Legislature(2009 - 2010)
04/16/2009 05:11 PM House FIN
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CS FOR SENATE BILL NO. 75(FIN) "An Act making and amending appropriations, including capital appropriations, supplemental appropriations, and appropriations to capitalize funds; and providing for an effective date." Co-Chair Hawker MOVED to adopt HCS CSSB 75 (FIN) as a working document before the committee. There being NO OBJECTION, it was so ordered. 8:14:42 PM JAMES ARMSTRONG, STAFF, CO-CHAIR STOLTZE, reported that there were three additional legislative finance reports; numbers and language differences only, numbers and language differences statewide, and numbers and language detailed by agency. 8:17:05 PM Mr. Armstrong listed the changes to the bill. Page 2, Line 13, adds the appropriation mechanism of $2,500,000, for the Enterprise Security Projects. Representative Gara asked for clarification on the first change. Mr. Armstrong replied that in the previous draft the Senate added the funding for the Enterprise technology in the language section, but due to a technical error, the actual funding allocation mechanism allowing the agency to spend the money, was omitted. The change adds that allowance language back in. Mr. Armstrong continued. Page 2, Line 27, adds $4.5 million in general funds match to Alaska Energy Authority-Renewable Energy Projects. It also adds $1 million in Statutory Designated Program Receipts and Inter Agency Receipts. Page 3, Line 17, adds intent language to the $10 million appropriation to the Port of Anchorage. The appropriation is contingent upon the municipality assembly adopting a resolution identifying the specific ferry landing location for M/V Susitna. Line 22, requests that the Municipality of Anchorage assist the Mat-Su borough in grant applications for port projects to the United States Department of Transportation. 8:18:23 PM Representative Gara wondered where the corresponding change could be found in the numbers and language section of the bill. Mr. Armstrong replied that the language had been added to the general fund portion of the ports appropriation. He added that he would point out intent language in the bill as it came up. 8:19:11 PM Mr. Armstrong continued to Line 27, the Kenai River Bluff Project. The project was not in the original bill. The Corps of Engineers has $13 million slated for the project. The Kenai borough has added $2 million to the project, which the state has matched. Language has been added to specify that the appropriation is contingent upon the fund from the Corps of Engineers. Mr. Armstrong noted that the bonds had been approved, but not issued, in anticipation of the $13 million. Vice-Chair Thomas asked when an answer from the Corps of Engineers could be expected. Mr. Armstrong said that the corps was still in deliberation. Co-Chair Stoltze pointed out that the project had been introduced by the administration. 8:20:06 PM Mr. Armstrong continued to Page 19, Line 19, which adds 40 percent of the deferred maintenance funds requested by Alaska Housing Finance Corporation (AHFC) for the AHFC Building System Replacement Program. Page 19, Line 33, adds $1,380,000 to AHFC Fire Protection Systems, also 40 percent of the deferred maintenance receipts requested by the corporation. 8:21:03 PM Mr. Armstrong explained that AHFC had bonded for deferred maintenance receipts in the past. The bonding has run out and regular program receipts are now being requested. Representative Kelly asked if the administration had made the request on behalf of the corporation. Mr. Armstrong replied that it had. 8:21:59 PM Mr. Armstrong continued to page 20, Line 15. He stated that $3.5 million had been added to the third phase of the AHFC Loussac Manor renovation and replacement in Anchorage. Line 18 notes a third of the deferred maintenance for AHFC Security Systems Replacement/Upgrades for public housing. Congress has given AHFC $600,000 for the Weatherization Program, as noted on Page 20, Line 32. 8:22:45 PM Mr. Armstrong informed the committee that $400,000 for the Alaska Aviation Safety Program had been added on Page 21, Line 10. Those funds have been matched by the Federal Aviation Administration and The Medallion Foundation. 8:23:22 PM Mr. Armstrong relayed that Page 21, Lines 20, 21 and 22 notes the administrative intent language for the Alaska Marine Highway System. Page 21, Line 31 notes the 60 percent of the funding for the Harbor Program Development was restored at the request of the administration. This project had been overlooked, but will be moved in 2010 to the operating budget. Representative Foster pointed out that in the past the administration had vetoed capital projects. Mr. Armstrong assumed that the administration would not veto its own request. 8:24:50 PM Representative Gara asked if all the changes mentioned were governor's requests. Mr. Armstrong reported that after the Senate version of the bill had passed, projects that could capture a match had been identified. He said that some of the matches would not flow through the appropriation process. Co-Chair Stoltze added that a list of projects had been presented that had match funds, but through errors, some projects had not made the list. Representative Gara restated his question. Mr. Armstrong explained that the back-up had been reviewed twice. He elaborated that some of the back-up did not illustrate whether there had been an accompanying federal match. Representative Gara asked if the items had been in the governor's original budget. 