Legislature(2015 - 2016)HOUSE FINANCE 519

04/30/2015 01:00 PM House FINANCE

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01:06:13 PM Start
01:06:39 PM HB1001
02:33:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
HOUSE BILL NO. 1001                                                                                                           
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan  program  expenses  of  state  government  and  for                                                                   
     certain    programs,    capitalizing    funds,    making                                                                   
     reappropriations,  making  capital  appropriations,  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."                                                                                                        
1:06:39 PM                                                                                                                    
Co-Chair  Neuman explained  that the meeting  would entail  a                                                                   
high  level overview  of the  new  Committee Substitute  (CS)                                                                   
for  HB  1001.  He instructed  committee  members  to  submit                                                                   
written  questions that  would be addressed  during the  next                                                                   
PETE  ECKLUND, STAFF,  REPRESENTATIVE  MARK NEUMAN,  reviewed                                                                   
the  changes in  the new  CS.  He directed  attention to  the                                                                   
"2015  Legislature  Operating   Budget  Agency  Summary  FY16                                                                   
Conference  Structure"  (copy  on file)  that  contained  the                                                                   
numbers  and   language  sections  summary   of  unrestricted                                                                   
general funds  (UGF) in HB 1001.  He cited the  totals listed                                                                   
in  column one:  Statewide  total  of $54.954.5  million  and                                                                   
Fund  Transfers  of  $39  million,  and  noted  that  the  CS                                                                   
contained   approximately    $94   million    of   additional                                                                   
unrestricted  general funds.  He  turned to  the numbers  and                                                                   
language   sections   all   funds   summary   titled,   "2015                                                                   
Legislature Operating  Budget Agency Summary  FY16 Conference                                                                   
Structure"  (copy on  file) and  pointed to  column one  that                                                                   
identified  $217.660  million   of  new  spending  above  the                                                                   
adopted  Conference Committee  Substitute (CCS)  [CCS HB  72]                                                                   
operating budget totals.                                                                                                        
Co-Chair Neuman  interjected that the four  columns specified                                                                   
the additional funding by department and type of funding.                                                                       
Representative  Wilson  asked  whether  the summary  was  the                                                                   
difference  between  the CCS  and  the  new CS  and  wondered                                                                   
whether additional  money above the $217.660 million  and $94                                                                   
million was added.                                                                                                              
Mr. Ecklund  explained that contained  in both  summaries the                                                                   
Department  of   Corrections  (DOC)   listed  a   savings  of                                                                   
$4.108.2  million,  which reflected  the  Medicaid  expansion                                                                   
portion  of  the  CS.  The  net  increase  in  the  bill  was                                                                   
$217.660 million of all funds.                                                                                                  
Representative  Wilson  pointed  out that  the  CS  contained                                                                   
"new numbers  that  do not show  up because  of the  Medicaid                                                                   
expansion  decrease."   Co-Chair  Neuman  offered   that  the                                                                   
Medicaid  expansion  discussion  would  occur in  depth  next                                                                   
week.  Representative  Wilson  asked  whether  the  committee                                                                   
would  re-examine the  entire  operating budget  or only  the                                                                   
increases in the  CS version. Co-Chair Neuman  explained that                                                                   
presently,  the   committee  was   reviewing  the   CS  which                                                                   
contained  the differences between  the conference  committee                                                                   
numbers and the governor's new bill.                                                                                            
1:12:43 PM                                                                                                                    
Mr. Ecklund referred  to section 5 of the  governor's version                                                                   
of HB  1001 which reflected  the Medicaid expansion  portion.                                                                   
He  observed   that  the   section  contained  negative   and                                                                   
positive  spending   appropriations;  the   negative  numbers                                                                   
reflected savings.                                                                                                              
Representative  Gara  referred   to  the  UGF  summary  "Non-                                                                   
Additive  Items, Fund Transfers"  listing  and asked why  the                                                                   
fund  transfers number  ($39 million)  was added  to the  UGF                                                                   
total of  $54.954.5 million. Mr.  Ecklund responded  that the                                                                   
amount reflected  $39 million  of new  general fund  spending                                                                   
which   necessitated  an   appropriation   into  the   public                                                                   
education    fund.    Representative     Gara    asked    for                                                                   
clarification.  Mr.  Ecklund   responded  that  on  page  15,                                                                   
Section  7 of the  CS, a  fund transfer  of $118 million  was                                                                   
appropriated from  the instate  natural gas pipeline  fund to                                                                   
the  public  education   fund.  He  detailed  that   the  CCS                                                                   
transferred  $157  million from  the  pipeline  fund and  the                                                                   
difference   of  $39  million   reflected   in  the  CS   was                                                                   
appropriated from general fund dollars.                                                                                         
Representative  Gattis commented about  the CS. She  wondered                                                                   
