Legislature(2015 - 2016)HOUSE FINANCE 519

02/05/2015 01:30 PM House FINANCE

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01:32:55 PM Start
01:33:38 PM HB72 || HB73
01:33:52 PM Fy 16 Budget Overview: Department of Commerce, Community and Economic Development
02:33:22 PM Fy 15 Governor's Supplemental Budget Overview
03:30:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
- The Governor's FY15 Supplemental Request by Pat
Pitney, Director, Office of Management & Budget
- FY16 Dept. of Commerce, Community, & Economic
HOUSE BILL NO. 72                                                                                                             
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain    programs,    capitalizing   funds,    making                                                                    
     reappropriations, and making  appropriations under art.                                                                    
     IX, sec.  17(c), Constitution of  the State  of Alaska,                                                                    
     from  the  constitutional   budget  reserve  fund;  and                                                                    
     providing for an effective date."                                                                                          
HOUSE BILL NO. 73                                                                                                             
     "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."                                                                                                        
1:33:38 PM                                                                                                                    
^FY 16  BUDGET OVERVIEW:  DEPARTMENT OF  COMMERCE, COMMUNITY                                                                  
AND ECONOMIC DEVELOPMENT                                                                                                      
1:33:52 PM                                                                                                                    
FRED  PARADY, ACTING  COMMISSIONER, DEPARTMENT  OF COMMERCE,                                                                    
COMMUNITY,  AND  ECONOMIC  DEVELOPMENT  (DCCED),  introduced                                                                    
department  staff.  He  provided a  PowerPoint  presentation                                                                    
titled  "Department  of  Commerce,  Community  and  Economic                                                                    
Development  Department Overview,"  dated  February 5,  2015                                                                    
(copy on file). He  discussed the department organization on                                                                    
slide 2.  The department's  six corporate  entities included                                                                    
the  Alaska Energy  Authority (AEA),  the Alaska  Industrial                                                                    
Development  and   Export  Authority  (AIDEA),   the  Alaska                                                                    
Gasline Development  Corporation (AGDC), the  Alaska Seafood                                                                    
Marketing Institute  (ASMI), the Alcoholic  Beverage Control                                                                    
Board, and  the Regulatory  Commission of Alaska  (RCA). The                                                                    
department's  six  core  divisions  included  Administrative                                                                    
Services; Banking  and Securities; Insurance;  Community and                                                                    
Regional  Affairs; Economic  Development; and  Corporations,                                                                    
Business  and  Professional  Licensing. He  noted  that  the                                                                    
department's mission  was to  promote strong  communities, a                                                                    
healthy  economy, and  to protect  consumers  in Alaska.  He                                                                    
described the department as a  conglomerate, which had a set                                                                    
of functions centering on its mission statement.                                                                                
Acting Commissioner Parady turned to  a pie chart on slide 3                                                                    
showing the department's funding  distribution by agency and                                                                    
division in the  governor's FY 16 amended  budget. The chart                                                                    
illustrated  that the  six corporations  accounted for  $123                                                                    
million of the  budget and the six  core divisions accounted                                                                    
for  $83.5 million.  He remarked  that  of the  department's                                                                    
$207  million  budget, $41  million  resided  in Power  Cost                                                                    
Equalization  (PCE)  funds.  He briefly  highlighted  a  pie                                                                    
chart on slide 4 showing  the DCCED budget by core services;                                                                    
40  percent  of  the  chart  was  allocated  to  sustainable                                                                    
energy, 28 percent went to  economic growth, 18 percent went                                                                    
to  consumer  protection,  and 14  percent  went  to  strong                                                                    
communities.  He addressed  economic growth,  which included                                                                    
the  Division  of  Economic  Development,  AIDEA,  and  ASMI                                                                    
(slide 5).                                                                                                                      
1:36:45 PM                                                                                                                    
Acting Commissioner  Parady continued  to speak  to economic                                                                    
growth, specifically in regards  to the Division of Economic                                                                    
Development (slide 6). The division  processed 261 loans for                                                                    
$29.1  million   across  10  loan  programs,   the  majority                                                                    
included 237 in the  Commercial Fishing Revolving Loan Fund.                                                                    
He  discussed   that  funds  supporting   tourism  marketing                                                                    
resided within the division; the  prior year the legislature                                                                    
had created the Alaska  Tourism Marketing Board, which acted                                                                    
as  an advisory  board to  the division.  He added  that the                                                                    
contracts for tourism marketing  roughly totaled $15 million                                                                    
and  resided in  the division.  Tourism marketing  generated                                                                    
800,000  information requests,  220,000  trips, and  700,000                                                                    
visitors.  He noted  that the  data was  based on  follow up                                                                    
surveys. Additionally, the  Division of Economic Development                                                                    
conducted partnerships  with industry and the  University of                                                                    
Alaska  (UA)  to  support resource  development  efforts  to                                                                    
develop new industry. As an  example he referenced a January                                                                    
1,  2015 report  on unmanned  aircraft systems  and economic                                                                    
development strategy  for Alaska,  which had  been developed                                                                    
in conjunction  with UA-Fairbanks.  The concept was  to take                                                                    
advantage of  Alaska's airspace in  the context  of research                                                                    
on  commercial  applications  of unmanned  aerial  vehicles.                                                                    
Another example  included a  report from  the prior  fall by                                                                    
the Alaska  Maritime Industrial  Support Sector;  the report                                                                    
assessed the  age of  the fishing fleet  and how  to rebuild                                                                    
the  fleet  in Alaska-based  shipyards.  He  noted that  the                                                                    
division   was   also   responsible   for   generating   the                                                                    
mining/minerals report.                                                                                                         
1:38:16 PM                                                                                                                    
Co-Chair  Neuman   recognized  that   Representative  Edgmon                                                                    
joined the committee.                                                                                                           
Co-Chair  Neuman  had spoken  with  members  of the  tourist                                                                    
industry  and had  suggested including  links  to the  state                                                                    
parks website on Alaska  tourism advertisements. He stressed                                                                    
that  state parks  were a  significant part  of the  state's                                                                    
attraction.  He asked  the department  to  help develop  the                                                                    
Acting  Commissioner Parady  appreciated the  suggestion and                                                                    
would follow up on it.                                                                                                          
Co-Chair Neuman referred  to the brand "Made  in Alaska." He                                                                    
thought there  should be shirts,  hats, and other  items for                                                                    
the Alaska state  parks. He thought there  should be further                                                                    
marketing  for the  state. He  believed ASMI  should do  the                                                                    
1:40:42 PM                                                                                                                    
Acting Commissioner  Parady made note of  the suggestion. He                                                                    
remarked that the prior fall a  Made in Alaska home had been                                                                    
constructed  in  Anchorage;  the predominant  materials  had                                                                    
been  manufactured in  Alaska,  including  the wood  floors,                                                                    
cabinets,  windows,  etcetera.  He  turned to  slide  7  and                                                                    
discussed AIDEA on slide 7:                                                                                                     
   · $17.6 million FY2016 dividend approved                                                                                     
   · Nearly $700 million in private sector investment                                                                           
     leveraged (projected)                                                                                                      
   · Projects and investments will create or retain nearly                                                                      
     1,500 construction jobs and over 1,000 permanent jobs                                                                      
Co-Chair Neuman noted that  Representative Pruitt had joined                                                                    
the meeting.                                                                                                                    
Acting  Commissioner Parady  spoke to  ASMI on  slide 8.  He                                                                    
communicated  that  ASMI  was the  "heartbeat"  of  Alaska's                                                                    
primary employment industry;  the fishing industry generated                                                                    
63,000 jobs.  He noted that  the fisheries export  value had                                                                    
been increased to  almost 85 percent to $3.2  billion in the                                                                    
past  ten  years.  He addressed  the  Responsible  Fisheries                                                                    
Management  Initiative and  explained that  Alaska's seafood                                                                    
had  been  "held  hostage"  to  a  third-party  entity  (the                                                                    
Maritime  Stewardship  Council)   that  was  certifying  the                                                                    
sustainability of the  state's fisheries. Consequently, when                                                                    
the   entity  had   certified  that   Russian  Pollock   was                                                                    
sustainable, the  value of the Alaska  Pollock catch dropped                                                                    
by 25 percent.  He reasoned that no one was  more capable of                                                                    
certifying  the sustainability  of  Alaska's fisheries  than                                                                    
Alaska.   He   relayed   that  the   Responsible   Fisheries                                                                    
Management  designation (generated  by ASMI)  was recognized                                                                    
in  the   market.  He  explained  that   the  sustainability                                                                    
designation   was   necessary   to   enter   certain   large                                                                    
procurement chains (e.g. Walmart and others).                                                                                   
Co-Chair  Neuman asked  if ASMI  verified  that fish  coming                                                                    
from   Alaska    were   caught   in    sustainable   fishery                                                                    
environments.  Acting  Commissioner  Parady replied  in  the                                                                    
Co-Chair  Thompson  asked  if   other  entity  continued  to                                                                    
increase the  fees it charged to  certify Alaska's fisheries                                                                    
as  sustainable.  He  asked if  the  entity  had  classified                                                                    
Alaska's fisheries  as unsustainable because Alaska  had not                                                                    
paid the  fee. Acting  Commissioner Parady replied  that the                                                                    
entity had  withdrawn its certification, which  had resulted                                                                    
in the  state losing  market share. However,  the department                                                                    
had created an alternative; the  brand of wild caught Alaska                                                                    
fish was immensely valuable to the state.                                                                                       
Co-Chair  Neuman  spoke  to  his   concern  that  the  Yukon                                                                    
Kuskokwim region  had to stop  subsistence fisheries  due to                                                                    
problems. He noted  that 8 out of 12 stock  of concerns came                                                                    
from the  Susitna River  Valley. He  wondered how  the issue                                                                    
impacted  the  sustainable   fishery  certification.  Acting                                                                    
Commissioner Parady would speak to  ASMI and would follow up                                                                    
with an answer.                                                                                                                 
1:45:26 PM                                                                                                                    
Representative Gara  asked how  many visitors the  state had                                                                    
in  the  year referenced  on  slide  6. Acting  Commissioner                                                                    
Parady replied that he did  not know the specific figure. He                                                                    