8:26:57 PM Mr. Armstrong pointed out that Page 34, Line 14 and Page 36, Line 9, were both oversights in the amendment process between the Department of Transportation stimulus legislation and the original capital budget. The line changes restore funding for FY 2009 projects that were already on the STIP in the original capital budget. 8:28:22 PM Mr. Armstrong turned to Section 4, Page 44, Line 10. The title for the appropriation has been changed from Egan Center Upgrades to Passenger Staging Upgrades. Representative Gara returned to the Egan Center appropriation. He wondered if the money would come from cruise ship funds. Mr. Armstrong said yes. All of Section 4 pertains to cruise ship funds. Mr. Armstrong continued reading from the bill. Page 45, Line 9 is related to the Baranof Park Project in Kodiak, which was in the original CS from the senate, and was not a qualifying project. Another project is slated for $1.3 million, making the addition a net zero addition. 8:30:54 PM Mr. Armstrong continued to Page 45, Lines 19 and 20, which are a title change. The words "and Construction" have been added. Page 46, Line 22, title change inserts the work "passenger" between "marine" and "service". Page 46, Line 29, is the Fort Abercrombie Tourist Bus Parking, which is the $1.3 million project previously mentioned. If you add the appropriation on Page 45, Line 9 to Page, 46, Line 29, and take out the Baranof Park Project, the addition is net zero. 8:32:46 PM Mr. Armstrong informed the committee that the $6 million in allocations from the original bill sent by the Senate have been collapsed into one separate appropriation, and intent language has been added to the top of page 47. Vice-Chair Thomas wondered how the numbers of people who utilize parks were accounted for. Mr. Armstrong deferred to the administration. 8:33:39 PM Representative Crawford asked about the funding source for line 32, page 46, State Parks Deferred Maintenance and Emergency. Mr. Armstrong related that when the bill was first released by the governor, projects in the section were to be funded, within the fast track supplemental, using cruise ship gambling proceeds. However, the administration, upon consultation with the legislature, decided to classify the gambling funds as general funds. As a result, $6 million of the cruise ship head tax dollars have been allocated for statewide deferred maintenance projects. 8:34:44 PM Co-Chair Hawker clarified that the head tax has very specific legal requirements as to how it can be spent. The Office of Management and Budget (OMB) and the state had originally thought of the gambling tax as a new and separate fund source. Upon reflection, it was understood that the gambling tax was just like all other taxes and was meant to feed the general fund. He made clear that where the tax was indicated on earlier spreadsheets was to be treated as an anachronism, and will always be treated as general funds going forward. 8:35:42 PM Mr. Armstrong continued to read from the bill. On Page 53, Lines 15 and 17, corrections have been made to rectify the incorrect House District numbers. Page 63, Lines 1 through 28, are intent language that covers an appropriation in the language section. Co-Chair Stoltze recommended deferring those line budget items to Co-Chair Hawker at a later time. Mr. Armstrong continued to Page 67, Line 23. 8:37:13 PM Co-Chair Hawker reported that there are three sections in the bill that could arguably be called operating appropriation for the year. The sections are; Section 21, Page 67, Section 20, Page 67, and associated intent language on Page 63. There has been ongoing discussion in the legislature concerning state investment in in-state gas development, while attempting to reconcile development of a gas line with high fuel costs. Section 20 appropriated an additional general fund appropriation into the Department of Health and Social Services (DHSS) to continue to build the Low Income Home Energy Assistance Program fund (LIHEAP). The funds augment the federal Alaska Heating Assistance Program. 8:39:17 PM Co-Chair Hawker stressed that money for in-state gas development was the top budgetary priority for the governor. He gave that $9 million in general funds have been added to Office of the Governor for gasline development. He read from the legislative intent language in Section 13, Page 63, Lines 3-6. He emphasized that the project is not related to Alaska Gasline Inducement Act (AGIA), but to continue to work to develop in-state gas for in-state use. It is meant expedite the efforts needed for private enterprise to complete the project. The money was appropriated to the Office of the Governor to ensure the governor the latitude to distribute the funds where she deemed most appropriate. 8:42:11 PM Representative Crawford inquired the funds could be used for the Alaska Natural Gas Development Authority (ANGDA). Co- Chair Hawker reported that it could be used for ANGDA. Representative Kelly understood that the funds could be used at the governor's discretion. Co-Chair Hawker clarified it the intent to make the money available to the governor to utilize, within parameters, as she deemed fit. 8:43:44 PM Representative Gara asked how the decision to appropriate the $9 million was made. Co-Chair Hawker reported that the governor had requested $9.3 million. The LIHEAP appropriation was already benchmarked at $9 million, which aided in the decision. Representative Gara wondered when the discussion on the amount of the appropriation had taken place. Co-Chair Hawker believed the discussion had taken place within the sphere of the administrations specialized knowledge. Representative Gara requested discussion from the administration as to what the state would receive for $9 million, and why that specific amount was requested. 