward. Senator Therriault
mentioned that Senator Green had some concerns and questions
about this.
MR. DeWITT said that he and Senator Green had a long
conversation and she felt positive about the approach being
taken. He related that Senator Green had met with the Palmer
Pioneers' Home administrator to share that she was fully
supporting this.
REPRESENTATIVE HAWKER turned attention to the October 10, 2003,
letter from Joel Gilbertson, Commissioner, Department of Health
and Social Services. He asked if this letter is accurate with
regard to taking the next step.
MR. DeWITT explained that per the request of the chair work was
done to ascertain the work necessary to get the proposal ready
to the 10 percent design stage, which is required before the
VA's final determination. Mr. DeWitt said that [the
administration] is very comfortable that this is a lean and
doable project.
REPRESENTATIVE HAWKER moved that the committee authorize Chair
Samuels to solicit and award a contract for phase two of this
study as outlined in the October 10, 2003, letter from
Commissioner Gilbertson.
REPRESENTATIVE KOHRING asked if the option of building an
entirely new facility with federal funds was considered.
MR. DeWITT acknowledged that could be an option and it was
discussed with the VA. However, the cost would probably
generate $10-$12 million in state costs plus the federal match.
Therefore, in the current economic environment an expenditure of
$10 million would be outside the state's ability.
REPRESENTATIVE KOHRING asked if this conversion proposal
actually takes existing beds and converts them to veterans' beds
or is the facility also being expanded.
MR. DeWITT answered that capital improvements would be made to
the Palmer Pioneers' Home in order to bring it up to the level
required to be acceptable as a veterans' home.
REPRESENTATIVE KOHRING surmised then that this doesn't expand
the number of beds, it merely converts existing pioneers' beds
to veterans' beds.
MR. DeWITT replied yes and highlighted that the upgrade will
result in a facility that won't have deferred maintenance issues
[and costs] for probably eight to ten years. Therefore, the
state will have an upgraded facility with a useful life of at
least 30 years.
REPRESENTATIVE KOHRING related his understanding that veterans
are already eligible to enter [the pioneers' homes] without
special preference related to their veteran status.
Representative Kohring expressed concern that this proposal
would make it difficult for pioneers who are not veterans to
gain access to this facility because there would be fewer beds
available once the beds are filled by veterans.
MR. DeWITT informed the committee that currently there are 22
empty [pioneers'] beds that are being filled. Currently, there
is an active waiting list of 20 individuals. Mr. DeWitt
specified that the intention is to fill those beds and obtain
the lengthier transitional language. While Representative
Kohring's concern might be an issue, it would be much later
before such impacts would occur. This conversion proposal would
allow [the state] to secure some federal reimbursement for those
veterans' services that are already provided in order to provide
better services over the long term.
REPRESENTATIVE KOHRING returned to the issue of the difficulty
in raising the funds to build a stand-alone veterans' home. He
related his understanding that a stand-alone veterans' home
would be funded through the federal government and with U.S.
Senator Ted Stevens as the appropriations chair it seems there
would be a good opportunity to secure federal dollars to do
that.
MR. DeWITT pointed out that a stand-alone veterans' home brings
with it federal statute. The probability of a federal grant
beyond the federal share prescribed in law would be fairly
remote. Additionally, the operational costs supported by the VA
simply don't cover the operational costs of veterans'
facilities. Therefore, a stand-alone veterans' facility is a
much larger investment than it might look initially.
SENATOR BEN STEVENS related his understanding that the reason
for a designated veterans' home is so that veterans [existing
residents] can use their veterans' benefits to pay for a portion
of their retirement home needs.
MR. DeWITT agreed that a [designated veterans' home] would allow
veterans to obtain benefits the veterans [in Alaska] currently
can't obtain.
SENATOR BEN STEVENS informed the committee that U.S. Admiral
Principe has said he isn't in favor of building a stand-alone
veterans' facility in Alaska.
CHAIR SAMUELS interjected that under this conversion there is no
net loss of beds.
CHAIR SAMUELS, upon hearing no objection to the earlier motion
authorizing him to solicit and award a contract for phase two of
this study as outlined in the October 10, 2003, letter from
Commissioner Gilbertson, he appointed himself, Senator
Therriault, David Teal, Pat Davidson, and Henry Webb to develop
the RFP.
ADJOURNMENT
There being no further business before the committee, the Joint
Committee on Legislative Budget and Audit meeting was adjourned
at 4:20 p.m.