added  that  the  information shown  on  slide  6  reflected                                                                    
additional  tourism  generated  from the  state's  marketing                                                                    
effort based on a series of follow-up surveys.                                                                                  
Acting  Commissioner Parady  returned to  slide 8  and noted                                                                    
that the voluntary  fish tax was established  at 0.5 percent                                                                    
of ex-vessel value, which generated  roughly $12 million. He                                                                    
moved  to   slide  10  related  to   affordable  energy.  He                                                                    
communicated that  AEA had dispersed  nearly $40  million in                                                                    
PCE  grant  payments  to  $188  communities  in  FY  14.  He                                                                    
discussed that  PCE subsidized the first  500 kilowatt hours                                                                    
of  energy into  a  home.  He elaborated  that  the RCA  was                                                                    
responsible   for  certifying   the  utilities   as  meeting                                                                    
required criteria and being eligible  for a subsidy. He read                                                                    
from slide 10:                                                                                                                  
   · 53 of 114 rural power system upgrades completed                                                                            
   · 22 projects funded through the Emerging Energy                                                                             
     Technology Fund program                                                                                                    
   · Annual fuel savings from the Renewable Energy Fund                                                                         
     projected to be 20 million gallons of diesel                                                                               
     equivalent in 2016                                                                                                         
Co-Chair  Neuman noted  the  absence  of a  list  of the  22                                                                    
projects funded through the  Emerging Energy Technology Fund                                                                    
that  had been  completed  and  how much  it  could cost  to                                                                    
complete the remaining projects.  He stressed that the slide                                                                    
did   not   contain   any  financial   information.   Acting                                                                    
Commissioner  Parady   replied  that  he  would   provide  a                                                                    
spreadsheet with the detailed information.                                                                                      
Representative  Edgmon   noted  that  the   Emerging  Energy                                                                    
Technology  Fund  had  not  been   funded  the  prior  year;                                                                    
therefore, he  reasoned that  the 22  projects went  back at                                                                    
least  two years.  He relayed  that he  sat on  the advisory                                                                    
committee for the Renewable Energy  Grant Fund and explained                                                                    
that  the  fund had  done  some  great  things, but  with  a                                                                    
decreasing  amount of  funding; prior  funding had  been $22                                                                    
million,  and the  funding  recommendation  for the  current                                                                    
year was $15 million.                                                                                                           
Representative  Gattis requested  a  list  of projects  that                                                                    
were not  on the list of  22 projects that were  needed. She                                                                    
wondered which  projects had been  funded that had  not been                                                                    
successful.  She used  an emergency  generator situation  in                                                                    
Tuluksak, Alaska as an example.                                                                                                 
1:49:22 PM                                                                                                                    
Acting Commissioner Parady would follow  up. He spoke to the                                                                    
AGDC on slide 11. He relayed  that AGDC continued on work to                                                                    
synchronize the  timing of the AKLNG  [Alaska Liquid Natural                                                                    
Gas]  and ASAP  (Alaska Stand  Alone Pipeline)  projects. He                                                                    
noted that  the state  had completed the  ASAP Class  3 cost                                                                    
estimate  (+/- 20  percent), which  had produced  new burner                                                                    
tip estimates of  $11.50 to $14.00 for  Fairbanks and $11.50                                                                    
to   $14.50  for   Anchorage.  He   communicated  that   the                                                                    
synchronization of the two projects was ongoing.                                                                                
Co-Chair  Neuman noted  that the  agencies would  present to                                                                    
the  committee  in  the future  regarding  their  individual                                                                    
Acting  Commissioner  Parady  turned  to slides  12  and  13                                                                    
pertaining  to  strong  communities  and  the  role  of  the                                                                    
Division of  Community and Regional Affairs.  He shared that                                                                    
state  statute   (Article  10   Section  14)   required  the                                                                    
existence of  a state agency  to support the  development of                                                                    
capacity in local government. He  detailed that the division                                                                    
had  40 local  government specialists  and grants  personnel                                                                    
located in  six regional  offices; the division  visited 150                                                                    
to  170  communities  annually and  provided  rural  utility                                                                    
business advisor  services, bulk fuel loans,  local boundary                                                                    
commission, municipal land trust,  Quick Books training, and                                                                    
other  for  rural  communities. He  shared  that  the  local                                                                    
boundary commission approved the  incorporation of Edna Bay,                                                                    
creating Alaska's first new city  in ten years. He noted the                                                                    
supplemental   request    of   $75,000   for    Edna   Bay's                                                                    
organization,  which was  statutorily  required ($50,000  in                                                                    
year  one,  and  $25,000  in year  two).  The  division  had                                                                    
distributed $85  million to 307 communities  through revenue                                                                    
sharing and  other programs (i.e.  payment in lieu  of taxes                                                                    
(PILT),   national   forest  receipts,   shared   fisheries,                                                                    
business  tax,  and  fisheries resource  landing  tax).  The                                                                    
division  was working  to cross-train  its staff  to deliver                                                                    
secondary information  and assistance to  local governments.                                                                    
For  example, the  trained  staff  could assist  communities                                                                    
with  arrearages  in   their  Public  Employees'  Retirement                                                                    
System  (PERS)   accounts  by   connecting  them   with  the                                                                    
appropriate person.                                                                                                             
Co-Chair Neuman discussed that revenue  sharing had not been                                                                    
funded in the governor's  proposed budget. He believed there                                                                    
was  a  good  possibility  that  revenue  sharing  would  be                                                                    
eliminated altogether  given the deficits facing  the state.                                                                    
He wondered how the state  would pay for assistance provided                                                                    
to communities  for essential services.  He remarked  on the                                                                    
$87 million distributed  to 307 communities that  may not be                                                                    
receiving  any money  in  the future.  He  wondered how  the                                                                    
department would  help communities  prepare for the  loss in                                                                    
Acting  Commissioner Parady  replied  that  it would  depend                                                                    
partially  on the  actions  of the  legislature  as to  what                                                                    
options would  be available. He  recognized that all  of the                                                                    
budget decisions the legislature  was considering were tight                                                                    
and interconnected.  He reasoned that the  community revenue                                                                    
sharing funds were distributed based  on the balance on June                                                                    
30. He detailed that the draw  had been $57 million the past                                                                    
year; if  the amount  could be  replenished, the  draw would                                                                    
continue at  the same  rate; however, if  it was  reduced it                                                                    
would lead  to reduced  community revenue sharing  funds. He                                                                    
recently learned  that the  community revenue  sharing funds                                                                    
were distributed to each community  and then on a per capita                                                                    
basis, which meant  the impact of the  reduced funding level                                                                    
would be felt in the more populated areas first.                                                                                
Co-Chair  Neuman  remarked   that  the  governor's  proposed                                                                    
budget did  not include  revenue sharing funds.  He wondered                                                                    
if the  department would assist communities  in dealing with                                                                    
the loss of funds.                                                                                                              
1:56:23 PM                                                                                                                    
Acting Commissioner  Parady replied that he  would follow up                                                                    
on the question.                                                                                                                
Co-Chair Thompson  remarked that  without any  funding there                                                                    
would  be $54  million to  distribute in  the current  year,                                                                    
around $30 million the following  year, $17 million the year                                                                    
after, and  would then  go down  to zero.  He referred  to a                                                                    
list showing that  revenue sharing accounted for  as much as                                                                    
94  percent of  the  budget in  some  small communities.  He                                                                    
believed  that without  the funding  many communities  would                                                                    
have to  close their doors.  He remarked that there  were no                                                                    
bankruptcy  laws  for  a community;  there  was  nothing  in                                                                    
statute  showing   what  would  happen  to   the  assets  or                                                                    
outlining who  would take care  of them. He added  that some                                                                    
of the  communities had bond  payments the state  would have                                                                    
to take over. He stressed  that there were many consequences                                                                    
that would result from an  absence of revenue sharing funds,                                                                    
which required consideration.                                                                                                   
Acting  Commissioner Parady  responded that  he had  studied                                                                    
the  spreadsheet  on  the  percentage  of  each  community's                                                                    
budget was  funded by revenue  sharing. He agreed  that some                                                                    
communities depended on revenue  sharing for over 90 percent                                                                    
of  their  budget.  He had  not  recognized  the  bankruptcy                                                                    
complications and believed the issue needed further study.                                                                      
Representative  Edgmon   relayed  that  for   his  district,                                                                    
revenue  sharing fell  into the  core services  category. He                                                                    
clarified that revenue sharing was  funded at $57 million in                                                                    
the  governor's current  budget,  even though  no money  was                                                                    
being  added to  the fund  itself. He  noted that  the prior                                                                    
year it had been funded at $52 million.                                                                                         
Representative  Wilson believed  there had  been a  point in                                                                    
time when revenue sharing had  not existed. She wondered how                                                                    
communities had  become reliant on  the funds. She  asked if                                                                    
there  had been  federal funds  communities had  received in                                                                    
the past that were no  longer available, which had increased                                                                    
reliance on revenue sharing.                                                                                                    
Acting  Commissioner Parady  replied that  Edna Bay  was the                                                                    
first new  community incorporated within the  past ten years                                                                    
and revenue sharing had returned  within that period. He did                                                                    
not believe  there had been communities  forming for revenue                                                                    
sharing in the past decade.                                                                                                     
Co-Chair Neuman  also questioned whether the  Local Boundary                                                                    
Commission had planned on having  revenue sharing as part of                                                                    
