Legislature(2015 - 2016)BILL RAY CENTER 208

05/16/2016 02:30 PM House FINANCE

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02:38:07 PM Start
02:38:46 PM SB138
03:45:59 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR SENATE BILL NO. 138(FIN)                                                                                               
     "An Act  making and amending  appropriations, including                                                                    
     capital  appropriations,  supplemental  appropriations,                                                                    
     reappropriations,  and   other  appropriations;  making                                                                    
     appropriations to  capitalize funds; and  providing for                                                                    
     an effective date."                                                                                                        
2:38:46 PM                                                                                                                    
Co-Chair  Neuman  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute  for   CSSB  138(FIN),  Work   Draft  29-GS2741\F                                                                    
(Martin,  5/16/16).  There being  NO  OBJECTION,  it was  so                                                                    
JOE MICHEL, STAFF,  REPRESENTATIVE STEVE THOMPSON, addressed                                                                    
the committee substitute (CS). The  first change appeared on                                                                    
page 4, line  26: emergency medical services  match for Code                                                                    
Blue  Project.  The Senate  version  of  the bill  had  used                                                                    
alcohol  money  to  pay   the  appropriation.  He  explained                                                                    
Governor Bill Walker's original  bill had used General Funds                                                                    
(GF)  to pay  for  the  program. The  CS  switched the  fund                                                                    
source back to  GF. He elaborated there  were several places                                                                    
alcohol funds had been removed  because the money was almost                                                                    
completely  spoken  for  in the  Department  of  Health  and                                                                    
Social  Services  (DHSS)  operating budget  for  the  coming                                                                    
year;  the  money  would  go  towards  funding  for  alcohol                                                                    
treatment programs.                                                                                                             
Co-Chair Thompson noted that  Representative Gara had joined                                                                    
the meeting.                                                                                                                    
Mr.  Michel addressed  the next  change on  page 5,  line 21                                                                    
related  to  the  Exxon  Valdez  Oil  Spill  (EVOS)  Trustee                                                                    
Council  purchase of  conservation easements  at Termination                                                                    
Point  and  Long Island.  The  funding  was a  large  dollar                                                                    
value,  but came  from the  EVOS  Trust Council  (not GF  or                                                                    
Co-Chair Thompson noted that  Representative Paul Seaton was                                                                    
in the audience.                                                                                                                
Mr.  Michel turned  to page  6,  line 16  and addressed  the                                                                    
Alaska  Housing  Finance  Corporation  (AHFC)  Cold  Climate                                                                    
Housing  Research Center.  He explained  the  line item  had                                                                    
originally been $1  million paid for with  AHFC dividends in                                                                    
the  governor's bill.  The Senate  version  had reduced  the                                                                    
amount to  $500,000 and the  CS restored the funding  to the                                                                    
full $1 million in AHFC dividends.  He moved to page 7, line                                                                    
25  related to  deferred maintenance,  renewal, repair,  and                                                                    
equipment.  The  original  request  for  the  Department  of                                                                    
Transportation  and  Public  Facilities (DOT)  had  been  $8                                                                    
million,   which  had   been   reduced   to  zero   deferred                                                                    
maintenance   by   the   Senate;  the   CS   increased   the                                                                    
appropriation to  $4 million. He  addressed the  next change                                                                    
on  page  7,  line  27   related  to  public  and  community                                                                    
transportation state  match. The original  appropriation had                                                                    
been  $1 million,  which had  been  reduced to  zero by  the                                                                    
Senate. The CS restored the funding to $1 million.                                                                              
2:42:18 PM                                                                                                                    
Mr.  Michel addressed  the next  change  on page  8, line  3                                                                    
pertaining  to   a  federal  aid  highway   state  match  of                                                                    
$41,867,800. He  detailed the Senate had  reduced the number                                                                    
to $6 million with a  series of reappropriations later on in                                                                    
the  legislation.  The difference  between  the  CS and  the                                                                    
Senate version  was the amount of  reappropriations that had                                                                    
been pulled  out of the  match funding  in the CS.  He noted                                                                    
the change  was present around  Section 21. The  next change                                                                    
was on  page 18, line  17 for University of  Alaska deferred                                                                    
maintenance,  renewal, repair,  and equipment,  totaling $10                                                                    
million.  The   amount  restored  the   governor's  original                                                                    
request, which  had been reduced  to zero by the  Senate. He                                                                    
noted  that on  pages 19  and 22  (Sections 2  and 3)  there                                                                    
would  be  slight  number  changes  reflecting  fund  source                                                                    
changes in Section 1.                                                                                                           
Mr. Michel turned to page 24,  line 10 related to the Alaska                                                                    
Land  Mobile  Radio  System  (ALMR).  The  CS  restored  the                                                                    
original  appropriation  of  $1   million,  which  had  been                                                                    
reduced  to zero  by  the  Senate. The  CS  also included  a                                                                    
reappropriation  for  ALMR  for approximately  $1.2  million                                                                    
(the  amount would  was not  reflected in  the bill's  total                                                                    
dollar amount  because it was  a reappropriation  of funds).                                                                    
Pages  25 and  26  outlined the  funding  sources that  took                                                                    
place  in Section  4. He  addressed a  new appropriation  on                                                                    
page 35, Section  16 pertaining to the  Alaska Court System.                                                                    
He  explained it  had been  brought  to Co-Chair  Thompson's                                                                    
attention  that  the new  Alaska  Supreme  Court justice  in                                                                    
Fairbanks needed an office. The  CS included $300,000 GF for                                                                    
the renovation  at the Rabinowitz  Courthouse. Additionally,                                                                    
the  Alaska  Court  System  was given  the  ability  to  use                                                                    
deferred   maintenance   funds   to  cover   any   remaining                                                                    
renovation cost. Page 36, line  5 included a reappropriation                                                                    
of  an  original  Denali   Commission  appropriation  of  $3                                                                    
million. The reappropriation leveraged  about $7.5 in Trans-                                                                    
Alaska  Pipeline   Liability  funds  for   mooring  stations                                                                    
throughout Alaska.  Section 17,  subsections (d) and  (e) on                                                                    