8:45:05 PM Representative Gara voiced concern about the language on page 63, Line 15. He felt it would allow the administration to spend state money as a subsidy to a private entity. Co- Chair Hawker explained that intent is to provide funds to facilitate progress on in-state gas development. 8:46:40 PM Representative Gara hoped that there would be more discussion on the matter. Co-Chair Hawker pointed out that every year funds are added to departments in the pursuit of in-state gas development, regardless of progress. He termed it a policy call. Co-Chair Stoltze added that it was a pronounced request from the administration. Co-Chair Hawker pointed out that there are laws to prevent the administration from giving away assets. 8:47:57 PM Vice-Chair Thomas requested an audit of ANGDA. Co-Chair Hawker replied that that was possible. He recommended that the request be directed to Legislative Budget and Auditing (LB&A). Vice-Chair Thomas suggested that the audit be done before the money is given to ANGDA. Co-Chair Hawker noted the funding is provided directly to the governor's office. In recognition of the concerns about ANGDA, he reported that the funds under discussion are entrusted specifically to the governor. He thought the governor's office would use the money wisely. 8:50:06 PM Representative Gara felt that the appropriation was a huge policy call, with no limitations, and unenforceable intent language. He thought it should be reconsidered in an open committee process. He strongly questioned its transparency. Co-Chair Hawker understood that the governor had stated that the intent for the $9 million was that it be invested in in- state gas development. 8:51:32 PM KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, informed the committee that this item has been a priority for the governor and has been discussed in various committees. LARRY PERSILY, STAFF, CO-CHAIR HAWKER, explained that Harry Noah, an executive branch employee, has been designated the governor's in-state gas line coordinator and has been discussing the issue with as many legislators as possible. He has presented suggestions as to the best way an in-state gasline could be developed; discussing timelines, necessary funds and the right of way permits that would be required. Representative Gara wondered which legislators Mr. Noah had spoken to. He understood that the governor presented bills to the legislature, and that those bills had parameters as to how the money would be spent. He maintained that the bills had not passed. He voiced concern that the $9 million was just an award to the governor's office. He alleged that full disclosure for use of the funds had not been discussed with the entire committee before the intent language was written into the bill. Ms. Rehfeld reported that Mr. Noah has spent time in the building talking to lawmakers, and those lawmakers have confidence in the design and detail that was presented to them. Co-Chair Hawker added that there had been many discussions on the issue. 8:55:54 PM Representative Austerman reported that the administration had not sent a representative to his office to discuss the issue. He expressed regret that he had not been better informed. Co-Chair Stoltze recalled that Mr. Noah had contacted his office to discuss the issue. Co-Chair Hawker communicated his frustration with the governor's current lack of connection with the legislature. He felt that she gave the appearance that she was more concerned with her national ambitions than with what was transpiring in her home state. He expounded that it was insulting, personally, and to the people of the state, that the administration had not followed up with leadership throughout the building on the issue. Vice-Chair Thomas stated for the record that no one had contacted him. JOE BALASH, INTER-GOVERNMENTAL COORDINATOR, DEPARTMENT OF NATURAL RESOURCES, reported that the work plan had been presented in a public manner in the governor's conference room, as well as broadcast on Gavel to Gavel in early March. Since that time, Mr. Noah has held several meetings with a legislative working group, coordinated through the presiding officers in both bodies. Various documents were distributed at the meetings, which detailed the work plan by date, schedule, activity, and approximate budget for each step. He offered to provide copies of the documents at a later date. 8:59:13 PM Representative Gara emphasized that while working together to make the gasline a reality, it was important that the administration keep the committee informed. He revealed that he had not heard of the legislative working group mentioned by Mr. Balash. He wondered if the group had a title. Mr. Balash replied it had been labeled the "working group" at administrative meetings. He recalled that, at the meetings he participated in, there had been legislative representatives present. He said that he could provide a list of those present. Representative Gara requested written documentation of the administration's plan for the funds, and for a commitment that the funds would be spent according to the plan. Mr. Balash related that meetings on the issue had occurred in early March. At that point, Mr. Noah was introduced by the governor as her project director. A three part approach was then laid out; funding had been identified, legislation on right of way and pipeline acts had been introduced, and legislation broadening the purpose of the Alaska Natural Gas Authority. He believed that the administration had been responsive to points of inquiry. 