Legislature(2009 - 2010)HOUSE FINANCE 519

02/02/2010 01:30 PM House FINANCE

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01:36:46 PM Start
01:38:22 PM HB300 || HB302
03:31:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Governor's FY11 Budget Overview: TELECONFERENCED
Dept. of Law
Alaska Court System
Dept. of Military & Veterans' Affairs
<Above Item Rescheduled to 02/04/10>
HOUSE BILL NO. 300                                                                                                            
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan program  expenses of state government,  for certain                                                                   
     programs, and  to capitalize funds;  making supplemental                                                                   
     appropriations;  making  appropriations  under art.  IX,                                                                   
     sec.  17(c), Constitution  of the  State of Alaska;  and                                                                   
     providing for an effective date."                                                                                          
HOUSE BILL NO. 302                                                                                                            
     "An  Act making  appropriations  for  the operating  and                                                                   
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental  health program; and  providing for                                                                   
     an effective date."                                                                                                        
1:38:22 PM                                                                                                                    
DEPARTMENT OF LAW OVERVIEW                                                                                                    
DANIEL  S. SULLIVAN,  ATTORNEY  GENERAL,  DEPARTMENT OF  LAW,                                                                   
emphasized that  the budget for  the Department of  Law (DOL)                                                                   
is  principally   personnel  driven;  the   budget  increases                                                                   
indicate  the  addition of  attorneys  or support  staff.  He                                                                   
complimented personnel at the department.                                                                                       
Mr.  Sullivan   pointed  to  the  one-page  summary   of  his                                                                   
presentation  on a handout  (copy on  file), noting  that the                                                                   
first item gives a sense of the size of the department:                                                                         
   I.   Department Overview                                                                                                     
        · DOL employees: 283 lawyers and 278 support staff                                                                      
        · Total budget: FY11 - $86.9 million; FY10 - $85.4                                                                      
        · GF budget: FY11 - $57.3 million; FY10 - $56.3                                                                         
        · DOL    offices:    Anchorage,    Barrow,    Bethel,                                                                   
          Dillingham, Fairbanks, Juneau, Kenai, Ketchikan,                                                                      
          Kodiak, Kotzebue, Nome, Palmer, and Sitka.                                                                            
Mr. Sullivan  believed  that the second  item summarizes  DOL                                                                   
core  services and  was the  most important  for the  Finance                                                                   
   II. Department's Core Services                                                                                               
        A. Protecting the Safety and Physical and Financial                                                                     
           Well Being of Alaskans                                                                                               
        B. Fostering    the     Conditions    for    Economic                                                                   
           Opportunity and Responsible Development and Use                                                                      
           of Our Natural Resources                                                                                             
        C. Protecting the Fiscal Integrity of the State                                                                         
        D. Promoting and Defending Good Governance                                                                              
Mr. Sullivan  believed  sub-item (A) was  most important  and                                                                   
that (B) was  not usually associated with DOL.  He noted that                                                                   
the department  had recently intervened  in three  cases that                                                                   
it  believes are  critical to  (B) related  to the  Southeast                                                                   
timber  harvest   and  to   outer  continental   shelf  (OCS)                                                                   
exploration plans in the Chukchi Sea.                                                                                           
Mr.  Sullivan   maintained  that  sub-item  (C)   related  to                                                                   
protecting  the fiscal integrity  of the  state; he  gave the                                                                   
Mercer case as  an example. He explained that  (D) related to                                                                   
issues  including   legal  and   regulatory  work   with  the                                                                   
legislature  on   legislation  such  as   certifying  citizen                                                                   
1:44:56 PM                                                                                                                    
Mr. Sullivan turned  to the Item III on the  summary sheet, a                                                                   
table  outlining the  budget allocation  of the  department's                                                                   
core services. He  opined that the numbers on  the chart were                                                                   
apportioned  correctly,  particularly  with  the  "Protecting                                                                   
Alaskans" as the majority of the budget.                                                                                        
Co-Chair Hawker  clarified that the analysis  was prepared by                                                                   
the department  before the "other" fund designation  had been                                                                   
changed, which  was why the short  form did not  reconcile to                                                                   
the short-form totals.  He pointed out that  the "other" fund                                                                   
would  be  high  ($24  million)  due to  the  nature  of  the                                                                   
department's  work;  roughly $4  million  would  move to  the                                                                   
designated other category.                                                                                                      
Mr. Sullivan turned to the next item:                                                                                           
   IV. Return of Investment                                                                                                     
        · Department's ROI [Return on Investment] based on                                                                      
          entire budget: 6 to 1.                                                                                                
        · Department's ROI based on general fund: 10 to 1.                                                                      
        · Civil Division sections that generate revenue ROI:                                                                    
          35 to 1.                                                                                                              
Mr. Sullivan emphasized that much  of what DOL does cannot be                                                                   
quantified;  however, much  of what the  civil division  does                                                                   
can  be quantified.  In the  prior year,  the state  received                                                                   
approximately  $560 million  in  collections  and awards.  He                                                                   
believed the return  on investment for the state  would be of                                                                   
interest to the committee.                                                                                                      
1:47:55 PM                                                                                                                    
Mr. Sullivan  listed the  cases the  department is  currently                                                                   
focused on that  will impact the budget either  positively or                                                                   
negatively depending on the outcomes:                                                                                           
   V.   Litigation Update                                                                                                       
        · Mercer                                                                                                                
        · Cruise Ship                                                                                                           
        · Carlson                                                                                                               
        · BP Corrosion                                                                                                          
Mr. Sullivan  stressed  the department's  desire to keep  the                                                                   
committee updated  on the cases.  He added that  some updates                                                                   
would have to be given in executive session.                                                                                    