its governmental organization funds.                                                                                            
Representative Gara  noted that  revenue sharing would  be a                                                                    
conundrum  for  all  legislators. He  agreed  with  Co-Chair                                                                    
Thompson that  the issue was especially  important for small                                                                    
communities.  He   thought  it  would  be   useful  for  the                                                                    
department to  provide a history  of revenue sharing  to the                                                                    
committee. He stated  that it had been over  $100 million at                                                                    
one point in  time. He surmised that  communities that could                                                                    
afford it the  most would have to take some  of the hits. He                                                                    
believed  a  significant  discussion was  necessary  on  the                                                                    
Co-Chair Neuman  referred to  a recent  meeting he  had with                                                                    
the  commissioner  about  communities  and  the  budget.  He                                                                    
remarked  on  DCCED's   mission  statement,  which  included                                                                    
strong communities.  He discussed an example  of a community                                                                    
where the school  was the nucleus that provided  a place for                                                                    
exercise and all types of  community gatherings. He wondered                                                                    
if the  department was working  on a  plan to deal  with the                                                                    
situation  given  the budget  deficit.  He  stated that  the                                                                    
legislators   were  citizen-based   and   depended  on   the                                                                    
department's recommendations  to the  committee. He  had not                                                                    
heard a plan as of yet.                                                                                                         
Acting Commissioner  Parady shared that  in the past  he had                                                                    
worked  as   the  chief  operating  officer   for  a  school                                                                    
district.  He agreed  that schools  were a  hub for  wedding                                                                    
receptions,  funerals, sporting  events, Head  Start, meals,                                                                    
and  other. He  remarked  that one  of  the conundrums  that                                                                    
would face  legislators was related to  school financing and                                                                    
the loss  of federal  receipts for communities.  He believed                                                                    
the question  was well  placed and  needed answering  by the                                                                    
department. He  relayed that the department  would follow up                                                                    
on the question.                                                                                                                
Co-Chair Neuman relayed  that there was a  limited amount of                                                                    
funding to  distribute between  all departments,  which made                                                                    
receiving the information important.                                                                                            
2:02:45 PM                                                                                                                    
Acting Commissioner Parady returned  to slide 13 and relayed                                                                    
that  the Division  of Community  and  Regional Affairs  had                                                                    
1,929  capital grants  open with  a total  of $2  billion in                                                                    
awards.  He  detailed   that  the  named-entity  legislative                                                                    
grants  resided  in  the   division  and  were  administered                                                                    
efficiently and  effectively. He added that  the grants were                                                                    
administered  with  a  passion   for  helping  people  solve                                                                    
problems. He noted that the  grants had a five-year lifetime                                                                    
and he  expected the numbers  to be shrinking.  He concluded                                                                    
that the  current grants  were still in  the pipeline  to do                                                                    
good work.                                                                                                                      
Representative  Guttenberg  addressed broadband  access.  He                                                                    
spoke  to the  broadband  task-force  DCCED had  formulated,                                                                    
that had  come out with  a $1  billion price tag.  He stated                                                                    
that  salmon  fishing,  marketing,  school  districts,  AEA,                                                                    
remote energy projects, and everything  the state touched on                                                                    
was helped  or hindered by broadband.  He believed broadband                                                                    
was  in  an abysmal  state  in  Alaska.  He noted  that  his                                                                    
broadband  capability  was  marginal  at best  in  his  home                                                                    
outside of Fairbanks. He stated  that broadband needed to be                                                                    
strengthened  to  build a  strong  state  and community.  He                                                                    
remarked  that much  of  what was  needed  was currently  in                                                                    
place due to the telecommunication  industry, but much of it                                                                    
needed  a  link to  make  the  chain  longer. He  urged  the                                                                    
department  to  work  on  a  plan. He  stated  that  it  was                                                                    
pointless to  provide students with  technology if  they did                                                                    
not have the  ability to access the  internet. He emphasized                                                                    
the  importance of  more reliable  and  faster internet.  He                                                                    
understood  that  it may  not  be  possible to  implement  a                                                                    
strategy at present,  but he believed it was  needed for the                                                                    
Acting  Commissioner Parady  linked  back to  Representative                                                                    
Gattis's comments on the Tuluksak  generator. He stated that                                                                    
in  a more  ideal broadband  world it  would be  possible to                                                                    
remotely monitor  various power  systems. He shared  that in                                                                    
Nuiqsut, Alaska there  had been a project  to distribute gas                                                                    
in the community, which had  a remote capacity. He continued                                                                    
that Alaska  was working to  achieve 10 megabits  per second                                                                    
(mbps) when the rest of the  country had speeds of 100 mbps.                                                                    
He  agreed  that  Alaska  was  woefully  behind  related  to                                                                    
broadband speed. He would continue to address the issue.                                                                        
2:06:43 PM                                                                                                                    
Acting Commissioner Parady  discussed consumer protection on                                                                    
slide 14.  He detailed  that consumer  protection activities                                                                    
were regulations that were applied  to protect the consumers                                                                    
of Alaska.  He spoke to  the Alcohol Beverage  Control (ABC)                                                                    
Board on  slide 15;  its mission was  to protect  the public                                                                    
from  alcoholic  beverage  abuse  by  enforcing  state  laws                                                                    
regulating  alcoholic beverage  commerce. There  were nearly                                                                    
1,900  active  liquor licenses  in  2014.  He believed  that                                                                    
since the board's transition to  DCCED, the agency was doing                                                                    
a  good  job straddling  the  divide  between public  health                                                                    
substance  abuse  concerns   and  the  responsible  industry                                                                    
concerns. He  spoke highly of  the board's  current director                                                                    
Cynthia Franklin. He addressed  a two-year effort to rewrite                                                                    
Title 4 (with  60 or 70 stakeholders); the  rewrite would be                                                                    
before the committee  later in the day. He  relayed that the                                                                    
timing  would provide  a  useful  foundation and  transition                                                                    
into the upcoming marijuana regulations.                                                                                        
Vice-Chair Saddler asked if there  was any diminution of the                                                                    
effectiveness of the  ABC Board as a  public safety function                                                                    
since  its transfer  from the  Department of  Public Safety.                                                                    
Acting  Commissioner  Parady  replied in  the  negative.  He                                                                    
believed  the transition  had gone  well.  He remarked  that                                                                    
there  had  been some  "sweat  equity"  amongst people  with                                                                    
differing views throughout the process,  but he believed the                                                                    
result had been strengthening.                                                                                                  
Vice-Chair Saddler  asked if there  was a  stronger function                                                                    
in collaboration  with the industry (i.e.  increased support                                                                    
for    the   industry's    business   operations).    Acting                                                                    
Commissioner   Parady   replied   that   there   were   some                                                                    
compromises  represented in  the  Title  4 legislation.  One                                                                    
compromise  was related  to the  consumption  of alcohol  by                                                                    
minors;  the   penalty  was  lessened,   but  it   was  more                                                                    
universally  enforceable.  He  explained  that  the  penalty                                                                    
under  current   statute  was  difficult  for   officers  to                                                                    
implement; therefore,  there was not always  follow through.                                                                    
He furthered  that by decreasing  the offense and  making it                                                                    
easier to  implement, the accuracy  of the record  of minors                                                                    
and adults providing minors with  alcohol would increase. He                                                                    
noted the  department's excitement  at bringing the  Title 4                                                                    
rewrite before the committee.                                                                                                   
Vice-Chair  Saddler  remarked  that   there  had  been  some                                                                    
concern  about  the transfer  of  the  ABC Board  to  DCCED;                                                                    
therefore, he was  glad to hear things were  going well from                                                                    
a public safety standpoint.                                                                                                     
Representative  Gara  recalled  a  presentation  by  several                                                                    
pipeline   companies.  He   remarked   that  one   company's                                                                    
representative had  told the committee that  the state would                                                                    
be rich  if their  company was chosen.  He stated  there had                                                                    
been a  similar tenor  in some of  the marijuana  debate; if                                                                    
the  marijuana initiative  became  law, the  state would  be                                                                    
able  to  levy taxes  on  the  substance.  He asked  if  the                                                                    
administration   anticipated    presenting   marijuana   tax                                                                    
legislation in the current year.                                                                                                
Acting  Commissioner  Parady  replied in  the  negative.  He                                                                    
detailed that the department was  in a nine-month regulatory                                                                    
writing  process.  He  furthered  that  the  bill  draft  to                                                                    
develop the marijuana control board  had opened that day. He                                                                    
detailed  that conceptually  the department  was working  to                                                                    
house an alcohol  and a marijuana board under  the ABC Board                                                                    
agency. The department was  also considering reassigning its                                                                    
experienced alcohol  examiners to  marijuana and  hiring new                                                                    
alcohol  examiners, given  that the  alcohol functions  were                                                                    
well established.  He communicated  that the  department was                                                                    
beginning  to  think  its way  through  the  regulatory  and                                                                    
operating process. He could not  speak to the tax component,                                                                    
which was under the purview of the Department of Revenue.                                                                       
2:11:40 PM                                                                                                                    
Representative Gara  asked if commercial sales  of marijuana                                                                    
would  begin with  no tax  implemented. Acting  Commissioner                                                                    
Parady replied in  the negative. He stated that  work was in                                                                    
Co-Chair  Neuman asked  for the  amount of  the supplemental                                                                    
PSUM request (slide 15).  Acting Commissioner Parady replied                                                                    
that  the request  was for  $785,000. Co-Chair  Neuman asked                                                                    
for the meaning of  PSUM. Acting Commissioner Parady replied                                                                    
that the acronym stood for  the production, sale, and use of                                                                    