9:02:05 PM Representative Gara stated that he had seen Mr. Noah in the building, but had not spoken to him. He maintained that there has not been deliberative discussion with all legislators regarding the plan. Representative Austerman stated it would have been appropriate for a representative of the administration to have briefed committee members on Section 13 of the bill. 9:03:41 PM Co-Chair Hawker related that the bill is a legislative budget. The administration did not know this section would be included. The issue has been in discussion among the Co- Chairs of both House and Senate Finance and the administration. Ultimately, the governor's desire prevailed and the request was included in the budget. He clarified that the addition of Section 13 was made by the legislature and not Mr. Balash. Representative Austerman expressed frustration that the issue had not come up in minority caucus meetings. Co-Chair Hawker argued that he would not discuss caucus matters on the table. He voiced his amazement with the administration's lack of communication with the other members of the committee. 9:05:50 PM Ms. Rehfeld communicated that the administration has had the appropriation in its budget since December 2008. A request for $5 million was put in specifically for ANGDA in December. It was then increased to $8 million in the amended budget. She felt that as the approach to the plan evolved, the administration had maintained clear communication with the committee. She added that the governor has been consistent in her dialogue on in-state gas. Representative Kelly pointed out that Mr. Noah had spoken to him about the project. He confirmed that he has also had discussions with Ms. Rehfeld about the request for ANGDA and was familiar with the section. 9:07:58 PM Representative Gara remarked that the earlier request for $5 million for ANGDA, to follow a statutory purpose, had not caused him alarm. He emphasized that the change grants $9 million to the governor to spend without a statutorily authorized purpose. 9:09:17 PM Mr. Balash explained the work plan entails, as a first step, an alternatives analysis to identify the cost of transportation and the various routes. In June, information would be gathered for applying for major permits, including rights of way. In parallel, the deliverability and reserve life in Cook Inlet would be evaluated. Ways to make reserves last longer and the possibility of stop-gap importation, in order to bridge any gap until natural gas can be delivered, will also be examined. More funds will likely be requested in 2010 as the customers and potential suppliers of gas are identified. The goal is to be in a position by 2011; to take the collection of major permits and regulatory approvals, and the identified suppliers and customers, and present the information to a private party, who will than construct the gasline. In return, the private party would reimburse the state for the costs incurred by the state for the package of permits and regulatory authorizations. 9:12:56 PM Representative Austerman pointed out that the change in the budget would need to be reviewed by the Senate Finance Committee. He wondered if the section had been discussed in that body. Co-Chair Stoltze thought that the Senate leadership would embrace the idea in order to move forward on in-state gas. Representative Crawford expressed concern with the switch in priority from ANGDA based spur line to ENSTAR bullet line. 9:14:05 PM Mr. Persily pointed out that ANGDA's operating budget is still funded from previous appropriations and can continue to operate fully. He shared his understanding that the additional funding was to ensure, should gas availability become scarce, that the state will have access to in-state gas. Co-Chair Stoltze suggested Mr. Balash talk to any committee members he may have missed in his first round of meeting on the issue. Representative Gara requested binding representation that legislative approval would be required for any project from the governor's office concerning the issue. Mr. Balash asked for clarification as to what kind of representation would be satisfactory. Representative Gara suggested a letter from governor ensuring that the state would get full value for work done on the project, upon approval of legislature. Mr. Balash agreed to do that. He perceived that a pipeline would not be built for $9 million. Co-Chair Hawker related that the legislature has sole appropriation power. 9:17:37 PM Representative Foster stated that he had not been invited to the meetings on the subject. He remarked that many House members are tied up in committee during the day. He felt and that the best way to be sure each member has the appropriate information on a bill was for department heads to go office to office. He felt that the committee had been caught off guard by the section. 