Co-Chair Hawker  acknowledged confidentiality  parameters and                                                                   
requested allowable background regarding the cases.                                                                             
1:50:08 PM                                                                                                                    
Mr.  Sullivan responded  that  the Mercer  case involves  the                                                                   
state's  former  actuarial; the  department  believes  Mercer                                                                   
made mistakes and possibly committed  fraud and cover-up that                                                                   
significantly  damaged  the  state's   ability  to  fund  the                                                                   
retirement  system. The  state has sued  the company.  Recent                                                                   
events  created a  motion  to dismiss  a  ruling in  superior                                                                   
court that he believed was in  the state's favor. He referred                                                                   
to a New  York Times article  about the lawsuit  and asserted                                                                   
that DOL was pressing for a July 2010 trial.                                                                                    
Co-Chair Hawker  queried the  financial stakes. Mr.  Sullivan                                                                   
replied approximately $2 billion.  He warned that the outcome                                                                   
is not  certain, although  the  state feels  it has a  strong                                                                   
Co-Chair   Hawker   emphasized   the  significance   of   the                                                                   
Mr.  Sullivan  described  the  cruise  ship  litigation;  the                                                                   
cruise ship industry sued the  state. He reported that DOL is                                                                   
in the process  of discovery and the trial  date is scheduled                                                                   
for the beginning of next year.                                                                                                 
Mr.  Sullivan explained  that the  Carlson case  is a  class-                                                                   
action  lawsuit that  is 25  years old  and has  been to  the                                                                   
Alaska Supreme Court  four times. The case involves  a class-                                                                   
action   suit  by   out-of-state   plaintiffs.   Non-resident                                                                   
fishermen sued  the state based on in-state  and out-of-state                                                                   
differentials with regard to permits  and crew fees. He noted                                                                   
that the case would be appropriate for executive session.                                                                       
Mr. Sullivan reported  that final judgment had  been received                                                                   
the day before and that the state's  liability is very large.                                                                   
He explained that  the case is very complicated  and has huge                                                                   
financial implications for Alaska.                                                                                              
1:54:28 PM                                                                                                                    
Co-Chair  Hawker asked  for  monetary figures.  Mr.  Sullivan                                                                   
replied approximately over $70 million.                                                                                         
Co-Chair  Hawker clarified  that the ruling  was against  the                                                                   
state, so the state would pay.                                                                                                  
Mr. Sullivan  detailed the  British Petroleum (BP)  Corrosion                                                                   
case  subsequent to  a 2006  spill.  He noted  that the  case                                                                   
involved the federal government  and criminal action and that                                                                   
the state  was expecting lost  revenues and royalties.  There                                                                   
had been  oral arguments  in December  2009  for a motion  to                                                                   
partially dismiss some of the  claims; the judge in Anchorage                                                                   
had not yet ruled.                                                                                                              
Co-Chair  Hawker asked  whether the ruling  would affect  the                                                                   
department's need  for funds. Mr. Sullivan responded  that he                                                                   
could not speculate without access to the ruling.                                                                               
Mr. Sullivan  assured  the committee that  the department  is                                                                   
very focused on the four cases.                                                                                                 
1:57:29 PM                                                                                                                    
Co-Chair  Stoltze  referenced  other  litigation  related  to                                                                   
fishery trade associations suing  the Department of Commerce,                                                                   
Community,  and Economic Development  over the  establishment                                                                   
of  personal-use fisheries  and  violation  of the  Magnuson-                                                                   
Stevens  Act.  He queried  commitment  to  protecting  Alaska                                                                   
resident  fisheries  and  asked  for  more  information.  Mr.                                                                   
Sullivan  responded  that he  had  not  been briefed  on  the                                                                   
CRAIG  TILLERY,  DEPUTY  ATTORNEY  GENERAL,  CIVIL  DIVISION,                                                                   
DEPARTMENT OF LAW,  answered that he was also  unaware of the                                                                   
status of the case in question.                                                                                                 
Co-Chair  Stoltze  wanted  the   priority  to  be  protecting                                                                   
Alaskan resident-based fisheries  against federal intrusions.                                                                   
He  did  not  want  to  wait  for  a  Senate  resolution  and                                                                   
emphasized  the importance  of timing.  He did  not want  the                                                                   
state  to lose  the case  in federal  court due  to a  missed                                                                   
opportunity.  He  strongly  reiterated  the urgency  and  the                                                                   
importance of the issue to many Alaskans.                                                                                       
2:02:15 PM                                                                                                                    
Vice-Chair  Thomas asked  about court  rulings and  potential                                                                   
change regarding  the interest  amount. He believed  that the                                                                   
interest  was most  destructive in  the particular  [Carlson]                                                                   
Mr.  Sullivan  responded  to   Co-Chair  Stoltze's  question,                                                                   
stating that the  department was committed to  intervening in                                                                   
the case.                                                                                                                       
Mr. Sullivan  responded to the  question posed  by Vice-Chair                                                                   
Thomas. He  explained that  the department  was working  on a                                                                   
recommended  statutory  amendment   that  would  address  the                                                                   
Alaska Supreme  Court ruling in  the Carlson case,  but noted                                                                   
that  the ruling  could  not be  addressed  in a  retroactive                                                                   
fashion. He  opined that  the court  was wrong regarding  its                                                                   
ruling on  the 11 percent  quarterly-compounded  interest. He                                                                   
noted  that the  earlier  number  was largely  interest.  The                                                                   
department had made a recommendation  and intended to not let                                                                   
the situation happen again.                                                                                                     
Co-Chair  Hawker  clarified  that  the answer  was  yes.  Mr.                                                                   
Sullivan emphasized that the ruling cannot be undone.                                                                           
Vice-Chair Thomas  wanted to undo  the ruling. He  noted that                                                                   
the interest  could amount to  a great deal of  money, almost                                                                   
equivalent to  the operating budget. He suggested  making the                                                                   
courts pay jointly with the fishermen.                                                                                          
Mr. Sullivan  cautioned  against the idea.  He commended  the                                                                   
