Legislature(2009 - 2010)HOUSE FINANCE 519

02/03/2010 01:30 PM House FINANCE

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01:37:26 PM Start
01:37:43 PM HB300 || HB302
03:52:28 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 Administration
Dept. of Commerce, Community & Economic
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."                                                                                                        
1:37:43 PM                                                                                                                    
Co-Chair Hawker discussed housekeeping.                                                                                         
DEPARTMENT OF ADMINISTRATION                                                                                                  
ANNETTE     KREITZER,     COMMISSIONER,    DEPARTMENT     OF                                                                    
ADMINISTRATION,  introduced her  support staff.  She defined                                                                    
the mission  of the  Department of Administration  (DOA): to                                                                    
provide consistent  and efficient support services  to state                                                                    
agencies so that  they may better serve  Alaskans. She noted                                                                    
that DOA has  ten divisions and five  independent boards and                                                                    
commissions.  She  stated  her  intent to  cover  two  major                                                                    
areas:   personnel  labor   relations  and   retirement  and                                                                    
1:41:37 PM                                                                                                                    
Ms. Kreitzer  maintained that DOA had  been steady regarding                                                                    
recruitment  and  retention  since she  had  been  appointed                                                                    
commissioner in  2007. She reminded  the committee  that the                                                                    
situation in  2007 was dire;  there were  multiple long-time                                                                    
employees  who  were  eligible  to  retire.  She  referenced                                                                    
current concern about the number  of state employees who are                                                                    
eligible to  retire. Regarding wages,  she reported  that in                                                                    
many  areas  the  department  is not  keeping  up  with  the                                                                    
private  sector  or  other government  agencies;  the  state                                                                    
continued old  hiring practices of screening  out applicants                                                                    
through desired qualification  questions, which was relevant                                                                    
when there  were many applicants. She  believed the strategy                                                                    
was outdated as there were fewer and fewer applicants.                                                                          
Ms. Kreitzer spoke of improvements  the department had made,                                                                    
including  the executive  working  group formed  in 2007;  a                                                                    
group of commissioners have identified  areas of concern and                                                                    
set  direction  for   improved  recruitment  and  retention.                                                                    
Through labor  negotiations, HB 417, and  other initiatives,                                                                    
most state employees have had  wages increase between 16 and                                                                    
19 percent since 2008.                                                                                                          
Ms.    Kreitzer   directed    attention   to    a   handout,                                                                    
"Administrative  Order  No.  237,  Executive  Working  Group                                                                    
Status  Report  of  Recommendations"  (copy  on  file).  She                                                                    
commented  that the  information was  also available  on the                                                                    
DOA  main webpage.  She highlighted  action items  completed                                                                    
and in progress: a geographic  differential study, review of                                                                    
human resources integration, and a salary survey.                                                                               
1:43:56 PM                                                                                                                    
Representative  Gara expressed  concern about  salary survey                                                                    
results  that social  workers at  the  Office of  Children's                                                                    
Services  (OCS) [Department  of Health  and Social  Services                                                                    
(DHSS)] were  paid more than  social workers in  the private                                                                    
sector. He  pointed out that  the average length of  stay at                                                                    
OCS  was  two years,  which  is  damaging for  the  children                                                                    
servied.   He  did   not  believe   the  survey   took  into                                                                    
consideration  the unusual  stress of  the job  and wondered                                                                    
whether a salary increase might improve morale.                                                                                 
1:45:38 PM                                                                                                                    
Ms. Kreitzer reminded  him of salary increases  to all state                                                                    
employees. She  reported that the salary  survey would first                                                                    
focus  on job  classes that  have been  identified as  being                                                                    
underpaid. The  focus would then  turn to other  issues; she                                                                    
suggested  that   the  burnout   might  be   addressed.  She                                                                    
disagreed  with  Representative Gara's  characterization  of                                                                    
the  survey comparisons  and offered  to  address the  issue                                                                    
more in subcommittee. She directed  attention to the website                                                                    
as a means for gathering information.                                                                                           
Representative  Gara  restated  concerns  about  OCS  social                                                                    
workers. He did not feel  that the issue had been addressed.                                                                    
He  asked  whether  every  state   worker  had  received  an                                                                    
increase in  pay. Ms.  Kreitzer replied  that the  impact to                                                                    
state employees had  been 16 to 19  percent average increase                                                                    
since 2008.                                                                                                                     
Representative  Gara  asked  whether  it  was  realistic  to                                                                    
expect [an increase  for OCS workers]. Ms.  Kreitzer did not                                                                    
believe  the  OCS  social  workers  were  in  the  underpaid                                                                    
Representative Gara  asked who he  would go  to if he  had a                                                                    
solution  to   propose.  Ms.   Kreitzer  replied   that  any                                                                    
suggestion made would have to conform to personnel rules.                                                                       
Representative   Gara   questioned  personnel   rules.   Ms.                                                                    
Kreitzer  remarked   that  there  were  tools   that  hiring                                                                    
managers  could  use, such  as  alternative  work weeks  and                                                                    
flexible hours. The  tools have to work for  the division in                                                                    
question.   She   had  made   an   effort   to  inform   the                                                                    
commissioners'  working group  about people  who are  taking                                                                    
advantage of the tools.                                                                                                         
1:50:27 PM                                                                                                                    
Ms.Kreitzer    directed    attention   to    a    PowerPoint                                                                    
presentation,  "News  and  Views:  Economic  Conditions  and                                                                    
Pensions, House  Finance Committee, February 3,  2010" (copy                                                                    
on file). She  quickly reviewed the headlines  on the slides                                                                    
to give  the committee a sense  of what she sees  on a daily                                                                    
   · Oil production fell more than 3 percent last fiscal                                                                        
     year, and another 5 percent decline is expected in the                                                                     
     current fiscal year                                                                                                        
   · Union workers at Alyeska made concessions                                                                                  
   · Another state prodded the retirement of 46,000 public                                                                      
     employees and increased the cost of health care                                                                            
     coverage to employees                                                                                                      
   · Alaska is catching up with the rest of the country on                                                                      
     the recession                                                                                                              
   · Anchorage municipality is expecting shortfalls and                                                                         
   · Increased stresses related to pensions                                                                                     
1:51:56 PM                                                                                                                    
Ms. Kreitzer turned  to the subject of  labor contracts. She                                                                    
reported  that labor  negotiations  were  taking place  with                                                                    
several labor  unions. She tells  the unions that  the state                                                                    
is  looking for  sustainable contracts.  She noted  that all                                                                    
states  attending  a  recent  gathering  of  human  resource                                                                    
professionals  reported that  they  were reducing  non-union                                                                    
salaries  and  offering  no  increases  for  union  workers;                                                                    