why the  CS only contained  the changes  between the  CCS and                                                                   
the   governor's  version   of  HB   1001.  Co-Chair   Neuman                                                                   
reiterated that  the bill  reflected the differences  between                                                                   
the CCS and  the governor's version of HB  1001.He emphasized                                                                   
that the CS only contained the differences.                                                                                     
Representative  Gara  announced  that the  governor  did  not                                                                   
work with the Minority when drafting HB 1001.                                                                                   
Vice-Chair   Saddler  assumed   that  CCS   HB  72   [APPROP:                                                                   
OPERATING BUDGET/LOANS/FUNDS]  would become law  and whatever                                                                   
proposed changes  that were adopted  would be rolled  into HB
72. Co-Chair Neuman answered in the affirmative.                                                                                
1:18:12 PM                                                                                                                    
Representative  Gattis expressed  her struggle to  understand                                                                   
the  strategy with  proposing the  Committee Substitute.  She                                                                   
asked whether whatever  changes were adopted would  be rolled                                                                   
into  HB  72.  Co-Chair  Neuman restated  that  the  CS  only                                                                   
contained  the  governor's requested  changes  to  streamline                                                                   
the process and  make it "easier to understand"  and would be                                                                   
rolled into CCS HB 72.                                                                                                          
PAT  PITNEY,  DIRECTOR,  OFFICE  OF  MANAGEMENT  AND  BUDGET,                                                                   
OFFICE OF  THE GOVERNOR, expressed  her appreciation  for the                                                                   
work of  the Legislative Finance  Division, Mr.  Ecklund, and                                                                   
Joan  Brown  from  Co-Chair  Neuman's  staff on  the  new  CS                                                                   
version  of HB  1001. She  explained that  the new  Committee                                                                   
Substitute  outlined  the  governor's priorities  and  was  a                                                                   
"much  simpler approach"  to the  process. The  intent of  HB
1001  was to  keep budget  negotiations  ongoing. She  stated                                                                   
that  the budget  included  funding for  education,  Medicaid                                                                   
expansion,  and adjusted  for items  that were  "cut too  far                                                                   
and   would  have   a  substantial   impact"  on   government                                                                   
operations.  She  emphasized   that  the  legislation  was  a                                                                   
vehicle  to  keep  discussions   going  and  work  towards  a                                                                   
"funded budget."  She announced  that the administration  was                                                                   
"flexible"  in  its  goal  to achieve  a  funded  budget  and                                                                   
willing to work together to reach a compromise.                                                                                 
Representative  Gattis  voiced  that  she did  not  hear  Ms.                                                                   
Pitney say that  "this was the only thing on  the table". She                                                                   
inquired  whether  everything  in  the budget  was  open  for                                                                   
discussion. Co-Chair  Neuman answered  that the items  in the                                                                   
CS were  contained in  the governor's version  but in  a much                                                                   
simpler form.                                                                                                                   
1:25:14 PM                                                                                                                    
Ms. Pitney  spoke to  the Cost  Of Living Adjustments  (COLA)                                                                   
included in the CS for union employees:                                                                                         
     State-wide     Unallocated      Appropriation     Total:                                                                   
Ms.  Pitney explained  that  one  of the  changes  in the  CS                                                                   
version  was to  leave the  funding and  language intact  for                                                                   
the  bargaining  unit's  union  contracts  and  maintain  the                                                                   
ability  to  engage  in "good  faith"  negotiations  to  gain                                                                   
concessions   rather   than    break   contracts   with   the                                                                   
understanding  that  non-union  employees would  not  receive                                                                   
pay raises.                                                                                                                     
Co-Chair  Neuman noted  that the appropriation  was found  on                                                                   
line 32, pages 3 through 4 of the legislation.                                                                                  
SHELDON FISHER,  COMMISSIONER, DEPARTMENT OF  ADMINISTRATION,                                                                   
explained that  he intended  to "aggressively" negotiate  the                                                                   
contracts  as  they  expire.  Presently,  the  Department  of                                                                   
Administration (DOA)  was in the process of  negotiating with                                                                   
bargaining    units   representing    approximately    17,000                                                                   
employees   and   with  other   units   representing   10,500                                                                   
employees  set  to  expire  within the  next  12  months.  He                                                                   
related  that the  administration  believed  in honoring  the                                                                   
commitments  that  were already  made  and funded  the  COLAS                                                                   
(Cost Of Living Adjustments).                                                                                                   
Co-Chair Neuman  talked about  the passionate discussions  on                                                                   
the  floor  about the  state  facing  huge deficits  and  the                                                                   
legislators support  for state  employees. However,  in light                                                                   
of  the  deficits the  legislature  adopted  provisions  that                                                                   
denied   pay  increases   for   both  union   and   non-union                                                                   
employees. He  recounted that  the 2.5 percent  pay increases                                                                   
were negotiated  three years ago.  He wondered why it  was so                                                                   
important for  the administration  to increase the  budget by                                                                   