marijuana.   He   wondered   what  would   happen   if   the                                                                    
supplemental  was not  approved. Acting  Commissioner Parady                                                                    
replied that a  denial of the funds would  essentially be an                                                                    
unallocated  cut to  the  department.  The department  would                                                                    
have  to perform  the functions;  therefore, he  would cross                                                                    
that bridge  when he came to  it down the road  if the funds                                                                    
were not approved.                                                                                                              
Co-Chair  Neuman  replied   that  the  administration  could                                                                    
introduce legislation  that would  go through  the committee                                                                    
and public  process to determine  the need, how it  would be                                                                    
implemented, and who would be on the board.                                                                                     
Acting  Commissioner  Parady  was  aware  of  a  bill  draft                                                                    
regarding a [marijuana]  board. He added that  the issue was                                                                    
governed  by the  [voter] initiative.  He stated  that there                                                                    
were issues  in the area  that he  had never dreamed  of. He                                                                    
turned to  slide 16 pertaining  to the RCA.  He communicated                                                                    
that  the  RCA  had  significantly  improved  processes  and                                                                    
minimized costs  to ratepayers and companies  by enabling e-                                                                    
filing. He noted that e-filing  was currently being extended                                                                    
to small rural telephone companies.  He relayed that the RCA                                                                    
collaborated  with  the  Regulatory  Assistance  Project  to                                                                    
lower costs and to certify  utilities for compliance for the                                                                    
PCE  Fund,  which led  to  distributions.  He discussed  the                                                                    
Division of Banking and Securities on slide 17:                                                                                 
   · Contributed $13.2 million of licensing fee and fine                                                                        
     receipts to the general fund                                                                                               
  · Facilitated $95.0 in restitution payments to Alaskans                                                                       
   · License, register, charter and examine:                                                                                    
        o Investments and Securities firms, registrations                                                                       
          and filings                                                                                                           
        o ANCSA proxy filings and inquiries                                                                                     
        o Mortgage broker/lenders                                                                                               
        o Money    service     businesses    (e.g.,    money                                                                    
          transmitters, currency exchangers)                                                                                    
        o State depository and nondepository institutions                                                                       
   · Sponsored the Anchorage Fraud Summit in September 2013                                                                     
Vice-Chair Saddler referred  back to slide 16  and asked for                                                                    
information about the  Regulatory Assistance Project. Acting                                                                    
Commissioner Parady replied that  the project was a national                                                                    
Vice-Chair Saddler asked  if the project came at  no cost to                                                                    
the  state   or  had  associated  federal   funding.  Acting                                                                    
Commissioner Parady  replied that the project  was federally                                                                    
funded. He offered to provide additional detail.                                                                                
Vice-Chair  Saddler asked  how well  the RCA  was doing.  He                                                                    
referred  to  work  on   the  pipeline  reauthorization.  He                                                                    
wondered if  the agency  was working  efficiently and  if it                                                                    
had any  needs. Acting  Commissioner Parady replied  RCA was                                                                    
stable. The  agency had  a range of  rate filings  and other                                                                    
cases  before it,  but the  chairman had  not indicated  any                                                                    
2:15:51 PM                                                                                                                    
Acting  Commissioner   Parady  discussed  the   Division  of                                                                    
Corporations, Business and  Professional Licensing (CBPL) on                                                                    
slide  18.  He  detailed  that there  were  68,000  business                                                                    
licenses, 67,000 professional  licenses, slightly over 6,500                                                                    
corporation licenses,  and 43  licensing programs.  He noted                                                                    
that the agency  generated fees. He relayed  that the number                                                                    
of professional licenses  were up 5 percent  since 2013, its                                                                    
open-to-close case  time had decreased  by half, and  it had                                                                    
worked  hard  to  control internal  costs  to  reduce  legal                                                                    
expenses  by 34  percent.  The issues  had  been before  the                                                                    
Legislative Budget  and Audit Committee; by  controlling the                                                                    
indirect  costs there  was a  strong effort  to control  the                                                                    
rate   of   increase   in   professional   licenses,   which                                                                    
represented a success for the division.                                                                                         
Representative  Wilson asked  if all  of the  state's boards                                                                    
were under  CBPL. Acting Commissioner Parady  replied in the                                                                    
negative. For example, teachers were not included.                                                                              
Representative Wilson  thought there  were a  couple hundred                                                                    
boards. Acting  Commissioner Parady replied that  there were                                                                    
43   boards,  3   of  which   were  new   including  massage                                                                    
therapists, behavior analysts, and contractors.                                                                                 
Representative Wilson asked if the  43 boards were all self-                                                                    
sufficient.  Acting  Commissioner   Parady  replied  in  the                                                                    
negative; however,  substantial progress  had been  made. He                                                                    
added that  the department was awaiting  further scrutiny of                                                                    
the  issues by  Representative  Pruitt  and the  legislative                                                                    
budget subcommittee for the department.                                                                                         
Vice-Chair Saddler  communicated that there  were regulatory                                                                    
and  professional  licensing  boards and  approximately  170                                                                    
advisory boards.                                                                                                                
Representative  Wilson asked  if the  other advisory  boards                                                                    
fell  under a  specific agency.  Acting Commissioner  Parady                                                                    
replied   that  the   boards   were   housed  across   state                                                                    
government. He noted that the  43 professional licenses were                                                                    
housed in CBPL.                                                                                                                 
2:19:05 PM                                                                                                                    
Acting  Commissioner  Parady  turned   to  the  Division  of                                                                    
Insurance on slide 19:                                                                                                          
  · Over $3.4 billion in total premium written in CY2013                                                                        
   · Collected $64 million in taxes and fees in FY2014                                                                          
   · Issued 47,376 licenses, an increase of almost 8                                                                            
     percent over FY2013                                                                                                        
   · Opened and closed 245 of 300 complaints, a closure                                                                         
     rate of 85 percent                                                                                                         
   · $216.0 returned to consumers in FY2014                                                                                     
   · Opened 79 and closed 115 investigations                                                                                    
   · Conducted first joint investigation with the Division                                                                      
     of Banking and Securities                                                                                                  
Acting  Commissioner Parady  elaborated that  the department                                                                    
was working diligently  to synergize investigative resources                                                                    
across  its  divisions.  He  spoke  to  challenges  for  the                                                                    
department on slide 20:                                                                                                         
   · High cost of energy impacts residents, businesses and                                                                      
     economic development efforts                                                                                               
   · Gaps in critical infrastructure including roads,                                                                           
     ports, communications, processing facilities                                                                               
   · Uncertainty hampering private investment                                                                                   
   · Maintain awareness in national and international                                                                           
     markets about Alaska products and services                                                                                 
   · Geographic scale impacts logistics and transportation                                                                      
   · New program responsibilities (PSUM)                                                                                        
Acting  Commissioner  Parady  provided  a  lookback  of  the                                                                    
department's  budget  on  slide  21. The  FY  16  governor's                                                                    
amended  budget  was  slightly  below  $207  million,  which                                                                    
represented a decrease of  approximately $7.5 million. There                                                                    
was  a  decrease in  unrestricted  general  fund from  $40.5                                                                    
million  to $35.5  million, which  represented an  8 percent                                                                    
decrease.  He provided  a  lookback of  the  DCCED share  of                                                                    
total agency  operations from 2007 to  present (general fund                                                                    
only)  on slide  22.  The department  accounted for  between                                                                    
2.16  and  3.06  percent  of  total  agency  operations;  it                                                                    
accounted for 2.37 percent in  the current year. He moved to                                                                    
another lookback  on slide  23 showing  DCCED appropriations                                                                    
(general fund  only) by division.  He pointed to a  spike in                                                                    
the purple line representing AEA  in 2009 where PCE had been                                                                    
fully funded with an additional  $23 million. A spike in the                                                                    
blue line  representing ASMI indicated  the reclassification                                                                    
of its funds from general fund.                                                                                                 
CATHERINE   REARDON,  DIRECTOR,   DEPARTMENT  OF   COMMERCE,                                                                    
COMMUNITY AND ECONOMIC DEVELOPMENT,  clarified that the ASMI                                                                    
funds  were  reclassified  from general  fund  to  statutory                                                                    
designated program receipts.                                                                                                    
Acting  Commissioner  Parady  addressed a  historical  chart                                                                    
slide 24  representing DCCED appropriations (all  funds). He                                                                    
noted  that similar  spikes in  appropriations occurred  for                                                                    
similar reasons.  He discussed economic growth  on slide 25.                                                                    
The department's  target was  to create  or retain  500 jobs                                                                    
annually.  He  expressed   dissatisfaction  with  the  chart                                                                    
because the target  did not move; he did not  believe it was                                                                    
aggressive enough.  He noted that  the chart  represented an                                                                    
artifact of  past choices, which he  believed the department                                                                    
needed to revisit.                                                                                                              
2:22:58 PM                                                                                                                    
Acting  Commissioner Parady  addressed slide  26 related  to                                                                    
the  department's ability  to support  municipal governments                                                                    
in their  ability to provide essential  public services. The                                                                    
percentage of  local governments providing  essential public                                                                    
services had  moved up towards  100 percent,  which remained                                                                    
the department's target. The chart  data included basic life                                                                    
services  such as  clean drinking  water, power  plants, and                                                                    