page 36 pertained to the  Alaska Travel Industry Association                                                                    
(ATIA). He  explained ATIA collected monies  from members to                                                                    
pay  for a  booklet  advertising Alaska.  The Department  of                                                                    
Commerce,   Community  and   Economic  Development   (DCCED)                                                                    
typically handled  the project, but  it had decided  to turn                                                                    
the responsibility  over to the  travel industry.  The funds                                                                    
normally  collected  by  DCCED  were going  to  ATIA  and  a                                                                    
visitor center  staffing position  in Tok, Alaska.  He noted                                                                    
the  center was  the  first place  visitors  coming in  from                                                                    
Canada stopped.                                                                                                                 
Mr. Michel  directed attention  to page  36, line  31, which                                                                    
included language  related to the Department  of Corrections                                                                    
(DOC)  Offender  Management  System and  Victim  Information                                                                    
Notification  System.  The item  had  been  included by  the                                                                    
governor  and the  Senate, but  the Senate  had changed  the                                                                    
funding  source  to  alcohol  funds.  The  CS  restored  the                                                                    
original  fund source  to GF  to allow  alcohol funds  to be                                                                    
maintained in DHSS [related to treatment programs].                                                                             
2:47:00 PM                                                                                                                    
Mr. Michel  pointed to  page 37, Section  21 related  to the                                                                    
Department of  Environmental Conservation (DEC)  clean water                                                                    
projects.  He  detailed  DEC  issued  multiple  clean  water                                                                    
projects  annually;   once  a  project  was   completed  the                                                                    
balances  eventually   lapsed.  He  explained   the  section                                                                    
included  numerous  completed  clean  water  projects  where                                                                    
remaining  funds  were  being  reappropriated  to  the  next                                                                    
project on the  list (shown in page 40,  subsections (b) and                                                                    
(c)).  Only  one  of  the   DEC  reappropriations  had  been                                                                    
removed,  which pertained  to removal  of Moonlight  Springs                                                                    
transmission line  upgrades [in Nome, Alaska].  He expounded                                                                    
the    funds    had    mistakenly   been    allocated    for                                                                    
reappropriation; however, the project  was not yet complete;                                                                    
therefore, the  project had  been removed  from the  list of                                                                    
reappropriations.    Page   41,    line   30    included   a                                                                    
reappropriation  not to  exceed $5.5  million. He  specified                                                                    
the money had  already been appropriated to  DHSS for design                                                                    
and planning of  the Alaska Center for  Treatment. The words                                                                    
"and construction" had been added on page 42, line 5.                                                                           
Mr. Michel directed attention to  Section 27, subsection (d)                                                                    
on page  44. The subsection included  the reappropriation of                                                                    
$7,591,275  to  DOT  for  federal   aid  highway  match.  He                                                                    
explained  the governor's  budget had  included $50  million                                                                    
for  the  item. He  furthered  all  of the  reappropriations                                                                    
would go to  matching funds for DOT to be  leveraged 9 to 1.                                                                    
Page 47, line 3, subsection  (e) also included $800,000. The                                                                    
two reappropriations  provided sufficient funds to  meet the                                                                    
$50  million  federal  highway   state  match.  Sections  28                                                                    
through 33 [beginning on page  47] included member submitted                                                                    
reappropriations, which concluded the changes in the CS.                                                                        
2:50:03 PM                                                                                                                    
Representative  Wilson asked  about the  current balance  in                                                                    
the alcohol  fund and the  appropriations going to  DHSS out                                                                    
of the  fund. She wondered why  the funds could not  be used                                                                    
for other  things. Additionally, she requested  specifics on                                                                    
how  the  University  would  spend   the  $10  million.  She                                                                    
recalled projects  of about $100 million  had been conducted                                                                    
several years  earlier and she  believed the  University had                                                                    
also  provided some  matching funds.  She wondered  what the                                                                    
University currently had in its deferred maintenance fund.                                                                      
Mr. Michel deferred the question to the University.                                                                             
KEITH  GERKEN, DIRECTOR,  FACILITY  SERVICES, UNIVERSITY  OF                                                                    
ALASKA  SOUTHEAST   (via  teleconference),   replied  former                                                                    
Governor  Sean   Parnell  had  allocated  $100   million  to                                                                    
deferred maintenance  for state  facilities for  five years.                                                                    
The University  had received $37.5  million, which  had been                                                                    
distributed  across the  University system.  The balance  of                                                                    
the remaining  funds was currently committed.  [Note: due to                                                                    
poor audio some testimony is indecipherable.]                                                                                   
Representative Wilson  asked how  much University  money had                                                                    
been put in  the projects. She referred to  the specific $10                                                                    
million and asked what projects  the funds would be used on.                                                                    
Additionally, she  wondered how much funding  the University                                                                    
would  be  contributing  to  the   completion  of  the  same                                                                    
Mr. Gerken  relayed that his counterparts  for Anchorage and                                                                    
Fairbanks  were also  online and  could speak  to particular                                                                    
projects. He spoke specifically  to the University of Alaska                                                                    
Southeast (UAS)  and relayed there were  three projects. The                                                                    
University system allocated the  funds based on the relative                                                                    
size, square footage, and age  of facilities; therefore, UAS                                                                    
would  receive  the  smallest portion  of  the  $10  million                                                                    
increment  at about  $500,000. He  furthered  UAS had  three                                                                    
projects including  the Robertson  Building in  Ketchikan, a                                                                    
downtown facility in  Juneau, and one on  the Juneau campus.                                                                    
The  University  expected  the   three  projects  to  exceed                                                                    
$500,000, but it  would pursue the funds  in priority order.                                                                    
[Note: due to poor audio some testimony is indecipherable.]                                                                     
Representative  Wilson  thanked   University  President  Jim                                                                    
