MINUTES SENATE FINANCE COMMITTEE March 7, 2000 9:06 AM TAPES SFC-00 # 48, Side A CALL TO ORDER Co-Chair Sean Parnell convened the meeting at approximately 9:06 AM PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Dave Donley, Senator Lyda Green, Senator Pete Kelly, Senator Loren Leman, Senator Gary Wilken and Senator Phillips. Also Attending: ANNALEE MC CONNELL, Director, Office of Management and Budget; DELL SMITH, Deputy Commissioner, Department of Public Safety; NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities; NICO BUS, Administrative Services Manager, Division of Support Services, Department of Military and Veterans Affairs. SUMMARY INFORMATION SB 250-APPROPRIATIONS: CAPITAL/SUPP/REAPPROP A committee substitute was distributed that encompassed only "fast track" items. Testimony was taken from the Office of Management and Budget, the Department of Transportation and Public Facilities and the Department of Military and Veterans Affairs. The bill was held. SENATE BILL NO. 250 "An Act making and amending capital, supplemental, and other appropriations and reappropriations; making a reappropriation under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; making appropriations to capitalize funds; ratifying certain expenditures; and providing for an effective date." Co-Chair Parnell noted the items that will be contained in the final version of this bill would only be the "fast track" items that needed immediate attention. The remainder of the items would be considered at a later date. He referred to a committee substitute, 1-GS204/H, and noted that the Committee would work from this rather than HB 343, which was the supplemental appropriation bill adopted by the House of Representatives. Co-Chair Parnell directed the Committee's attention to a spreadsheet, SB 250 - FY 2000 Fast Track Supplemental Appropriations Bill [copy on file], that detailed the items requested, the amount the House funded and the proposed Senate amount. He explained the committee substitute using the spreadsheet as a guide. [Original SB 250 location is shown in brackets.] Section 1 [Section 2 of the original version of SB 250]: Department of Natural Resources, Fire Suppression - House and Senate funding the same at $6,415,100 general funds Section 2 [Section 4(d)]: Department of Administration, Division of Senior Services, Operating Costs of the General Relief Program - House and Senate funding the same at $118,600 general funds Co-Chair Parnell noted the committee substitute does not fund the Department of Administration, Division of Retirement and Benefits request of $100,000 for the unexpected Public Employees Retirement System (PERS) Board election. The House did fund this item. Section 3 [Section 6]: Alaska Industrial Development and Export Authority (AIDEA) Revolving Fund, Additional one-time AIDEA dividend - uses $3.6 million to fund the Power Cost Equalization (PCE) program shortfall to carry it through May 15, 2000 Senator Adams interjected to state that he hoped the Committee would fund the program up through June 30, 2000. Section 4 [Section 9 (a)]: Early Development/Day Care Assistance - funding $1.5 Interagency Receipts Co-Chair Parnell clarified that the funding would actually be federal receipts coming through the Department of Health and Social Services. Section 5 (a) [not included in the original SB 250]: Office of the Governor, Human Rights Commission, Operating costs for Equal Employment Opportunities Commission contract - $18,000 federal funds Section 5 (b) [not included in the original SB 250]: Office of the Governor, Human Rights Commission, Operating costs for Housing and Urban Development Grant - $5,500 federal funds Co-Chair Parnell explained that these two requests were originally submitted to the Legislative Budget and Audit Committee and that the Commission was instructed to resubmit to the full legislature through the supplemental budget process. Section 6 (a) [Section 10 (c)]: Department of Health and Social Services, Catastrophic and Chronic Illness Assistance, Operating costs - House and Senate funding the same at $608,600 general funds Section 6 (b) [Section 10 (k)]: Department of Health and Social Services Public Assistance Administration/Child Care Benefits, Operating costs - House and Senate funding the same at $1,500,000 federal funds Section 6 (c) [Section 10 (l)]: Department of Health and Social Services, Low Income Home Energy Assistance Program, federal grant for emergency heating assistance - House and Senate funding the same at $2,361,100 federal funds Section 7 (a) [Section 11 (b)]: Department of Law, Lapse date extension to June 30, 2001 for tort reform and medical procedures cases - House and Senate language the same Section 7 (b) [not included in the original SB 250]: Department of Law, Statehood defense - new section added by the Senate to fund $500,000 for statehood defense issues Section 8 [not included in the original SB 250]: Legislative Council, Statehood defense - new section added by Senate to fund $400,000 for statehood defense issues. Co-Chair Parnell listed some of the statehood defense cases arising including a potential Antiquities Act withdrawal by President Clinton, national forests roadless areas disputes and submerged lands litigation in Glacier Bay National Park and the Tongass National Forest. Senator Adams asked if members could get a breakdown of the statehood defense items to