funding  pay  raises   when  the  state  was   facing  severe                                                                   
deficits.  Commissioner  Fisher  thought  that  as  contracts                                                                   
expired  the state should  negotiate a  new salary  schedule.                                                                   
He believed  that the  state should  honor the contracts  and                                                                   
commitments  that were  previously negotiated  in good  faith                                                                   
in order  to maintain  a sense of  trust with the  bargaining                                                                   
Vice-Chair  Saddler  asked  whether   there  could  be  legal                                                                   
repercussions  from  denying the  non-union  employees  their                                                                   
COLA while  giving it  to the  union employees.  Commissioner                                                                   
Fisher  replied   that  each  employee  group   has  its  own                                                                   
"structure"  and   he  believed  that  there   was  no  legal                                                                   
liability.  Vice-Chair  Saddler   wondered  about  the  moral                                                                   
effects  of  denying  the  COLA   to  the  exempt  employees.                                                                   
Commissioner  Fisher  related  that over  the  long-term  the                                                                   
state  had been  fair and  equitable  to both  the union  and                                                                   
exempt units and intended to continue to do so.                                                                                 
1:32:17 PM                                                                                                                    
Vice-Chair  Saddler surmised  that increases  would be  given                                                                   
to  union  employees   and  that  in  the   future  non-union                                                                   
employees   would  receive   a   COLA.  Commissioner   Fisher                                                                   
responded  that  historically,  there  were  years  when  the                                                                   
exempt  employees were  given  the COLA  and union  employees                                                                   
were not  and vice  versa. He  felt that differences  existed                                                                   
between  negotiated  outcomes  over  the two  groups  in  any                                                                   
given  year but  when examined  over  the long-term  benefits                                                                   
were consistently fair.                                                                                                         
Vice-Chair  Saddler  asked  for  clarification  on  the  plan                                                                   
going   forward.  He   discerned  that,   in  fairness,   the                                                                   
department  intended to  give the exempt  employees a  raise.                                                                   
Commissioner   Fisher  was   not  prepared   to  answer   the                                                                   
question.  Vice-Chair  Saddler  restated his  question  about                                                                   
exempt  employee morale.  Commissioner  Fisher believed  that                                                                   
the  non-union  employees generally  understood  the  state's                                                                   
predicament.  He   indicated  that  all  employees   will  be                                                                   
"challenged"  and feel  stress  under the  fiscal crisis.  He                                                                   
did  not  feel  that  the  present  proposal  would  have  "a                                                                   
dramatic  impact on  morale above  and  beyond the  stressful                                                                   
environment of which we are operating under."                                                                                   
Co-Chair  Neuman reminded  members that  there would  be more                                                                   
detailed   information  provided   in  future  meetings.   He                                                                   
requested   that   members   ask  question   in   line   with                                                                   
"information  gathering"  for  their  written  questions  for                                                                   
more in-depth answers in a future meeting.                                                                                      
Representative  Wilson  understood what  Commissioner  Fisher                                                                   
was saying.  She conveyed that  denying the raises was  a way                                                                   
to  spread  out  the  cuts  over   the  departments  so  more                                                                   
employees could keep  their jobs. She believed  that the COLA                                                                   
was negotiated  in good  faith without  the knowledge  of how                                                                   
low oil  prices would decline.  She wanted to  understand the                                                                   
negotiation  process better  for  future  decision making  to                                                                   
avoid  a  similar  situation   in  the  future.  Commissioner                                                                   
Fisher  indicated  that  in the  future  contracts  would  be                                                                   
negotiated  with more flexibility  with  the future in  mind,                                                                   
such as the  ability to reopen negotiations with  a change in                                                                   
oil prices.                                                                                                                     
Representative  Wilson wanted to  better understand  not only                                                                   
salary   issues,  but   also  the   step  increases,   health                                                                   
insurance,  and   other  benefits  in  regards   to  contract                                                                   
1:37:55 PM                                                                                                                    
Representative  Gattis felt that  granting the COLA  increase                                                                   
was  sending employees  "the wrong  message"  and hoped  that                                                                   
people realized the situation the state was facing.                                                                             
Representative   Gara  was  confused   about  which   of  the                                                                   
contracts were  included in the  legislation. He  agreed with                                                                   
the  concerns  over  morale  issues   related  to  denying  a                                                                   
"statutory"  pay   increase.  He  asked  whether   the  union                                                                   
contracts that  were negotiated but  not yet approved  by the                                                                   
legislature  was included  in the  bill. Commissioner  Fisher                                                                   
replied  that he  needed  to  confirm whether  the  contracts                                                                   
referred  to were  included in  the legislation.  He did  not                                                                   