Johnson. She remarked that the  problem may not exist if the                                                                    
University system  was consolidated from  three universities                                                                    
to one. She was trying to  determine how much of the funding                                                                    
allocated  during  the  former  Parnell  Administration  was                                                                    
remaining. Additionally, she wondered  where the $10 million                                                                    
in  the CS  would be  allocated and  whether the  University                                                                    
would provide any matching funds.                                                                                               
Mr.  Gerken  answered  that  the  University  was  currently                                                                    
investing  in the  projects with  its  own operating  budget                                                                    
dollars. He  believed the University statewide  budget staff                                                                    
could  provide   information  about  the   previous  capital                                                                    
appropriations, which went  to the Board of  Regents in each                                                                    
of their  meetings. The  funds from  the $100  million five-                                                                    
year  program   were  expended  or  obligated   to  existing                                                                    
2:54:47 PM                                                                                                                    
Co-Chair  Thompson  asked  for  verification  Representative                                                                    
Wilson had  a [deferred  maintenance] list  sent out  by his                                                                    
Representative Wilson  appreciated the  list, but  it merely                                                                    
contained   the  deferred   maintenance   on   all  of   the                                                                    
[University]  buildings statewide.  She  imagined and  hoped                                                                    
the University  had a ranking  system. Based on  the finance                                                                    
budget subcommittee process she  believed the University had                                                                    
funds remaining  (not necessarily in Southeast).  She wanted                                                                    
to know what  projects they were talking  about. She relayed                                                                    
the  budget  subcommittee  had tasked  the  University  with                                                                    
looking  at  its buildings  to  determine  whether it  could                                                                    
continue  operating   over  400   buildings;  if   not,  the                                                                    
University had been asked to  report back in the coming year                                                                    
about  how it  would look  different. She  wanted to  ensure                                                                    
more money  was not  put into buildings  that may  no longer                                                                    
have the  population. She thought the  University would have                                                                    
the  information.  She  remarked  that  $10  million  was  a                                                                    
significant sum.                                                                                                                
CHRIS CHRISTENSEN  III, ASSOCIATE  VICE PRESIDENT  FOR STATE                                                                    
RELATIONS,  UNIVERSITY  OF  ALASKA,  communicated  that  the                                                                    
University  had  almost 40  percent  of  all of  the  square                                                                    
footage owned  by the  State of  Alaska, which  included 420                                                                    
buildings with  an average age  of 32 years.  The University                                                                    
currently had a $1  billion deferred maintenance backlog; it                                                                    
took  approximately $50  million  per year  to keep  current                                                                    
with  the backlog  and it  had received  substantially below                                                                    
that  amount from  the legislature  in recent  years as  the                                                                    
state's  budget problems  had worsened.  The University  had                                                                    
recently  bonded  for $50  million  to  go towards  deferred                                                                    
maintenance  and would  be paying  the amount  off for  many                                                                    
years.  He stated  that $10  million sounded  like a  lot of                                                                    
money but it was not that  much when considering the size of                                                                    
the backlog  and the percentage of  buildings the University                                                                    
operated. One of  the problems with that  many buildings was                                                                    
the   need  to   keep  funding   available  for   unforeseen                                                                    
Mr. Christensen  referred to a  letter that he  had provided                                                                    
to Co-Chair  Thompson's office  [letter from  James Johnson,                                                                    
President  of the  University to  Co-Chair Neuman  dated May                                                                    
16,  2016]  (copy on  file),  which  described the  specific                                                                    
projects   the  $10   million   would   cover  (barring   no                                                                    
emergencies  occurred).  He  noted he  had  represented  the                                                                    
Alaska Court System for many  years and he recalled the roof                                                                    
of  the  Dimond Courthouse  had  failed  one day.  The  roof                                                                    
project had  been on the  deferred maintenance list,  but it                                                                    
had failed prior  to the work being done;  water had damaged                                                                    
seven  stories of  the  building as  a  result. He  reasoned                                                                    
things like  that happened and  it may be necessary  to pull                                                                    
money away  from another  project to  address the  issue. He                                                                    
stated  $10 million  was a  minimal  amount considering  the                                                                    
size of  the problem,  but the  University was  grateful for                                                                    
whatever the legislature could provide.                                                                                         
2:58:24 PM                                                                                                                    
Co-Chair  Thompson  did  not want  to  see  the  legislature                                                                    
micromanage  the University's  deferred maintenance  on over                                                                    
400 buildings.  He had confidence  the University  was being                                                                    
as frugal  and responsible as it  could be in order  to keep                                                                    
buildings from  deteriorating and costing more  money in the                                                                    
Representative  Wilson wanted  to  see where  the money  had                                                                    
been spent  to determine  whether there were  still existing                                                                    
funds remaining prior to the  allocation of the $10 million.                                                                    
She requested a funding sheet.                                                                                                  
Vice-Chair Saddler  referred to the University's  $1 billion                                                                    
deferred maintenance  backlog. He asked for  the total value                                                                    
of the  University buildings. Mr. Christensen  answered that                                                                    
it was in  excess of $2 billion. He would  work to follow up                                                                    
with a precise number.                                                                                                          
Vice-Chair   Saddler   surmised  the   backlog   represented                                                                    
approximately half the value of the buildings.                                                                                  
Mr.  Christensen answered  that the  backlog reflected  that                                                                    
the 420  buildings had an average  age of 32 years.  Half of                                                                    
the  buildings were  very old  and  very few  were new.  The                                                                    
combination of old buildings and  being unable to keep up on                                                                    