Alaska was  the only  state that was  potentially increasing                                                                    
Ms. Kreitzer  pointed out that  the state is  a self-insured                                                                    
provider of health coverage and  pensions and one of the few                                                                    
states to pre-fund  post-retirement benefits. She referenced                                                                    
the SB 125 contributions, the  cost above the 22 percent for                                                                    
the  Public Employees'  Retirement System  (PERS) and  12.56                                                                    
percent for  the Teachers' Retirement System  (TRS) that the                                                                    
state  contributes; the  current year's  amounts are  $165.8                                                                    
million for PERS and $190.9 million for TRS.                                                                                    
Ms. Kreitzer  remarked that there  had been some  rebound in                                                                    
the market;  the fiscal year  earnings for PERS and  TRS are                                                                    
just over 11 percent as  of November 2009. Health care costs                                                                    
for active  employees are up for  FY 11 by 19.6  percent for                                                                    
active employees  and 14 percent for  retirees (retirees are                                                                    
on a calendar year).                                                                                                            
Co-Chair  Hawker   wondered  whether   a  schedule   of  the                                                                    
increases  had been  provided and  wondered how  the numbers                                                                    
compared  with   the  previous   six  years.   Ms.  Kreitzer                                                                    
responded   that  based   on  an   estimated  15,000   state                                                                    
   · FY 02: 21.1 percent increase, which equates to an                                                                          
     annual increment of about $18 million                                                                                      
   · FY 03: 9.6 percent increase                                                                                                
   · FY 04: 11.9 percent increase                                                                                               
   · FY 05: no increase                                                                                                         
   · FY 06: 16.3 percent increase                                                                                               
   · Since FY 06: using reserves, 1.8, 1.9, and 4.8 percent                                                                     
   · FY 11: 19.6 increase, also using reserves                                                                                  
Co-Chair  Hawker  underlined  that  reserves  were  used  to                                                                    
reduce a larger number to  the 19.6 increase included in the                                                                    
FY 11 budget request.                                                                                                           
1:55:25 PM                                                                                                                    
Co-Chair Hawker  delineated the progressive increase  in the                                                                    
cost for the health care  trust for active public employees:                                                                    
$3 million  increase two  years ago,  $7.5 million  one year                                                                    
ago, and  $32 million for  the current year. He  queried the                                                                    
reasons.   Ms.  Kreitzer   responded   that  actuaries   had                                                                    
projected that $32 million would  be required for FY 11; the                                                                    
estimated increase for FY 12 is 20 percent.                                                                                     
Co-Chair Hawker summarized that there  had been roughly a 40                                                                    
percent increase in two years,  following a period of around                                                                    
five years  with a  15 percent increase.  He wanted  to know                                                                    
what was driving the increases.  Ms. Kreitzer responded that                                                                    
the department would get more detail to the committee.                                                                          
1:57:55 PM                                                                                                                    
Representative Kelly asked whether  the annual increases are                                                                    
reflected in the adjusted base.                                                                                                 
KEVIN   BROOKS,    DEPUTY   COMMISSIONER,    DEPARTMENT   OF                                                                    
ADMINISTRATION, replied that the  increases are reflected in                                                                    
the per-employee, per-month  contribution, personal services                                                                    
benefits line in all the budgets.                                                                                               
Representative Kelly  observed that a certain  amount of the                                                                    
growth  is  only  briefly   considered  during  the  average                                                                    
legislature. He  asked whether only  the increase  was being                                                                    
considered,  and if  part of  the  growth was  a given.  Mr.                                                                    
Brooks replied  that the department  was presenting  a macro                                                                    
view of all  the budgets; the total spent on  health care is                                                                    
$200  million,   which  is  in  the   base.  The  additional                                                                    
increments  seen   every  year   have  shown   single  digit                                                                    
increases for several years.                                                                                                    
Representative  Kelly pointed  out that  there was  a larger                                                                    
problem looming.                                                                                                                
Co-Chair  Hawker agreed  and observed  that the  numbers are                                                                    
not as  visible when  allocated throughout the  entire state                                                                    
budget and  across all  the agencies.  He believed  a macro-                                                                    
focus is  necessary to  examine the  overall issue  of state                                                                    
benefits. He  wanted to know  what happened in the  last few                                                                    
years. Ms. Kreitzer responded that  the department would get                                                                    
the information to the committee.                                                                                               
Representative  Kelly relayed  that  he had  made an  uneasy                                                                    
truce with PERS and TRS  but felt that the systematic growth                                                                    
in the budget was not good.                                                                                                     
Co-Chair   Hawker  maintained   that   employees  are   very                                                                    
expensive;  the   FY  11  monthly  cost   per  employee  for                                                                    
healthcare is $1,088. Ms. Kreitzer  clarified that $1,088 is                                                                    
the number that is being bargained.                                                                                             
Representative Doogan assumed that  there were other factors                                                                    
contributing to the higher  numbers than employees consuming                                                                    
healthcare  without discretion,  including increased  health                                                                    
costs. He wanted a complete picture.                                                                                            
2:03:59 PM                                                                                                                    
Representative  Doogan turned  to social  work salaries  and                                                                    
the  salary study.  He  believed that  one  third of  social                                                                    
workers  were quitting  every year,  which  would result  in                                                                    
considerable cost to  the state in terms  of recruitment and                                                                    
training. He wondered whether the  department needed help to                                                                    
reduce  social worker  turnover. Ms.  Kreitzer replied  that                                                                    
DOA's personnel division works closely  with the DHSS; there                                                                    
have been  a number  of meetings to  address the  issue. She                                                                    
did  not want  to  speak  for DHSS,  but  she  had not  been                                                                    
contacted  about  the problem.  She  stressed  that she  was                                                                    
obligated to use the survey to  look at people who are under                                                                    
the line.                                                                                                                       
2:06:19 PM                                                                                                                    
Representative Doogan  acknowledged that  the issue  was not                                                                    
only  DOA's  responsibility. He  wanted  to  make a  general                                                                    
point  that excessive  turnover  in any  category costs  the                                                                    
state  money and  is inefficient.  He requested  information                                                                    
regarding the longevity and seriousness of the problem.                                                                         
2:08:12 PM                                                                                                                    
Representative Doogan  expressed concern  about the  cost of                                                                    
continually  retraining employees  instead  of figuring  out                                                                    
how to retain them.                                                                                                             
Co-Chair Hawker  queried whether the social  worker turnover                                                                    
rate  in the  state was  comparable to  similar jobs  in the                                                                    
private  and  public sectors.  He  thought  some jobs  would                                                                    
always have a high turnover rate.                                                                                               