Alaska Supreme Court and the justice system.                                                                                    
2:06:55 PM                                                                                                                    
Representative Gara asked for  more information regarding the                                                                   
personal-use fishery  case. Mr.  Sullivan stated that  he was                                                                   
not particularly informed about the case.                                                                                       
Representative  Austerman  believed   the  department  should                                                                   
answer the committee in writing  regarding intentions related                                                                   
to  the personal-use  fishery  case. He  thought the  Carlson                                                                   
case  should have  been settled  long ago,  which would  have                                                                   
saved the state a great deal of money.                                                                                          
Mr. Sullivan wondered  if the question was whether  the state                                                                   
should intervene in the case.                                                                                                   
Representative  Gara requested  a memo  listing the  pros and                                                                   
cons of intervening.                                                                                                            
Co-Chair  Hawker thought  the  issue should  be discussed  in                                                                   
executive session  in order to  protect the interests  of the                                                                   
state.  He  recalled  past executive  meetings  dedicated  to                                                                   
freely discussing litigation.                                                                                                   
2:10:34 PM                                                                                                                    
Representative Austerman asked  whether or not DOL planned to                                                                   
get involved in the case.                                                                                                       
Representative  Gara  stated  that  he  was  sympathetic  but                                                                   
needed  more information,  especially  regarding  subsistence                                                                   
Mr. Sullivan  requested further  clarification regarding  the                                                                   
question. He stated  that the department would  be willing to                                                                   
provide as much information as it could to the committee.                                                                       
Representative  Kelly stated that  his need for  an executive                                                                   
session  had   been  addressed  by  an  earlier   meeting  in                                                                   
Anchorage where DOL made a presentation  to the committee. He                                                                   
acknowledged that  there may be other information  that would                                                                   
require an executive session.                                                                                                   
Co-Chair  Hawker wondered  whether  the question  was if  the                                                                   
department would pursue the case.                                                                                               
Representative  Austerman   agreed;  he  believed   that  the                                                                   
committee would want  to know if the case is  a states-rights                                                                   
Co-Chair Hawker noted that there  had not been a confirmation                                                                   
regarding  the attorney  general  and requested  a  statement                                                                   
regarding Mr. Sullivan's suitability for the position.                                                                          
2:14:04 PM                                                                                                                    
Mr.  Sullivan stated  that  he had  been  involved in  public                                                                   
service  his whole  career. He  believed  his experience  has                                                                   
prepared him to be Alaska's attorney general.                                                                                   
Mr. Sullivan  detailed  that he  came to Alaska  in 1997  and                                                                   
spent four  years in  active duty with  the Marine  Corps. He                                                                   
clerked for a judge  in Fairbanks and a chief  justice on the                                                                   
Alaska Supreme  Court, acquiring a  good overview of  how the                                                                   
Alaska  legal system  works. He  was in  private practice  in                                                                   
Anchorage  where he focused  on small  businesses and  Native                                                                   
Corporations. He was in the Marine  Corps Reserves during the                                                                   
period.  He  worked  in  the  White  House  on  the  National                                                                   
Security  Council  for three  years  on economic  and  energy                                                                   
issues.  He spent  time in  the  Middle East  serving in  the                                                                   
Marine Corps then  served as the U.S. Assistant  Secretary of                                                                   
State covering energy and global  economic issues. He was the                                                                   
President's  negotiator at  eight summits,  a U.S.  governing                                                                   
board member  at the International  Energy Agency, and  ran a                                                                   
bureau at the State Department.                                                                                                 
2:18:50 PM                                                                                                                    
Mr.  Sullivan  concluded with  his  current position  in  the                                                                   
Alaska  Department  of Law.  He  emphasized how  strongly  he                                                                   
believed  in the  issues. He  noted his  long involvement  in                                                                   
public service.                                                                                                                 
Co-Chair  Hawker stated  his confidence  in Mr. Sullivan.  He                                                                   
was  pleased  with  Mr.  Sullivan's   application  for  state                                                                   
Co-Chair Hawker noted that the  DOL budget could be primarily                                                                   
characterized  as litigation  and increments  related to  oil                                                                   
and gas. Mr. Sullivan agreed.                                                                                                   
Co-Chair  Hawker queried  increments and  support in  the DOL                                                                   
budget.  Mr. Sullivan  responded  that the  large  increments                                                                   
involve   the  department's   core   mission  of   protecting                                                                   
Alaskans,  including  the  new sexual  assault  and  domestic                                                                   
violence  coordinator  position.  He highlighted  a  funding-                                                                   
source change  for several prosecutors and support  staff due                                                                   
to expiration  of a federal  grant. The department  continues                                                                   
to  work  with  the  federal  government  to  get  additional                                                                   
funding to decrease the $2.3 million increment.                                                                                 
Mr. Sullivan  pointed to a  request for an additional  child-                                                                   
protection attorney in Kenai and  noted the increment request                                                                   
of  an additional  attorney  in  DOL focusing  on  Endangered                                                                   
Species Act issues.                                                                                                             
2:23:09 PM                                                                                                                    
Mr.  Sullivan explained  a $150,000  capital project  request                                                                   
for key  card access  in Anchorage  and Fairbanks to  enhance                                                                   
Co-Chair Hawker discussed supplanting  existing federal money                                                                   
with general funds when federal  authority expires related to                                                                   
the  one-time  earmark  for  domestic   violence  and  sexual                                                                   
assault grants.  He referred to  a meeting with  U.S. Senator                                                                   
Daniel Inouye  [Hawaii] who  supported earmarks for  domestic                                                                   
violence efforts and was a friend  to Alaska; Co-Chair Hawker                                                                   
wondered  whether the  contact  would help  in retaining  the                                                                   