deferred  maintenance   resulted  in   significant  deferred                                                                    
maintenance  representing a  significant  percentage of  the                                                                    
asset value.                                                                                                                    
2:59:59 PM                                                                                                                    
Vice-Chair Saddler referred to page  41 of the CS related to                                                                    
the changes  and reappropriation for the  DHSS Alaska Center                                                                    
for Treatment. He asked for  specifics about the project. He                                                                    
asked about the original  appropriation for the Southcentral                                                                    
Foundation  Residential  Psychiatric  Treatment  Center.  He                                                                    
wondered about the cost when  finished and who was operating                                                                    
the facility.                                                                                                                   
Mr.  Michel answered  that  the  original appropriation  had                                                                    
been  state  matching funds  for  the  Bring the  Kids  Home                                                                    
project. The funds had been  reappropriated for planning and                                                                    
design  of   Alaska  Center   for  Treatment   in  Anchorage                                                                    
(Clitheroe Center).  He detailed  in collaboration  with the                                                                    
Alaska Mental  Health Trust Authority  (AMHTA) the  goal had                                                                    
been to start construction on  the project to have treatment                                                                    
available as  soon as possible  (utilizing efforts  from the                                                                    
omnibus crime bill SB 91 and other).                                                                                            
Vice-Chair Saddler  stated there was a  Clitheroe Center the                                                                    
Salvation Army operated out of  at Point Woronzof, which had                                                                    
associated  facilities. He  asked if  the Alaska  Center for                                                                    
Treatment  project would  entail brand  new construction  or                                                                    
the demolishing and reconstruction of an existing facility.                                                                     
Mr.  Michel  answered  that  the   building  was  very  old;                                                                    
therefore, there would be  significant new construction, but                                                                    
they would try  to salvage as much of  the existing building                                                                    
as possible.                                                                                                                    
Vice-Chair Saddler  asked for  resources to  gain additional                                                                    
information  on  the project.  Mr.  Michel  replied that  he                                                                    
would supply the information.                                                                                                   
Representative Kawasaki  asked about  Section 35 on  page 50                                                                    
related to  legislative reappropriations. He noted  that the                                                                    
language  in   the  previous   bill  version   was  slightly                                                                    
different; the  prior version  included language  about four                                                                    
specific reappropriations from  the Taskforce on Sustainable                                                                    
Education,   Legislative  Budget   and  Audit,   Legislative                                                                    
Council,  and  the  operating budget.  The  current  version                                                                    
included  four different  dollar amounts.  He asked  why the                                                                    
change had been made.                                                                                                           
Mr. Michel answered that  the additional reappropriations in                                                                    
the section  were related to the  second legislative special                                                                    
Representative Kawasaki  referred to language that  the $1.5                                                                    
million appropriated for  security surveillance upgrades and                                                                    
enhancements for  the state capitol building  were included.                                                                    
He  asked about  the unexpended  and unobligated  GF balance                                                                    
for the  eight items [Section  35 of the CS  contained eight                                                                    
3:04:00 PM                                                                                                                    
Mr. Michel would  follow up with an answer.  He believed the                                                                    
Senate   version  had   included   a   dollar  figure.   The                                                                    
calculation    would    mean     adding    the    additional                                                                    
reappropriations   on  top   of  the   balance  minus   $1.5                                                                    
Representative Kawasaki  referred to the prior  bill version                                                                    
[CSSB 138(FIN)],  which listed the estimated  balance of the                                                                    
four  items as  $5.5175 million.  He furthered  $1.5 million                                                                    
would   be  appropriated   specifically  for   the  security                                                                    
systems. He noted  the remaining funds would  go directly to                                                                    
Legislative Council. He  did not know what  the amount would                                                                    
be  -  he  guessed  $4  million  or  larger.  He  asked  for                                                                    
verification  that  the remaining  funds  would  be used  at                                                                    
Legislative Council's discretion as long  as it was used for                                                                    
renovation  and   repair  or  technology   improvements  for                                                                    
legislative buildings.                                                                                                          
Mr. Michel  replied that an  additional difference  from the                                                                    
Senate  version appeared  on page  51, line  11: "and  other                                                                    
necessary  projects."  The  Senate  version  used  the  word                                                                    
"expenses"  instead  of  "projects,"   which  could  be  any                                                                    
variety  of  things  (not  specific  capital  projects).  He                                                                    
explained the  money would go to  Legislative Council, which                                                                    
expended funds from its appropriations.                                                                                         
Representative  Kawasaki asked  if  the Legislative  Council                                                                    
could   use  the   funds  for   the  Anchorage   Legislative                                                                    
Information Office (LIO).                                                                                                       
Mr. Michel  replied in the  affirmative. The  capital budget                                                                    
included  a $12.5  million appropriation  for the  Anchorage                                                                    
LIO. The language  was not confining and the  funds could be                                                                    
used  for other  necessary expenses  related to  legislative                                                                    
buildings and facilities.                                                                                                       
Representative Guttenberg  pointed to Section 10  on page 33                                                                    
related to the Kivalina School.  The bill specified that the                                                                    
money would  satisfy the state's  obligation of  the consent                                                                    
decree. He  asked if the  legislature was the  body deciding                                                                    
that  the appropriation  satisfied  the  consent decree.  He                                                                    
wondered what authority the language had.                                                                                       
Mr. Michel responded  that he did not  have sufficient legal                                                                    
expertise  to answer  the question.  He  advised members  to                                                                    