Representative Gara  stressed that 50 percent  of the social                                                                    
workers who  left were people  who had been in  the position                                                                    
for less  than two years. He  pointed out that the  16 to 18                                                                    
percent   salary    increases   resulting    from   previous                                                                    
legislation  did not  go  to the  social  workers who  left,                                                                    
because the  legislation was for workers  with longevity. He                                                                    
asked  whether  the salary  increases  went  to entry  level                                                                    
employees. Ms.  Kreitzer responded that the  employees would                                                                    
have benefited from  the salary increase if  they had stayed                                                                    
on the  job longer than  two years. She emphasized  that the                                                                    
longevity increments replaced by  service steps have more of                                                                    
an impact on employees who stay  longer, but they go to non-                                                                    
covered  employees,  and  they   have  been  bargained  into                                                                    
contracts.  Therefore, the  social workers  would have  been                                                                    
covered to  the extent that  the social workers  stayed with                                                                    
their contracts.                                                                                                                
Mr.  Brooks  added  that the  salary  schedule  for  General                                                                    
Government  Unit (GGU)  employees has  moved 10  percent and                                                                    
11.5 percent  for Supervisory Unit  (SU) employees;  all new                                                                    
employees benefit from the  schedule increase. Each employee                                                                    
will  get an  annual review  for the  first five  years that                                                                    
could result  in a  3.5 percent  increase; after  five years                                                                    
the review takes place every  other year and could result in                                                                    
a 3.7 percent increase.                                                                                                         
2:12:36 PM                                                                                                                    
Representative  Gara  queried  the increase  to  entry-level                                                                    
workers.  Mr.   Brooks  replied  that  entry-level   pay  is                                                                    
currently 10 percent  higher and within a year  would be 3.5                                                                    
percent higher.                                                                                                                 
Ms. Kreitzer continued with health  care costs. She believed                                                                    
the question  should be  how to  contain big  increases. She                                                                    
referred to  a 2009  confidential health risk  assessment of                                                                    
44.3  percent  of  state  employees;  a  second  survey  was                                                                    
planned for the end of  2010 or early 2011. Survey responses                                                                    
were compiled by an independent  party and results show that                                                                    
the largest issues for Alaska  are obesity, cardiac disease,                                                                    
and diabetes.                                                                                                                   
Ms. Kreitzer  also explained  that there  had been  a survey                                                                    
done in 2009  by Wells Fargo Insurances  Services, which had                                                                    
become the state's claims  administrator following a Request                                                                    
for  Proposals  (RFP). The  RFP  also  specified that  Wells                                                                    
Fargo  was  to  build  and provide  its  own  networks;  the                                                                    
company   had  recently   announced  that   Alaska  Regional                                                                    
Hospital  is  the  preferred  hospital  for  the  AlaskaCare                                                                    
Health  Plan.  Other  networks  include  Costco  Wholesale's                                                                    
vision  and pharmaceuticals  services, Wellness  Initiatives                                                                    
Network,  Inc.,  Alaska  Vision  Services,  Magellan  Health                                                                    
Services, and Beech Street Corporation.                                                                                         
2:15:37 PM                                                                                                                    
Ms. Kreitzer reported that DOA  was moving away from the use                                                                    
of social  security numbers to increase  identity protection                                                                    
and  that the  state is  examining ways  to further  protect                                                                    
information   it   collects.    All   information   is   now                                                                    
electronically  encrypted  and  physical security  has  been                                                                    
Representative   Fairclough   asked  about   Wells   Fargo's                                                                    
capacity to  handle the  high volume  of the  state's health                                                                    
care. Ms. Kreitzer responded that  she would get back to the                                                                    
committee regarding the issue.                                                                                                  
2:17:41 PM                                                                                                                    
Representative  Fairclough  stated concerns  about  managing                                                                    
customer service.                                                                                                               
Co-Chair Hawker  expressed concerns about  state procurement                                                                    
issues.  Ms.   Kreitzer  questioned  the  accuracy   of  the                                                                    
information he had received.                                                                                                    
Representative Joule  emphasized that  the state is  a major                                                                    
employer in  Alaska. He wondered whether  the department was                                                                    
noticing  more out-of-state  job applicants  in the  current                                                                    
economy.  Ms. Kreitzer  responded  that  DOA's emphasis  has                                                                    
been to hire  Alaskans. She noted that  some positions, such                                                                    
as information  technology (IT)  positions are  difficult to                                                                    
fill in  Juneau. Other job categories  experience difficulty                                                                    
as  well. She  questioned  why. She  acknowledged that  some                                                                    
applicants come  from the  Lower 48  and some  positions are                                                                    
being filled,  but she did not  think it was at  the expense                                                                    
of  Alaskan  applicants.  She encouraged  anyone  who  heard                                                                    
complaints about the issue to let her know.                                                                                     
Co-Chair Hawker referred to a $3 million decrease in third-                                                                     
party  administrator costs  for group  health. Ms.  Kreitzer                                                                    
explained that when there is a transition between third-                                                                        
party administrators, the state  always holds out the amount                                                                    
of  money  it anticipates  paying  to  unfilled claims.  She                                                                    
believed the amount  was closer to $5 million,  but less was                                                                    
needed  in the  transition;  this explained  the $3  million                                                                    
reduction for retirement and benefits.                                                                                          
2:22:36 PM                                                                                                                    
Ms. Kreitzer  scanned core  services within  the department.                                                                    
She  reported  on a  2006  legislative  requirement for  the                                                                    
Division  of Finance  to increase  the number  of electronic                                                                    
payments;  there  was  a  substantial  increase  in  FY  10,                                                                    
approximately  2,100  more  vendors  (foster  parents)  were                                                                    
getting electronic payments, double the FY 09 amount.                                                                           
Ms. Kreitzer  noted that other  progress in the  Division of                                                                    
Finance  included the  elimination  of the  need for  Social                                                                    
Security  numbers on  timesheets  and  leave slips.  On-line                                                                    
pay-stubs  and  the  discontinuation of  paper  paystubs  in                                                                    
August have  saved the  state over  $130,000 in  paper stock                                                                    
and postage.                                                                                                                    
Ms.  Kreitzer anticipated  questions  regarding  the new  e-                                                                    
travel budget component. She reported  that the state travel                                                                    
office  has  been  significantly  overhauled;  the  $600,000                                                                    
increment  for   interagency  receipts  now   covers  actual                                                                    
Ms. Kreitzer  informed the  committee that  the construction                                                                    
for  the Palmer  State Office  Building is  on schedule  and                                                                    
well  underway; the  bulk  of  the tenants  will  be in  the                                                                    
facility  by  the  end  of  August  2010.  Mat-Su  agencies,                                                                    
including the court system,  law enforcement, the Department                                                                    
of Law  (DOL), the  Department of  Public Safety  (DPS), the                                                                    
