Legislature(2015 - 2016)HOUSE FINANCE 519

03/02/2015 01:30 PM House FINANCE

Audio Topic
01:32:49 PM Start
01:33:04 PM HB72 || HB73
02:44:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ - Introduction & Adoption of the Committee TELECONFERENCED
Substitutes Incorporating the Subcommittees'
- Subcommittee Reports
Please Note: Operating Budget Public Testimony
for "Off Net" Callers (communities without a
LIO) is scheduled for 3/4/15. Call 465-4648 by
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+ Bills Previously Heard/Scheduled TELECONFERENCED
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."                                                                                                        
1:33:04 PM                                                                                                                    
Co-Chair  Neuman  discussed  the   agenda  for  the  day.  He                                                                   
relayed  that  the  committee  would  hear  public  testimony                                                                   
Tuesday   through   Thursday   of  the   current   week.   He                                                                   
communicated  that the  operating  budget amendment  deadline                                                                   
was on Thursday, March 2, 2015.                                                                                                 
Co-Chair  Thompson  MOVED  to ADOPT  the  proposed  committee                                                                   
substitute  for  HB  72,  Work  Draft  29-GH1780\P  (Wallace,                                                                   
Co-Chair  Thompson  MOVED  to ADOPT  the  proposed  committee                                                                   
substitute  for  HB  73,  Work  Draft  29-GH1782\H  (Wallace,                                                                   
Representative Gara OBJECTED for discussion.                                                                                    
Co-Chair  Neuman noted  that the  adoption  of the  Committee                                                                   
Substitutes   would  provide   the  committee  with   working                                                                   
documents for discussion.                                                                                                       
1:36:04 PM                                                                                                                    
Representative  Gara WITHDREW his  OBJECTION. There  being NO                                                                   
further OBJECTION,  Work Drafts  29-GH1780\P and  29-GH1782\H                                                                   
were ADOPTED.                                                                                                                   
PETE ECKLUND, STAFF, REPRESENTATIVE MARK NEUMAN, read a                                                                         
     As  you've  heard during  various  presentations  before                                                                   
     the   Committee,  the   state's   fiscal  situation   is                                                                   
     troubling.  When  the legislature  left  at  the end  of                                                                   
     last  session,  there  was  an  expectation  that  there                                                                   
     would  be   a  deficit  of  approximately   1.3  Billion                                                                   
     dollars for FY15.                                                                                                          
     When   the  legislature   convened  in  January,   those                                                                   
     projections  had  changed. Now  we  anticipate the  FY15                                                                   
     deficit to  be nearly 3.5 Billion dollars.   To compound                                                                   
     the situation,  revenues are  not forecast to  cover our                                                                   
     expenditures for several years.                                                                                            
     Mr.   Chair,   with   this   in   mind,   you   directed                                                                   
     Subcommittees  to look for  additional savings  from the                                                                   
     Unrestricted   General  Fund  agency   operations,  non-                                                                   
     formula budget.                                                                                                            
     Why  did  you direct  additional  reductions  in  agency                                                                   
     operations, non-formula?  For two reasons:                                                                                 
     Number  one, simply  put, when the  public thinks  about                                                                   
     state  government,  agency  operations,  non-formula  is                                                                   
     the  day  to   day  government  they  are   most  likely                                                                   
     thinking about.                                                                                                            
     But Mr.  Chair, agency  operations, non-formula  is only                                                                   
     half of  the story. The  total UGF in agency  operations                                                                   
     is  nearly  split  50/50 between  formula  programs  and                                                                   
     non-formula funding.                                                                                                       
     This  brings  us  to reason  number  two:  Generally  it                                                                   
     takes a statutory  change to adjust spending  in formula                                                                   
     As  you know  Mr. Chair,  but  the public  may not,  for                                                                   
     statutory  change to take  place, legislation  must pass                                                                   
     and  be signed  by  the Governor,  which  is beyond  the                                                                   
     finance  subcommittee's  control.  That being  said,  we                                                                   
     have made some  reductions to formula programs  where we                                                                   
     So Mr. Chair,  to sum up, subcommittees  concentrated on                                                                   
     agency   operations  non-formula   UGF  for   reductions                                                                   
     because  that  is the  area  of  the budget  they  could                                                                   
     affect change through the budget process.                                                                                  
     Beyond  agency  operations non-formula,  this  committee                                                                   
     has  talked  about the  areas  of  our budget  that  are                                                                   
     growing  the  fastest, commonly  referred  to  as our  3                                                                   
     'budget  drivers':  that  being Medicaid  and  education                                                                   
     formula programs, and retirement funding.                                                                                  
     If  we  are  really  going  to get  a  handle  on  state                                                                   
     spending  and extend  the life of  our savings  account,                                                                   
     we've  got to  address  more than  just  the dollars  we                                                                   
     invest  in  each  department's programs,  we've  got  to                                                                   
     address our budget drivers.                                                                                                
     Last  year   the  legislature  appropriated   3  Billion                                                                   
     dollars  to  our  retirement  systems  and  lowered  our                                                                   
     annual   payment   to  the   unfunded   liability   from                                                                   
     approximately  1 Billion  dollars down  to 256  Million.                                                                   
    That action addressed one of our 3 budget drivers.                                                                          
     To  get a handle  on our  other two  budget drivers,  we                                                                   
     will  have to  find efficiencies  and  most likely  make                                                                   
    statutory changes to our current formula programs.                                                                          
     To  that end,  the  HSS subcommittee  that  you all  are                                                                   
     members  of,  will  continue  to meet  this  session  to                                                                   
     explore  Medicaid reform,  other  formula programs,  and                                                                   
     to  just  get a  better  understanding  of  departmental                                                                   
     We  also  must  continue  working  on  a  plan  to  slow                                                                   
     correctional  system  growth  and recidivism,  to  blunt                                                                   
    the need to build a new prison in the near future.                                                                          
     With  all of  that in  mind, your  instructions for  the                                                                   
     operating  budget subcommittees  were to  reduce  UGF in                                                                   
     particular,  as  any  reduction in  the  expenditure  of                                                                   
     Unrestricted  General Funds extends  the length  of time                                                                   
     our   savings   account,   the   Constitutional   Budget                                                                   
     Reserve, will last.                                                                                                        
     Mr.  Chair,  you  also  directed  the  Subcommittees  to                                                                   
     continue to  review the agency  budgets via  a five-step                                                                   
     process  that was  modified to a  four-step process  for                                                                   
     this unique budget year.                                                                                                   
1:40:36 PM                                                                                                                    
Mr. Ecklund continued to read from a statement:                                                                                 
        1. Review the agency Mission, Core Services, and                                                                        
          Performance   Measures  so  through   results-based                                                                   
          budgeting,  the public could see how  effective and                                                                   
          efficient  agency programs  are and agencies  could                                                                   
          demonstrate  the value the public is  receiving for                                                                   
          our investments in them.                                                                                              
        2. Review budget changes since FY06, enabling us to                                                                     
          track GF  and Total Funds changes over  time to see                                                                   
          where budget growth has been                                                                                          
        3. We omitted Step 3 this year which was to "Review                                                                     
          agency  10-year plans,  to evaluate future  changes                                                                   
          that  department's  see  coming" since  the  agency                                                                   
          10-year plans were not available this year                                                                            
        4. Review audit findings made by the Division of                                                                        
          Legislative  Audit   -providing  an  accountability                                                                   
        5. And get a status update on budget changes                                                                            