believe so.                                                                                                                     
Co-Chair  Neuman   requested  a  historical   comparative  of                                                                   
salary increases.                                                                                                               
Representative  Gara  asked  whether   the  COLAS  that  were                                                                   
negotiated in the  past were also removed by  the legislature                                                                   
in   the   CCS.  Commissioner   Fisher   responded   in   the                                                                   
Representative  Pruitt   asked  what  would  happen   if  the                                                                   
legislature  chose not  to fund  the  contracts. He  wondered                                                                   
how   the   administration  would   handle   that   scenario.                                                                   
Commissioner  Fisher  stated that  the  administration  would                                                                   
honor  the  contracts.  In  the   absence  of  funding,  each                                                                   
department  would  identify the  amount  of funding  for  the                                                                   
raises  and find  it  in savings.  He  maintained that  there                                                                   
would be additional layoffs under the unfunded scenario.                                                                        
Representative  Pruitt   asked  for  perspective   on  future                                                                   
expectations  in  the  upcoming   negotiations.  Commissioner                                                                   
Fisher agreed with the request.                                                                                                 
1:43:41 PM                                                                                                                    
Vice-Chair Saddler  asked whether the governor  had committed                                                                   
to signing CCS  HB 72 as adopted by the legislature  into law                                                                   
and that HB  1001 would be an  addendum to HB 72.  Ms. Pitney                                                                   
responded  that the  current budget  was  "unfunded" and  the                                                                   
governor had not committed to signing "anything."                                                                               
Representative  Edgmon stated that  the governor's  intent of                                                                   
the  bill was  to  create a  pathway  for achieving  a  three                                                                   
quarter  vote in  order  to  attain a  Constitutional  Budget                                                                   
Reserve  (CBR) draw  in  the  House of  Representatives.  Ms.                                                                   
Pitney responded in the affirmative.                                                                                            
Ms. Pitney  addressed page  2 of the  bill starting  with the                                                                   
line  items  for  the  Department   of  Education  and  Early                                                                   
Development (DEED):                                                                                                             
     Teaching and Learning Support Total: $2,599,700                                                                            
     Alaska Learning Network  $599,700                                                                                          
     Pre-Kindergarten Grants  $2,000,000                                                                                        
Ms. Pitney explained  that DEED was the "hardest  hit" in the                                                                   
CCS budget. The non-formula components  were decreased by $18                                                                   
million,  which reflected  a 31 percent  decrease in  general                                                                   
funds.  The inclusion  of the  funds still  represented a  26                                                                   
percent decrease  in non-formula funding. She  commented that                                                                   
all of  the items except  for one in  HB 1001 was  include in                                                                   
the governor's  original budget  which included $250  million                                                                   
in budget reductions. She expounded  that the Alaska Learning                                                                   
Network   provided  distance   education   mostly  to   rural                                                                   
communities  in the form  of courses  that were required  for                                                                   
the Alaska Performance Scholarship (APS) Scholarship.                                                                           
Representative  Gattis commented that  the funding in  the CS                                                                   
was actually  additional funding rather  than just less  of a                                                                   
Representative   Wilson  asked   why  the   items  were   the                                                                   
governor's  priority  and  why   reductions  were  not  found                                                                   
someplace  else as  an offset  to the  increases. Ms.  Pitney                                                                   
maintained that  the administration  felt the unfunded  items                                                                   
would  cause "more  damage  than necessary."  She  reiterated                                                                   
that  the legislation  was  a vehicle  to  bring the  parties                                                                   
together in negotiations to achieve a funded budget.                                                                            
Co-Chair Neuman  interjected that  the items  in the  CS were                                                                   
items  the governor  believed  were important  enough to  add                                                                   
back  into  the   budget.  Ms.  Pitney  concurred   with  the                                                                   
1:51:46 PM                                                                                                                    
Representative   Wilson  emphasized   that  every   item  was                                                                   
"vetted  in subcommittee  and there were  reasons" for  their                                                                   
removal.   She  wondered   why   the  governor   deemed   the                                                                   
subcommittees were  wrong in their choices and  what Alaskans                                                                   
would  lose if the  items were  not funded.  She opined  that                                                                   
all  she  heard  was  that  the  items  were  the  governor's                                                                   
priority  and  the funding  should  be  added back  into  the                                                                   
Ms. Pitney affirmed  that the items were the  priority of the                                                                   
governor  and  acknowledged that  it  was  the right  of  the                                                                   
legislature   to   appropriate   funds   and   welcomed   the                                                                   
discussion regarding funding the governor's priorities.                                                                         
Vice-Chair Saddler  reported that  the governor indicated  he                                                                   