Public Defender's  Office and the Office  of Public Advocacy                                                                    
(OPA), will be co-located in the new building.                                                                                  
Ms. Kreitzer commented that  most energy-saving measures had                                                                    
already  been taken  and indicated  a report  detailing cost                                                                    
savings because of that work.                                                                                                   
2:25:25 PM                                                                                                                    
Co-Chair  Hawker  queried  increased costs  for  state-owned                                                                    
facilities: the  FY 09  actual cost was  $10 million;  FY 10                                                                    
was $13.25;  another $2  million is  being requested  for FY                                                                    
11. Mr.  Brooks believed  that part of  the expense  was for                                                                    
the  Palmer State  Office Building,  which is  a very  large                                                                    
Vice-Chair  Thomas thought  the project  had not  been fully                                                                    
funded the previous year.                                                                                                       
Ms.  Kreitzer directed  attention  to Enterprise  Technology                                                                    
Services  (ETS).  She  relayed  that bandwidth  has  been  a                                                                    
challenge  and   that  the  cost  of   bandwidth  should  be                                                                    
considered  when  web-based  initiatives are  proposed.  The                                                                    
cost to  the state under the  current core-services contract                                                                    
for bandwidth is measured in  megabits per second; currently                                                                    
the  cost  is  $500  per megabit.  Technical  upgrades  have                                                                    
doubled and  tripled wide-area  network bandwidths  in areas                                                                    
including  Juneau, Anchorage,  Fairbanks, Ketchikan,  Sitka,                                                                    
Kenai   Peninsula,  Bethel,   and   the  Mat-Su.   Technical                                                                    
deployment  of  land-based  microwave  connection  has  been                                                                    
completed from Bethel to Emmonak, Aniak, and St. Mary's.                                                                        
Ms.  Kreitzer observed  that security  is  an ETS  challenge                                                                    
because  of constant  and evolving  threats  to the  state's                                                                    
network.  Efforts begun  in  2005  to undertake  appropriate                                                                    
security initiatives have been continued.                                                                                       
2:28:57 PM                                                                                                                    
Ms. Kreitzer pointed to a  supplemental request for $865,000                                                                    
for  OPA, which  has  the  court-appointed special  advocate                                                                    
program.  She  observed  that the  program  did  good  work;                                                                    
community volunteers  serve as guardians ad  litem (GAL) for                                                                    
abused  and neglected  children  in  the state's  protective                                                                    
custody.  The   volunteers  support  and   supplement  OPA's                                                                    
professional  GALs.  A  part-time coordinator  of  volunteer                                                                    
court-appointed  special  advocates  (CASA)  was  hired  the                                                                    
previous  year in  the Mat-Su  Valley,  which has  increased                                                                    
trained  volunteer GALs  by 114  percent  and increased  the                                                                    
number of  children being  served by  volunteer GALs  by 104                                                                    
percent.  In FY 09,  OPA experienced a 13.6 percent increase                                                                    
in the number of public  guardian clients and have developed                                                                    
a new guardian  program to help family members  learn how to                                                                    
be public  guardians. In 2009,  OPA's Office of  Elder Fraud                                                                    
and  Assistance recovered  $462,000  through settlement  and                                                                    
court order for  Alaska elders who were victims  of fraud or                                                                    
financial exploitation;  during 2010 so far,  the office has                                                                    
recovered about $1.5 million for elders.                                                                                        
Co-Chair Hawker  queried the Public Defender  Agency request                                                                    
in  the supplemental  budget which  cited a  number of  case                                                                    
filings, including a 37 percent  increase in felony cases in                                                                    
the  Northern district.  He wondered  what  was causing  the                                                                    
increase in felony and misdemeanor prosecutions.                                                                                
2:31:29 PM                                                                                                                    
Ms. Kreitzer  had no concrete  evidence as to why  crime had                                                                    
risen.  She speculated  that in  a  declining economy,  more                                                                    
people might qualify for a public defender.                                                                                     
Co-Chair Hawker  noted that other agencies  reported similar                                                                    
speculative conclusions.  He thought  the issue  was serious                                                                    
and  merited  consideration.  He asked  about  the  $300,000                                                                    
increased request to the  Violent Crimes Compensation Board,                                                                    
especially  in the  light of  the  declining Permanent  Fund                                                                    
Dividend (PFD) funding. Ms. Kreitzer  responded that she was                                                                    
there  to defend  the governor's  budget.  Mr. Brooks  added                                                                    
that the  calculation was  by the  Office of  Management and                                                                    
Budget (OMB).                                                                                                                   
2:34:02 PM                                                                                                                    
Ms. Kreitzer listed measures the  Public Defender Agency had                                                                    
taken to  contain costs: the  use of paralegals in  order to                                                                    
free  attorneys  to  do  what  they need  to  do;  the  case                                                                    
management system  that has been implemented  gives a better                                                                    
overall  picture; and  regional restructuring,  with smaller                                                                    
offices being grouped into regional units.                                                                                      
Co-Chair  Stoltze commended  Mr.  Steiner  [Director of  the                                                                    
Public Defender Agency].                                                                                                        
Ms.  Kreitzer moved  to  a $1.15  million  requested by  the                                                                    
Alaska  Oil  and  Gas Conservation  Commission  (AOGGC)  for                                                                    
gasline evaluation work.                                                                                                        
Co-Chair Hawker thought that  AOGGC typically bills industry                                                                    
for services and  asked why it was asking  for state general                                                                    
funds.  Ms. Kreitzer  replied that  general  funds had  been                                                                    
continually appropriated for the item year to year.                                                                             
2:37:14 PM                                                                                                                    
ERIC   SWANSON,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT  OF   ADMINISTRATION,  explained  that                                                                    
there have  been general fund appropriations  over the years                                                                    
for AOGGC  oil and  gas related  work. He  acknowledged that                                                                    
AOGGC  bills industry  for  day-to-day  operations, but  the                                                                    
decision  had been  made to  use general  funds for  gasline                                                                    
related work.                                                                                                                   
Co-Chair Hawker  noted that  oil and  gas requests  would be                                                                    
aggregated  into a  single  request  involving all  relevant                                                                    
Ms.  Kreitzer   turned  to  the  Office   of  Administrative                                                                    
Hearings, another  independent commission/board in  DOA. She                                                                    
highlighted a supplemental request  for $85,000 general fund                                                                    
due to an increase in tax cases.                                                                                                
Ms.  Kreitzer  commented  that  the  Alaska  Public  Offices                                                                    
Commission (APOC) did not have  substantive budget items and                                                                    
has completed a computer filing project.                                                                                        
Ms. Kreitzer  reported that the  Division of  Motor Vehicles                                                                    
(DMV) was requesting $500,000  federal authorization for the                                                                    
commercial  driver   license  (CDL)  program   and  $668,000                                                                    
reduction for the [Dowling Road/Benson Avenue] lease.                                                                           
Co-Chair  Hawker referenced  a $600,000  capital request  by                                                                    
APOC.  He   questioned  increases  to  the   Elected  Public                                                                    
Officials Retirement System (EPORS).  Mr. Brooks pointed out                                                                    