Vice-Chair Saddler pointed to  slide 25 related to retaining                                                                    
jobs. He  wondered how  to measure  how well  the department                                                                    
was retaining existing jobs. He  believed it would allow the                                                                    
department  to claim  credit for  the vast  majority of  the                                                                    
jobs that  would remain.  Acting Commissioner  Parady agreed                                                                    
and believed the chart was  ill founded. He relayed that the                                                                    
chart data stemmed largely from  AIDEA and was correlated to                                                                    
the  agency's  loan  programs,  which a  subset  of  a  more                                                                    
specific target.                                                                                                                
Representative  Gara saw  a gap  in some  of the  numbers on                                                                    
slide 6.  He looked  at the  bullet indicating  that tourism                                                                    
marketing had  generated 700,000 visitors. He  stated that a                                                                    
person  doing  an internet  search  about  travel to  Alaska                                                                    
could  end up  on a  car  rental, fishing  guide, hotel,  or                                                                    
private  website. He  reasoned  that just  because a  person                                                                    
visited the state's travel website  did not mean the website                                                                    
was  responsible  for the  person's  decision  to visit  the                                                                    
state.  He wondered  if the  department  could convince  the                                                                    
committee  that  the  700,000 visitors  would  not  come  to                                                                    
Alaska if they did not visit the state's website.                                                                               
Acting Commissioner  Parady answered  that the data  was not                                                                    
website generated.  He explained the department  sent follow                                                                    
up  surveys   of  the  800,000  individuals   who  requested                                                                    
information.  The   survey  looked   at  how  many   of  the                                                                    
individuals came to the state  and how many trips they took.                                                                    
He  believed the  information was  germane  directly to  the                                                                    
information  requests.  He agreed  that  people  may take  a                                                                    
multi-pronged  approach, which  could also  include internet                                                                    
searches. He offered to follow up with additional detail.                                                                       
Co-Chair  Thompson  noted that  the  state  was putting  $15                                                                    
million to  $16 million into tourism  marketing. He remarked                                                                    
that the  tourism industry  claimed that  one of  the cruise                                                                    
lines was  spending $50 million  to bring people  to Alaska.                                                                    
He wondered if there  was anything showing other advertising                                                                    
that brought people to Alaska  and how much those industries                                                                    
spent on  top of what  the state spent.  Acting Commissioner                                                                    
Parady replied that he would follow up on the question.                                                                         
Representative Munoz  asked for  detail on proposed  cuts to                                                                    
the department. Acting Commissioner  Parady replied that the                                                                    
department's budget had just  been published. The department                                                                    
had worked to reduce vacant  positions and to reduce program                                                                    
funding when possible; some of  the reductions were included                                                                    
in various  components of the department's  funding streams,                                                                    
but were not generally associated with staff reductions.                                                                        
HANNAH  LAGER,  BUDGET   MANAGER,  DEPARTMENT  OF  COMMERCE,                                                                    
COMMUNITY  AND   ECONOMIC  DEVELOPMENT,  replied   that  the                                                                    
department had  focused on  general fund  cuts to  reach the                                                                    
target requested by  the administration. Additionally, DCCED                                                                    
had looked at  places where the budget was  over inflated by                                                                    
things like  receipts that it  was not  actually collecting.                                                                    
The department  had focused on  where it had  absorbed costs                                                                    
and duties performed  by positions it was  not filling; some                                                                    
had  not  been  filled  in  quite some  time  and  had  been                                                                    
deleted. She relayed that more  detail was published online.                                                                    
The strategy  had been to  make reductions  while minimizing                                                                    
the  impact on  existing employees  and maximizing  services                                                                    
provided to the public.                                                                                                         
Representative Munoz asked how  many positions Ms. Lager was                                                                    
speaking  about.  Ms.  Lager  replied  that  four  full-time                                                                    
positions had  been deleted from  the budget and  there were                                                                    
many the department was planning to hold vacant.                                                                                
Representative  Munoz asked  for  the  anticipated ASMI  and                                                                    
tourism  marketing  increments  in  the  governor's  amended                                                                    
budget.  Ms.  Lager  replied that  the  tourism  budget  had                                                                    
initially  been $15.2  million  (general  funds), which  had                                                                    
been reduced  to approximately  $12.5 million.  The proposed                                                                    
ASMI  budget had  been  reduced from  $7.3  million to  $6.3                                                                    
Co-Chair   Neuman    thanked   the   department    for   its                                                                    
2:29:39 PM                                                                                                                    
AT EASE                                                                                                                         
2:33:16 PM                                                                                                                    
^FY 15 GOVERNOR'S SUPPLEMENTAL BUDGET OVERVIEW                                                                                
2:33:22 PM                                                                                                                    
PAT  PITNEY,  DIRECTOR,  OFFICE  OF  MANAGEMENT  AND  BUDGET                                                                    
(OMB),  OFFICE  OF THE  GOVERNOR,  provided  a chart  titled                                                                    
"FY2015  Supplemental Bill"  (copy on  file). She  addressed                                                                    
page 1  and relayed  that the most  significant item  was on                                                                    
line 6 for the production,  sale, and use of marijuana under                                                                    
the  Alcoholic Beverage  Control (ABC)  Board for  $785,000.                                                                    
The page  included three smaller  increments on lines  2, 4,                                                                    
and 5  related to  Affordable Care Act  reporting compliance                                                                    
and caseload  for the Public  Defender Agency and  Office of                                                                    
Public Advocacy.                                                                                                                
Co-Chair Neuman  noted that some  additional money  had been                                                                    
allocated   to   caseworkers   in  a   bill   sponsored   by                                                                    
Representative Gara. He noted  that money had been allocated                                                                    
to  foster care  recipients aged  16 to  21; there  had been                                                                    
additional costs associated due  to the caseload backlog and                                                                    
Representative    Kawasaki   remarked    that   the    DCCED                                                                    
commissioner  had testified  that if  the increment  for the                                                                    
ABC Board  was not approved  it would be an  unallocated cut                                                                    
to the  department. He noted  that the increment  related to                                                                    
the production, sale, and use  of marijuana did not show the                                                                    
revenue side of  the equation. He wondered  if revenue would                                                                    
be reflected in the FY  16 budget. Ms. Pitney indicated that                                                                    
revenue had not been estimated  for FY 16. Revenue would not                                                                    
be  reflected in  the chart  currently before  the committee                                                                    
because it pertained only to  the FY 15 supplemental budget.                                                                    
The potential  revenue had been  estimated at $2  million to                                                                    
$20 million. The administration  was assuming that the first                                                                    
year of  implementation would  not be  cost neutral;  it was                                                                    
anticipated that much would be  learned in the first four to                                                                    
six months of  the implementation. She hoped that  the FY 16                                                                    
supplemental  would show  a $20  million  revenue line  item                                                                    
[related to marijuana revenue].                                                                                                 
2:38:17 PM                                                                                                                    
Representative Wilson  pointed to  lines 4 and  5 on  page 1                                                                    
related  to  the  Office  of   Public  Advocacy  and  Public                                                                    
Defender Agency caseload backlogs.  She asked if any headway                                                                    
had  been  made  on  the  backlog  or  if  it  continued  to                                                                    
increase.  She presumed  an increment  would be  included in                                                                    
the  budget the  following  year.  She requested  additional                                                                    
Co-Chair Neuman believed a backlog  had been created because                                                                    
there were  new applicants in  the foster care  program that                                                                    
had   been  expanded   via  legislation.   He  stated   that                                                                    
Representative Gara would know more about the situation.                                                                        
Ms.   Pitney   relayed  that   she   would   follow  up   on                                                                    
Representative Wilson's question.                                                                                               
Representative  Gattis asked  about a  $2 million  education                                                                    
increment  on  page 1,  line  7.  She  wondered how  the  $2                                                                    
million figure had been  derived. Additionally, she wondered                                                                    
how the  money would be  distributed (e.g. based  on Average                                                                    
Daily Membership). She wondered  how and where the increment                                                                    
would fit in the budget.                                                                                                        
Ms.  Pitney  answered  that the  Public  School  Trust  Fund                                                                    
contained  earnings, which  were  reinvested  back into  the                                                                    
fund;  the money  was spent  first from  the trust  and then                                                                    
from  the  general  fund  for  any  additional  amount.  She                                                                    
explained that  when $2 million  was put into the  trust, it                                                                    
meant $2 million less would  be taken from the general fund.                                                                    
The  increment   accounted  for   the  earnings   that  were                                                                    
currently accrued into the trust.                                                                                               
Ms.  Pitney  moved to  page  2,  line  8 that  contained  an                                                                    
increment for  the wood bison  transport. She  detailed that                                                                    
legislation had  been worked on  the prior session  to allow                                                                    
receipt  of   federal  funds  to  conduct   the  wood  bison                                                                    
transport. She looked  at lines 9 through 11  related to the                                                                    
growing   number  of   children  in   foster  care   due  to                                                                    
legislation  that increased  the maximum  age children  were                                                                    
allowed to remain in care.  The request was based on program                                                                    
changes  and in  the  acceptance of  social security  income                                                                    
associated with clients involved.                                                                                               
Representative   Gara  asked   for  verification   that  the                                                                    
increment was  based on  an increase in  the number  of kids                                                                    
coming  into care.  Ms. Pitney  replied in  the affirmative.                                                                    
She  detailed that  line  9  represented additional  revenue                                                                    
collected as well and the ability to accept the revenue.                                                                        
2:42:34 PM                                                                                                                    
Representative   Gara   spoke   to  the   purpose   of   the                                                                    
supplemental budget. He addressed  foster care and discussed                                                                    
that  social workers  with caseloads  that  were 50  percent                                                                    