review the pros and cons  discussed by the Senate related to                                                                    
the language. The language had been inserted by the Senate.                                                                     
Representative   Guttenberg    asked   if   there    was   a                                                                    
representative or  written response  from the  Department of                                                                    
Law (DOL) that could provide further detail.                                                                                    
Co-Chair Thompson replied there  was a written response from                                                                    
Doug Gardner  [Legislative Legal  Services director]  and he                                                                    
would have information provided.                                                                                                
Representative  Gara requested  to hear  from DOL  to ensure                                                                    
the legislature  was meeting  its legal  obligations related                                                                    
to the Kivalina School.                                                                                                         
Co-Chair Thompson agreed that he would try.                                                                                     
3:09:05 PM                                                                                                                    
Representative Gara  requested to  ask several  questions of                                                                    
the Alaska Court System.                                                                                                        
Co-Chair  Thompson noted  that DOL  had provided  responses,                                                                    
but were not available at present.                                                                                              
Representative  Gara  remarked  there had  been  a  $600,000                                                                    
increment to  renovate an  office in  Fairbanks for  the new                                                                    
Alaska  Supreme Court  justice. He  noted the  increment had                                                                    
been reduced to  $300,000 with the remainder of  costs to be                                                                    
covered by deferred maintenance  funds. He knew the incoming                                                                    
justice would not want excessive  funds spent on her office.                                                                    
He asked why  it would cost $600,000 to  accommodate the new                                                                    
justice  and a  couple  of staff  for one  office  in a  new                                                                    
DOUG WOOLIVER, DEPUTY  ADMINISTRATIVE DIRECTOR, ALASKA COURT                                                                    
SYSTEM, answered  that the Rabinowitz  Courthouse had  a 5th                                                                    
floor  that was  largely  unfinished. He  detailed when  the                                                                    
building  had  been built  in  2001  there had  been  enough                                                                    
funding to  allow for  eventual expansion  in the  hope that                                                                    
Justice Jay Rabinowitz would be  replaced by another justice                                                                    
from  Fairbanks.  In  2008  Justice  Dan  Winfree  had  been                                                                    
appointed [and had  moved into the 5th  floor]. The $629,000                                                                    
had  been the  cost to  build Justice  Winfree's office  for                                                                    
four additional staff  and a conference room.  The 5th floor                                                                    
was still  largely unfinished. The court  system anticipated                                                                    
the cost  for the work on  the new office would  be slightly                                                                    
less, but the project had not  yet gone out to bid since the                                                                    
appointment had  been made the previous  Thursday. The court                                                                    
system had  done some preliminary  work on the  numbers, but                                                                    
he was  always surprised  by the  cost of  capital projects.                                                                    
The  $300,000 and  deferred maintenance  funds would  enable                                                                    
the  court  system  to  build  the  office.  He  added  that                                                                    
hopefully the cost would be below $629,000.                                                                                     
Representative Gara  relayed he had been  privileged to work                                                                    
for  former Justice  Rabinowitz. He  asked for  verification                                                                    
that  there was  unfinished space  on the  5th floor  of the                                                                    
Rabinowitz Building that it would cost over $300,000.                                                                           
Mr. Wooliver answered in the affirmative.                                                                                       
Representative Gara observed that  the estimate exceeded the                                                                    
amount needed to purchase a  house. Mr. Wooliver answered in                                                                    
the affirmative  and noted  commercial space  was expensive.                                                                    
He  reiterated the  cost had  been $629,000  for almost  the                                                                    
same amount of  space for Justice Winfree. He  added some of                                                                    
the work  that had been  done when Justice Winfree  moved to                                                                    
the  5th  floor  was  one-time work  (e.g.  circulation  and                                                                    
ventilation work).  He anticipated the  cost would be  a bit                                                                    
less [than $629,000].                                                                                                           
Co-Chair Thompson  assumed Davis  Bacon wages would  be paid                                                                    
to the contractor  because it was a  government project. Mr.                                                                    
Wooliver believed so.                                                                                                           
Representative  Gara  remarked  on  the  high  cost  for  an                                                                    
existing space.  He asked  if the  department had  looked at                                                                    
the most efficient way to build  an office for three or four                                                                    
Co-Chair  Thompson  assumed  the  estimated  funds  included                                                                    
building and  equipping the office with  computers and other                                                                    
necessary  supplies.  He asked  for  verification  it was  a                                                                    
turn-key operation.                                                                                                             
Mr. Wooliver  answered that the cost  included construction,                                                                    
plumbing  and electrical.  The  walls  were currently  bare-                                                                    
Representative Gara  referred to  an ATIA  appropriation for                                                                    
tourism marketing and a staff  member. He asked for the page                                                                    
reference  in the  bill. Mr.  Michel  directed attention  to                                                                    
page 36, line 12.                                                                                                               
Representative Gara asked if the  position at the Tok office                                                                    
would be a state or ATIA employee.                                                                                              
Mr.  Michel answered  that it  was defined  in law  that the                                                                    
state  have  a  tourism   marketing  position  in  Tok.  The                                                                    
Legislative Finance  Division had communicated  the position                                                                    
was  funded  with Designated  General  Funds  (DGF). In  the                                                                    
current CS  the money  was collected  from ATIA  members and                                                                    
went  to funding  a position  required  by state  law for  a                                                                    
state employee,  which had been  an error. He  explained the                                                                    
error would be corrected in the next CS.                                                                                        
Co-Chair Thompson  asked if the  office was the  first place                                                                    
commercial trucks  were required  to stop when  entering the                                                                    
Mr. Michel answered  that the facility in Tok  was the first                                                                    