that the EPORS retirement system was fully funded.                                                                              
Co-Chair Hawker  asked how many bargaining  unit settlements                                                                    
were open currently.                                                                                                            
2:41:15 PM                                                                                                                    
Ms.  Kreitzer replied  that  the  department is  negotiating                                                                    
with  the SU,  the GGU,  Confidential Employees  Association                                                                    
(CEA), and Labor, Trades, and Crafts (LTC).                                                                                     
Co-Chair  Hawker wondered  whether any  of the  negotiations                                                                    
would be concluded  by the close of the  budget process. Ms.                                                                    
Kreitzer stated that she was hopeful.                                                                                           
Representative  Fairclough queried  whether the  CDL program                                                                    
in the DMV was contracted  or internal. Ms. Kreitzer replied                                                                    
that it was both and offered to get more information.                                                                           
Representative  Fairclough noted  other  private sector  CDL                                                                    
training and wondered how the  state managed funding for the                                                                    
2:42:36 PM                                                                                                                    
Representative  Kelly  commented  that the  current  binding                                                                    
arbitration  system   means  a   single  person   makes  the                                                                    
decision.  He asked  how many  negotiations went  to binding                                                                    
arbitration.  Ms. Kreitzer  replied that  Class 1  Employees                                                                    
have  the   opportunity  and  ability   to  go   to  binding                                                                    
arbitration. The  two biggest  applicable unions  are public                                                                    
safety  employees,   mostly  troopers  and   airport  safety                                                                    
officers  working  for   Department  of  Transportation  and                                                                    
Public Facilities  and DPS;  the other  union is  the Alaska                                                                    
Correctional   Officers  Association   (ACOA),  representing                                                                    
correctional officers in facilities throughout the state.                                                                       
Representative  Kelly   queried  the  percentage   going  to                                                                    
binding arbitration. Ms. Kreitzer  replied that there was an                                                                    
ACOA binding  arbitration settlement before  the legislature                                                                    
currently  in the  supplemental; the  last contract  went to                                                                    
binding arbitration as well.                                                                                                    
2:44:51 PM                                                                                                                    
Representative  Kelly  wanted  to know  what  percentage  of                                                                    
bargaining  engagements in  the  state could  go to  binding                                                                    
arbitration  because that  option is  allowed, and  how many                                                                    
have.  Ms.   Kreitzer  replied  that   she  could   get  the                                                                    
information.  She recalled  that  the SU  Class 1  Employees                                                                    
ended up going to binding  arbitration in 2008, and that was                                                                    
extended across the entire bargaining unit.                                                                                     
DEPARTEMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT                                                                   
2:46:48 PM                                                                                                                    
EMIL NOTTI, COMMISSIONER,  DEPARTMENT OF COMMERCE, COMMUNITY                                                                    
AND ECONOMIC DEVELOPMENT,  provided an overview, "Department                                                                    
of Commerce, Community  and Economic Development, Department                                                                    
Overview,  February  2010" (copy  on  file).  He stated  the                                                                    
mission of the department:                                                                                                      
   · The mission of the Department of Commerce, Community,                                                                      
     and Economic Development is to promote a healthy                                                                           
     economy, strong communities, and protect consumers in                                                                      
Commissioner  Notti   described  the   three  legs   of  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED):  one keeps  the community  strong,  a second  deals                                                                    
with   business  aspects,   and   the   third  consists   of                                                                    
independent agencies.  He saw the department's  priority, in                                                                    
keeping  with   the  governor's  instruction,   as  economic                                                                    
development as well  as keeping the budget  stable. A deputy                                                                    
commissioner   was  recently   hired   to  pursue   economic                                                                    
development for the state.                                                                                                      
Commissioner  Notti  noted  that  the  DCCED  FY  10  budget                                                                    
included $35  million general funds  with an  overall budget                                                                    
of  $195  million; the  FY  11  budget  is for  $33  million                                                                    
general  funds with  an  overall budget  of  just over  $200                                                                    
Commissioner  Notti reported  that DCCED  currently has  529                                                                    
employees with a net zero increase in positions.                                                                                
Commissioner  Notti  informed  the  committee  that  a  core                                                                    
challenge is the  high cost of energy,  which hinders growth                                                                    
because  of  high  transportation costs.  He  stressed  that                                                                    
transportation costs  factor large in  economic development.                                                                    
He did  not anticipate energy  costs going down in  the near                                                                    
2:51:42 PM                                                                                                                    
Commissioner Notti listed DCCED accomplishments (page 3):                                                                       
   · Re-established the Alaska Film Office                                                                                      
   · Helped nine new tourism businesses get started through                                                                     
     the Tourism Mentorship program                                                                                             
   · Administered over 1,400 grants with a value in excess                                                                      
     of $766 million                                                                                                            
   · Community & Regional Affairs presented 39 trainings                                                                        
     throughout the state on bookkeeping, land planning,                                                                        
     utility management, and tax assessment.                                                                                    
Commissioner Notti  detailed that the Division  of Community                                                                    
and Regional Affairs trains  city administrators and village                                                                    
people to  be eligible for  federal grants and  assists them                                                                    
when  there   are  problems  related  to   taxes,  workmen's                                                                    
compensation, and  bookkeeping. In  order to  keep utilities                                                                    
functioning,  the division  also  trains  people to  operate                                                                    
utilities and  to price services. These  activities are part                                                                    
of the  community leg of  the department and use  14 percent                                                                    
of the general funds.                                                                                                           
Commissioner Notti  explained that  the largest part  of the                                                                    
department's budget  is used  for the  business leg.  He did                                                                    
not want  to call  this the  "economic development"  side as                                                                    
the  bulk  of  the  money is  used  to  administer  business                                                                    
licenses  and  to  watch  over   the  banking  industry  and                                                                    
insurance business.  These activities  in the  two divisions                                                                    
[the  Division of  Banking and  the  Division of  Insurance]                                                                    
employ approximately 20 investigators.                                                                                          
2:54:15 PM                                                                                                                    
Co-Chair Hawker  asked what the  state was doing  to promote                                                                    
economic development,  especially in  the light  of expenses                                                                    
attributable to a declining economy,  such as Medicaid costs                                                                    
and  rising  criminal  prosecutions.  He  also  queried  the                                                                    
department's management of  professional licensing, pointing                                                                    
to years of audits stating the need for improvement.                                                                            
Commissioner Notti replied that  although there is an Office                                                                    
of  Economic  Development,  the department  is  not  pushing                                                                    
development. He  relayed a brief  history of the  office. He                                                                    