would  decrease the  budget 16  percent,  if elected,  during                                                                   
his election campaign.  He requested a reconciliation  of the                                                                   
governor's  current priorities  that he believed  represented                                                                   
a "dramatic shift"  from his priorities during  his campaign.                                                                   
He wondered  how adding  spending was a  "tool" to  achieve a                                                                   
funded budget under the circumstances.                                                                                          
Co-Chair  Neuman  asked  Vice-Chair  Saddler if  he  had  any                                                                   
specific questions  regarding the two items that  were listed                                                                   
under DEED. He recognized that the issue was "emotional."                                                                       
Ms. Pitney  responded that  the governor  had talked  about a                                                                   
16  percent  budget  cut  in  recognition  of  declining  oil                                                                   
prices  but  wanted to  institute  the  cuts over  time.  She                                                                   
contended  that the  budget  including the  items  in the  CS                                                                   
reflected  an 8  percent reduction  in  the operating  budget                                                                   
compared to last year's budget.                                                                                                 
1:55:59 PM                                                                                                                    
Representative  Gattis expressed  her confusion over  whether                                                                   
the items  in the  CS reflected what  the governor  wanted or                                                                   
was   demanding   or   were    included   to   begin   budget                                                                   
Ms. Pitney commented  that the bill reflected  the governor's                                                                   
priorities but  was flexible  to reach the  goal of  a funded                                                                   
budget   and  recognized   that   the   bill   was  "in   the                                                                   
legislature's court."                                                                                                           
Co-Chair   Neuman  reiterated   that  the   items  were   the                                                                   
governor's  priorities  but  the   legislature  would  decide                                                                   
whether to fund them or not.                                                                                                    
Representative Gara  asked about the Alaska  Learning Network                                                                   
(AKLN). He  asked whether  AKLN was funded  in order  to meet                                                                   
the  former governor's  merit scholarship  policy to  provide                                                                   
access  to   the  courses  necessary   to  qualify   for  the                                                                   
Co-Chair  Neuman   requested  that  DEED   supply  additional                                                                   
information  regarding   the  program.  Representative   Gara                                                                   
offered   to   withdraw   the   question.   Co-Chair   Neuman                                                                   
reiterated  that the  committee  would examine  each item  in                                                                   
greater depth in subsequent meetings.                                                                                           
Representative Gattis  stated that education was  her Finance                                                                   
Subcommittee and  hoped to have a further discussion  to hear                                                                   
why he  replaced the funding  for the items her  subcommittee                                                                   
VALERIE  DAVIDSON,  COMMISSIONER,  DEPARTMENT OF  HEALTH  AND                                                                   
SOCIAL SERVICES,  spoke to the line items for  the Department                                                                   
of Health and Social Services (DHSS) in the CS:                                                                                 
     Children's Services Total:  $1,330,500                                                                                     
     Front Line Social Workers:  $1,000,000                                                                                     
     Family Preservation:          $330,500                                                                                     
     Departmental Support Services Total:  $$1,175.000                                                                          
     Public Affairs  $50,000                                                                                                    
     Commissioner's Office  $125,000                                                                                            
     Administrative Support Services $875,000                                                                                   
     Information Technology Services $125,000                                                                                   
     Agency-wide Appropriation Total: $2,218,500                                                                                
     Agency-wide Unallocated Appropriation: $2,218,500                                                                          
Commissioner  Davidson  began with  page  2, line  19,  Front                                                                   
Line Social Workers  and reported that the amount  would fund                                                                   
seven  social   workers  using   Children  Health   Insurance                                                                   
Program  (CHIP) funding.  She  moved to  line  20, and  noted                                                                   
that the restored  funding for the Family  Preservation Grant                                                                   
Program  helped children  remain in  the home  as opposed  to                                                                   
out  of  home placements.  She  delineated  that  there  were                                                                   
currently a record  number of 2,500 children in  the state in                                                                   
out of  home placements. She turned  to lines 21  through 27,                                                                   
Departmental   Support   Services   and   stated   that   the                                                                   
transaction  reversed interagency  transfers totaling  $1.175                                                                   
million. She  continued with lines  28 through 30  and voiced                                                                   
that  the  Agency-wide  Appropriation   of  $2.218.5  million                                                                   
reversed an unallocated reduction.                                                                                              
2:01:56 PM                                                                                                                    
Vice-Chair  Saddler referred  to the CHIP  funding for  front                                                                   
line  social  workers  and  asked   what  CHIP  funding  was.                                                                   
Commissioner   Davidson   relayed   that   CHIP   stood   for                                                                   
Children's  Health  Insurance   Program.  She  detailed  that                                                                   