tourism  and  marketing  office,  but it  was  not  a  weigh                                                                    
Co-Chair Thompson surmised the position  did not have a dual                                                                    
purpose.  Mr. Michel  answered that  it was  a dual  purpose                                                                    
position, which  was shared with  DOT in regards  to visitor                                                                    
center responsibilities including licenses and other.                                                                           
3:16:51 PM                                                                                                                    
Representative Pruitt  stated that it  was a weird  quirk in                                                                    
Alaska statute mandating a visitor  center in Tok; there was                                                                    
no   other  location   in  Alaska   with  the   requirement.                                                                    
Therefore, the state was required  to provide a staff at the                                                                    
location.  He  did  not  recall why  the  provision  was  in                                                                    
statute,  but he  thought  it  should be  looked  at in  the                                                                    
future. He surmised  at some point in time  someone from the                                                                    
district had been  in the right circumstances  to secure the                                                                    
requirement  in  statute.  He agreed  that  Mr.  Michel  was                                                                    
correct. The  only way to  eliminate the requirement  was to                                                                    
make a statutory change. He  remarked the state required the                                                                    
position, but it  was also requiring the  travel industry to                                                                    
pay  for a  state employee,  which  may not  fit within  the                                                                    
travel industry's plan  on how it wanted to  spend its money                                                                    
as the state moved the association away from GF.                                                                                
Representative  Gattis remarked  that  she hauled  equipment                                                                    
across the border and she did  not have to stop to talk with                                                                    
tourism  staff.  She clarified  the  weigh  station was  not                                                                    
affiliated with the tourist staff.                                                                                              
Representative  Gara wanted  to  hear why  the position  was                                                                    
needed.  He  relayed  that  two  or  three  years  back  the                                                                    
legislature had passed a school  funding plan specifying how                                                                    
much money  should have gone  towards education  funding. He                                                                    
explained that later  on, the legislature had  chosen not to                                                                    
appropriate  the  funds.  He   stated  that  everything  was                                                                    
subject  to appropriation,  even  the position  in Tok.  The                                                                    
question was  whether it was a  wise use of money,  which he                                                                    
did  not have  information  on. He  underscored  it was  not                                                                    
mandatory  to  fund everything  just  because  it was  in  a                                                                    
statute.  He added  there were  some statutes  providing for                                                                    
things he wished were funded at present.                                                                                        
Co-Chair Thompson asked if the increment was GF money.                                                                          
Mr. Michel answered that it was  not GF money in the current                                                                    
CS. The funds  were received from members of  the ATIA (just                                                                    
like cruise  ship head  tax) and should  be spent  on things                                                                    
authorized by  ATIA. As  drafted, the  current CS  used ATIA                                                                    
funds to  pay for  the position, which  had been  a drafting                                                                    
error on his part.                                                                                                              
Representative  Gara surmised  if it  was one  thing if  the                                                                    
money was  provided to  the state  by ATIA,  but he  was not                                                                    
aware of ATIA giving the state  any money. He knew ATIA took                                                                    
advertisements out  in a state  travel planner and  paid for                                                                    
those, but  it was not  money being  given to the  state. He                                                                    
asked travel planner money was being used for the position.                                                                     
Mr. Michel answered that it was travel planner money.                                                                           
Representative Gara noted [ATIA]  members received a benefit                                                                    
for  that. He  questioned whether  it  was the  best use  of                                                                    
$125,000,  but  he  moved  on to  a  different  subject.  He                                                                    
discussed that  over $2  million for  his district  had been                                                                    
taken  from projects  that were  not moving  forward at  the                                                                    
time. He  understood that the  state was in a  fiscal crisis                                                                    
and had not  tried to claw the money back.  He believed most                                                                    
members had  done the same.  However, he pointed to  page 48                                                                    
and remarked he  had no problem appropriating  funds to help                                                                    
with  a  senior center  or  police  building, but  the  bill                                                                    
included  a reappropriation  in  the  Soldotna and  Sterling                                                                    
areas   for  kitchen   upgrades,   police   roof  work.   He                                                                    
acknowledged the items  were needed, but asked  if the items                                                                    
had been in the governor's original budget.                                                                                     
Mr.  Michel answered  in the  negative. The  reappropriation                                                                    
items had been submitted by members of the legislature.                                                                         
Representative Gara asked if the  same applied to the Anchor                                                                    
Point Library  on page 48,  line 22. Mr. Michel  answered in                                                                    
the  affirmative,  the  item   was  a  reappropriation.  The                                                                    
original  appropriation was  Anchor Point  Library planning;                                                                    
the   words   "and  purchase"   had   been   added  to   the                                                                    
Co-Chair Thompson surmised the money  was still going to the                                                                    
same project.                                                                                                                   
Mr. Michel  replied in the affirmative.  He detailed $15,000                                                                    
had been appropriated  in 2014 for the  Anchor Point Library                                                                    
and  a  legislator  from  the  district  had  requested  the                                                                    
additional "and purchase" language.                                                                                             
3:22:49 PM                                                                                                                    
Co-Chair Thompson asked for verification  that it was a 2014                                                                    
appropriation. Mr. Michel replied in the affirmative.                                                                           
Representative Gara relayed  he did not have  a problem with                                                                    
the  projects, but  he wondered  whether the  original money                                                                    
for  the Sterling  Senior Center  for  garage, storage,  and                                                                    
workshop work had been reappropriated to kitchen upgrades.                                                                      
Mr. Michel  answered in the affirmative.  He elaborated that                                                                    