          approved for the current fiscal year, FY15.                                                                           
     Then,  after   looking  at   an  agency's   mission  and                                                                   
     results,   looking  back   at  agency  growth,   looking                                                                   
     forward,  and looking  at  current  year progress,  each                                                                   
     Subcommittee  had  a  context  in which  to  review  the                                                                   
     budget changes proposed for FY16.                                                                                          
     I'd  like to  thank  Pat  Pitney and  the  staff of  the                                                                   
     Office  of Management  and  Budget,  and the  leadership                                                                   
     teams of  the Executive Branch  agencies for  their help                                                                   
     and cooperation in the budget review process.                                                                              
     I'd also like  to thank David Teal and the  staff at the                                                                   
     Legislative Finance  Division as they provide  all of us                                                                   
     with  excellent   service  so  we  can   understand  the                                                                   
     dollars  and   programs  associated  with   putting  the                                                                   
     budget together.  The Legislature  is fortunate  to have                                                                   
     such  an   outstanding  and  patient  group   of  people                                                                   
     assisting in development of the state's budget.                                                                            
     Last, but certainly  not least, a big thank  you must go                                                                   
     to all  of the subcommittee  staff, members,  and chairs                                                                   
     for their hard  work and diligence in order  to put this                                                                   
     budget together.                                                                                                           
     From the  start of the  legislative session,  there were                                                                   
     just  39 days  prior  to  the February  27  Subcommittee                                                                   
     close-out  deadline. While this  is a very  short review                                                                   
     timeframe   under   normal  circumstances,   this   year                                                                   
     provided some unique challenges.                                                                                           
     The  placeholder  "work   in  progress"  budget  largely                                                                   
     developed  by former  Governor Parnell  was released  on                                                                   
     December  15   simply  to  meet  the   statutory  budget                                                                   
     submission  deadline. Subcommittees  were provided  with                                                                   
        · Supplemental    budget   requests    submitted   on                                                                   
          February 2,                                                                                                           
        · Governor Walker's FY16 "endorsed" budget on                                                                           
          February 5,                                                                                                           
        · Early the next week, the week of February 9th,                                                                        
          subcommittees  received the subcommittee  books and                                                                   
          detailed  transactions   from  legislative  finance                                                                   
          needed  to  evaluate   Governor  Walker's  endorsed                                                                   
          budget and                                                                                                            
        · Governor's budget amendments on February 17.                                                                          
     That  has   meant  this  year  has  been   an  extremely                                                                   
     compressed timeframe  for the Subcommittees  to complete                                                                   
     their work by last Friday, February 27.                                                                                    
     As   you   have   stated    many   times,   Mr.   Chair,                                                                   
     subcommittees  were  to   find  as  many  reductions  as                                                                   
     possible  within the  short time  available to  evaluate                                                                   
     the details  of the Governor's endorsed  budget, with an                                                                   
     eye   to   protecting   the  core   missions   of   each                                                                   
     With our fiscal  situation looming, much  more work lies                                                                   
     We have already  begun talking to the  Administration to                                                                   
     detail  a process  by which  the  Finance Committee  can                                                                   
     work with  the Departments  over this interim  to wisely                                                                   
     rethink the size, shape and functions of government.                                                                       
     Ideally when  we get back here next year  discussing the                                                                   
     budget, we  will have worked  out many details  over the                                                                   
     interim  of what  state government  is  going look  like                                                                   
     going  forward. Alaskans  are going to  have to  come to                                                                   
     grips  with  their  state government  doing  less  while                                                                   
     more responsibility  must be  taken upon themselves  and                                                                   
     their local governments.                                                                                                   
     Mr.  Co-Chair,  all  of  the  Subcommittee  reports  are                                                                   
     found  on the  Legislative Finance  website. Reports  on                                                                   
     these  two  committee  substitute  bills  will  also  be                                                                   
     posted  on the Legislative  Finance website  immediately                                                                   
     after this hearing.                                                                                                        
1:45:03 PM                                                                                                                    
Mr. Ecklund read the numbers in the budget:                                                                                     
     The  operating budget  work  draft Committee  Substitute                                                                   
     totals $9.492  Billion (all funds), a reduction  of just                                                                   
     over $3 Billion from the current year budget.                                                                              
     Mr. Chairman,  the operating budget has been  reduced by                                                                   
     $239.5  Million  Unrestricted  General Funds  below  the                                                                   
     current   year,  FY15   Management   Plan,  for   agency                                                                   
     operations,  non-formula.   That  equates  to   a  10.5%                                                                   
     reduction  from the  FY15 Management  Plan. For  a frame                                                                   
     of  reference, last  year at  this point  in time,  this                                                                   
     committee had  reduced agency operations  non-formula by                                                                   
     $52.7 million from FY14 management plan.                                                                                   
     Back to  FY16, the budget  work draft you have  in front                                                                   
     of you is  $220.2 Million UGF below FY16  Adjusted Base,                                                                   
     agency operations non-formula.                                                                                             
     The  operating   budget  also  contains   reductions  in                                                                   
     agency  operations  formula programs  in  the amount  of                                                                   
     $199.9 Million  UGF. That is an 8.8% reduction  from the                                                                   
     FY15 Management Plan budget.                                                                                               
     The  Statewide operating  budget items  (those are  debt                                                                   
     service,     assistance    to    retirement,     special                                                                   
     appropriations,  and fund  capitalization) increased  in                                                                   
     the  FY16  budget  in  large   part  due  to  the  State                                                                   
     Assistance to  Retirement appropriation. Last  year that                                                                   
     appropriation    was   part    of    the   $3    Billion                                                                   
     Constitutional   Budget    Reserve   transfer   to   the                                                                   
     retirement  funds,  i.e.,  not from  the  general  fund.                                                                   
     This  year  the  Unrestricted  General  Fund  retirement                                                                   
     assistance   appropriation   is   $262.5   Million,   an                                                                   
     increase of $257.3.                                                                                                        
     Well  Mr.  Chairman,  you  might  ask,  'how  does  this                                                                   
     proposed operating budget affect our savings'?                                                                             
     The Statutory  Budget Reserve  Fund will be  depleted by                                                                   
     the end of  this Fiscal Year 15. We will  need to access                                                                   
     the  Constitutional  Budget Reserve  Fund  to close  out                                                                   
     FY15   to  the  tune   of  $700   Million  or   so.  The                                                                   
     Constitutional   Budget    Reserve   Fund   balance   is                                                                   
     estimated  to  be around  $9.3  Billion  dollars at  the                                                                   
     start of Fiscal Year 2016.                                                                                                 
     As the  operating budget  sits in front  of you,  and IF                                                                   
     there were  no additional capital budget  spending above                                                                   
     the Governor's  request of $158.7 Million  UGF, we would                                                                   
     have a  projected deficit of approximately  $3.3 Billion                                                                   
     dollars for FY16.                                                                                                          
     But  we  know  that  this  budget is  truly  a  work  in                                                                   
     progress  and  only  one  piece of  our  budget  puzzle.                                                                   
     There  are likely to  be some  changes before  this work                                                                   
     draft  leaves committee  and certainly  will be  changes                                                                   