agreed  that  DCCED  is  not doing  much  to  push  economic                                                                    
development; only 2  percent of money is spent  in the state                                                                    
for  economic  development.  He  spoke  in  support  of  the                                                                    
current staff in the office.                                                                                                    
2:58:34 PM                                                                                                                    
Co-Chair  Hawker referred  to Legislative  Budget and  Audit                                                                    
Committee  reports  and  asked whether  progress  was  being                                                                    
CURTIS THAYER, DEPUTY  COMMISSIONER, DEPARTMENT OF COMMERCE,                                                                    
COMMUNITY AND ECONOMIC DEVELOPMENT,  described work that the                                                                    
department has  done to address  the issue.  He acknowledged                                                                    
that  the department  was  behind in  the  area of  renewing                                                                    
corporation  filings.  He  reported  that  he  had  replaced                                                                    
personnel and had developed a  team that was making progress                                                                    
on the backlog and reporting  directly to him. He noted that                                                                    
the old computer system had  impeded progress and was in the                                                                    
process of being replaced.                                                                                                      
Mr.  Thayer  addressed  queries related  to  the  Office  of                                                                    
Economic  Development. He  has been  conducting an  audit of                                                                    
personnel  and their  activities;  new  personnel are  being                                                                    
sought who will  be more responsive to  community needs. The                                                                    
office  is small,  but many  parts of  state government  are                                                                    
connected with  it. He  stated that  more would  be revealed                                                                    
after the audit was completed.                                                                                                  
3:01:36 PM                                                                                                                    
Representative Kelly  wondered whether the office  should be                                                                    
cut since the director had been  cut and it was such a small                                                                    
part of the budget. Mr.  Thayer replied that there were many                                                                    
elements involved,  including the  Alaska Film  project with                                                                    
$100  million  worth of  credits.  In  addition, the  agency                                                                    
administers the  $9 million  from the  state for  the Alaska                                                                    
Travel Industry  Association (ATIA).  He wanted  to evaluate                                                                    
what could be done to improve  the division, as its reach is                                                                    
Representative Kelly  referred to  the $30 per  barrel price                                                                    
of oil a  year previous. He wondered  whether the department                                                                    
would redirect the work the  Office of Community Development                                                                    
if oil were the same  price today. Mr. Thayer responded that                                                                    
the question was  valid but he could not answer  it since he                                                                    
was only six weeks into the evaluation process.                                                                                 
Representative  Kelly thought  the  response  was fair;  his                                                                    
intent was  not to criticize  the department. He  noted that                                                                    
the governor had  given a lean agency budget.  He was trying                                                                    
to determine where government spending could be cut.                                                                            
3:05:15 PM                                                                                                                    
Mr.  Thayer pointed  out that  the legislature  had combined                                                                    
two departments,  the Department  of Community  and Regional                                                                    
Affairs  and   the  Department  of  Commerce   and  Economic                                                                    
Development,  into  one. He  believed  that  over time,  the                                                                    
community and regional affairs has  been more prominent. His                                                                    
analysis was  questioning how the economic  development side                                                                    
could be aided.                                                                                                                 
Representative Kelly wanted to see concrete results.                                                                            
Co-Chair Stoltze  commented that Commissioner Notti  was not                                                                    
working  theoretically as  he had  been  through times  with                                                                    
much lower  oil prices. He queried  Mr. Thayer's perspective                                                                    
on the  railroad. Mr. Thayer  responded that he  was working                                                                    
with  the  railroad  regarding the  Flint  Hills  [Resources                                                                    
Alaska], the Port of Anchorage, and the fuel issue.                                                                             
Co-Chair  Stoltze asked  for  more  information about  Flint                                                                    
Hills. Mr.  Thayer answered that  the department  was trying                                                                    
to understand the  issue. He pointed out that  there were 70                                                                    
potential projects,  and he was attempting  to analyze which                                                                    
are  practical, which  should be  taken to  the legislature,                                                                    
and which  need administrative action. Some  of the projects                                                                    
have been  in play  for five  to ten  years; he  opined that                                                                    
Alaska was  hampering its own economic  development. He said                                                                    
the  department  was  working  with  the  Alaska  Industrial                                                                    
Development  and  Export  Authority  (AIDEA)  regarding  the                                                                    
Flint Hills  and the fuel  storage at the Port  of Anchorage                                                                    
Co-Chair Stoltze  hoped there would be  better communication                                                                    
between  the   department  and   the  legislature.   He  was                                                                    
concerned  about  missing  something that  could  result  in                                                                    
serious repercussions for the state. Mr. Thayer agreed.                                                                         
3:09:49 PM                                                                                                                    
Co-Chair   Stoltze  reiterated   his  desire   for  improved                                                                    
communication.   He  did   not  want   to  micromanage   the                                                                    
department. He  wanted a successful partnership  between the                                                                    
state and the railroad.                                                                                                         
Representative Austerman  wanted more information  about the                                                                    
film  office. He  had looked  at the  numbers in  the annual                                                                    
report and wondered how much  business had been generated in                                                                    
the state by  the tax credits. He thought  the office should                                                                    
be closed down if it spends money and does not make money.                                                                      
Co-Chair Hawker  reported that he  had been a critic  of the                                                                    
film office tax credits. He  gave Mr. Thayer a brief history                                                                    
of the  legislation. He expressed concern  regarding expense                                                                    
to the state.                                                                                                                   
Representative  Gara  queried  trade and  marketing  efforts                                                                    
within the  agency intended to expand  economic development.                                                                    
He  wondered whether  there had  been an  evaluation of  the                                                                    
results  of money  spent.  Commissioner  Notti replied  that                                                                    
there was  no statistical analysis  of returns to  the state                                                                    
for the money spent.                                                                                                            
Mr.  Thayer  listed  several trades,  including  the  Alaska                                                                    
Seafood   Marketing  Institute   (ASMI),  Alaska   Aerospace                                                                    
Development  Corporation (AADC),  and the  Governor's Office                                                                    
of International Trade,  and noted that none  of them report                                                                    
directly  to  the department.  He  added  that analysis  was                                                                    
trying  to  determine how  the  money  was being  spent  and                                                                    
whether efforts could be combined.                                                                                              
Representative  Gara  explained  that he  was  referring  to                                                                    
trade  with  businesses  outside of  Alaska.  He  understood                                                                    
statistics were  hard to gather,  but he  wanted reassurance                                                                    
that the  money the  state spent on  trade work  was getting                                                                    
Commissioner  Notti replied  that the  question was  whether                                                                    
the  agencies were  returning money  to the  state, such  as                                                                    
AIDEA and the Alaska  Housing Finance Corporation [connected                                                                    