previously  the federal  government  would  grant bonuses  to                                                                   
states for  CHIP enrollment.  Subsequently, the bonuses  were                                                                   
stopped. The  funds were used  for a variety of  purposes and                                                                   
some  funding  remained.  The $1  million  appropriation  for                                                                   
front line social  workers was taken from the  remaining CHIP                                                                   
bonus grants  in order  to help reduce  the record  number of                                                                   
children in out of home placements.                                                                                             
Co-Chair  Neuman asked  whether the  CHIP money  was a  long-                                                                   
term funding  source. Commissioner Davidson responded  in the                                                                   
negative.   Co-Chair   Neuman   asked  how   the   department                                                                   
anticipated funding  the positions  after the CHIP  money was                                                                   
expended.  Commissioner Davidson  responded that  it was  the                                                                   
department's  hope  that  some  tribal  health  organizations                                                                   
that  partner with  DHSS and  were able  to provide  services                                                                   
through a  program called 4-E  would assist in  reversing the                                                                   
out of home placement trend.                                                                                                    
Co-Chair  Neuman  requested  more   information  on  how  the                                                                   
department planned  on supplanting the federal  funds for the                                                                   
social workers.                                                                                                                 
Co-Chair Thompson  referred to the original  operating budget                                                                   
and shared  that the  appropriation was in  the amount  of $2                                                                   
million in  federal funding  and added  20 front line  social                                                                   
workers.  The  amount was  reduced  to  $350 thousand  for  3                                                                   
front  line  social  workers.   He  asked  whether  with  the                                                                   
combined appropriations  from the CS and the  CCS there would                                                                   
be  a total  of 10  front line  social workers.  Commissioner                                                                   
Davidson  responded  in the  affirmative.  Co-Chair  Thompson                                                                   
pointed out  that the  funding was  not expected to  continue                                                                   
in future years.                                                                                                                
2:06:50 PM                                                                                                                    
Vice-Chair  Saddler was  not clear  whether  the funding  for                                                                   
the social workers  in the CS was in addition  to or included                                                                   
the 3 positions funded in conference committee.                                                                                 
Ms. Pitney  replied that the  social worker positions  funded                                                                   
in the  CS was  in addition  to the  positions funded  in CCS                                                                   
Co-Chair  Neuman asked  whether the funding  included  all of                                                                   
the  related   equipment  necessary.  Commissioner   Davidson                                                                   
explained  that it  would  include some  equipment.  Co-Chair                                                                   
Neuman related that  in prior years when he was  Chair of the                                                                   
House  Finance DHSS  Subcommittee  he proposed  $1.5  million                                                                   
for  10  frontline  social  workers  and  $348  thousand  for                                                                   
SANA  EFIRD,  ASSISTANT COMMISSIONER,  DEPARTMENT  OF  HEALTH                                                                   
AND SOCIAL SERVICES, affirmed the statement.                                                                                    
Representative   Wilson  asked   whether   the  funding   was                                                                   
specifically  for certified social  workers or case  workers.                                                                   
Commissioner  Davidson answered that  the funding  included a                                                                   
variety  of  positions  necessary   besides  licensed  social                                                                   
workers.   Representative   Wilson    requested   information                                                                   
specifying  the exact  positions  the social  worker  funding                                                                   
would include.                                                                                                                  
Representative  Gara understood  the CS  budget was a  "kick-                                                                   
start effort" to drive budget negotiations.                                                                                     
Representative  Gara  mentioned  a workload  study  that  was                                                                   
done  a  few  years  prior  that   concluded  the  Office  of                                                                   
Children's Services  (OCS) was  understaffed by 45  employees                                                                   
and  in  the  ensuing  years   the  number  of  foster  youth                                                                   
increased from  approximately 1,800  to 2,500. He  noted that                                                                   
13 positions  were added last  year. He was certain  that the                                                                   
7  additional   positions   included  in   the  CS  was   not                                                                   
sufficient  to solve  the problems  facing OCS.  Commissioner                                                                   
Davidson answered in the affirmative.                                                                                           
Co-Chair  Neuman asked  for more information  to support  the                                                                   
need for the increase in social workers.                                                                                        
Vice-Chair  Saddler   wanted  to  reconcile   the  difference                                                                   
between  the  social  workers  requested  in CCS  HB  72  and                                                                   
amount requested in the CS.                                                                                                     
2:13:07 PM                                                                                                                    
Ms.  Pitney   responded  that  the  particular   program  was                                                                   
supported by the  administration in HB 72 and  the additional                                                                   
funding in the CS was "additive to the money in HB 72."                                                                         