     in the  other body which  will be settled  in conference                                                                   
     How  much of our  savings we  will use  in FY16  will be                                                                   
     determined as this session progresses.                                                                                     
     Now,  Ms. Brown  will describe  the changes  we made  to                                                                   
     the language sections of the bill.                                                                                         
1:48:07 PM                                                                                                                    
JOAN BROWN, STAFF, REPRESENTATIVE MARK NEUMAN, read from a                                                                      
     Mr.  Co-Chair,   before  I   begin  with  the   language                                                                   
     sections,  I need  to mention  a few  changes that  were                                                                   
     made  to  Section  1  of  House  Bill  72,  the  numbers                                                                   
     Two  Subcommittees  reduced  personal  services  funding                                                                   
     equal to  the amount of salary adjustment  transactions.                                                                   
     That   action  was   not  under   the  purview   of  the                                                                   
     Subcommittees.  The funding  has been  restored so  that                                                                   
     all  departments  are treated  equitably  vis-a-vis  the                                                                   
     salary adjustments.                                                                                                        
     In  addition,  the  Budget   Action  worksheet  for  the                                                                   
     Department   of   Commerce,  Community,   and   Economic                                                                   
     Development    inadvertently   did    not   include    a                                                                   
     transaction  to establish  a separate appropriation  for                                                                   
     Tourism    Marketing   &    Development,   though    the                                                                   
     Subcommittee's  narrative   report  did  highlight  that                                                                   
     change.  The  bill  before  you  includes  the  separate                                                                   
     appropriation.  A few  line item  corrections were  also                                                                   
     Now,  starting on  page 54, I'll  identify the  language                                                                   
     sections  where  changes were  made  and describe  those                                                                   
     Section  6, PERSONAL SERVICES  TRANSFERS. We  reinstated                                                                   
     this  section that  requires  executive branch  agencies                                                                   
     to  report   on  funding  transfers  to   and  from  the                                                                   
     personal  services line  to the  legislature in  January                                                                   
     and October.                                                                                                               
     Page   55,    Section   8,   ALASKA    HOUSING   FINANCE                                                                   
     CORPORATION,   Mr.  Co-Chair,   in  subsection   (c)  we                                                                   
     changed  the   location  of  where  any   excess  Alaska                                                                   
     Housing  Finance  Corporation  Dividend funds  would  be                                                                   
     deposited  from  the  Governor-proposed  Budget  Reserve                                                                   
     Fund   to  the   Alaska   Capital   Income  Fund.   This                                                                   
     recognizes   the   legislature's  traditional   use   of                                                                   
     corporate  dividends for  capital projects. However,  no                                                                   
     "excess" dividend funds are anticipated.                                                                                   
     Pages   55-56,   Section   9,  ALASKA   PERMANENT   FUND                                                                   
     CORPORATION.   Mr.  Co-Chair,   in  subsection   (b)  we                                                                   
     reduced  the  estimated  amount to  be  transferred  for                                                                   
     inflation  proofing  from  the Governor's  amendment  of                                                                   
     $894  Million dollars  down $5 Million  dollars  to $889                                                                   
     The    Governor's   amendment    was   based    on   the                                                                   
     corporation's  November 30th  projection. Our  change is                                                                   
     based  on the  corporation's most  recent projection  as                                                                   
     of December 31st.                                                                                                          
     Page 56,  Section 10, ALASKA INDUSTRIAL  DEVELOPMENT AND                                                                   
     EXPORT AUTHORITY.  Mr. Co-Chair,  just as we did  in the                                                                   
     Alaska Housing  Finance Corporation section,  we revised                                                                   
     subsection (b)  so if there  should be any  excess AIDEA                                                                   
     Dividend funds,  they will be deposited  into the Alaska                                                                   
     Capital  Income  Fund,  instead of  the  budget  reserve                                                                   
     fund.   Again,   no   "excess"    dividend   funds   are                                                                   
     Pages 60 - 61, Section   16,   DEPARTMENT   OF   NATURAL                                                                   
     RESOURCES.   Mr. Co-Chair,  in subsection (e),  we added                                                                   
     wording  to clarify  that  our expectation  is that  the                                                                   
     amount  necessary  will  be  zero, but  if  the  general                                                                   
     funds  are  necessary  to fund  the  three  professional                                                                   
     firefighting  crews, the  general funds  may not  exceed                                                                   
     Pages 61 - 63  Section  19, OFFICE OF THE  GOVERNOR. Mr.                                                                   
     Co-Chair,    we    reinstated     the    fuel    trigger                                                                   
     appropriation,   but  changed   the  estimated   funding                                                                   
     amount   to  zero  and   also  changed  the   percentage                                                                   
     allocations    based    on   the    Governor's    recent                                                                   
     supplemental   amendment  to   the  FY15  fuel   trigger                                                                   
     appropriation.  Reinstating  this  language  is  just  a                                                                   
     back-stop  in case  the  price of  oil  exceeds $70  per                                                                   
     barrel  in FY16.  The  Department  of Revenue's  current                                                                   
     FY16 projection is $66.03 per barrel.                                                                                      
     We  did not  include  the  Governor's requests  for  $10                                                                   
     Million  and  the  ability  to  transfer  funds  between                                                                   
     appropriations   within   a   department   and   between                                                                   
     departments  in order  to "fix"  any unexpected  funding                                                                   
     problems caused by this year's budget reductions.                                                                          
1:52:27 PM                                                                                                                    
Ms. Brown continued to read from a statement:                                                                                   
     Pages 67 - 69  Section  21, DEBT AND  OTHER OBLIGATIONS.                                                                   
     Mr. Co-Chair,  on page 67,  in subsection  (h) paragraph                                                                   
     (13), we reduced  the estimated amount from  $20 Million                                                                   
     to  $10  Million  for  the   general  obligation  bonds,                                                                   
     series 2015A.  This reduction is based upon  slower than                                                                   
     anticipated spending.                                                                                                      
     On  page  68,  we reworded  subsection  (k)  related  to                                                                   
     school    debt    reimbursement    by    changing    the                                                                   
     appropriation  from an  amount certain  to an  estimated                                                                   
     amount, and  we reduced the general fund  estimate by $5                                                                   
     Million.  The  general  funds  appropriated  for  school                                                                   
     debt reimbursement  were reduced by $5 Million  in FY13,                                                                   
     by $15.4  Million in FY 14,  and by $5.5 Million  in the                                                                   
     FY15  Supplemental. School  debt reimbursement  is fully                                                                   
     funded with this revision.                                                                                                 
     On  page  69,  we  made   a  slight  wording  change  in                                                                   
     subsection  (l) by  adding the  word "and"  in front  of                                                                   
     the last  phrase so it  reads "and for  early redemption                                                                   
     of those bonds".                                                                                                           
     Page  69,   Section  22,   FEDERAL  AND  OTHER   PROGRAM                                                                   
     RECEIPTS.  The only  change we  made was  to delete  the                                                                   
     reference  to  the  receipts  of  the  Alaska  Aerospace                                                                   
     Corporation.  This was  redundant as  Aerospace has  its                                                                   
     own language in section 7 of this Act.                                                                                     
     Pages 70 - 71, Section  23,  FUND CAPITALIZATION.    Mr.                                                                   
     Co-Chair, in  subsection (c) on page 70,  we reduced the                                                                   
     $5   Million  general   fund   appropriation  into   the                                                                   
     Disaster  Relief   Fund  down  to  $2  Million.   As  of                                                                   
     February 17th,  the unobligated balance of  the Fund was                                                                   
     $9.4 Million.                                                                                                              
     On  page  71,  in  subsection   (n),  we  increased  the                                                                   
     program   receipt   estimate   for  the   crime   victim                                                                   
     compensation  fund from $34,000  to $125,000  to reflect                                                                   
     anticipated revenue.                                                                                                       
     Pages 72 - 74  Section  24,  FUND  TRANSFERS.   Mr.  Co-                                                                   