federal funding. Mr. Sullivan  replied that he had not spoken                                                                   
to Senator Inouye but had been  meeting at senior levels with                                                                   
U.S.   Department  of   Justice   officials,  including   the                                                                   
associate attorney general, and  that he had informed them of                                                                   
Alaska's actions  regarding the  sexual assault  and domestic                                                                   
violence issue. He believed progress had been made.                                                                             
RICHARD   SVOBODNY,   DEPUTY   ATTORNEY   GENERAL,   CRIMINAL                                                                   
DIVISION,  DEPARTMENT  OF  LAW,   detailed  that  there  were                                                                   
challenges  with  the  way  the   federal  government  worked                                                                   
related  to the  budget. He  explained that  the state  could                                                                   
keep  applying  for  different  grants  or  earmarks  through                                                                   
Senator Inouye; however the federal  government might provide                                                                   
a six-month  "cover" to  fund until  the next federal  fiscal                                                                   
year in  October, and  then say  that they  are not  going to                                                                   
allow federal  grant money to  supplant general  funds money.                                                                   
He stated that  in the past the money has taken  two years to                                                                   
get to  Alaska from  the federal  government. The state  does                                                                   
not have that two-year leeway.                                                                                                  
2:28:31 PM                                                                                                                    
Co-Chair  Hawker  supported pursuing  political  remedies  in                                                                   
Washington D.C.                                                                                                                 
Representative  Doogan  queried the  $2.3  million change  in                                                                   
funds on  page 2 of the  document (DOL Budget  Overview, copy                                                                   
on  file). He  wanted  to translate  people  into money.  Mr.                                                                   
Svobodny  clarified   that  the  issue  was   the  number  of                                                                   
personnel.  He stated  that the  $2.3  million dollars  would                                                                   
ensure employment  for DOL staff for a full  fiscal year. The                                                                   
goal  is to  manipulate the  funds for  greater savings.  Mr.                                                                   
Sullivan stated that the $2.3  million represents the funding                                                                   
lost due to federal grants.                                                                                                     
Co-Chair Hawker  added that the money currently  supported 16                                                                   
full-time positions  and 6 part-time positions.  Mr. Svobodny                                                                   
broke   the  number   down   further:   8.5  attorneys,   5.5                                                                   
paralegals,  and 3.5  law-office assistants  in the  criminal                                                                   
division.  Mr. Sullivan  hoped  the numbers  would  be a  bit                                                                   
Representative Kelly  referenced Indian Law and  Rural Issues                                                                   
on  page 10  and  wondered whether  he  could  meet with  the                                                                   
department regarding  the state's position on  the matter. He                                                                   
questioned whether an executive  session would be appropriate                                                                   
for the discussion.                                                                                                             
Co-Chair Hawker  stated that he  would be happy  to entertain                                                                   
any request.                                                                                                                    
2:34:15 PM                                                                                                                    
ALASKA COURT SYSTEM OVERVIEW                                                                                                  
CHRIS  CHRISTENSEN,  DEPUTY ADMINISTRATIVE  DIRECTOR,  ALASKA                                                                   
COURT  SYSTEM,   explained  that   the  judicial   branch  is                                                                   
different than other  agencies in that it is  small, or about                                                                   
one percent  part of the  state's operating budget.  However,                                                                   
the court system serves more private  citizens every day than                                                                   
any other governmental  entity. The court system  employs 775                                                                   
permanent  full-time and  part-time  employees, including  70                                                                   
judges  and 48  magistrates,  and  operates  in 44  locations                                                                   
around  the  state. He  referred  to  a  handout with  a  map                                                                   
indicating the  locations ("Alaska Court Locations,"  copy on                                                                   
file).  The  court system  had  operated  in about  19  rural                                                                   
locations  as  well,  but has  downsized  because  of  budget                                                                   
Mr. Christensen continued that  the court system handles many                                                                   
things  internally   rather  than  delegating   them  to  the                                                                   
executive branch.  For example, the court system  has its own                                                                   
human  resources  department   to  make  personnel  decisions                                                                   
instead of delegating to the Division of Personnel.                                                                             
Mr.  Christensen remarked  that Alaska's  judicial system  is                                                                   
unique in  the United States;  like only seven  other states,                                                                   
it  has a  unified  judiciary, which  means  no municipal  or                                                                   
county courts but only state courts.  The system is efficient                                                                   
and  provides   consistent  results  throughout   the  state.                                                                   
Funding  for the  court  system is  derived  solely from  the                                                                   
legislature as  opposed to  from municipalities  or dedicated                                                                   
funds.  The position of  the administrative  director  of the                                                                   
court  system  was  created by  the  Alaska  constitution  as                                                                   
opposed  to statute  or court  rule.  Justices are  appointed                                                                   
based on competency.                                                                                                            
Mr. Christensen  observed that for budgetary  purposes, three                                                                   
things distinguish the court system:                                                                                            
   · All actions are mandated by the constitution or by                                                                         
     statutes passed by the legislature.                                                                                        
   · The courts are almost completely reactive in nature.                                                                       
     The courts do not initiate the work; others file cases                                                                     
     to create the work.                                                                                                        
   · All cases must be taken by the court system, while                                                                         
     other divisions may show discretion. The law also says                                                                     
     how quickly the work must be done; the legislature has                                                                     
     passed statutes with timelines.                                                                                            
Mr.  Christensen   asserted  that  the  primary   driver  for                                                                   
caseload  is  population.  The  caseload  will  grow  as  the                                                                   
population  grows.  Beyond  population  growth,  caseload  is                                                                   
affected  by  the  Department  of  Public  Safety  (DPS)  and                                                                   
municipal  police departments  putting more  officers on  the                                                                   
street,  by  economic  changes, by  legislative  statute,  by                                                                   
unfunded federal mandates, and other factors.                                                                                   