9:18:40 PM Representative Kelly felt that the intent language could be more specific. 9:19:49 PM Mr. Armstrong returned to explaining changes in the bill. On Page 79, Line 6 to Page 80, Line 17 there are structural changes to the legislature's lapsing funds. The reappropriations are for legislative audit, legislative council and the legislative operating budget. Limitations were placed in Section C, Line 24, appropriations for 50th statehood; display of historical art and artifacts. An appropriation for statewide energy plans were removed and put into Section D, which begins on Line 29 of Page 79. He said that the bill matches the Senate version except the Senate had some funds going to LBA that are now going to Legislative Council. 9:21:48 PM Representative Foster commented on Lines 26 and 27 regarding Legislative Council. He wondered if it would be possible to make the work of Legislative Council more accessible to communities outside of Juneau. Mr. Armstrong suggested bringing it to the attention of the Legislative Council chair when they next meet. Vice-Chair Thomas asked about a statewide energy plan. Mr. Armstrong said that in the version of the bill sent out by the other body, there had been $300,000 lined out for a statewide comprehensive energy plan, to be conducted by LB&A. The plan was removed, and the funds were rolled back into section D of the appropriation. Co-Chair Stoltze added that the item is in the legislative branch and open for discussion. Vice-Chair Thomas stated that he would rather hire a state employee for the job, rather than an out-of- state consultant. 9:23:54 PM Representative Crawford questioned the language on page 80, Lines 2 and 3, "for necessary legislative capital projects". Mr. Armstrong explained that Legislative Council has control of the building operations during the interim. He added that it must be an agenda item to expend funds. Representative Crawford asked for an estimated amount. Mr. Armstrong said $2 million. Representative Gara thought that the reapproprations from LB&A to Legislative Council were excessive. Mr. Armstrong replied that most of the funds had been expended for the projects listed in Section 40. 9:27:17 PM Mr. Armstrong continued to Page 81, Line 25, which lists the appropriation set out for federal stimulus funds for DHSS health care services, for a statewide electronic health information exchange system. The contingent language on Page 84, Line 20, states that SB 133 needs to pass for the mechanism in Section 43 to be funded. Mr. Armstrong continued with the final changes to the bill in Sections 22-39, which correct a series of technical typos. Mr. Armstrong explained that additional appropriations had come in after the March 25, 2009 deadline, and were added to the bill. He listed reappropriations by district. 9:30:05 PM Mr. Armstrong noted that the change from Senate to House Finance funds is outlined on the bottom right hand corner of Page 2 of the Legislative Finance report. 9:31:05 PM Representative Salmon asked for clarification on the appropriation amount listed on Page 67, Lines 5 to 11. JOHN BITNEY, STAFF, SPEAKER JOHN HARRIS, explained that the reappropriation request for that district. The original appropriation to the city of Delta Junction of $1.2 million was to pay a litigation settlement in a lawsuit with a private prison developer. Per the appropriation in 2000, the city was required to pay 50,000 each year out of the city's revenue sharing. Currently there is an unpaid balance of $1 million on the loan. The original language contained the contingency that the loan would be forgiven if the community incorporated as a borough. The new language removes the contingency. 9:34:33 PM Representative Kelly asked if the language on Line 28 on Page 67, extends the LIHEAP general fund increase for two more years. Co-Chair Hawker replied that it is a single $9 million appropriation to DHSSto be spent between June 30, 2009 and June 30, 2010. Representative Kelly asked it was in addition to funds given during the 2008 session. Co-Chair Hawker replied yes. 9:35:59 PM Mr. Armstrong reported that the Constitutional Budget Reserve management fees had been removed from the bill and could be found in the operating budget. Representative Gara asked if all projects in the bill were reinstatements of the governor's requests. Mr. Armstrong said that was correct, except for the cruise ship items. Representative Gara wondered about Page 63 of the bill, which details legislative intent on gas line money. He understood that the funds could be used only for a private sector project and that the project would go from The North Slope to Fairbanks and down to the Kenai Peninsula. He remarked that the project sounded like the ENSTAR project. Co-Chair Hawker disagreed. He contended that this was the generic investigation of a bullet line and that many companies have discussed the possibility of involvement in the project. He said the funds were to facilitate private sector construction, ownership and management, and that all interested in the project are welcome into the discussion. Representative Gara relayed that he was not interested in a project headed by ENSTAR. 9:39:12 PM Representative Fairclough shared that ENSTAR had not talked to her office. Mr. Armstrong said that the legislative finance reports will not show $9 million as those are considered operating expenditures. CSSB 75 (FIN) was heard and HELD in Committee for further consideration.