     Chair,  we  did  not include  the  Governor's  amendment                                                                   
     that  sought   to  have   a  $5  Million   general  fund                                                                   
     contingency   deposit  into   the   oil  and   hazardous                                                                   
     substance  release  prevention account  in  the oil  and                                                                   
     hazardous  substance  release  prevention  and  response                                                                   
     fund,  if an expected  FY15 settlement  is not  received                                                                   
     timely. We  realize that this action leaves  a shortfall                                                                   
     in  the   Department  of  Environmental   Conservation's                                                                   
     budget,  but expect  the  funding issue  to be  resolved                                                                   
     before the legislative session concludes.                                                                                  
     Page  74, Section  25,  RETIREMENT  SYSTEM FUNDING.  Mr.                                                                   
     Co-Chair,  in   subsection  (a)  regarding   the  Public                                                                   
     Employee  Retirement System  we  corrected the  language                                                                   
     so  that the  deposit is  "in the  defined benefit  plan                                                                   
     account" within PERS.                                                                                                      
     Pages 74 - 75  Section    26,    SALARY   AND    BENEFIT                                                                   
     ADJUSTMENTS.   Mr.  Co-Chair,   in  subsection   (a)  we                                                                   
     deleted  the  word "ongoing"  from  the phrase  "of  the                                                                   
     following ongoing  collective bargaining  agreements" as                                                                   
     it is unnecessary.                                                                                                         
     In subsection  (c), we  changed "appropriations  made by                                                                   
     this  Act" to "appropriations  made in  this Act".  As a                                                                   
     note, there  are still four  bargaining units  that have                                                                   
     not submitted agreements for FY16.                                                                                         
1:56:46 PM                                                                                                                    
Ms. Brown continued to read from a prepared statement:                                                                          
     Page 76 Mr.  Co-Chair, we deleted what  had been Section                                                                   
     28,  STATUTORY  BUDGET  RESERVE  FUND.  As  Mr.  Ecklund                                                                   
     mentioned  earlier, the  Fund  will be  depleted at  the                                                                   
     end of the current fiscal year.                                                                                            
     Mr.  Co-Chair, we  also deleted  what  had been  Section                                                                   
     29,  CONSTITUTIONAL  BUDGET  RESERVE  FUND,  as  a  more                                                                   
     comprehensive version  of this section will  be included                                                                   
     in  another   appropriation   bill  later  during   this                                                                   
     legislative session.                                                                                                       
     Sections 29  - 33.   Mr. Co-Chair, only  section numbers                                                                   
     have been updated.                                                                                                         
     Mr.  Co-Chair, those  were all  of the  changes made  to                                                                   
     the language sections in House Bill 72.                                                                                    
Ms. Brown described the changes made in the Mental Health                                                                       
bill, HB 73:                                                                                                                    
     On Page 11, Section 4, CAPITAL PROJECTS.                                                                                   
     A  total of  four mental  health  capital projects  have                                                                   
     been submitted  for legislative authorization,  two were                                                                   
     in  the  original   bill  and  two  were   submitted  as                                                                   
     Each  year  the  House  Finance  Committee  removes  one                                                                   
     capital  project  from the  Mental  Health budget.  This                                                                   
     year  we've   added  the   two  Department   of  Revenue                                                                   
     projects  submitted  as   amendments  to  the  bill  and                                                                   
     deleted  the  Department  of Transportation  and  Public                                                                   
     Facilities  project  for MH  Coordinated  Transportation                                                                   
     and  Vehicles  for  $1.3  Million,  ($1,000.0  GFMH  and                                                                   
     $300.0 MHTAAR).                                                                                                            
     The  other body,  in its  version of  the Mental  Health                                                                   
     bill, will  add back that  project and delete  the three                                                                   
     capital  projects  in  the  House's  budget  bill,  thus                                                                   
     making  all  of  the  mental   health  capital  projects                                                                   
     subject to Conference Committee.                                                                                           
     Mr. Co-Chair, the language sections begin on page 14.                                                                      
     Pages 14 - 15  Mr.  Co-Chair, the  only changes  we made                                                                   
     were  minor wording  corrections  in  Sections 7,  8(a),                                                                   
     and 9(c)  and (d),  changing the phrase  "appropriations                                                                   
     made  by  this  Act" to  "appropriations  made  in  this                                                                   
     Act", just as we did in House Bill 72.                                                                                     
     Mr. Co-Chair,  those are all of the language  changes in                                                                   
     House Bill 73.                                                                                                             
1:59:10 PM                                                                                                                    
Representative  Gara asked  for verification  that there  was                                                                   
no Constitutional  Budget  Reserve (CBR)  language in  either                                                                   
bill. Ms. Brown replied in the affirmative.                                                                                     
Representative  Gara  believed  the  original  mental  health                                                                   
bill   [HB  73]   included   a  contribution   for   Medicaid                                                                   
expansion. He asked whether the provision had been removed.                                                                     
Ms. Brown answered  that some Medicaid expenditures  had been                                                                   
in the  mental health  bill, but they  had been  deleted. She                                                                   
clarified that  anything referring to Medicaid  expansion had                                                                   
been deleted from both bills.                                                                                                   
Representative   Gara  referred   to  a  spreadsheet   titled                                                                   
"Agency  Summary Numbers  and Language  (UGF Only)" (copy  on                                                                   
file). He  observed that page  one included two  changes from                                                                   
the  finance subcommittee  recommendations  to the  Committee                                                                   
Substitute:  one in  the Department  of Administration  (DOA)                                                                   
and   one  in   the  Department   of   Education  and   Early                                                                   
Development (DEED). He asked for detail.                                                                                        
Ms.  Brown  responded  that  the  changes  pertained  to  the                                                                   
salary    adjustment   transactions    she   had    mentioned                                                                   
Representative  Gara pointed  to page  D of the  spreadsheet.                                                                   
He  noted that  the DOA  number increased.  He surmised  that                                                                   
the increase occurred  because it factored in  all funds. Ms.                                                                   
Brown  answered that  the item  included  federal, and  other                                                                   
Co-Chair Neuman  asked subcommittee  chairs to present  their                                                                   
individual budget highlights.                                                                                                   
2:01:56 PM                                                                                                                    
Representative    Gattis    addressed    personal    services                                                                   
reductions  taken by her  two subcommittees  (DOA and  DEED).                                                                   
She  recognized  that the  subject  was  not germane  to  the                                                                   
subcommittee  process and  that there  were more  appropriate                                                                   
places  to have  the  conversation.  She believed  the  issue                                                                   
needed to  be addressed on a  statewide level rather  than in                                                                   
individual   departments;  it   would  be  better   evaluated                                                                   
through  legislation  or  standing   committees.  She  looked                                                                   
forward to joining the conversation as it began.                                                                                
Representative Gattis  spoke to the DEED  budget subcommittee                                                                   
recommendations.  She shared that  the subcommittee  had held                                                                   
five  meetings   to  discuss  the  department's   budget;  it                                                                   
recommended   an  overall  reduction   of  $12,704,000.   The                                                                   
reduction  was 18.6 percent  from the  FY 15 management  plan                                                                   
and 16.1  percent from  the governor's  proposed budget.  She                                                                   
acknowledged  that the  reductions  had  been challenging  to                                                                   
make  and  had been  given  much  thought. The  budget  would                                                                   
eliminate the  statewide literacy program ($150,000  GF), K-3                                                                   
literacy  project funding  ($320,000  GF), broadband  program                                                                   
funding  that had  been added  the prior  year ($5  million),                                                                   
Best   Beginnings   ($937,000   GF),  Parents   as   Teachers                                                                   