2:39:56 PM                                                                                                                    
Mr. Christensen  reported that  there is  both good  news and                                                                   
bad news  when looking at caseloads  for FY 09 and  the first                                                                   
quarter  of  FY 10.  In  FY  09, the  courts  received  about                                                                   
154,000  new cases,  a decrease  of about 0.08  of 1  percent                                                                   
from  the  previous  year.  The   superior  court's  caseload                                                                   
decreased by about that amount  last year, with 20,000 filed.                                                                   
The  number  included  a  7.5   percent  decrease  in  felony                                                                   
filings; there has  not been a decrease in  felony filings in                                                                   
a  decade. While  fewer  crimes are  being  committed in  the                                                                   
state, a  larger percentage of  people committing  the crimes                                                                   
are being arrested, the result  of more police officers. Even                                                                   
with the  recent decrease, the  number of felony  filings has                                                                   
gone up  70 percent over the  past eight years.  Felonies now                                                                   
make up  29 percent of the  superior court's  caseload, which                                                                   
takes  more  resources,  including  jury  trials  and  return                                                                   
Mr. Christensen noted  a 15 percent decrease  in the juvenile                                                                   
delinquency  caseload and  about  1 percent  decrease in  the                                                                   
child-in-need-of-aid   caseload.  There  were   increases  in                                                                   
specific caseloads including sanity  and alcohol commitments,                                                                   
guardianships,  and   conservatorships.  The   general  civil                                                                   
caseloads  (including tortes,  contracts, and  administrative                                                                   
appeals)  increased  3  percent.   Domestic  relations  cases                                                                   
(divorces, child custody, marriage  dissolutions and support)                                                                   
increased  approximately  7  percent.   The  district  courts                                                                   
caseload  decreased  approximately  0.75  of 1  percent  last                                                                   
year. There was a 4 percent decrease  in misdemeanors for the                                                                   
first time in years and 1.3 percent  decrease in requests for                                                                   
domestic violence  restraining orders. There was  a 3 percent                                                                   
increase in  small claims and  1 percent increase  in traffic                                                                   
offenses and fish and game violations.                                                                                          
2:43:14 PM                                                                                                                    
Mr.  Christensen  explained  that the  department  keeps  the                                                                   
caseload statistics  on a  quarterly basis.  The bad  news is                                                                   
that  the statistics  for the  first quarter  of the  current                                                                   
fiscal  year show  a 19.5  percent increase  in felonies;  in                                                                   
Anchorage alone the felony increase was 31 percent.                                                                             
Co-Chair Hawker expressed surprise  and asked the reason. Mr.                                                                   
Christensen  was not sure.  He conjectured  that the  numbers                                                                   
might be a continuation of the  increase in felonies over the                                                                   
past few  years. He noted  that misdemeanor filings  had also                                                                   
increased  7 percent during  the first  quarter. The  overall                                                                   
superior court caseload increased 8 percent.                                                                                    
Representative  Doogan   asked  for  more   information.  Mr.                                                                   
Svobodny did not  have an explanation, but reported  that the                                                                   
Department  of Law numbers  were less  dramatic. He  detailed                                                                   
that the court system numbers  overall for felonies increased                                                                   
approximately 10  percent over a  10-year period. He  did not                                                                   
know  what  the  one-quarter   statistics  meant.  He  echoed                                                                   
concerns  and  wondered  if  the state  of  the  economy  was                                                                   
related.  There were no  increases in  prosecutors. He  noted                                                                   
that DOL  numbers are  higher than  the court system  numbers                                                                   
because although  all cases are  referred to the  department,                                                                   
but not all of them are filed.                                                                                                  
2:47:36 PM                                                                                                                    
Representative  Foster asked whether  more offenses  were now                                                                   
being  categorized as  felonies. Mr.  Svobodny replied  there                                                                   
seemed to  be an increase  in certain  kinds of felonies.  He                                                                   
noted the  inception of  "three strikes  you are out"  [three                                                                   
felonies  would result  in a 99-year  sentence], but  pointed                                                                   
out that  the first  sentence did not  take place  for around                                                                   
eight years.  He thought the  increases were more  related to                                                                   
the economy and the number of  police officers on the street.                                                                   
Mr. Christensen  agreed that the  number of officers  was the                                                                   
largest  driver. He  also  pointed to  the  inflation of  the                                                                   
dollar  value of  a felony.  In  the early  1970s, $500  (the                                                                   
amount set  for felony theft) was  a lot of money.  Now, $500                                                                   
is  not a  lot  of money.  He  referenced several  pieces  of                                                                   
legislation trying to increase the amount.                                                                                      
Co-Chair Hawker  queried the 30 percent increase  in felonies                                                                   
in the first  quarter of FY 10. Mr. Christensen  replied that                                                                   
the [31 percent]  number applied to Anchorage;  statewide the                                                                   
number was 19.4 percent.                                                                                                        
Co-Chair Hawker asked whether  the statistic justified the 20                                                                   
percent budget increase.                                                                                                        
2:51:01 PM                                                                                                                    
Representative Gara queried legislation  to increase [dollar-                                                                   
value]  limits   for  felonies.   Mr.  Christensen   believed                                                                   
Representative  Coghill   had  a  proposal  related   to  the                                                                   
inflation  rate; $500 would  be worth  over $1200 in  current                                                                   
dollars.  He added  that  opposition  largely  came from  the                                                                   
business community.                                                                                                             
Mr.  Christensen referred  to a  handout, "FY2010  Authorized                                                                   
Budget  Overview, All  Budget Units"  (copy on file)  showing                                                                   
how the  current year's money  is being spent. He  noted that                                                                   
78 percent ***of the budget is  for personnel, which is high;                                                                   
for example, the  Department of Public Safety  has fewer than                                                                   
10  percent  more employees  than  the  courts, but  the  DPS                                                                   
budget  is  50  percent larger  because  they  are  equipment                                                                   