show accountability. Co-Chair Parnell said he would provide. Section 11 [Section 12 (c)]: Department of Military and Veterans Affairs, Alaska National Guard/Youth Corps, operating costs - House and Senate funding the same at $582,100 general funds and $110,500 other funds Section 12 [not in original bill]: Department of Public Safety, Alaska State Troopers, Grant to Alaska Mountain Safety Center to provide avalanche warning services - $125,400 general funds Co-Chair Parnell explained this item was submitted to him the previous day and he was offering it for consideration by the full Committee. He said further information would be provided later in the meeting. Section 13 [Section 15 (d)]: Department of Revenue, Child Support Enforcement, One-time project to reduce the backlog of case adjustments (extended lapse date of June 30, 2001) - House and Senate funding is the same at $150,000 general funds and $470,200 federal funds Section 14 (a) [Section 16 (b)]: Department of Transportation and Public Facilities, Marine Vessel Operations, Increased fuel costs for FY 01 - House and Senate funding the same at $500,000 general funds Co-Chair Parnell commented that the fuel costs rose from 35 cents a gallon to 80 cents a gallon creating this extraordinary short fall. Section 14 (b) [Section 16 (d)]: Department of Transportation and Public Facilities, Northern Region Facility Maintenance and Operations, Unanticipated winter storm costs outside declared Central Gulf storm disaster area - House and Senate funding the same at $25,000 general funds Co-Chair Parnell pointed out that the committee substitute did not include funding for the special highway projects that the House had inserted. He stated these are ongoing maintenance issues happening across the state. Co-Chair Parnell also pointed out that the committee substitute did not include funding for the University of Alaska for planning and design of the university museum because it was not considered a fast track item and could be considered during the FY 01 capital budget deliberations. He noted that the House did appropriate $500,000 federal funds for the project. Section 9 (a) [Section 18 (a)]: Use the estimated $3,070,000 lapse of Y2K appropriation to partially fund the shortfall in Longevity Bonus grants - House and Senate funding the same Section 9 (b) [Section 18 (b)]: Longevity Bonus Grants, Estimated general funds required to complete full- funding - House and Senate funding the same at $1,430,000 general funds Section 10 (a) and (b) [not included in the original SB 250]: Northwest Arctic Schools-Buckland, Amend Section 133, Ch. 139, SLA 1998, Lines 26-31 - House and Senate language changes the same Co-Chair Parnell noted this reappropriation is within the same school district. Section 15 [Section 19]: Department of Community and Economic Development, Capitalize PCE Fund with the additional one-time AIDEA dividend - House and Senate funding the same at $3,600,000 AIDEA funds Co-Chair Parnell stated that the final items contained in the committee substitute pertain to the three-quarters vote of the legislature to draw from the Constitutional Budget Reserve fund, lapse provisions and an immediate effective date. He said this information was the same as that in HB 343. Co-Chair Parnell stated that the total general fund amount appropriated in the committee substitute was $10.2 million. Senator Adams referred to Section 22 of the original bill that addressed Ratification and asked if it would be considered in the committee substitute. Co-Chair Parnell said he had not intended to take them up in the fast track but noted that specific items could be discussed if any member felt it was an extraordinary fast track item. ANNALEE MCCONNELL, Director, Office of Management and Budget noted that the HB 343 contained funding for the Department of Transportation and Public Facilities to address areas outside of the declared Central Gulf Coast storm disaster area. She said that originally, the Administration did not feel this item needed to be included in the fast track bill, but due to other circumstances, the department had requested earlier funding. She reminded the Committee of the serious avalanche problems this winter and said that experts had determined that there would be particularly severe avalanche danger for the remainder of the spring. Therefore, she said, the request was submitted for funds to monitor and provide additional public safety information about avalanche warnings and dangers. She noted the Alaska Mountain Safety Center had previously provided this service as required by statute but that funding was eliminated in 1986. She said the governor had requested that a task force be formed to identify what efforts the state should be making to issue avalanche warnings. She spoke of the still active group operating in the Hatcher Pass area that has expertise and does avalanche forecasting training for industry and government. She stated that in light of the current danger and in effort to prevent further fatalities, the group should be funded until the crisis passed. Senator Phillips asked about the $35,000 request for avalanche activities in Juneau. Ms. McConnell replied that three areas of the state had been identified as having the highest risk: the Anchorage area, Valdez and Juneau-Douglas. She stressed that there had been some avalanche fatalities in Juneau in the last few years. DELL