($307,000  GF), and Pre-K  pilot program  grants ($2  million                                                                   
2:04:31 PM                                                                                                                    
Representative   Gattis   reported    on   the   DOA   budget                                                                   
subcommittee    recommendations.     The    budget    totaled                                                                   
approximately  $80  million  in  unrestricted  general  funds                                                                   
(UGF); $50 million  of the total was allocated  to the Public                                                                   
Defenders  Agency  and the  Office  of Public  Advocacy.  She                                                                   
noted  that the funding  for the  two agencies  could  not be                                                                   
cut   without  statutory   changes.   She   hoped  that   the                                                                   
legislature moved  some of the  statute changes  forward; the                                                                   
offices were backlogged  and would be in worse  shape without                                                                   
the changes. She  discussed that the subcommittee  had denied                                                                   
the proposal  to close the  Alaska Public Offices  Commission                                                                   
(APOC) Juneau  office and  had asked  the department  to look                                                                   
at comprehensive  changes. Just over $1 million  UGF had been                                                                   
removed;  $600,000  GF  had  been   backfilled  with  program                                                                   
receipts to  be collected in  the form of increased  lobbyist                                                                   
and  independent  expenditure  fees.  The net  effect  was  a                                                                   
reduction  to  APOC's  overall  size. She  relayed  that  the                                                                   
longer-term  goal was  to make  APOC  self-sufficient and  to                                                                   
reduce  its overall  footprint.  The  UGF budget  for  Public                                                                   
Communications  had been reduced  by 50  percent; it  did not                                                                   
represent  a 50  percent  reduction  of the  agency's  entire                                                                   
budget  given  other  revenue  sources such  as  federal  and                                                                   
advertising. She  did not believe the office  provided a core                                                                   
government  service.  She  reasoned  that  with  advances  in                                                                   
technology,   many   communities   had   other   broadcasting                                                                   
sources.  The  recommendations  included intent  language  to                                                                   
ensure that service  would not be cut to communities  with no                                                                   
other  broadcasting  source (12  of  the 24  communities  had                                                                   
other  options). The  subcommittee  had  reduced agency  core                                                                   
services   by   10   percent;   services   that   were   more                                                                   
administrative  in function had  been reduced by  20 percent.                                                                   
The budget included  two small fund source  changes where the                                                                   
department had over collected in the prior year.                                                                                
Co-Chair  Neuman  noted  that questions  would  be  addressed                                                                   
after committee reports.                                                                                                        
2:07:06 PM                                                                                                                    
Representative   Edgmon  reported   on   the  Department   of                                                                   
Corrections  (DOC)  budget subcommittee  recommendations.  He                                                                   
detailed  that the department's  budget  was comprised  of 86                                                                   
percent   UGF;  total   proposed   funds  for   FY  16   were                                                                   
$328,400,000.  He explained  that  the subcommittee  proposed                                                                   
to  make  a   5.5  percent  reduction  of   $16,476,400;  the                                                                   
reduction  would decrease  the  governor's  FY 15  management                                                                   
plan  total of  $297,654,000 down  to $281,178,000.  Accepted                                                                   
items  from  the  governor's  amended  budget  included  a  2                                                                   
percent  cut  in  personnel  services   to  the  12  in-state                                                                   
correctional  facilities. He detailed  that the  governor had                                                                   
originally  proposed to  cut the  entire  $10.2 million  from                                                                   
the  15  community  contract jails,  but  had  reinstated  $7                                                                   
million;    the    subcommittee   accepted    the    proposed                                                                   
restoration.  He  shared  that the  process  of  transferring                                                                   
eligible  prisoners from  the Palmer  Correctional Center  to                                                                   
halfway  houses or  electronic monitoring  was beginning  and                                                                   
would be  a byproduct  of the  budget reduction process.  The                                                                   
subcommittee  had  denied  the  Medicaid  expansion  element,                                                                   
which totaled  $4.1 million;  the money was  added in  UGF to                                                                   
the  overall  department  budget.   The  funding  source  for                                                                   
prisoner healthcare  had been  switched from UGF  to criminal                                                                   
Permanent Fund  Dividend (PFD)  funds totaling $2.8  million;                                                                   
the  switch was  a  byproduct  of a  larger  dividend and  an                                                                   
increased number of eligible prisoners.                                                                                         
2:09:53 PM                                                                                                                    
Representative  Edgmon  addressed  the Department  of  Public                                                                   
Safety budget  recommendations. He relayed that  the criminal                                                                   
justice  agency  was  largely  funded by  UGF  (83  percent).                                                                   
Total funds  for FY  16 were  $196,961,600. The  subcommittee                                                                   
proposed a total  of $165,148,800 compared to  the governor's                                                                   
FY 15  management plan  of $171,410,000  (a UGF reduction  of                                                                   
3.7  percent or  $6,261,800). The  subcommittee accepted  the                                                                   
elimination   of  32  permanent   full-time  PCNs   [Position                                                                   
Control Numbers],  9 temporary PCNs,  and the transfer  of 20                                                                   
of  the  permanent  full-time  troopers to  vacant  PCNs.  He                                                                   
explained that  a number of  troopers in Fairbanks,  Wasilla,                                                                   
and  Soldotna  would  be  transferred   from  the  Bureau  of                                                                   
Highway Patrol to  regular trooper duties given  that federal                                                                   
funds for  highway patrol had  run their course.  The Village                                                                   
Public Safety Officer  (VPSO) program would be  capped at the                                                                   
services  it  provided;  the  reduction  totaled  about  $1.6                                                                   
million  from the  prior  year. Additionally,  six  oversight                                                                   
trooper  positions would  be filled by  regular troopers  who                                                                   
would   be  stationed   in  Fairbanks,   Bethel,  and   other                                                                   
locations; the troopers  would have the duty  of working with                                                                   
the VPSO  component in  addition to  regular trooper  duties.                                                                   
The subcommittee  had appropriated  $1.5 million of  what had                                                                   
been  the Choose  Respect funds  directly to  the Council  on                                                                   
Domestic  Violence and  Sexual  Assault  (CDVSA) rather  than                                                                   
through  the governor's  office. He detailed  that the  prior                                                                   
year  CDVSA had  received $2.3  million of  the funds;  under                                                                   
the   proposed    budget   the   funds   were    a   one-time                                                                   
appropriation.  Four  non-permanent  cold  case  investigator                                                                   
positions  had   been  deleted,  which  were   retired  state                                                                   
troopers.  He relayed  that  the specialized  services  would                                                                   
continue  to be  provided in  a  different manner  throughout                                                                   
the department.  He relayed  that the  Stimson patrol  vessel                                                                   
would be transferred  from Unalaska to Kodiak.  He noted that                                                                   
the  decision  had  been  difficult   (Unalaska  was  in  his                                                                   
district),  but  he felt  it  was currently  the  appropriate                                                                   
action in  order to reduce  the budget. The  subcommittee had                                                                   
denied  $2.37  million  for pilots  and  four  mechanics  for                                                                   
maintenance of aircraft contract work.                                                                                          
2:13:41 PM                                                                                                                    
Co-Chair  Neuman remarked  that  Representative Edgmon  would                                                                   
continue to work  on the DOC budget with the  recidivism task                                                                   
Representative   Munoz  thanked   the   personnel  with   the                                                                   
departments  she had  worked with.  She thanked  Commissioner                                                                   
Hartig   and    Director   Thomas   Cherian    [Division   of                                                                   
Administrative   Services,   Department    of   Environmental                                                                   
Conservation].   The   total  Department   of   Environmental                                                                   
Conservation  (DEC)   funds  for  FY  16   were  $85,864,700;                                                                   
including total  UGF of $20,454,600.  The UGF  reduction from                                                                   
the  FY   15  management   plan  to   the  subcommittee   was                                                                   
$1,787,400 (8 percent).  Highlights of the budget  included a                                                                   