with Alaska Energy  Authority]. He thought it  could be many                                                                    
years  before  the  rocket   launches  returned  money,  and                                                                    
returns related to ASMI were  hard to measure, although ASMI                                                                    
has had significant successes,  including making Alaska fish                                                                    
products one  of the  top three  menu items  of the  top 500                                                                    
U.S.  restaurant  chains.  He  believed ASMI  had  the  best                                                                    
numbers  regarding  its  impact  on  Alaska's  economy,  for                                                                    
example related to how much gets back to the fishermen.                                                                         
3:15:32 PM                                                                                                                    
Representative     Fairclough    asked     about    internal                                                                    
improvements. She  wanted to know how  the technical changes                                                                    
would be  integrated in communities,  specifically bandwidth                                                                    
in rural  communities. Commissioner  Notti replied  that the                                                                    
communications aspect  is left  up to  commercial companies,                                                                    
which  will build  in response  to  demand. He  acknowledged                                                                    
that some places  had good bandwidth and  others had slower.                                                                    
He recalled work  in Ketchikan; AT&T had stepped  up to fill                                                                    
the need.                                                                                                                       
Representative    Fairclough    wondered   whether    strong                                                                    
communications  capability  might  contribute to  a  healthy                                                                    
economy  in  both  rural and  urban  Alaska  and  strengthen                                                                    
communities   to  alleviate   poverty.  Commissioner   Notti                                                                    
responded that  communications is a key  factor for economic                                                                    
development, especially  taking into consideration  the need                                                                    
to compete  in a world  market; small villages will  need to                                                                    
get  online before  they can  compete. He  did not  see that                                                                    
happening  right away.  He pointed  to current  efforts; for                                                                    
example,  there were  29 applications  for stimulus  dollars                                                                    
for  fiber optics.  He cautioned  however that  fiber optics                                                                    
projects  are  billion-dollar  projects, and  there  is  not                                                                    
enough money. He did not see the state solving the problem.                                                                     
Representative   Fairclough  wondered   whether  there   are                                                                    
federal  dollars to  bring smaller  communities online.  She                                                                    
referred to  a department  evaluation regarding the  cost of                                                                    
fiber optic communications.                                                                                                     
3:19:26 PM                                                                                                                    
Commissioner Notti replied  that Deputy Commissioner Michael                                                                    
Black could provide  more details as he has  been working on                                                                    
broadband issues with the federal  government and with other                                                                    
Representative  Fairclough  asked  for an  update  from  Mr.                                                                    
Black  to  her office.  She  asked  how the  department  was                                                                    
interfacing   with   the   university   concerning   energy,                                                                    
particularly  related  to  weatherization. She  referred  to                                                                    
cold-climate research and  the need in both  rural and urban                                                                    
communities  to  reduce  energy  costs.  Commissioner  Notti                                                                    
responded  that Mr.  Black  had been  working  on the  cold-                                                                    
weather  issue,  specifically related  to  Newtok/Mertarvik,                                                                    
where  an energy-efficient  community  hall  is being  built                                                                    
through both the university and a private company.                                                                              
Representative Doogan  noted that  the department  budget is                                                                    
over  $2  million,  50  percent   of  which  is  corporation                                                                    
budgets; he asked what the remaining $89 million was for.                                                                       
JO  ELLEN  HANRAHAN,  DIRECTOR, DIVISION  OF  ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT OF  COMMERCE,  COMMUNITY AND  ECONOMIC                                                                    
DEVELOPMENT, responded  that the  remaining part of  the $89                                                                    
million was spread across  banking corporations, a community                                                                    
and  regional affairs  program,  insurance investments,  and                                                                    
revenue-sharing programs, such  as national forest receipts,                                                                    
the Payment in  Lieu of Taxes (PILT) program,  the Office of                                                                    
Economic Development, and the Serve Alaska program.                                                                             
Representative Doogan asked whether  part of the $89 million                                                                    
was   pass-through   funds.   Ms.  Hanrahan   replied   that                                                                    
approximately  $30  million represented  pass-through  funds                                                                    
for revenue-type sharing programs  such as PILT and national                                                                    
forest receipts.  Part of  the amount  (about 36  percent of                                                                    
the DCCED budget) is for grants to communities.                                                                                 
3:23:29 PM                                                                                                                    
Representative  Doogan  wanted  further  clarification.  Ms.                                                                    
Hanrahan explained  that $30 million is  pass-through funds;                                                                    
the 36  percent is of the  total budget and the  $30 million                                                                    
is part of the 36 percent.                                                                                                      
Representative  Doogan asked  whether the  approximately $60                                                                    
million remaining  was for  agency operations.  Ms. Hanrahan                                                                    
directed attention  to a pie  chart on page 7  depicting the                                                                    
budget breakdown:                                                                                                               
   · Grants - 36 percent ($72.5 million)                                                                                        
   · Personal Services - 26 percent ($51 million)                                                                               
   · Services (contractual) - 35 percent ($70 million)                                                                          
Representative Doogan  wanted to  determine how much  of the                                                                    
budget was a typical agency  budget and how much represented                                                                    
money passing  through the  agency on  its way  to somewhere                                                                    
else. He  questioned how much was  for grants administration                                                                    
and how much was for agency operations.                                                                                         
3:26:10 PM                                                                                                                    
Ms. Hanrahan replied  that the department has  begun to view                                                                    
itself  in   two  pieces:  corporations  and   core  [agency                                                                    
operations].   Approximately  $111   million   is  for   the                                                                    
corporations; $89  million is for agency  operations. Of the                                                                    
$89 million  for agency operations,  a portion is  for pass-                                                                    
through appropriations;  she did not have  the exact numbers                                                                    
for the  breakout, but  offered to provide  them at  a later                                                                    
Co-Chair Hawker provided a description  of the DCCED budget,                                                                    
using   the   short   form    and   dividing   the   various                                                                    
appropriations  into "things  we  do"  and "things  somebody                                                                    
else  does." Agency  operations  include the  commissioner's                                                                    
office, the  offices of  economic development  and community                                                                    
and  regional  affairs,  investments  (managing  state  loan                                                                    
programs),   regulation  of   banking  and   insurance,  and                                                                    
corporate business licensing.  Operations that are conducted                                                                    
by  others   include  revenue  sharing,   trade  association                                                                    
contracts,  Alaska  Aerospace   Corporation,  AIDEA,  Alaska                                                                    
Energy Authority (AEA), and ASMI programs.                                                                                      
Representative  Salmon  wanted clarification  regarding  the                                                                    
powers  of the  AIDEA  board  as related  to  AEA. He  asked                                                                    
whether a  previous problem had been  resolved. Commissioner                                                                    
Notti  replied  that the  year  before,  the department  had                                                                    
tried  to separate  the programs.  The department  felt that                                                                    