heavy. He maintained  that 70 percent of court  employees are                                                                   
range 15  or less; most of  the work is clerical  work. Lower                                                                   
paid   employees    means   more   turnover,    which   means                                                                   
inefficiency,  more  training  costs,  and  more  supervisory                                                                   
costs. He  noted that  the turnover rate  has gone  down over                                                                   
the past year, reflecting the economy in general.                                                                               
Co-Chair Hawker asked the proportions  of union and non-union                                                                   
employees.  Mr. Christensen  responded that  the courts  have                                                                   
the  largest   group  of  non-union  employees   outside  the                                                                   
university.   He  provided   history   of   past  union   and                                                                   
legislative action  related to  pay increases. He  noted that                                                                   
the  Alaska Public  Employees Association  (APEA) and  Alaska                                                                   
State   Employees  Association   (ASEA)   are  looking   into                                                                   
organizing  employees. He  believed that  employees were  the                                                                   
best judge of  whether a union was needed.  From a management                                                                   
point of  view, he believed a  union shop is  more expensive,                                                                   
even if the employees are paid the same wage.                                                                                   
Mr. Christensen remarked  that the turnover rate  was as high                                                                   
as 125  percent in  one year,  and that  it was  particularly                                                                   
high in  rural Alaska.  He explained  the travel expense  for                                                                   
jury sequestration  or for judges  who must be  flown because                                                                   
of timelines and the lack of judges in some locations.                                                                          
2:55:48 PM                                                                                                                    
Representative   Kelly    queried   turnover    detail.   Mr.                                                                   
Christensen  responded  that turnover  took  place mostly  in                                                                   
ranges 15 and below. The largest  group of court employees is                                                                   
range 10, who  understandably want to do better.  He referred                                                                   
to a joke  that the court  system is the training  ground for                                                                   
the North Slope Borough, where people can make more.                                                                            
Representative Kelly  emphasized that the court  workers were                                                                   
local residents.  He thought it would be  more cost-effective                                                                   
to start  people at a higher  range. Mr. Christensen  replied                                                                   
that  the legislature  has been  open to  suggestions by  the                                                                   
department to raise the salaries  of the lowest paid workers.                                                                   
A "G" step had  been added for employees in the  14 and below                                                                   
range to increase longevity.                                                                                                    
Representative  Joule commented  that  legislators should  be                                                                   
familiar with range 10. Co-Chair  Hawker pointed out that the                                                                   
workers being discussed were range 10 without per diem.                                                                         
Mr.  Christensen drew  attention to  a supplemental  request.                                                                   
The department  has been  using Sprint  pre-paid phone  cards                                                                   
for  long-distance  communication  at  considerable  savings.                                                                   
However, Sprint  sold the service  to another  company, which                                                                   
raised  rates;  in  addition,  the  quality  of  the  service                                                                   
declined.  Because  of  its  substantial  investment  in  the                                                                   
cards,  the   court  system  filed   a  complaint   with  the                                                                   
Regulatory Commission of Alaska  and received a settlement of                                                                   
$35,000, the  amount of the extra  phone costs for  the year.                                                                   
The $35,000 was turned over to  the general fund; he hoped to                                                                   
get the amount back through the supplemental request.                                                                           
2:59:53 PM                                                                                                                    
Mr. Christensen informed the committee  that the court system                                                                   
currently  had  a 30-day  hiring  freeze for  all  positions;                                                                   
there has  been a 6 to 7  percent underfunding rate  and jobs                                                                   
need to be open 30 days to make up the amount.                                                                                  
Mr. Christensen  maintained  that a number  of projects  have                                                                   
been expanded  to increase  efficiency  and reduce costs  and                                                                   
improve service. For example,  there is a new jury management                                                                   
system in  Anchorage; the system  is planned for the  rest of                                                                   
the  state as  well. The  current  manual record-keeping  for                                                                   
jurors has been  automated. In addition,  jury questionnaires                                                                   
are being  processed electronically through  a private-sector                                                                   
company  at substantial  savings.  Another  example has  been                                                                   
moving  communications  off the  state's  wide-area  network,                                                                   
which was not  adequate for their needs. The  court system is                                                                   
now  on   its  own   network  and  is   in  the   process  of                                                                   
renegotiating   the  current   contract   for  doubling   the                                                                   
bandwidth for less cost.                                                                                                        
Mr.  Christensen detailed  travel savings  through a  program                                                                   
that issues free  tickets and described a federal  grant used                                                                   
to train judges and others in  order to decrease trial rates.                                                                   
3:03:45 PM                                                                                                                    
Mr.  Christensen  highlighted three  projects  in  the FY  11                                                                   
operating budget:                                                                                                               
   · No Dark Courtrooms initiative. In some places, there                                                                       
     are not enough in-state clerks  for all the magistrates.                                                                   
     Unlike other states that  have two or three personnel in                                                                   
     a  courtroom,  Alaska  has  historically  had  only  one                                                                   
     person  operating  recording   equipment.  He  described                                                                   
     conditions of bail improvements  that improve efficiency                                                                   
     and public safety because  the information is entered in                                                                   
     a timely manner.                                                                                                           
   · Judicial vacancy rate reduction. The overall rate is                                                                       
     about 7  percent. In recent  years, the number  of cases                                                                   
     has  increased  dramatically  but judge  positions  have                                                                   
     not.  In response,  the court  system  has been  filling                                                                   
     judicial positions  as soon as the old  judge retires or                                                                   
     resigns.  Judges  are cooperating  by  giving  six-month                                                                   
     notice of their intent to  leave. The program (funded at                                                                   
     $250,000 for  the last two years and  requesting another                                                                   