reduction  of  25   permanent  PCNs.  She  relayed   that  an                                                                   
increment had  been approved for  the Air Quality  permitting                                                                   
program to meet  growing oil and gas industry  needs; the PCN                                                                   
would be  paid for with  program fees. She communicated  that                                                                   
$250,000 had  been decremented  from the Laboratory  Services                                                                   
Fish Tissue  Monitoring Program. The subcommittee  had denied                                                                   
a  fund source  change  of  $250,000  from the  Ocean  Ranger                                                                   
program to pay  for the activity because the  fish monitoring                                                                   
did not meet  the legislative intent with the  original ocean                                                                   
ranger  legislation.  The subcommittee  had  included  intent                                                                   
language  to  encourage  the Spill  Prevention  and  Response                                                                   
(SPAR)   division   to  increase   cost   recovery   efforts.                                                                   
Additionally,  the division  had been  encouraged to  work to                                                                   
consolidate its  drill activities as much as  possible within                                                                   
any  given   region.  Lastly,   she  was  working   on  draft                                                                   
legislation to address a SPAR division funding shortfall.                                                                       
Representative     Munoz    addressed    the     subcommittee                                                                   
recommendations  for  the Alaska  Court  System  [Judiciary].                                                                   
She thanked  Doug Wooliver,  Deputy Administrative  Director,                                                                   
Alaska Court System  and other department staff.  Total funds                                                                   
for  FY  16   were  $114,356,300;  including   total  UGF  of                                                                   
$110,405,700.  The UGF  reduction from  the FY 15  management                                                                   
plan  to  the  subcommittee  was  $1,000,400  (1.3  percent).                                                                   
Budget highlights  included the denial of all  UGF increments                                                                   
and  reductions in  personnel  services  through unpaid  days                                                                   
off; the amounts  were roughly six days in  unpaid leave. The                                                                   
subcommittee  reduced   supplies,  travel,   and  contractual                                                                   
costs;  advertising funds;  and  eliminated  the Court  Watch                                                                   
2:17:37 PM                                                                                                                    
Co-Chair  Neuman addressed  the Department  of Fish and  Game                                                                   
(DFG), Office  of the Governor,  and the Alaska  Legislature.                                                                   
He read  from a statement  beginning with  the Office  of the                                                                   
     The subcommittee  accepted the Office of  the Governor's                                                                   
     budget as  requested. The  budget totals $24.3  million,                                                                   
     of  which $25.3 million  is UGF.  The governor's  budget                                                                   
     includes  reductions affecting  nearly every  allocation                                                                   
     and eliminates  seven vacant full-time  positions. After                                                                   
     the removal  of the one-time items such  as the election                                                                   
     year funding,  redistricting, and the  Domestic Violence                                                                   
     and  Sexual Assault  Initiative, that  brings us  to the                                                                   
     FY 16  adjusted budget. From  the FY 16  adjusted budget                                                                   
     the Office  of the Governor reduced UGF  by $2.2 million                                                                   
     or 8.3  percent. For  an apples-to-apples comparison  if                                                                   
     the  governor had  not transferred  the $1.5 million  to                                                                   
     the Department  of Public  Safety for domestic  violence                                                                   
     prevention,   the  governor's   office  reduction   from                                                                   
     adjusted base would have been $625,100 or 2.4 percent.                                                                     
     The    subcommittee   for    the   Alaska    Legislature                                                                   
     recommended  a budget totaling  $76.4 million,  of which                                                                   
     $75.6  million  was  UGF. The  subcommittee  denied  all                                                                   
     increment  requests, removed  one-time  items, and  made                                                                   
     additional budget  reductions of nearly $1.8  million to                                                                   
     the  legislature's  proposed  budget.  From  the  FY  16                                                                   
     adjusted  budget the [subcommittee]  budget reduces  UGF                                                                   
     by $2.7 million or 3.5 percent.                                                                                            
     The  House Finance  Subcommittee for  DFG recommends  an                                                                   
     operating budget  for FY 16 of $67,872,200  in UGF and a                                                                   
     total   of  $210,521,900.   This  is   a  reduction   of                                                                   
     $11,515,600  from  the  FY  15 management  plan  to  the                                                                   
     House subcommittee;  that is a 14.5 percent  decrease in                                                                   
     UGF.  The  subcommittee for  DFG  held  a total  of  six                                                                   
     meetings  during which  we went  through the  governor's                                                                   
     FY   16  budget   for  the   department  and   recommend                                                                   
     accepting   the  governor's  FY   16  budget   with  the                                                                   
     additional  actions  listed in  this  report. Our  focus                                                                   
     was   on    reduction   in   personnel    programs   and                                                                   
     restructuring  without  negatively  impacting  the  core                                                                   
     services.  The   department  was  very   cooperative  in                                                                   
     working through  this complex budget where  there were a                                                                   
     lot  of different  numbers  that are  used  to fund  and                                                                   
     manage  our  fish  and game  resources;  it's  a  fairly                                                                   
     complex  task deciding  which  projects  can be  reduced                                                                   
     and  where  the  long-range  impacts are.  We  had  many                                                                   
     discussions  on  the research  projects  that are  going                                                                   
     around the  state whether its  fish and game;  there are                                                                   
     a lot of  areas where there were stressed  fisheries and                                                                   
     fish and  game issues. We  worked very closely  with the                                                                   
     department  to make  sure  that we  funded the  projects                                                                   
     that were  necessary to make  sure we had fish  and game                                                                   
     for  our state.  There were  quite a  few projects  that                                                                   
     were not funded.  Almost every one of  the projects that                                                                   
     is  funded,  if  not  all  the  way  funded,  came  from                                                                   
     special  use funds:  the Pittman  Robertson fund,  which                                                                   
     is  a  10 percent  excise  tax  on sporting  goods  that                                                                   
     people  pay into (those  funds go  back into  research);                                                                   
     also  the  Dingle  Johnson  funds, which  go  back  into                                                                   
     access  for fisheries.  There  was $3  million in  other                                                                   
     funds   that   was   originally   recommended   by   the                                                                   
     administration  to  reduce  the Division  of  Commercial                                                                   
     Fisheries  agency operations.  We took  that $3  million                                                                   
     and put that  into projects to enhance  fisheries around                                                                   
     the  state  that  are used  by  the  commercial  fishing                                                                   
     industry and all users.                                                                                                    
2:22:00 PM                                                                                                                    
Co-Chair Thompson spoke to Department of Military and                                                                           
Veterans Affairs budget subcommittee.                                                                                           
     The   subcommittee  had   held  5   meetings  with   the                                                                   
     department   and   analyzed    the   governor's   budget                                                                   
     transactions.  The  total  funds  for  FY  16  DMVA  are                                                                   
     $61,910,000;  the  UGF  total is  $17,588,100.  The  UGF                                                                   
     difference   from   the  FY   15   management  plan   to                                                                   
     subcommittee  was the  reduction of  $7,228,800 or  29.1                                                                   
     percent. A  large portion of  the reduction in  the DMVA                                                                   
     budget was  the elimination  of general funds  to Alaska                                                                   
     Aerospace  Corporation.  Alaska  Aerospace  did  receive                                                                   
     authority   to  spend  Alaska   Aerospace  receipts   to                                                                   
     replace  the  general  fund   reductions  as  they  move                                                                   
     towards  more privatization  operations.  A total  of 15                                                                   
     positions  were eliminated  from  DMVA in  consolidation                                                                   
     efforts  in  the Office  of  the Commissioner  and  both                                                                   
     Army   and  Air   Guard   facilities  maintenance.   The                                                                   
     subcommittee  eliminated a physician's  service contract                                                                   
     who  is replaced  with an  existing health  practitioner                                                                   
     who will be on premises.                                                                                                   