higher  than they  could handle,  could not  get their  jobs                                                                    
done. The social  workers could not get  kids into adoption,                                                                    
which would save the state  money. He wondered why there was                                                                    
never supplemental money to help with the issue.                                                                                
Ms.  Pitney replied  that  line 11  related  to the  growing                                                                    
number of subsidized adoptions and guardianships.                                                                               
Representative Gara  remarked that there were  currently 849                                                                    
kids waiting for adoption.                                                                                                      
Representative Wilson  stated that  the state  was providing                                                                    
funds to  parents once  a child was  adopted and  the number                                                                    
was increasing. She  wondered at what age in  a child's life                                                                    
the state  stopped paying the  funds. She wondered  how many                                                                    
children  were included  in the  category.  She believed  it                                                                    
should  be  possible  to  ascertain  a  more  accurate  cost                                                                    
figure. She remarked that the  cost was another $1.7 million                                                                    
in the  current year.  She noted the  cost was  for children                                                                    
who had been adopted. She  assumed the state would still pay                                                                    
the amount annually.                                                                                                            
Ms.  Pitney  replied  that  she   would  follow  up  on  the                                                                    
question. She  moved to page  3, line 12 that  contained the                                                                    
largest  supplemental item,  which totaled  $92 million  for                                                                    
Medicaid  advanced  payments.  She detailed  that  the  item                                                                    
related to charges  incurred in FY 14 as a  result of system                                                                    
limitations   at  the   time.   She   elaborated  that   the                                                                    
expenditures had not been booked  or charged relative to the                                                                    
financial statement; therefore, the  charges had rolled over                                                                    
to FY 15  and $114 million in general fund  for Medicaid had                                                                    
lapsed in  FY 14. She  explained that the money  had existed                                                                    
in FY 14  if the state had been able  to finalize and record                                                                    
the payments  and charges, but  the Division  of Legislative                                                                    
Budget  and  Audit  had  determined there  had  not  been  a                                                                    
sufficient record to close the items in FY 14.                                                                                  
Vice-Chair  Saddler asked  for confirmation  that the  state                                                                    
would depend  on the system  for processing  Medicaid claims                                                                    
in the future. Ms. Pitney replied in the affirmative.                                                                           
Vice-Chair Saddler  wondered if it  would be wise  to expand                                                                    
Medicaid before the system problems  were rectified in order                                                                    
to avoid  similar issues in  the future. Ms.  Pitney replied                                                                    
that  the Department  of Health  and Social  Services (DHSS)                                                                    
was working  diligently on  ensuring the  system was  up and                                                                    
running. She  stated that an efficiently  running system was                                                                    
central to  business and to  the state's  medical providers;                                                                    
ensuring the  system was running  correctly well  in advance                                                                    
of the expansion date was of the highest priority.                                                                              
2:47:12 PM                                                                                                                    
Vice-Chair Saddler wondered if  from a budget perspective it                                                                    
would  be  helpful to  avoid  Medicaid  expansion until  the                                                                    
state  was positive  the system  was working  correctly. Ms.                                                                    
Pitney  answered that  the savings  the state  would receive                                                                    
through   Medicaid  expansion   and  the   service  delivery                                                                    
provided  made  it a  smart  and  critical option  from  the                                                                    
administration's  policy standpoint.  She detailed  that the                                                                    
system  was a  critical point  of  need and  the agency  was                                                                    
working  to  ensure  it  was   running  correctly.  She  had                                                                    
confidence DHSS would have the system up and running.                                                                           
Vice-Chair  Saddler wondered  if Ms.  Pitney would  advocate                                                                    
for  expansion if  the system  was not  up and  running. Ms.                                                                    
Pitney would follow up on the question.                                                                                         
Representative  Kawasaki  spoke   to  the  Medicaid  advance                                                                    
payments. He asked  for verification that an  error by Xerox                                                                    
(when the system had been adopted  1.5 years ago) had led to                                                                    
a  significant  number of  late  payments  to providers.  He                                                                    
wondered if  the situation involving  Xerox was part  of the                                                                    
problem. Ms. Pitney answered in the affirmative.                                                                                
Representative Kawasaki wondered  if money would potentially                                                                    
come back to  the state in some form as  a result of ongoing                                                                    
discussions with Xerox. Ms. Pitney  replied that she did not                                                                    
know  about the  potential of  money being  returned to  the                                                                    
state or  about the current  status of discussions  with the                                                                    
company. She  relayed that the discussions  were ongoing and                                                                    
noted the urgency of the situation.                                                                                             
Co-Chair  Neuman added  that separately  from the  line item                                                                    
under discussion, there were  some lawsuits underway through                                                                    
DHSS. He  noted the line  item included money that  had been                                                                    
approved  by  the   legislature  for  Medicaid  expenditures                                                                    
through payment  reimbursement. He  detailed that  there had                                                                    
been  an  accounting  problem;  the  money  had  still  been                                                                    
deposited into  the bank. He  furthered that because  of the                                                                    
accounting problem  it had become  an FY 15 issue.  The item                                                                    
entailed money coming out of the bank to cover the costs.                                                                       
2:50:08 PM                                                                                                                    
Representative Gara  discussed that there had  been a number                                                                    
of  computer  systems that  had  not  worked. He  asked  Ms.                                                                    
Pitney to let  the committee know if there  was an indemnity                                                                    
provision  to protect  the state  when the  systems did  not                                                                    
function correctly. He remarked  that committee members were                                                                    
aware  of providers  that could  potentially  sue the  state                                                                    
because  they  had gone  out  of  business  as a  result  of                                                                    
nonpayment.   He  opined   that   the  state's   programming                                                                    
contracts  should include  indemnity  provisions to  provide                                                                    
protection when systems did not work.                                                                                           
Co-Chair  Neuman relayed  that the  DHSS subcommittee  would                                                                    
hear  about  the  Medicaid  Management  Information  Systems                                                                    
updates and contracts.                                                                                                          
Representative Munoz noted that  the item description stated                                                                    
that  the  expenditures  were not  eligible  for  a  federal                                                                    
match. She wondered  if it was due to the  problems with the                                                                    
computer  system or  other issues.  Ms. Pitney  deferred the                                                                    
question to DHSS.                                                                                                               
MARGARET   BRODIE,  DIRECTOR,   DIVISION   OF  HEALTH   CARE                                                                    
SERVICES, DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, replied                                                                    
that  DHSS had  worked  with the  Centers  for Medicare  and                                                                    
Medicaid Services (CMS) to claim  the advances federally and                                                                    
to receive  the federal share.  She explained that  DHSS had                                                                    
worked  everything  out  with  CMS  and  the  Department  of                                                                    
Administration  and had  made the  claim federally;  however                                                                    
Division of Legislative Budget and  Audit had told DHSS that                                                                    
it did not  meet the level in a new  fiscal year; therefore,                                                                    
the  entries  had been  reversed.  The  state would  receive                                                                    
federal match for all of the claims.                                                                                            
2:53:04 PM                                                                                                                    
Representative  Gara   asked  Ms.   Brodie  if   there  were                                                                    
indemnity  agreements to  keep  the state  off  the hook  if                                                                    
problems were  caused by programs  it purchased.  Ms. Brodie                                                                    
replied  that  the state  did  not  have indemnity  clauses.                                                                    
Alternatively,  it  had  liquidated  damages;  there  was  a                                                                    
hearing in front of an  administrative law judge on February                                                                    
17  [2015]  to  determine  whether  the  liquidated  damages                                                                    
applied. She explained that it was  a way to get some of the                                                                    
state's money back  and it would not prevent  the state from                                                                    
its ability  to claim the  actual damages. She  had outlined                                                                    
all  of  the  actual   damages,  which  far  outweighed  the                                                                    
liquidated damages.                                                                                                             
Ms.  Pitney  returned  to  page   3,  lines  13  through  16                                                                    
pertaining  to management  fees  associated with  investment                                                                    
earnings on  particular funds. She  classified the  items as                                                                    
"good news"  payments. The increase  in fees  for management                                                                    
under the  Department of Revenue  (DOR) had resulted  from a                                                                    
positive  earnings  year. She  turned  to  page 4,  line  17                                                                    
associated  with the  Alaska Municipal  Bond Bank  Authority                                                                    
(AMBBA). She detailed that  there were additional regulatory                                                                    
environment expenses  associated with  the oversight  of the                                                                    
municipal  bond market;  the  item was  to  account for  the                                                                    
costs within AMBBA's funding authority.  Lines 18 through 20                                                                    
were technical adjustments related  to the Alaska Retirement                                                                    
Management Board and a year-end  balancing of the retirement                                                                    
systems;   all  of   the  items   were  net-zero   technical                                                                    
adjustments. Line 22  reflected that Edna Bay  had become an                                                                    
organized  community; an  organizational grant  was provided                                                                    
to  the  newly  formed  city   to  help  with  the  cost  of                                                                    
Co-Chair Neuman asked if the  grant was provided by statute.                                                                    
Ms.   Pitney   replied   that   the   organizational   grant                                                                    
specification for  a newly  formed city  was included  in AS                                                                    
2:56:56 PM                                                                                                                    
Ms. Pitney  turned to  page 5, line  25. She  explained that                                                                    
Division  of  Legislative  Budget  and Audit  had  done  the                                                                    
single  audit for  the federal  programs  until the  present                                                                    
year.  The division  had requested  that the  administration                                                                    
hire a  third-party audit  firm to do  the single  audit for                                                                    
DHSS's federal  programs. The  request represented  the cost                                                                    