the   original   appropriation   had  been   $300,000.   The                                                                    
reappropriation  used the  remaining  balance  of the  funds                                                                    
spent on  garage, storage, and  workshop to pay  for kitchen                                                                    
Representative  Gara asked  for verification  that the  bill                                                                    
expanded  the use  of previously  appropriated funds  to the                                                                    
Sterling Senior Center and the Soldotna police building.                                                                        
Mr. Michel  answered that the reappropriation  used the same                                                                    
pot of  money originally  appropriated in  2012 (FY  13); no                                                                    
additional state funds were  being used. The reappropriation                                                                    
merely  expanded  the  scope of  the  project  the  original                                                                    
appropriation had been intended  for to kitchen upgrades and                                                                    
essential roof replacements.                                                                                                    
Representative Gara did not support  opening the bill up for                                                                    
all members  to start  getting projects in  their districts.                                                                    
He wanted to  ensure the process was done in  a fair way. He                                                                    
referred  to  $2.496  million  appropriated  to  Palmer  for                                                                    
wastewater    treatment    plant    property    acquisition,                                                                    
engineering,  design,  and  construction. He  asked  how  it                                                                    
related  to  the original  appropriation  (page  47, line  8                                                                    
through 13).                                                                                                                    
Mr. Michel answered that the  original appropriation in 2005                                                                    
was Palmer wastewater  treatment plant property acquisition.                                                                    
The funds  were still allocated to  the wastewater treatment                                                                    
plant.  He explained  the  land had  been  acquired and  the                                                                    
reappropriation  would go  to  funding engineering,  design,                                                                    
and  construction. He  furthered that  very little  had been                                                                    
used from  the original appropriation. He  detailed the City                                                                    
of  Palmer was  going  to  be sued  for  some  of its  water                                                                    
discharge;   therefore,   the  legislator   requesting   the                                                                    
reappropriation  had  the  primary  goal  of  advancing  the                                                                    
project  into  the  construction  phase in  order  to  start                                                                    
filtering water.                                                                                                                
Representative  Gara noted  the  initial funds  had been  to                                                                    
acquire  the property  and now  the reappropriation  of $2.5                                                                    
million would go  to costs that every city  had. He remarked                                                                    
that the City  of Palmer stood out in the  CS as a community                                                                    
getting $2.5  million to  do something  not included  in the                                                                    
original appropriation. He stated  that the increment almost                                                                    
begged for every community to ask for similar treatment.                                                                        
3:26:38 PM                                                                                                                    
Representative Gattis  discussed that her district  had over                                                                    
$4  million  reappropriated.  She  had  told  the  mayor  of                                                                    
Wasilla  that all  of  the  funds had  been  swept. She  had                                                                    
promised the  mayor that  if other people  were able  to use                                                                    
the reappropriations she would fight  for the $4 million for                                                                    
the  City of  Wasilla. She  was now  fighting for  the funds                                                                    
because she had  promised that if other  districts were able                                                                    
to get  their money she  would fight hard for  her district.                                                                    
She  stated the  increments had  opened up  a big  door. She                                                                    
remarked  that people  said "they  wouldn't squawk"  because                                                                    
they understood  the state's fiscal situation,  but if other                                                                    
districts were able to get  their money, she would fight for                                                                    
money for Wasilla.  She concluded that the issue  was a huge                                                                    
Mr. Michel  asked if it  had been an appropriation  from the                                                                    
last year.  There had been  a variety of projects  around of                                                                    
around $20 million that had  been swept into the AHFC income                                                                    
fund. He  noted the receipts  had been  saved and if  it was                                                                    
one  of  the  reappropriations  it would  still  be  sitting                                                                    
Representative  Gattis  had  believed   no  money  would  be                                                                    
reappropriated towards specific districts.                                                                                      
Representative   Kawasaki  concurred   with  the   past  two                                                                    
speakers. He stated  that the Senate bill  version had swept                                                                    
aside 43 different  items. For example, he referred  to a $4                                                                    
million  appropriation for  the  Kalifornsky  Beach Road  in                                                                    
Kenai in 2006,  of which, about $140,000 had  not been used.                                                                    
He  noted that  for  a  timeline of  that  length it  seemed                                                                    
reasonable that  perhaps the  funds were  just not  used. He                                                                    
noted the CS contained  much fewer reappropriation items and                                                                    
he wondered how they had been selected.                                                                                         
Mr. Michel replied that many  versions had been discussed in                                                                    
regards  DOT federal  highway  match  money. The  governor's                                                                    
original  appropriation included  about  $50  million GF  to                                                                    
match  9  to  1  federal dollars  for  the  state's  federal                                                                    
highway  match.   Over  the  course  of   meeting  with  the                                                                    
different  departments,  there  had been  multiple  projects                                                                    
originally  appropriated to  a department  that were  set to                                                                    
lapse. The  idea was if  the money  was going to  lapse, the                                                                    
funds could  be used to  leverage the 9  to 1 DOT  match. He                                                                    
detailed initially  it was merely  DOT lapsing  funds, later                                                                    
on other  projects due  to lapse had  been brought  into the                                                                    
DOT  reappropriation for  matching funds  by the  Senate. He                                                                    
elaborated there  had been many  projects that were  not set                                                                    
to  lapse. He  specified that  any project  where there  was                                                                    
concern it  would end  up closing out  with less  money than                                                                    
the original appropriation - the  dollar figures in the bill                                                                    
had  been taken  from  a lapsing  grant  report (a  snapshot                                                                    
occurring sometime in January) -  and would not be available                                                                    