     The  Department  of Revenue  (DOR)  budget  subcommittee                                                                   
     held six meetings  with the department and  analyzed the                                                                   
     governor's budget  transactions. The total  funds for FY                                                                   
     14 for  DOR was  $402,132,200. The UGF  total in  the FY                                                                   
     16 DOR  budget is $30,225,600.  The UGF  difference from                                                                   
     FY 15  management plan to  subcommittee was  a reduction                                                                   
     of $3,605,800  or 10.7 percent. A total  of 13 positions                                                                   
     were   eliminated   from    DOR.   To   facilitate   the                                                                   
     consolidation  of  information services  and  technology                                                                   
     within DOR,  2 of the 13 positions eliminated  were from                                                                   
     information   service  personnel   and  funding   for  2                                                                   
     information  service positions was  changed from  UGF to                                                                   
     CIP    receipts.    To    capitalize    on    investment                                                                   
     opportunities  the  Alaska  Permanent  Fund  Corporation                                                                   
     expanded by 4 positions.                                                                                                   
     The Department  of Transportation and  Public Facilities                                                                   
     (DOT)  budget subcommittee  held  12  meetings with  the                                                                   
     department   and   analyzed    the   governor's   budget                                                                   
     transactions.  The  actions forwarded  from  DOT are  as                                                                   
     follows:   $612,488,800   in   total  funds.   This   is                                                                   
     comprised  of  $247,905,900   of  UGF;  a  reduction  of                                                                   
     $30,698,700  from  the  FY  15  management  plan  or  11                                                                   
     percent.  There  were  many technical  changes  in  this                                                                   
     year's budget.  The department has gone through  a major                                                                   
     change  by  creating  a  new  South  Coast  region  that                                                                   
     encompasses  the old  Southern region  and parts  of the                                                                   
     Central  region  to  better   reflect  the  geographical                                                                   
     similarities  of parts of  the state.  A change  for the                                                                   
     State  of Alaska  to assume  complete responsibility  in                                                                   
     the   National    Environmental   Policy    Act   (NEPA)                                                                   
     authorizations.  This action will  allow projects  to go                                                                   
     from  design to  completion at  a more  rapid rate.  The                                                                   
     committee made  reductions in two areas that  contain 92                                                                   
     percent   of   general   funds   appropriated   to   the                                                                   
     department.  These  divisions have  had  an increase  of                                                                   
     general  fund  dollars  of  66 percent  and  59  percent                                                                   
     respectively  over  the last  10  years.  A 9.9  percent                                                                   
     reduction  in  general  funds   for  the  Alaska  Marine                                                                   
     Highway  System (AMHS)  and a 9.6  percent reduction  in                                                                   
     general  funds from  the maintenance  and operations  of                                                                   
     highways,   aviation,  and   facilities;  both   of  the                                                                   
     reductions  reflect  the  need  to bring  the  State  of                                                                   
     Alaska's   budget   more  in   line   with  its   fiscal                                                                   
     situation.  A   $30.6  million  reduction   from  FY  15                                                                   
     management  is a combination  of  governor cuts  and the                                                                   
     finance  subcommittee  cuts.  The governor  reduced  the                                                                   
     department's  general fund  by $10.8  million below  the                                                                   
     FY  15  management  plan;  this  number  includes  minor                                                                   
     reductions  to almost  every  line item  in the  budget.                                                                   
     The one fact  to remember, is two  appropriations really                                                                   
     take  up  92  percent  of  the  general  fund  of  DOT's                                                                   
     budget:  maintenance and operations  of our  highway and                                                                   
     state  airports and  other facilities  ($168 million  GF                                                                   
     or  46  percent);  and  AMHS at  $169  million  or  46.4                                                                   
     percent of  the budget. All other allocations  are a mix                                                                   
     of  CIP  receipts,  interagency  receipts,  and  federal                                                                   
     money.   There  are  minor   aspects  of  general   fund                                                                   
     involved.  The next two highest  general fund  items are                                                                   
     administration and  support for $23 million  and design,                                                                   
     engineering, and construction at $4.6 million.                                                                             
2:27:37 PM                                                                                                                    
Vice-Chair  Saddler spoke  to  the Department  of Health  and                                                                   
Social Services  (DHSS) budget subcommittee  recommendations.                                                                   
The   subcommittee    recommended    a   total   budget    of                                                                   
$2,626,288,100;  including $1,173,564,800  in UGF,  which was                                                                   
a reduction  from the  FY 15 management  plan of  $77,814,400                                                                   
or 6.2  percent. Highlights  included denying the  governor's                                                                   
budget  transactions  related  to Medicaid  expansion,  which                                                                   
had  proposed  $145  million  of  federal  authorization.  He                                                                   
looked forward  to the administration submitting  legislation                                                                   
on Medicaid  expansion and reform. Other  highlights included                                                                   
making general fund  reductions to grants and  other programs                                                                   
in the  department. The  subcommittee had eliminated  funding                                                                   
for the Healthcare  Commission Obesity Prevention  grants and                                                                   
the Youth Court  program. The subcommittee had  added funding                                                                   
for  the  Office  of  Children's  Services  frontline  social                                                                   
workers to address the increasing workload.                                                                                     
Vice-Chair  Saddler addressed  the Department  of Law  budget                                                                   
subcommittee  recommendations.  The subcommittee  recommended                                                                   
total  funds of  $88,393,600; including  $54,112,200 in  UGF,                                                                   
which  was a  reduction from  the  FY 15  management plan  of                                                                   
$5,163,100 or  8.7 percent. Highlights included  reducing the                                                                   
Criminal Division  by $1.6 million and 9  permanent full-time                                                                   
positions  and reducing  the Civil Division  by $1.5  million                                                                   
and 10 permanent full-time positions.                                                                                           
2:29:44 PM                                                                                                                    
Representative  Pruitt  thanked  the  departments  for  their                                                                   
work. He  addressed the  budget subcommittee  recommendations                                                                   
for  the  Department  of  Commerce,  Community  and  Economic                                                                   
Development   (DCCED).   Total   funds   for   FY   16   were                                                                   
$157,560,500;  including  $27,711,400  in  UGF, which  was  a                                                                   
$3,099,500  (10.1 percent)  decrease from  FY 15.  Highlights                                                                   
from  the  budget  included a  $2,883,000  UGF  (39  percent)                                                                   
reduction to  the Alaska  Seafood Marketing Institute  (ASMI)                                                                   
budget.  A $5,935,600  or 39.05  percent  reduction had  been                                                                   
made to  tourism marketing;  it  had been  placed in its  own                                                                   
separate  appropriation   (from  the  Division   of  Economic                                                                   
Development). The  subcommittee had also reduced  the 8 named                                                                   
grant recipients  in the governor's  proposed budget  down to                                                                   
4. The subcommittee  eliminated 19 vacant positions  that had                                                                   
been vacant somewhere  between 6 to 36 months.  Lastly, there                                                                   
had been a department-wide travel reduction.                                                                                    
Representative Pruitt  reported on the Department  of Natural                                                                   
Resources  (DNR) budget  subcommittee recommendations.  Total                                                                   
funds for FY  16 were $162,118,400; including  $82,758,600 in                                                                   
UGF, which  was a $3,896,700  (4.5 percent) decrease  from FY                                                                   
15.   Highlights  included   an   increase   in  funding   of                                                                   
$13,886,700 UGF  for North  Slope gas commercialization;  the                                                                   
increment  would continue  the state's  participation  in the                                                                   
pipeline  and  gas  commercialization.   There  was  a  $1.54                                                                   
million  UGF reduction  to  the RS2477  Navigability  program                                                                   
(the  pad unit).  Additionally, there  was a  $1 million  UGF                                                                   
reduction  to  airborne  geophysical survey  funding;  and  a                                                                   
reduction  of $1.3  million UGF  and  of $400,000  designated                                                                   