of the  single audit.  She relayed  that she  had mistakenly                                                                    
reported to the  Senate Finance Committee that  the item was                                                                    
for a three-year contract.                                                                                                      
Co-Chair  Neuman  asked  for   verification  that  the  item                                                                    
represented the cost  for a single year.  Ms. Pitney replied                                                                    
in the affirmative.                                                                                                             
Vice-Chair  Saddler  asked  if  it  was  less  expensive  to                                                                    
contract out for  the audit versus doing the  work in house.                                                                    
Ms. Pitney replied  that she would have to  consult with the                                                                    
Division  of  Legislative  Budget  and  Audit  to  determine                                                                    
whether  contracting out  was  less  expensive. She  relayed                                                                    
that  the  division  felt  the   audit  needed  a  level  of                                                                    
attention and expertise that had  been hard to achieve under                                                                    
the former system.                                                                                                              
Vice-Chair Saddler would enable the  division to catch up on                                                                    
the backlog of audits and allow  it to take on the audit for                                                                    
DHSS's  federal programs  again  in the  future. Ms.  Pitney                                                                    
would replied that she would  follow up on the question with                                                                    
DHSS and the Division of Legislative Budget and Audit.                                                                          
SANA  EFIRD, ASSISTANT  COMMISSIONER,  DEPARTMENT OF  HEALTH                                                                    
AND SOCIAL  SERVICES, replied that  the backlog would  be in                                                                    
the Division of  Legislative Budget and Audit  and not DHSS.                                                                    
She asked for clarification on the question.                                                                                    
Vice-Chair Saddler  wondered if outsourcing the  audit for a                                                                    
while would allow the work to  be brought back in house once                                                                    
the  backlog  had been  addressed.  Ms.  Efird believed  the                                                                    
backlog  was  for the  Division  of  Legislative Budget  and                                                                    
Audit.  She added  that the  line item  would give  DHSS the                                                                    
opportunity to work with a  contractor with expertise in all                                                                    
of the department's large federal programs.                                                                                     
Representative   Kawasaki   understood  that   Division   of                                                                    
Legislative  Budget and  Audit would  typically perform  the                                                                    
audit; therefore, he wondered why  the request was not being                                                                    
requested through  the legislature. Ms. Pitney  replied that                                                                    
it could  be. The Division  of Legislative Budget  and Audit                                                                    
had asked the administration to  manage the contract and its                                                                    
funding. She stated  that the presumption was  that the cost                                                                    
of  the  audit would  be  the  same;  essentially it  was  a                                                                    
transfer of costs.                                                                                                              
3:01:13 PM                                                                                                                    
Representative Wilson  surmised that the state  was auditing                                                                    
federal   programs   to   ensure   the   money   was   spent                                                                    
appropriately. She  stated that in  the past there  had been                                                                    
money  in  the  federal funds  designated  specifically  for                                                                    
audits.  She wondered  why  the money  would  not come  from                                                                    
federal funds.                                                                                                                  
Ms. Efird  replied that she  did not know the  percentage of                                                                    
compliance for each  of the federal grants or  what would be                                                                    
available for audits in each  grant. The department was able                                                                    
to  collect  some  federal funds  through  its  (DHSS)  cost                                                                    
allocation  public assistance  plan. She  believed the  line                                                                    
item  represented  the  amount  of money  it  had  cost  the                                                                    
Division of Legislative Budget and  Audit based on the hours                                                                    
it had spent on the audit.                                                                                                      
Representative  Wilson thought  that  a  portion of  federal                                                                    
funds was supposed  to be reserved for  audits. For example,                                                                    
a certain percentage of a  $1 million grant was reserved for                                                                    
audits. She wondered  where the money went.  Ms. Efird would                                                                    
follow up with the information.                                                                                                 
Ms. Pitney  briefly highlighted the  cost associated  with a                                                                    
recent  settlement agreement  with  the Alaska  Correctional                                                                    
Officers Association on page 5, line 26.                                                                                        
Co-Chair  Neuman  asked  for   further  detail.  Ms.  Pitney                                                                    
replied  that  the item  represented  cost  incurred from  a                                                                    
previous  case  that  had  been brought  to  the  state  and                                                                    
settled.  She explained  that the  Senate Finance  Committee                                                                    
had  requested information  on lessons  learned in  order to                                                                    
avoid a similar settlement in the future.                                                                                       
Co-Chair  Neuman noted  that the  issue went  back to  labor                                                                    
negotiations between 8-hour and  12-hour shifts. He believed                                                                    
DOA had concerns  about vacation time that  was accrued with                                                                    
over time; therefore, it had gone to arbitration.                                                                               
Vice-Chair  Saddler wondered  if it  was a  settlement or  a                                                                    
result of arbitration.  Ms. Pitney would follow  up on where                                                                    
it had been in the process.  She detailed that it had been a                                                                    
settlement versus a judgement or  claim. She did not know if                                                                    
there had been court hearings or other.                                                                                         
Co-Chair  Neuman asked  Representative Edgmon  to look  into                                                                    
the issue.                                                                                                                      
3:05:15 PM                                                                                                                    
Ms.  Pitney moved  to  item  27 on  page  5  related to  the                                                                    
Emerging Energy  Technology Project.  She detailed  that the                                                                    
$345,000  in   federal  funds  was  receipt   authority  for                                                                    
additional federal funds that  were available, but could not                                                                    
be used without additional  receipt authority. She looked at                                                                    
item  28 related  to  the  repeal two  pieces  of the  Ormat                                                                    
Nevada, Inc. Mount Spurr  Geothermal Project. She elaborated                                                                    
that the general  fund portion was reappropriated  in the FY                                                                    
16 capital  budget; the other portion  related to designated                                                                    
general funds.                                                                                                                  
Co-Chair Neuman asked for the  total funds that had gone out                                                                    
in the grant. He believed there  had been $20 million to $25                                                                    
million.  Ms. Pitney  replied that  the total  had been  $25                                                                    
Co-Chair Neuman observed that $23  million had been used. He                                                                    
wondered if  anything had been learned.  Ms. Pitney answered                                                                    
that quite a  bit had been learned, but the  cost of getting                                                                    
to  the  energy  site  and of  transmitting  the  energy  to                                                                    
consumers was past the point of being economical.                                                                               
Co-Chair Neuman noted  that the cost was  $0.17 per kilowatt                                                                    
to  get the  energy to  Beluga,  Alaska, which  was what  he                                                                    
already paid in Big Lake.                                                                                                       
Representative Guttenberg  discussed that when he  had first                                                                    
read the  line item he  had surmised  that a grant  had been                                                                    
awarded, but  no hot water  source had been located.  He now                                                                    
understood that  an economical source  of hot water  had not                                                                    
been found.                                                                                                                     
Ms. Pitney  answered that  promising geothermal  sources had                                                                    
been located. She reasoned that  if there had been something                                                                    
else  the company  wanted to  do  on top  of the  geothermal                                                                    
source,  it would  probably have  been worth  the cost.  She                                                                    
moved to page 6,  line 29. The line item was  a net zero and                                                                    
was  a  reappropriation  on the  bill  associated  with  the                                                                    
Interior gas  project. She elaborated  that in  the original                                                                    
bill  the money  had  been  specific to  a  North Slope  gas                                                                    
solution;  the item  expanded the  scope of  the project  to                                                                    
allow for in-state gas solutions.                                                                                               
Co-Chair Neuman asked why the  increment was included in the                                                                    
supplemental  as  opposed   to  introducing  legislation  to                                                                    
address the  issue. Ms. Pitney replied  that the development                                                                    
was  relatively new.  The administration  believed the  item                                                                    
was  appropriate  for  the   supplemental.  She  noted  that                                                                    
amended  language would  also  be  necessary. She  explained                                                                    
that the item  had been included in the  supplemental due to                                                                    
the  timing.  She stated  that  it  was possible  additional                                                                    
legislation could be needed.                                                                                                    
3:09:32 PM                                                                                                                    
Representative Wilson  asked for verification that  the line                                                                    
item was  outside of legislation passed  by the legislature.                                                                    
Ms.  Pitney replied  that the  amount had  been included  in                                                                    
legislation that  had passed and  had been reflected  in the                                                                    
overall budget.                                                                                                                 
Representative  Wilson believed  that if  the increment  was                                                                    
associated with  the legislation, the legislation  needed to                                                                    
change to  reflect what the  project may have to  be instead                                                                    
of including the item in the supplemental.                                                                                      
Representative   Kawasaki   referred   to  the   line   item                                                                    
description, which  listed the  section and  SLA2013 related                                                                    
specifically  to  the   Alaska  Industrial  Development  and                                                                    
Export  Authority  (AIDEA) Sustainable  Energy  Transmission                                                                    
and Supply fund and the  reappropriation. He stated that the                                                                    
only  controversial  language  was related  to  North  Slope                                                                    
natural gas. He wondered if  the $57.5 million balance would                                                                    
hinder  AIDEA's ongoing  due diligence  project if  the item                                                                    
was not included in the  supplemental budget. He wondered if                                                                    
it  was necessary  to provide  the funds  early because  the                                                                    
$57.5 million was part of the language.                                                                                         
Ms. Pitney  replied that the administration  recognized that                                                                    
the supplemental  budget ran at approximately  the same pace                                                                    
as  the capital  budget. She  elaborated that  including the                                                                    
project  within the  supplemental was  a transparent  way to                                                                    
