MINUTES SENATE FINANCE COMMITTEE February 18, 2000 9:03 AM TAPES SFC-00 # 32, Side A CALL TO ORDER Co-Chair Sean Parnell convened the meeting at approximately 9:03 AM. PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken, Senator Green and Senator P. Kelly. Also Attending: DAVID TEAL, Director, Division of Legislative Finance SUMMARY INFORMATION SB 217-APPROPRIATIONS: OPERATING BUDGET The Committee heard on overview of the "language section" by the Division of Legislative Finance. The bill was held in Committee. SENATE BILL NO. 217 "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. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." Co-Chair Parnell noted that only the "Language Section" would be addressed at this meeting. This is the part of the budget bill formally known as the "Front Section." The previous "Back Section" will now be referred to as the "Numbers Section." In SB 217, the language section begins on page 39 with Section 3. DAVID TEAL, Director, Division of Legislative Finance gave a section by section overview of the language section as follows. He noted that SB 190, the legislation containing the governor's proposed budget, contains several sections that are not included in this bill. Section 3 Alaska Housing Finance Corporation This section contains the same language as in the previous year. Mr. Teal stated that the Division of Legislative Finance recommends the language be replaced with the Governor's proposed language, which is clearer. The Governor's language specifies that: (a) $103 million is available as a dividend to the State, (b) describes how the dividend is to be appropriated, (c) sends any remaining money to the debt retirement fund (replacing sections (a) and (d)), (d) appropriates corporate receipts for AHFC operations (same as (b)), and (e) appropriates money for loan programs. Mr. Teal qualified that housing assistance payments are $25 million in the Governor's bill rather than the $16 million approved last year. He suggested this matter could be addressed in the budget subcommittee. Section 4 Permanent Fund Corporation This is standard language describing disposition of Permanent Fund earnings and settlements. No amounts are listed in this language, only specification of where the money is going. Section 5 Science and Technology Foundation This is standard language allowing carry forward of earnings on the endowment. Section 6 Alaska Seafood Marketing Institute This is standard language allowing ASMI to carry forward receipts collected in FY00 from the salmon marketing tax and seafood marketing assessment. Section 7 Child Support Enforcement This section makes sure that the Child Support Enforcement Division (DCED) has sufficient state match to obtain all available federal money. Mr. Teal pointed out that the language differs slightly from the Governor's, but appears to have the same effect. Section 8 Constitutional Budget Reserve Subsection (a) contains standard language that reverses the sweep from the general fund into the Constitutional Budget Reserve. Mr. Teal noted the Governor added a section in SB 190 that states that the draw from the Constitutional Budget Reserve is equal to whatever is needed to fill the fiscal gap. As written, section 8 of SB 217 allows no draw at all, he stressed. He explained that the fixed limit provision was removed from the draft. Section 9 Disaster Relief This is standard language appropriating federal receipts for disasters. Section 10 Federal and Other Program Receipts This contains standard language allowing the Legislative Budget and Audit Committee to address certain additional receipts. Mr. Teal stressed that this is restrictive language that allows only a limited type of program receipts. He noted that the governor's proposed language would allow RPLs to address all funds, including general funds. Mr. Teal told the Committee about Section 9 in the governor's proposed budget dealing with federal subsistence funds. The section is divided into two subsections described as follows: Subsection (a) is not an appropriation, it merely states that $11 million of federal money is being used for subsistence management. Subsection (b) appropriates $3 million in federal receipts to the Department of Fish and Game for contracts with the federal government and to support coordination. Mr. Teal stated that the Division of Legislative Finance recommends that the $3 million in federal receipts be placed in the numbers section of the bill. However, he noted to do that, specific components and line items directing the use of the funds, should be identified. He suggested the Fish and Game Budget Subcommittee address the matter. Section 11 Fish and Game Enforcement This is standard language allowing the Department of Public Safety to spend the criminal fines and penalties portion of the Fish and Game Fund. Mr. Teal pointed out that the governor has added a section in his bill that puts crew license fees, shooting range fees and boating access fees into the Fish and Game Fund. Mr. Teal suggested the subcommittee could also address this issue. However, he noted that the Division of Legislative Finance saw no reason why this should not be done. Section 12 Four Dam Pool This is standard language that describes the split of funds from the Four Dam Pool Transfer Fund. It continues the 60/40 split to the Power Cost Equalization program and the Southeast Energy Fund. Section 13 Information Services Fund This is standard language allowing the Information Technology Group to retain designated program receipts. Mr. Teal shared the Division of Legislative Finance recommendation that this appropriation be moved to the numbers section of the bill. Section 14 Insurance and Bond Claims This is standard language allowing the Department of Administration to use the insurance catastrophic reserve account to cover bond claims. Section 15 Insurance Fees This section allows DCED to carry forward insurance fees and other program receipts. Mr. Teal pointed out that this section contains "not to exceed" language that was first used last year, but that the amount appears wrong as it is far less than the amount appropriated in the numbers section of the bill. He shared the Division of Legislative Finance suggestion of using language similar to that in Section 33 of this bill. Section 33 states that the receipts are included in the amount appropriated in section 1. He surmised this would be less confusing and the amounts won't need to be listed in the language section at all. Senator Adams wanted to know if by stating a dollar amount, the language stipulates that the department can spend "up to" that amount. Mr. Teal clarified that, "the amount that