general funds (DGF)  and timber receipts to  the timber sales                                                                   
2:33:00 PM                                                                                                                    
Representative  Wilson  began with  the  Department of  Labor                                                                   
and Workforce  Development. The  subcommittee had  focused on                                                                   
the mission  of putting  people back to  work or  into higher                                                                   
paying jobs. She  stated that there were many  good programs,                                                                   
but many  were geared towards  high school and  middle school                                                                   
students;  the  subcommittee  felt  that  programs  targeting                                                                   
youths  belonged in  DEED. The  subcommittee recommended  UGF                                                                   
of  $23,042,200   and  total   funds  of  $173,297,100.   She                                                                   
detailed  that  most  of  the  non-matching  funds  had  been                                                                   
eliminated.  She  spoke  to  employment  security  and  adult                                                                   
basic  education  and stated  that  with  a test  changing  a                                                                   
$25,000  decrement had  been made. She  elaborated that  most                                                                   
of  the students  paid  for the  tests that  were  done by  a                                                                   
private  company;  therefore,  costs  could  not  be  changed                                                                   
significantly.  Career  and  technical   education  had  been                                                                   
reduced  because much  of the  money had been  aimed at  K-12                                                                   
students  instead  of  focusing  on putting  adults  back  to                                                                   
work.  Funding had  been removed  from  the Alaska  Technical                                                                   
Center,  Southwest Alaska  Vocational  and Education  Center,                                                                   
and Northwest Alaska  Career and Technical Center;  all three                                                                   
schools  received  Technical   Vocational  Education  Program                                                                   
funds  and State  Training  and Employment  Program  funding.                                                                   
She  elaborated that  state funds  had been  provided to  the                                                                   
programs in the  past, but she did not find  justification to                                                                   
continue  the funding.  The Alaska  Construction Academy  had                                                                   
been reduced by  $3.1 million; over half the  program went to                                                                   
high  schools,  but not  into  programs  that put  adults  to                                                                   
work.  She  looked  to  see if  there  was  a  private/public                                                                   
partnership financially;  none had been brought  forward. She                                                                   
stated that the  budget had been reduced by  $6,127,700 or 21                                                                   
She addressed  the University  of Alaska budget  subcommittee                                                                   
recommendations.  She explained  that one  increment went  to                                                                   
the  university,   but  she  had  split  the   figure  up  to                                                                   
demonstrate   the  subcommittee's   intent.  The   university                                                                   
received  $334,768,500 UGF,  $327,169,000  DGF. She  detailed                                                                   
that most states  only provided 18 percent in  state funds to                                                                   
their universities;  the State  of Alaska's contribution  was                                                                   
much higher. The  subcommittee did not accept  the governor's                                                                   
$1.4  million in  one-time funding  for facility  maintenance                                                                   
and student  advising. She  believed student advising  should                                                                   
be included  in tuition  fees. The  subcommittee had  divided                                                                   
the university  budget between the Fairbanks,  Anchorage, and                                                                   
Juneau systems; the  smaller schools were attached  to one of                                                                   
the  three primary  campuses.  The subcommittee  had  removed                                                                   
$500,000  from the  $1,094,000  travel budget.  Additionally,                                                                   
20 percent  had been removed  from the Office  of Information                                                                   
System-Wide  Education statewide  services. The  subcommittee                                                                   
had removed  50 percent  of travel  funds from main  campuses                                                                   
(the university  could  choose to allocate  the reduction  in                                                                   
any  way); it  had removed  $2  million from  a $5.3  million                                                                   
allocation  for University  of Alaska  Anchorage travel.  She                                                                   
elaborated that  $2.1 million had  been removed from  an $8.7                                                                   
million  travel budget  for University  of Alaska  Fairbanks;                                                                   
$438,500  had been  removed  from  the University  of  Alaska                                                                   
Southeast  travel  funds  ($520,400  remained).  Lastly,  the                                                                   
subcommittee  had  removed  4.3  percent  from  each  of  the                                                                   
campuses   (divided   between    personal   and   contractual                                                                   
services).  She stated  that  the university  could  allocate                                                                   
money much  easier than  most of  the departments.  She added                                                                   
that it had over 400 buildings to maintain.                                                                                     
2:38:15 PM                                                                                                                    
Co-Chair Neuman  discussed that there  had been a wrap  up of                                                                   
the  budget subcommittee  process, but  the operating  budget                                                                   
had  a long  journey  ahead.  He  shared that  the  committee                                                                   
would hear  public comments  and would  take amendments  from                                                                   
finance members.  Based on public  comments a  finalized bill                                                                   
would eventually move  to the House floor. He  noted that all                                                                   
members would  have a say in  how the budget  process worked.                                                                   
He relayed  that the budget had  been difficult to  work with                                                                   
due  to  the  time  situation   with  the  new  governor.  He                                                                   
discussed  the short budget  timeline.  He detailed that  the                                                                   
legislature  had received Governor  Walker's endorsed  budget                                                                   
on February 5,  with subcommittee work beginning  on February                                                                   
9,  2015.  Subsequently,  the legislature  had  received  the                                                                   
governor's   amended  budgets   on  February   27,  2015   in                                                                   
preparation for  subcommittee closeouts.  He referred  to the                                                                   
House  CS   numbers  on  the   Agency  Summary  page   C.  He                                                                   
referenced  the  FY 15  management  plan to  House  Committee                                                                   
Substitute  of   $387,244,700.  He  reiterated   that  budget                                                                   
discussions would  be ongoing. He recognized that  no one was                                                                   
happy with  the budget;  some people  wanted more  reductions                                                                   
and others wanted fewer.                                                                                                        
Co-Chair Thompson  discussed the  schedule for the  following                                                                   
day.  He  shared   that  the  committee  would   hear  public                                                                   
testimony  during  the  upcoming  three  days.  He  discussed                                                                   
protocol related to public testimony.                                                                                           
Co-Chair Neuman thanked members for their hard work.                                                                            
Representative  Gara discussed  that the governor's  proposed                                                                   
budget  appeared to  be  $250  million less  than  the FY  15                                                                   
management  plan; however,  due to a  technicality in  budget                                                                   
reporting, it  was really $500  million less. He  stated that                                                                   
the  $250   million  extra  cut   should  be  shown   in  the                                                                   
legislature's  proposed  budget.   He  elaborated  that  both                                                                   
budgets  counted  the $250  million  (the state  was  putting                                                                   
towards paying  down its retirement  debt) as an  increase in                                                                   
spending. He  asserted that the  amount did not  represent an                                                                   
increase in spending.  He elaborated that the  state spent $3                                                                   
billion   the  prior   year  for   the  unfunded   retirement                                                                   
liability out  of the CBR;  the $250 million  increment would                                                                   
come out  of general  funds in the  current year.  He pointed                                                                   
out  that  on  paper the  amount  looked  like  an  increase;                                                                   
however, it  was not.  He observed  that the governor's  cuts                                                                   
were  closer to  $500 million  and  the Committee  Substitute                                                                   
cuts   were  closer   to  $615   million.  Additionally,   he                                                                   
understood  there  would  be  continued  discussions  on  the                                                                   
budget, but  he believed  it was a  mistake to eliminate  the                                                                   
state's  Pre-K   program.  He  reported  that   children  who                                                                   
attended Pre-K graduated  in higher numbers, went  to jail in                                                                   
lower numbers,  and cost less  money in social  services. The                                                                   
issue represented  just one  of his  concerns related  to the                                                                   

Document Name Date/Time Subjects
HB 72 Agency Summaries.pdf HFIN 3/2/2015 1:30:00 PM
HB 72
HB 72 -CS Workdraft - 29-GH1780P.pdf HFIN 3/2/2015 1:30:00 PM
HB 72
HB 73 CS WorkDraft - 29-GH1782H.pdf HFIN 3/2/2015 1:30:00 PM
HB 73