get the  information out.  The administration  also expected                                                                    
it to  take a  revision of the  legislation. The  timing had                                                                    
been  anticipated that  it would  be at  the end  of session                                                                    
before the  legislation was passed;  the project  was moving                                                                    
forward,  but  no  action  would be  taken  outside  of  the                                                                    
existing authority.                                                                                                             
Representative  Kawasaki wondered  if the  language speaking                                                                    
to  the North  Slope  in particular  in  SB 23  [legislation                                                                    
passed  by the  legislature  in 2013  related  to AIDEA  and                                                                    
Liquid  Natural Gas  project financing]  and in  the capital                                                                    
budget  section  hampered  AIDEA's ability  to  discuss  the                                                                    
ongoing  negotiations  on  the purchase  of  Pentex  [Pentex                                                                    
Alaska Natural  Gas Company,  LLC]. Alternatively,  he asked                                                                    
if AIDEA could act on its own.                                                                                                  
Co-Chair Neuman noted that AIDEA  acted as a separate entity                                                                    
and had its own board.                                                                                                          
Ms. Pitney would follow up on the question at a later date.                                                                     
Representative Wilson asked about  the last time legislation                                                                    
had  been changed  in  a supplemental  budget.  She did  not                                                                    
recall  the situation  occurring in  the past.  She did  not                                                                    
want to  start something  they could be  sorry about  in the                                                                    
future. Ms. Pitney  replied that she would follow  up on the                                                                    
Co-Chair  Neuman believed  the  occurrence may  happen on  a                                                                    
regular  basis. He  reasoned that  the legislature  approved                                                                    
reappropriations frequently.                                                                                                    
Ms. Pitney moved to a  repeal of the Alaska Digital Teaching                                                                    
Initiative  on  line  30,  page  6.  She  relayed  that  the                                                                    
existing  program   could  be  managed  without   adding  an                                                                    
additional program. The administration  believed it would be                                                                    
good to  stop the  program before it  got started.  Lines 31                                                                    
and  32  (pages  6  and  7) related  to  the  Department  of                                                                    
Environmental  Conservation  (DEC).  She detailed  that  DEC                                                                    
provided several grants for sewer  and water projects; there                                                                    
were currently grants out to  a few communities. Line 31 was                                                                    
a  reappropriation  of   funding  remaining  from  completed                                                                    
projects.  The remaining  funds  were  pooled and  deposited                                                                    
into the  Spill Prevention and Response  (SPAR) account. She                                                                    
explained that the account ran on  a $0.05 per barrel of oil                                                                    
surcharge on  oil running through the  Trans-Alaska Pipeline                                                                    
System  (TAPS). She  furthered that  when there  had been  2                                                                    
million  barrels of  oil running  through TAPS  it had  been                                                                    
sufficient  to cover  the program;  however, production  had                                                                    
declined  and 500  thousand barrels  was  not sufficient  to                                                                    
cover  the program.  The reappropriation  would buy  time to                                                                    
develop a more holistic approach  to manage SPAR duties. She                                                                    
added  that  the  increment  would  only  provide  temporary                                                                    
3:16:32 PM                                                                                                                    
Co-Chair Neuman  remarked that the  SPAR fund  was currently                                                                    
empty due to a decline  in oil throughput. He explained that                                                                    
the surcharge had not been changed in a number of years.                                                                        
Representative  Wilson wondered  if  the  funds had  matched                                                                    
federal  funds for  sewer and  water for  small communities.                                                                    
She specifically mentioned that  funds had been allocated to                                                                    
North Pole  for sewer  upgrades. She  wondered if  the state                                                                    
was sweeping  only state dollars  into the SPAR  account and                                                                    
if some federal matching funds had been lost.                                                                                   
Ms.  Pitney  replied  that the  line  item  represented  the                                                                    
unspent, unobligated balance of  general funds that had been                                                                    
designated to  projects. She explained  that if there  was a                                                                    
match, it was garnered based on the cost of the project.                                                                        
Representative Wilson  asked if some federal  matching funds                                                                    
had  remained  after the  completion  of  the projects.  She                                                                    
wondered what had come of any remaining federal funds.                                                                          
Ms. Pitney  answered that federal matching  funds were given                                                                    
when the state spent its portion  of the funds; if the state                                                                    
funds  were  not spent,  the  match  was not  received.  She                                                                    
relayed  that traditionally  (under more  positive financial                                                                    
environments)  communities asked  for remaining  funds (i.e.                                                                    
$25,000 to $50,000) to be  reappropriated to another project                                                                    
in  their  area, which  may  or  may  not have  any  federal                                                                    
opportunity. An  alternative policy option would  be to pool                                                                    
the remaining funds for use on  a water and sewer project in                                                                    
the next community.  She explained that the  increment was a                                                                    
way  to use  existing resources  to cover  the SPAR  account                                                                    
shortfall at present,  which would give the  state more time                                                                    
to determine a more holistic solution.                                                                                          
Representative  Wilson asked  if  federal  funds would  have                                                                    
been  available for  a water  and sewer  project in  another                                                                    
community  if the  state elected  to  use remaining  project                                                                    
funds  for that  purpose.  She was  curious  how much  money                                                                    
could have been utilized for  the purpose. She understood it                                                                    
had been  a choice, but she  thought the state had  given up                                                                    
federal funds that were not reflected on the handout.                                                                           
3:21:03 PM                                                                                                                    
Co-Chair Neuman  noted that there was  additional background                                                                    
material available for members to review.                                                                                       
Ms. Pitney pointed to judgments  and settlements on lines 33                                                                    
and 34  (page 7);  line 33 related  to actual  judgments and                                                                    
settlements  and   line  34  was  for   any  judgements  and                                                                    
settlements prior to the end of  FY 15. Line 35 expanded the                                                                    
scope of  Department of Public  Safety funds for  the Alaska                                                                    
Public  Safety  Information  Network  to  other  information                                                                    
technology.  Line 36  was  a $3  million  increment for  any                                                                    
additional  fire  suppression funding  for  FY  15. Line  37                                                                    
allowed for  movement in the  percentages called for  in the                                                                    
fuel trigger mechanism. She explained  that the fuel trigger                                                                    
mechanism  set  a percent  for  each  agency; sometimes  the                                                                    
bounds  of the  percentages did  not accommodate  the actual                                                                    
costs  faced by  an entity.  The  line item  would allow  an                                                                    
expansion  of the  boundary of  percentages to  most closely                                                                    
align the distribution of the  fuel trigger mechanism to the                                                                    
entities with the costs associated.                                                                                             
Ms.  Pitney   addressed  line  38,  which   reflected  funds                                                                    
leftover from  redistricting costs  that would  be deposited                                                                    
back into  the general  fund. Lines  39 through  43 included                                                                    
funds that  would be deposited  back into the  general fund.                                                                    
Line   39  reflected   leftover  funds   from  school   debt                                                                    
reimbursement  projects that  had  been  paid off;  overall,                                                                    
school debt reimbursements had decreased by $5.4 million.                                                                       
Representative   Pruitt   asked   what   caused   the   debt                                                                    
reimbursement to go down.                                                                                                       
3:24:38 PM                                                                                                                    
Ms. Pitney replied that under  the school debt reimbursement                                                                    
program  a community  passed a  school  bond. She  explained                                                                    
that  if a  community  began paying  debt  service 20  years                                                                    
back, the debt  service was completed and  had therefore the                                                                    
project had  fallen off the  list of required  debt service.                                                                    
She explained  that subsequently  the obligation  for school                                                                    
debt reimbursement had decreased by $5.4 million.                                                                               
Representative Pruitt  asked for verification that  the $5.4                                                                    
million decrease  was associated with one  project. He noted                                                                    
that Anchorage  continued to add school  debt; therefore, it                                                                    
did not  make sense to him  that there was money  left over.                                                                    
Ms.  Pitney would  follow  up with  the  data. She  believed                                                                    
there  would be  a  downward trend;  schools  that had  been                                                                    
built 20 years earlier would drop off the list.                                                                                 
Representative  Pruitt  asked  if   the  change  in  statute                                                                    
implemented the prior year  impacted the reimbursement rate.                                                                    
He hoped  the downward trend would  continue because nothing                                                                    
was being added. Ms. Pitney  answered that she would provide                                                                    
further information.                                                                                                            
Ms. Pitney pointed  to an interest transfer  from the Alaska                                                                    
Marine Highway  System stabilization  fund. Lines 42  and 43                                                                    
represented  significant  policy  calls  and  reflected  the                                                                    
repeal of  one-time education funding  that had  been passed                                                                    
in  legislation the  preceding session.  She explained  that                                                                    
the  $32 million  in FY  16 would  result in  a 2.5  percent                                                                    
decrease in  K-12 funding  (line 42).  The reduction  of $19                                                                    
million in FY  17 was closer to a 1  percent reduction (line                                                                    
Co-Chair  Neuman remarked  that  the  two education  funding                                                                    
items would have additional discussion going forward.                                                                           
Ms. Pitney  addressed ratifications on lines  48 through 63.                                                                    
She  explained  that  the   ratifications  were  prior  year                                                                    
expenses that  had been accounted for;  the lines reconciled                                                                    
the  expenses  to  the  budget   that  had  passed  from  an                                                                    
accounting perspective  and represented  necessary technical                                                                    
HB  72  was   HEARD  and  HELD  in   committee  for  further                                                                    
HB  73  was   HEARD  and  HELD  in   committee  for  further                                                                    
Co-Chair  Neuman discussed  the schedule  for the  following                                                                    

Document Name Date/Time Subjects
02.05.2015 DCCED Overview HFC - Final.pdf HFIN 2/5/2015 1:30:00 PM
FY2015_Supplemental_Detail.pdf HFIN 2/5/2015 1:30:00 PM
HB 94
FY2015_Supplemental_Summary.pdf HFIN 2/5/2015 1:30:00 PM
HB 94