Representative Pruitt  surmised that HB 1001 was  an addendum                                                                   
to CCS HB 72.  He wondered what would happen  if the governor                                                                   
did veto  CCS HB 72.  He asked whether  HB 1001 would  become                                                                   
the budget  vehicle. He  thought that was  the source  of the                                                                   
committee  member's confusion.  Ms. Pitney  replied that  CSS                                                                   
HB 72 was  adopted but remained unfunded. She  expounded that                                                                   
HB  1001 was  an  entirely new  budget  that encompassed  the                                                                   
conference  committee version  and the  changes reflected  in                                                                   
the CS. Subsequent  to the introduction of HB  1001, Co-Chair                                                                   
Neuman's staff  and LFD suggested narrowing  the conversation                                                                   
specifically  to  the  changes  from  the  CCS.  The  CS  was                                                                   
created  as  an  addendum  that  mirrored  any  changes  that                                                                   
differed from  the conference  committee version.  She voiced                                                                   
that  under the  assumption that  the CBR  vote would  happen                                                                   
the changes  adopted would  "slide in."  She reiterated  that                                                                   
the  legislation  was  a  vehicle   to  begin  a  "compromise                                                                   
discussion" to arrive at a "funded budget."                                                                                     
Co-Chair  Neuman   noted  that   the  scenario  was   up  for                                                                   
discussion. He  recounted that CCS  HB 72 was adopted  by the                                                                   
legislature, the  governor disagreed  with some of  items and                                                                   
introduced  a  new  piece  of legislation  to  add  back  his                                                                   
Representative  Wilson remarked  that the governor  submitted                                                                   
a new  operating budget  in HB  1001 and  asked whether  that                                                                   
was  the  governor's  intent.  Ms. Pitney  replied  that  the                                                                   
governor's  intent   was  to  get  a   compromise  discussion                                                                   
started  to achieve  a funded  budget. Representative  Wilson                                                                   
asked whether  the governor  did or did  not intend to  put a                                                                   
new operating budget  forward. Ms. Pitney responded  that the                                                                   
bill was  merely a mechanism to  start a dialogue  that would                                                                   
end in compromise  and achieve a funded budget.  She remarked                                                                   
that  the administration  accepted  the  approach  of the  CS                                                                   
versus a bill including the entire budget.                                                                                      
Co-Chair   Neuman    repeated   his   statements    regarding                                                                   
introduction  of the  CS that  only  included the  governor's                                                                   
2:18:50 PM                                                                                                                    
Representative  Wilson declared  that she  would not  vote to                                                                   
increase  the operating  budget.  She felt  that the  Finance                                                                   
subcommittees  "well  vetted"  the  departments  budgets  and                                                                   
without a  bill that included  the entire budget in  order to                                                                   
"exchange"  cuts for any  of the  priorities adopted,  the CS                                                                   
ended the discussion for her.                                                                                                   
Vice-Chair   Saddler   announced    that   he   agreed   with                                                                   
Representative  Wilson and that  "it was  not clear"  how the                                                                   
budget process was going to proceed and with what bill.                                                                         
Ms.  Pitney  explained  the  change   in  the  Department  of                                                                   
Natural Resources (DNR):                                                                                                        
     Administration and Support Services Total: $4,900,000                                                                      
     North Slope Gas Commercialization:  $4,900,000.                                                                            
Ms.  Pitney continued  that  an  increment was  requested  to                                                                   
pursue gas  commercialization  contracts. The entire  request                                                                   
was  for  $13 million  and  part  of  the amount  was  funded                                                                   
through  Alaska Stand Alone  Pipeline (ASAP).  The amount  in                                                                   
the CS  brought the  funding back to  the full funding  level                                                                   
requested  in the governor's  budget. She  remarked that  gas                                                                   
commercialization  was  a  huge  revenue  opportunity  and  a                                                                   
"high  priority for  the governor."  She  continued with  two                                                                   
items in the Department of Public Safety (DPS):                                                                                 
     Alaska State Troopers Total: $500,000                                                                                      
    Alaska Wildlife Troopers Aircraft Section: $500,000                                                                         
     Council on Domestic Violence and Sexual Assault Total:                                                                     
     Council on Domestic Violence and Sexual Assault                                                                            
Ms.  Pitney  noted  that  the  first  item  restored  partial                                                                   
funding  for the  helicopter  service located  in  Fairbanks.                                                                   
The  second  item  restored  half  of  the  funding  for  the                                                                   
Council  on Domestic  Violence  and Sexual  Assault  (CDVSA).                                                                   
The administration  cut the funding  to $1,500,000  and moved                                                                   
it  from the  Governor's  Office  to  DPS in  the  governor's                                                                   
budget request. The funding supported prevention programs.                                                                      
Co-Chair  Thompson asked  who  received the  $1.5 million  in                                                                   
funding.   Ms.   Pitney   answered   that   the   money   was                                                                   