is allowed to be carried forward is included in the number listed in Section 1." He said this language makes it clear that the stated amount is all the department is allowed to spend. Section 16 Marine Highway System Fund This is standard language that puts approximately $27 million from the general fund into the Alaska Marine Highway Operating Fund. Mr. Teal noted that the Division of Legislative Finance recommends that this appropriation be moved to the numbers section of the bill. Section 17 Medicaid School Based Claim This is standard language stating that shortfalls in federal funding will be replaced with general funds. Mr. Teal noted that there is no limit on the amount of shortfalls that would be made up. Section 18 Motor Fuel Tax This is standard language splitting fuel taxes into highway and aviation accounts. Mr. Teal qualified that the governor's language lists the amounts as $25,338,300 to highways and $5,600,000 to aviation, rather than the $23,924,500 and $5,400,000 respectively listed in SB 217. He suggested this is another item that subcommittees may wish to address. Co-Chair Parnell asked if the difference is due to increase collection or if it is based on a higher tax. Mr. Teal answered increased collection. Section 19 Occupational Licensing This section allows DCED to carry forward fees and other program receipts. Mr. Teal cautioned that the section contains "not to exceed" language first used last year, but that the amount appears wrong as it is far less than the amount appropriated in the numbers section of the bill. He said the Division of Legislative Finance suggests that language similar to that in section 33 would be less confusing. That language says the receipts are included in the amount appropriated in section 1 of the bill. Mr. Teal also noted that DCED is requesting $450.0 in the supplemental bill, presumably because the limit was too restrictive. Again, he told the Committee that the Division of Legislative Finance suggests subcommittee review. Section 20 011 and Hazardous Substance Release Prevention Account This is standard language capitalizing the account. Mr. Teal shared that the Governor's request was for $9,800,000 rather than the $10,900,000 stated in the bill. Section 21 Oil and Hazardous Substance Release Response Account This is standard language capitalizing the account. Section 22 Regulatory Commission of Alaska (RCA) This is standard language allowing the RCA (formerly Alaska Public Utilities Commission) to carry forward receipts. Section 23 Retained Fees This is standard language allowing the collector of fees, licenses and taxes to retain a portion of the receipts. Section 24 Safety Advisory Council This is standard language allowing carry forward of receipts from the prior year. Mr. Teal pointed out an incorrect statutory reference in this section that should be to sec. 23, ch.84, SLA 1999 rather to the 1998 operating bill. Mr. Teal conveyed Division of Legislative Finance's suggestion that language similar to that in Section 33 of the bill would clarify that the carry forward does not increase the amount appropriated in Section 1 of the bill. Section 25 Salary and Benefit Adjustments This section specifies that funding for salary increases at the University are included in the amount appropriated in Section 1. Mr. Teal said that the language differs slightly from that proposed by the Governor, but the effect appears to be identical. He then noted that "University of" should be added to the description of "Alaska Classified Employees Association." Section 26 Salmon Enhancement Tax This is standard language allowing a pass-through of salmon taxes to regional associations. Section 27 Shared Taxes and Fees This is standard language allowing local governments to obtain their share of listed taxes and fees. Mr. Teal told the Committee that the Governor's bill included a section that treats block grants in the same manner as Medicaid School Based Claims. Mr. Teal explained that a shortfall in federal receipts would be replaced with general funds. He added that the section places a cap of $4,474,500 on general funds for this purpose. Division of Legislative Finance recommends subcommittee review of this issue, according to Mr. Teal. Section 28 State Debt and other Obligations This language was taken from the Governor's bill and updates last year's amounts. Mr. Teal noted that the language contains no reference to General Obligation Bonds because the last of that debt was paid off in FY00. A new subsection should be added if new General Obligation Bonds are issued, he advised. Senator Adams asked if the witness would suggest "boiler plate" language since the legislature is considering issuing new General Obligation Bonds. Mr. Teal responded that, because bonds are issued almost every year, "it can't hurt and it may help." Subsection (i) fixes a technical error in last year's bill. Section 29 State Training and Employment Program This is standard language allowing carry forward of the STEP account balance. Governor's Section 31 Primary and General Election Mr. Teal pointed out in the governor's legislation, a section included that identifies election costs as one-time items. Mr. Teal said the Division of Legislative Finance recommends that this and similar one-time items be placed in the language section as a matter of policy. Doing so would highlight the one-time items, thus ensuring that they are backed out when appropriate instead of becoming lost in the numbers section of the bill, according to Mr. Teal. Section 30 Statutory Budget Reserve Fund This is standard language allowing budget shortfalls to be covered by withdrawals from the reserve account Mr. Teal noted that the account has no balance. Section 31 Storage Tank Assistance Fund This is standard language capitalizing the fund. Mr. Teal qualified that the governor's bill requested $1,090,612 rather than the $5,239,700 specified in SB 217. Section 32 Student Loan Program This is standard language allowing origination fees to be used to offset losses due to death, disability, default or bankruptcy. Section 33 Teacher Certification This is standard language allowing carry forward of receipts. Section 34 Test Fishery Receipts This is standard language allowing carry forward of receipts. Mr. Teal pointed out that there is no limit on the amount of carry forward. Section 35 and Section 36 These sections are standard non-lapse and effective date provisions. Senator Adams asked if there was any other language the Committee should consider that is not present in this bill. Mr. Teal responded there was not. ADJOURNED Senator Parnell adjourned the meeting at approximately 9:20 AM. SFC-00 (1) 02/18/00