AEA  should not  be  under  a board  of  directors that  was                                                                    
primarily banking  people and that  AEA needed  more freedom                                                                    
to do work related to  producing energy. An attempt was made                                                                    
to  create  two  different boards  with  separate  executive                                                                    
directors for  each entity. The action  required legislative                                                                    
approval.  The  job  was  only   half  done;  there  was  an                                                                    
executive  director  placed  over  AEA,  but  the  executive                                                                    
director  remained  under  the  same board  with  AIDEA.  He                                                                    
expected that  a future  attempt would  be made  to separate                                                                    
the boards.                                                                                                                     
3:32:33 PM                                                                                                                    
Representative  Joule asked  whether the  AIDEA board  spent                                                                    
time  on energy  issues. Commissioner  Notti responded  that                                                                    
the meetings for AIDEA and AEA,  held by the same board, are                                                                    
held on the same day. He  reported that the bulk of the time                                                                    
was spent on loans, projects,  and AIDEA reports. He thought                                                                    
it was  fair to say  that AEA  gave briefer reports  and did                                                                    
not get as much attention as AIDEA.                                                                                             
Representative  Gara  asked  whether  there was  a  plan  to                                                                    
upgrade  diesel plants  to save  people fuel  costs. He  had                                                                    
realized that the best way to  save money in many places was                                                                    
not to  build a wind  mill but  to make the  existing diesel                                                                    
plant  more efficient.  He referred  to efficiency  upgrades                                                                    
being done by  the Denali Commission. For the  past year, he                                                                    
had been  trying to work  with AEA to  get a list  of diesel                                                                    
plants that AEA  believed could be made  more efficient, but                                                                    
he had not been able to  get the information. He stated that                                                                    
his  goal was  to  reduce energy  costs  by updating  diesel                                                                    
plants that  would not  get Denali  Commission funds  in the                                                                    
next few years.                                                                                                                 
Commissioner Notti thought that  wind power could save money                                                                    
in  some  places; he  believed  it  had  saved close  to  $1                                                                    
million   in  Kodiak,   displacing   diesel.  However,   the                                                                    
investment is high. He stated  that upgrading diesel is only                                                                    
part of  the problem.  A community  might be  moving towards                                                                    
using  low-sulfur diesel  fuel, which  requires a  much more                                                                    
sophisticated  and expensive  engine; a  village might  need                                                                    
three  different sizes  of generators  for different  energy                                                                    
3:36:20 PM                                                                                                                    
Commissioner  Notti emphasized  that any  energy upgrade  is                                                                    
very  expensive, whether  wind, hydro,  bio-fuel, or  diesel                                                                    
Representative Gara  queried instigating a  statewide diesel                                                                    
upgrade plan.  He believed that  aggressive planning  may be                                                                    
in order. Commissioner Notti deferred to AEA.                                                                                   
Co-Chair Hawker  believed that  a future  Legislative Budget                                                                    
and Audit Committee meeting would address AEA projects.                                                                         
Representative  Kelly   spoke  of  his  experience   on  the                                                                    
subcommittee. The  film office  tax credits troubled  him as                                                                    
well.  He expressed  frustration regarding  the department's                                                                    
500 employees.                                                                                                                  
3:40:08 PM                                                                                                                    
Representative Kelly  commented that  Mr. Thayer  might have                                                                    
been  brought  on board  to  address  the tough  issues;  he                                                                    
believed  that the  biggest  issue was  the  high number  of                                                                    
Representative Joule commended Margaret  Gold Hanson, one of                                                                    
DCCED's employees  in the Kotzebue office.  He reported that                                                                    
she  had  been there  for  over  twenty  years, has  a  deep                                                                    
understanding  of  the  community,   and  is  an  invaluable                                                                    
lifeline  for many.  She touches  many  lives in  struggling                                                                    
villages. He  wondered if  the same  quality of  people were                                                                    
being hired to maintain  vital lifelines. Commissioner Notti                                                                    
acknowledged that  the person in question  was getting ready                                                                    
to  retire and  that there  was  no plan  of succession.  He                                                                    
noted  one  person who  had  been  brought  in on  the  land                                                                    
custodian  deal for  unincorporated villages,  so that  when                                                                    
the  current  person  retires there  will  be  institutional                                                                    
memory. He pointed  out that people in  the villages usually                                                                    
stay on  for many years  and that the jobs  are economically                                                                    
very important in small communities.                                                                                            
Co-Chair Hawker remembered that his  first four years on the                                                                    
committee  were  spent looking  at  the  agencies and  their                                                                    
executive structures. He felt  that the growth of executives                                                                    
and  employees in  all agencies  has been  "horrendous" over                                                                    
the past  six years.  He referred to  DCCED's organizational                                                                    
chart  (copy on  file), which  indicates a  commissioner and                                                                    
two deputy commissioners. He wondered what could be done.                                                                       
Commissioner Notti  responded that the  organizational chart                                                                    
was a rough draft and  that the division responsibilities of                                                                    
the two  deputy directors  had not  yet been  determined. He                                                                    
added that the chart does not  reflect what the people on it                                                                    
are doing. He stated that he  deals at any given time with a                                                                    
wide  range  of issues  and  cannot  possibly keep  up.  The                                                                    
deputy commissioners are also  extremely busy. He added that                                                                    
about  40 percent  of the  529 employees  in the  report are                                                                    
from  outside agencies.  He felt  the same  issue should  be                                                                    
examined throughout the departments.                                                                                            
Co-Chair Hawker  felt that  growth was  a valid  concern. He                                                                    
pointed  to a  $200 thousand  increment for  postage because                                                                    
37,000 insurance  licensees needed  to be notified  of every                                                                    
change in  rules. He  questioned why the  task was  not done                                                                    
electronically. He  also questioned  the need for  the inch-                                                                    
thick insurance report produced each session.                                                                                   
3:50:01 PM                                                                                                                    
Ms. Hanrahan agreed that the  point was important. She noted                                                                    
that the issue was addressed  in the ten-year plan, but that                                                                    
a statute change was needed.                                                                                                    
Co-Chair  Hawker maintained  that  he would  introduce as  a                                                                    
finance bill any statute that would save $200,000.                                                                              
Co-Chair Stoltze thought the measure could be attached to                                                                       
another bill.                                                                                                                   
3:52:28 PM                                                                                                                    

Document Name Date/Time Subjects
Administration Budget Overview Priorities.doc HFIN 2/3/2010 1:30:00 PM
DOA Budget Overview.doc HFIN 2/3/2010 1:30:00 PM
DOA Budget Overview.pdf HFIN 2/3/2010 1:30:00 PM
DOA Overview PowerPoint020310 (2).pptx HFIN 2/3/2010 1:30:00 PM
2-2-10 DOA Overview Organization.pdf HFIN 2/3/2010 1:30:00 PM
Economic DevelopmentCCED Oveview. Remarks.pdf HFIN 2/3/2010 1:30:00 PM
DOA Overview PowerPoint020310 (2).pptx HFIN 2/3/2010 1:30:00 PM
CCEDORG CHART CO Presentation Last Page.pdf HFIN 2/3/2010 1:30:00 PM
cced OverviewORG CHART OED.Thayer.pdf HFIN 2/3/2010 1:30:00 PM
CCED Overview ORG CHART NEW FOCUS..pdf HFIN 2/3/2010 1:30:00 PM
Budget Overview CCED February 2010.pdf HFIN 2/3/2010 1:30:00 PM