appropriated  directly  to  the  CDVSA  and  was  focused  on                                                                   
prevention.  Co-Chair  Thompson  asked  whether  the  funding                                                                   
went  through the  Anchorage  Police Department.  Ms.  Pitney                                                                   
responded  that the  funding he  cited was  a capital  budget                                                                   
item awarded as  a grant directly appropriated  to the police                                                                   
Representative  Gara  asked  whether  the  $1.5  million  the                                                                   
administration  was trying to  add back  was included  in the                                                                   
governor's  original proposal.  Ms. Pitney  responded in  the                                                                   
Vice-Chair Saddler  asked whether  the proposed $1.5  million                                                                   
would  restore  the  council's  budget  to  $3  million.  Ms.                                                                   
Pitney  replied   that  the   CDVSA  budget  for   prevention                                                                   
programs would  amount to $1.5  million with adoption  of the                                                                   
CS.  She  informed   the  committee  that  the   council  had                                                                   
operating  funds   in  addition  to  prevention   money  that                                                                   
primarily funded grants for shelters.                                                                                           
Co-Chair  Neuman   asked  for  more  information   about  the                                                                   
council and its efficacy rate.                                                                                                  
MARK LUIKEN,  COMMISSIONER, DEPARTMENT OF  TRANSPORTATION AND                                                                   
PUBLIC    FACILITIES,    discussed    the    Department    of                                                                   
Transportation and Public Facilities' (DOT) item in the CS:                                                                     
     Marine Highway System Total: $7,000.000                                                                                    
     Marine Vessel Operations $7,000,000                                                                                        
Commissioner Luiken  indicated that the increment  on page 3,                                                                   
line  21  allowed  the department  to  maintain  its  current                                                                   
commitment  to passengers  based  on  the schedule  that  was                                                                   
published on October, 2014.                                                                                                     
Co-Chair  Thompson   asked  whether  the   funding  supported                                                                   
existing   reservations.   Mark   Luiken  answered   in   the                                                                   
affirmative.  Co-Chair  Thompson  asked whether  the  funding                                                                   
was  a  one-time  increment.  Mark  Luiken  answered  in  the                                                                   
affirmative.  He reported that  the department would  prepare                                                                   
a much  more conservative schedule  for FY 2017 at  the level                                                                   
of expected funding.                                                                                                            
Co-Chair  Neuman asked  what  the total  budget  was for  the                                                                   
Alaska  Marine Highway  System.  Co-Chair Thompson  responded                                                                   
that the  total was  $147 million.  Co-Chair Neuman  remarked                                                                   
that  $7  million  equated  to   .5  percent  of  the  marine                                                                   
highway's  budget.  He wondered  why  the  cut could  not  be                                                                   
absorbed  by  the department.  Commissioner  Luiken  answered                                                                   
that  the  cut   would  be  absorbed  through   service  cuts                                                                   
beginning  on July 1,  2015. Co-Chair  Neuman requested  more                                                                   
information  regarding  routes and  scheduling.  Commissioner                                                                   
Luiken  stated that  the  options would  be  explored in  the                                                                   
next budget cycle.                                                                                                              
2:27:49 PM                                                                                                                    
Ms.  Pitney continued  with  the  University of  Alaska  (UA)                                                                   
     University of Alaska Total: $7,000,000                                                                                     
    Budget Reductions/Additions System-wide: $7,000,000                                                                         
Ms. Pitney offered  that $7 million out of  the $29.8 million                                                                   
(8.1 percent) reduction  was restored in the  CS. The funding                                                                   
in the  CS would bring the  reduction to $18.9  million which                                                                   
represented 5 percent of the university's budget.                                                                               
Vice-Chair  Saddler asked  whether  the  $7 million  included                                                                   
money for  the union university  employee contract  COLA. Ms.                                                                   
Pitney   responded  that   the  contract   funding  for   the                                                                   
university  was  included  in   the  CS  under  the  contract                                                                   
section (beginning  on page 3,  line 30). Vice-Chair  Saddler                                                                   
wondered  what specific  programs the money  would fund.  Ms.                                                                   
Pitney  responded that  the Board  of  Regents was  currently                                                                   
making decisions  to determine  which  programs would  be cut                                                                   
and added  that many  cuts would  be necessary  to reach  the                                                                   
$18.9 million threshold.                                                                                                        
Co-Chair  Neuman   asked  for  further  information   on  the                                                                   
university's  budget. He stated  that the legislature  worked                                                                   
hard  to address  the state's  budget deficit  and adopted  a                                                                   
budget that  fell short of  the three quarters  vote required                                                                   
to access the  CBR. He further reiterated the  CS process. He                                                                   
suggested  that  the CS  would  be  a  "tough sell"  for  the                                                                   
2:32:35 PM                                                                                                                    
HB  1001  was  HEARD  and  HELD   in  committee  for  further                                                                   

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