SMITH, Deputy Commissioner, Department of Public Safety testified that although there have been no avalanche deaths in Juneau this year, there were some the previous year. Ms. McConnell added that efforts had already been made this season to break up avalanches in the Juneau area. Senator Green asked if the funding for Anchorage included the Hatcher Pass area. Mr. Smith assured her it did. Ms. McConnell pointed out that the funding source shown on the spreadsheet was program receipts and she was unaware of any program receipts that would apply. Co-Chair Parnell clarified the funding source should be general funds. NANCY SLAGLE, Department of Transportation and Public Facilities spoke to the extreme weather conditions and the extra efforts made by the department to mediate the situation outside of the declared disaster area. She warned that if additional funds were not allocated to the Northern Region, the department would have to lay off some employees. Co-Chair Parnell asked why this item needed to be included in the fast track rather than the regular supplemental budget, which would be funded sometime in April. Ms. Slagle replied the cash flow would run out in early April. She explained that before the department could lay staff off, they needed to provide the employees with two weeks notice. Senator Phillips asked who owned and maintained the building in St. Mary's. Ms. Slagle answered the Department of Transportation and Public Facilities. Senator Phillips asked if there was a building and maintenance fund and if a different project could be delayed to direct funds to this emergency project. Ms. Slagle spoke of the limited funds available through the deferred maintenance capital budget appropriation and the urgency of the other projects as well, saying they are all "critical needs". Senator Leman asked about the extent of the damage and if the windstorm ripped all of the siding off of the building or just some of the siding. Ms. Slagle said she would provide pictures showing the damage. Ms. McConnell addressed the need for a supplemental appropriation for pupil transportation saying that school districts are concerned about what would happen in the event that no further funds are appropriated. Ms. McConnell then stressed that the PCE program needed to have the full funding amount rather than the reduced amount proposed by the Committee. She understood the intent to appropriate the remainder of needed funds with the full supplemental but thought it made sense to fund the entire amount in this bill. Ms. McConnell talked next about the National Missile Defense System, the opportunities to attract the project to Alaska and the importance of allowing the Department of Military and Veterans Affairs ensure that as many jobs are brought to the state as possible. Co-Chair Parnell said he had received no indication from the Administration that this request needed to be a fast track item. Ms. McConnell said she would explain more at a later time, but noted that the urgency had just been realized. She pointed out that the funding was inserted in the House budget. She again stressed the importance of the job opportunities and the advantage of taking the most proactive approach. Co-Chair Parnell told the witness that the Committee supported the project but wondered why the additional travel was needed in the next three weeks. He asked if Congress was expected to make a decision on the location of the program within those three weeks. Ms. McConnell responded that while Congress was not involved at this point, the state was working with the Department of Defense and the Boeing Corporation to position Alaska to the best advantage. NICO BUS, Administrative Services Manager, Division of Support Services, Department of Military and Veterans Affairs explained the travel scheduled for national meetings in Colorado and Washington D.C. in February, March and April. He stated the department currently had no funds to cover the cost. Co-Chair Parnell asked if funds were being diverted from elsewhere in the department. Mr. Bus affirmed. Ms. McConnell recommended general funding of $1 million for the Central Gulf Coast Disaster to match $3 million in federal funds. She said additional funds would be needed later but this amount would help the immediate cash flow situation. Senator Wilken asked why the PCE would need an additional $4.4 million to operate the program from May 15 to June 30, 2000 if the fast track appropriated $3.6 million. Co-Chair Parnell answered that the $3.6 million would not cover the projected need for billings from previous months explaining that the program operates on a cash flow basis. The entire $8 million would pay all the costs for this fiscal year, he detailed. Ms. McConnell expounded on the time lag between the utilization and the receipt of billings. She said there was question about the future of PCE and that it would be good for the concerned customers and utility companies to know up front that the program has been fully funded. Ms. McConnell told the Committee of her appreciation that the legislature was addressing the supplemental so early. Co-Chair Parnell said the bill would report from Committee tomorrow and be heard on the Senate floor tomorrow. He announced that amendments to the committee substitute were due at his office by 4:00 PM. ADJOURNED Senator Parnell adjourned the meeting at 9:37 AM. SFC-00 (8) 03/07/00