     increment)  will  allow   for  the  elimination  of  the                                                                   
     vacancy  rate   for  judicial  employees.   Filling  the                                                                   
     positions  right away  in the recent  period has  forced                                                                   
     the system to dramatically  increase the vacancy rate of                                                                   
     clerical employees.                                                                                                        
   · Nome Court Building: The current building is shared                                                                        
     with other operations and  is going to be surplused. The                                                                   
     court system  will be get the building first  as long as                                                                   
     there is a budget increment  of $278,000 (the extra cost                                                                   
     to  operate  the  building).   There  would  be  capital                                                                   
     requests  over  the  next  two  years  to  renovate  the                                                                   
     building (approximately $3.8  million this year and $4.8                                                                   
     million next  year). The court system will  have to look                                                                   
     for more space  if the state does not  buy the building.                                                                   
     There is no other space available, so something would                                                                      
     have to be built.                                                                                                          
3:08:55 PM                                                                                                                    
Representative  Foster  thought  the current  building  would                                                                   
have to  be demolished  if the  court were to  move to  a new                                                                   
office.  He   queried  what  had   been  done   already.  Mr.                                                                   
Christensen  replied that  the  federal  government had  only                                                                   
decided  to surplus  the  building in  the  past few  months.                                                                   
Legislative  action  was  required.   The  building  will  be                                                                   
offered to other  agencies if the court system  does not take                                                                   
Co-Chair   Hawker   asked  whether   there   were   potential                                                                   
environmental  issues   with  the  existing   structure.  Mr.                                                                   
Christensen answered  that the building is over  50 years old                                                                   
and has asbestos, which would  have to be removed; this would                                                                   
account for a large portion of the capital expenditures.                                                                        
Co-Chair  Hawker  relayed  historical   experience  with  the                                                                   
federal  government   abandoning  buildings  to   the  state,                                                                   
including  the closing of  the airbase  at Galena.  The state                                                                   
acquires everything in the building, including obligations.                                                                     
3:12:55 PM                                                                                                                    
Representative Doogan  queried the amount required  to repair                                                                   
the building. Mr. Christensen  responded that the item was in                                                                   
the capital budget;  he believed the increment  would be $3.8                                                                   
million for the  current year and $4.8 million  the following                                                                   
Representative   Doogan   summarized   the  cost   would   be                                                                   
approximately $8  million for the  capital part and  that the                                                                   
operating  budget would  increase  as well.  Mr.  Christensen                                                                   
replied  that the  court system  currently  pays the  federal                                                                   
government rent of  $183,000 per year (less than  it costs to                                                                   
operate the  building), which is  a bargain; the  state would                                                                   
pay an additional $278,000.                                                                                                     
Co-Chair Hawker  pointed out that  the federal  structure was                                                                   
not  adequate to  meet the  court system's  need. The  Barrow                                                                   
facility  was  designed  by  and  for  the  court  system  in                                                                   
cooperation  with  the  regional   corporation  that  secured                                                                   
financing. Mr. Christensen stated  that the court system only                                                                   
wanted  an adequate  building  and stressed  that there  were                                                                   
time considerations.                                                                                                            
Representative  Foster queried the  deadline to decide  about                                                                   
the  building. Mr.  Christensen  responded  that the  federal                                                                   
government  had agreed  to wait until  after the  legislative                                                                   
session to  see whether the  legislature would  fund anything                                                                   
in the current year. In theory,  the federal government could                                                                   
try  and  find someone  else  to  take  the building  if  the                                                                   
legislature  does not  act; in  that case,  the court  system                                                                   
would have  two years  to vacate  the premises (assuming  the                                                                   
federal  government  did  not completely  shut  the  building                                                                   
3:16:12 PM                                                                                                                    
Vice-Chair Thomas  relayed experience with the  transfer of a                                                                   
building  with asbestos  issues. He asked  whether the  state                                                                   
would have to sign a document  holding the federal government                                                                   
harmless. Mr.  Christensen recalled  an incident  that taught                                                                   
him about the costs of environmental  remediation, especially                                                                   
involving asbestos.  He assured  the committee that  it would                                                                   
be very clear who would be responsible.                                                                                         
Mr. Christensen  turned to the  final item, which was  not in                                                                   
the operating  budget but in  legislation requesting  one new                                                                   
superior court judge in Anchorage.  He reminded the committee                                                                   
that  the courts  had  been warning  the  legislature of  the                                                                   
growing need for the position; backup would be provided.                                                                        
Co-Chair Hawker  referred to the  fiscal note  and questioned                                                                   
the need for  increased physical facilities.  Mr. Christensen                                                                   
did not  know about  the fiscal note.  He noted that  capital                                                                   
budget  items   to  remodel  the  old  Boney   Courthouse  in                                                                   
Anchorage have been vetoed in  past years; as the judges move                                                                   
in to  the Boney  facility, there  will be  space in  the new                                                                   
Co-Chair Hawker  requested a history  of the past  five years                                                                   
of  requests for  facilities  expansion,  including what  has                                                                   
been appropriated,  what has been  vetoed, and  progress made                                                                   
RHONDA MCLEOD,  CHIEF FINANCIAL OFFICER, ALASKA  COURT SYSTEM                                                                   
(via   teleconference),   replied   that  the   fiscal   note                                                                   
identified courtroom space for the new judge.                                                                                   
3:20:21 PM                                                                                                                    
Mr. Christensen referenced the  ten-year plan for the courts.                                                                   
He  recalled  that   HB  125  (passed  two   years  ago)  had                                                                   
instructed  the governor  to prepare a  ten-year fiscal  plan                                                                   