for  the federal  9 to  1  matching funds.  He explained  if                                                                    
there had been  concern the item may have  been expended, it                                                                    
had been removed from the  reappropriation and replaced with                                                                    
GF.  The majority  of the  projects originally  included and                                                                    
replaced were  set to lapse  into the GF  at the end  of the                                                                    
year. The  goal in the CS  was to ensure the  items were not                                                                    
in the DOT  match. One of the items was  used for the Denali                                                                    
Commission  reappropriation for  mooring  stations, but  the                                                                    
majority were no longer included  in the DOT reappropriation                                                                    
and were sitting  on the lapsing grant fund  list waiting to                                                                    
lapse into the GF.                                                                                                              
Representative Kawasaki asked if  the current CS capitalized                                                                    
as  much  federal  money   as  possible.  Alternatively,  he                                                                    
wondered if money had been left on the table.                                                                                   
Mr. Michel deferred the question to DOT.                                                                                        
3:33:39 PM                                                                                                                    
MIKE  VIGUE,  DIRECTOR,  DIVISION  OF  PROGRAM  DEVELOPMENT,                                                                    
DEPARTMENT   OF   TRANSPORTATION  AND   PUBLIC   FACILITIES,                                                                    
answered the governor's requested  budget of $50 million for                                                                    
match would be  adequate to fully obligate  the 2017 federal                                                                    
aid  apportionment received  by the  state from  the Federal                                                                    
Highway Administration.                                                                                                         
Representative Kawasaki asked how  projects were funded if a                                                                    
state match was required when  grants and federal funds came                                                                    
in after the cycle.                                                                                                             
Mr. Vigue  replied the department received  an appropriation                                                                    
from the Federal Highway Administration  at the beginning of                                                                    
each   year.   The   department   compiled   the   Statewide                                                                    
Transportation Improvement Program  (STIP), which included a                                                                    
program of projects. Any additional  funds that came through                                                                    
were already  incorporated into the STIP.  He clarified that                                                                    
the   Federal   Highway   Administration   really   provided                                                                    
authority  to  spend more  money,  but  it did  not  provide                                                                    
additional  funds. He  detailed the  department received  an                                                                    
appropriation and obligation  authority. When the department                                                                    
received a  bit of extra money,  which occasionally happened                                                                    
with  "August redistribution"  that was  already built  into                                                                    
the program.                                                                                                                    
Representative   Kawasaki   asked   for   verification   the                                                                    
situation  would  be  the  same   for  the  Federal  Railway                                                                    
Administration (FRA)  that worked  on a  different calendar,                                                                    
or  the  Federal  Aviation Administration  (FAA),  or  other                                                                    
Mr. Vigue responded  he was uncertain about  FRA because the                                                                    
department did  not typically see  FRA money.  However, FAA,                                                                    
the Federal Transit Administration,  and the Federal Highway                                                                    
Administration operated in a similar manner.                                                                                    
Representative Gara  referred to  page 48, lines  24 through                                                                    
29. He  noted in  the past there  had been  an appropriation                                                                    
for the  Tall Tree Bridge  on the Kenai Peninsula,  of which                                                                    
the CS would  reappropriate $45,000 to a  project to upgrade                                                                    
Aspen  Avenue in  Ninilchik. He  asked if  it was  a federal                                                                    
match project  or merely  left over money  being put  into a                                                                    
new project paid for by the state.                                                                                              
Mr. Michel  answered that it  the grant had  originally been                                                                    
appropriated  to the  Kenai Peninsula  Borough and  was more                                                                    
than likely  an appropriation requested by  a legislator. He                                                                    
noted it had not been included in the STIP.                                                                                     
Co-Chair Thompson  asked for  the year  of the  request. Mr.                                                                    
Michel  replied   2014.  He  offered   to  follow   up  with                                                                    
additional information.                                                                                                         
Representative  Gara   replied  he  did  not   need  to  see                                                                    
additional information. He  stated the increment transferred                                                                    
remaining  funds  from one  project  to  a new  project.  He                                                                    
stated there  were 40 House  members and he did  not support                                                                    
including  the member  requested items.  He stressed  he was                                                                    
not grabbing  any of the reappropriations  for his district.                                                                    
He would love to have money for a road in his district.                                                                         
Representative  Wilson asked  whether  the legislature  ever                                                                    
received  a  list  of  what  the  matching  funds  would  be                                                                    
utilized   for.   She   referred  to   Chena   Hot   Springs                                                                    
roundabouts,  which  many people  had  voiced  they did  not                                                                    
want. She believed it was  almost impossible for legislators                                                                    
to  stop  the  process  because  the  legislature  allocated                                                                    
matching  funds and  the department  was able  to spend  the                                                                    
money  however it  wanted. She  wondered how  the department                                                                    
received a  project the community  did not want once  it was                                                                    
on the department's list.                                                                                                       
[Note: Mr. Vigue was unable to  complete a response due to a                                                                    
fire alarm.]                                                                                                                    
3:38:46 PM                                                                                                                    
AT EASE                                                                                                                         
3:44:40 PM                                                                                                                    
Co-Chair  Thompson remarked  that the  committee would  meet                                                                    
the  following day  on the  bill.  The meeting  would be  at                                                                    
10:00 a.m. The  meeting was recessed to a call  of the chair                                                                    
[Note: the meeting never reconvened].                                                                                           

Document Name Date/Time Subjects
SB 138 HCS WORKDRAFT FIN vF.pdf HFIN 5/16/2016 2:30:00 PM
SB 138
SB 138 UA Letter Deferred Maintenance Funding.pdf HFIN 5/16/2016 2:30:00 PM
SB 138