for the  executive branch  as part  of the governor's  duties                                                                   
under  the  Executive  Budget  Act.  The  judiciary  was  not                                                                   
subject to  the act and was  not required to prepare  a plan.                                                                   
However, the  finance committees  had asked the  court system                                                                   
to do so voluntarily; he pointed  to the result depicted in a                                                                   
handout   ("Alaska   Court  System   Ten   Year   Expenditure                                                                   
Projection," copy on file).                                                                                                     
Mr. Christensen  emphasized the difficulty of  predicting the                                                                   
future because  others decide  what the  courts will  need to                                                                   
do.  Caseload  is  driven by  population  changes  and  other                                                                   
factors, such as the number of  police officers, the state of                                                                   
the  economy,  laws  enacted  by  the  legislature,  unfunded                                                                   
mandates  enacted by  Congress, and policy  decisions  by the                                                                   
attorney general.  He recalled a past decision by  DOL to ban                                                                   
plea bargaining  resulting in  the number  of cases  going to                                                                   
trial rising dramatically.                                                                                                      
Mr. Christensen  informed the committee  that for FY  11, the                                                                   
courts assumed  two strategic initiatives: the  completion of                                                                   
the  No Dark  Courtrooms  project  and  the addition  of  one                                                                   
superior court judge in Anchorage.  For future years, the 2.7                                                                   
percent  inflation   factor  suggested   by  the   Office  of                                                                   
Management  and  Budget (OMB)  is  used.  He noted  that  the                                                                   
previous  year's ten-year  plan  included one  new judge  for                                                                   
Anchorage and one new superior  court judge in Juneau; Juneau                                                                   
is  the busiest  superior  court location  in  the state  and                                                                   
needs  a new  judge,  although  there is  not  space for  the                                                                   
position. He underlined that the  Juneau judge had been taken                                                                   
off the  plan as the courts  have figured out another  way to                                                                   
fix  the  problem.  Superior  court  judgeships  have  to  be                                                                   
created by statute  through the legislature;  a statute gives                                                                   
the  state supreme  court the  authority  to create  district                                                                   
judgeships. Two  magistrates in Juneau have been  funded. The                                                                   
solution  is to  eliminate  the two  magistrates  and fund  a                                                                   
district court judge who can do substantially more.                                                                             
3:24:40 PM                                                                                                                    
Co-Chair  Hawker  referred  to   past  budget  problems  with                                                                   
therapeutic court  funding. The  committee had asked  OMB and                                                                   
the  court  system  to  aggregate  the  money  under  central                                                                   
appropriation  to  the courts.  The  courts  were willing  to                                                                   
administer the  money through  service agreements  with other                                                                   
agencies  to accomplish  the therapeutic  courts. He  thought                                                                   
the  therapeutic courts  had proven  a success;  part of  the                                                                   
strategic plan  was to expand  them throughout the  state. He                                                                   
expressed disappointment and concerns  regarding OMB notation                                                                   
on  the budget  to take  the issue  to  the criminal  justice                                                                   
working group.                                                                                                                  
Mr.  Christensen supported  consolidating  the  money in  the                                                                   
courts  budget so  that there  is  one clear  source for  the                                                                   
legislature to consider.                                                                                                        
Co-Chair Hawker  queried historical  resistance by  judges to                                                                   
therapeutic   courts  and  evolution   toward  support.   Mr.                                                                   
Christensen   explained   that    therapeutic   courts   were                                                                   
originally started  in Anchorage by  two judges (one  with an                                                                   
alcohol court and one with a mental  health court). The model                                                                   
takes more time and effort, but  is effective and has changed                                                                   
the approach of judges.                                                                                                         
Co-Chair  Hawker pointed  out that the  amount referenced  by                                                                   
Representative  Gara  was  only  a small  part  of  what  has                                                                   
historically   been   allocated    for   therapeutic   courts                                                                   
throughout a number of agencies.                                                                                                
Representative  Gara had heard  that the bottleneck  for good                                                                   
candidates  for therapeutic  court was  the inability  to get                                                                   
people  into  treatment.  Mr. Christensen  was  unsure  about                                                                   
waiting lists, but offered to  research the issue. He related                                                                   
that  there are  many  therapeutic courts  and  a variety  of                                                                   
treatment  sources. He  conjectured that  the issue  might be                                                                   
lack of treatment facilities in  a given community. Regarding                                                                   
the therapeutic court  money, he noted that the  money in the                                                                   
budget is  not kept  by the court  system but passed  through                                                                   
the other  agencies. The proposal  was to have all  the money                                                                   
pass through the courts system.                                                                                                 
Representative  Gara  asked  which  funds  were  not  passing                                                                   
through the court  system currently. Co-Chair  Hawker did not                                                                   
know but offered to get more information.                                                                                       
3:31:16 PM                                                                                                                    
Co-Chair  Hawker referenced  $65,000  going  to Partners  for                                                                   
Progress, Inc. through the Department  of Administration. The                                                                   
outside company  helps people in the therapeutic  courts with                                                                   
ancillary services.                                                                                                             
Representative  Gara   recommended  that  the   court  system                                                                   
provide clearer information about the therapeutic courts.                                                                       
Representative  Kelly  queried  the comfort  level  with  the                                                                   
dramatic increase in the budget.  Co-Chair Hawker stated that                                                                   
he was  comfortable with the  court's requests. In  the past,                                                                   
the  agency  has   asked  for  more  and  been   refused.  He                                                                   
anticipated a  substantial reduction  in the requests  before                                                                   
the process was completed.                                                                                                      

Document Name Date/Time Subjects
Court System Budget Overview.pdf HFIN 2/2/2010 1:30:00 PM
Court System Overview 10 Yr. Plan.pdf HFIN 2/2/2010 1:30:00 PM
Court System Overview Budget Request.pdf HFIN 2/2/2010 1:30:00 PM
LAW budget overview 2-1-10 _DB_.pdf HFIN 2/2/2010 1:30:00 PM
LAW Overview Admin Services Summary.pdf HFIN 2/2/2010 1:30:00 PM