Legislature(2009 - 2010)SENATE FINANCE 532

02/09/2010 09:30 AM Senate FINANCE

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
Heard & Held
Bills Previously Heard/Scheduled
Heard & Held
Scheduled But Not Heard
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 253                                                                                                           
     "An  Act  making  capital  appropriations  for  deferred                                                                   
     maintenance   projects,   equipment   replacement,   and                                                                   
     emergency  repairs;  and   providing  for  an  effective                                                                   
     SB 253 was HEARD and HELD in Committee for further                                                                         
9:34:06 AM                                                                                                                    
KAREN  REHFELD, DIRECTOR,  OFFICE OF  MANAGEMENT AND  BUDGET,                                                                   
OFFICE  OF  THE GOVERNOR,  explained  that  her task  was  to                                                                   
provide  a  high  level overview  of  both  the  supplemental                                                                   
requests    beginning   with    the   deferred    maintenance                                                                   
legislation.  She explained the  governor's plan  to preserve                                                                   
state  owned  assets and  create  jobs  in the  process.  She                                                                   
announced  that  the state  has  2300  buildings and  a  $1.9                                                                   
billion  backlog   of  deferred  maintenance   projects.  The                                                                   
governor included  the first $100 million in  the December 14                                                                   
budget for FY11.  The governor is requesting  the legislature                                                                   
consider  accelerating  approval  to allow  funding  projects                                                                   
this  construction season.  She  highlighted  the eight  page                                                                   
bill containing five sections.                                                                                                  
Ms.  Rehfeld   provided  a  sectional  analysis.   Section  1                                                                   
includes a  specific request  by department.  Section 2  is a                                                                   
simple funding  summary by department.  Section 3  includes a                                                                   
total  funding   summary.  Section   4  includes   the  lapse                                                                   
provision  of the bill.  Section 5  informs of the  immediate                                                                   
effective date.                                                                                                                 
9:36:31 AM                                                                                                                    
Ms. Rehfeld  highlighted by  agency the department  requests.                                                                   
Some  departments   requested  allocations  within   a  total                                                                   
amount. She reported that the  Department of Administration's                                                                   
(DOA)  allocation  of  $100 million  is  $7.25  million.  The                                                                   
proposal  is to split  between facilities  with the  deferred                                                                   
maintenance at  approximately $4.25 million and  the State of                                                                   
Alaska  Telecommunications  System  (SATS)  telecommunication                                                                   
system  deferred maintenance  at  $3 million.  She  continued                                                                   
with  the Department  of  Corrections  (DOC)  which has  $6.5                                                                   
million in  deferred maintenance  projects. She depicted  the                                                                   
Department  of  Education  and   Early  Development's  (DEED)                                                                   
request  of $1.7  million  for  deferred maintenance  at  Mt.                                                                   
Edgecombe high school.                                                                                                          
Co-Chair  Hoffman  asked  Ms. Rehfeld  about  potential  jobs                                                                   
provided in the state. She invited  the senior policy analyst                                                                   
from the Office  of Management and Budget (OMB)  who has been                                                                   
working on Institute  of Social and Economic  Research (ISER)                                                                   
studies of employment information.                                                                                              
JACK  KREINHEDER, CHIEF  ANALYST,  OFFICE  OF MANAGEMENT  AND                                                                   
BUDGET,   OFFICE  OF   THE  GOVERNOR,   explained  that   the                                                                   
projections available  for this type of  deferred maintenance                                                                   
package and  repair work  result in  $100 million in  general                                                                   
funds  and approximately  $106  million in  total funds.  The                                                                   
direct jobs are estimated at 700  on an annual average basis.                                                                   
If employees  are hired for  a six month  job, more  than 700                                                                   
people could  be hired. The  multiplier effects of  the money                                                                   
spent  in the  economy equals  approximately  1100 jobs.  Ms.                                                                   
Rehfeld pointed  out the potential  projects funded  with the                                                                   
approval  this legislation.  Most  agencies do  not have  the                                                                   
internal capacity  to do  the work  themselves, so  they must                                                                   
Ms. Rehfeld  continued with  the Department of  Environmental                                                                   
Conservation  (DEC) who  allocated $200  thousand to  address                                                                   
the deferred  maintenance needs  at the environmental  health                                                                   
lab.  The allocation  for  the Department  of  Fish and  Game                                                                   
(DFG) is  $2 million  with specific  allocations within  that                                                                   
including  $850  thousand  for   statewide  employee  housing                                                                   
needs,  $700   thousand  for   statewide  storage   and  shop                                                                   
facilities,  and  $450  thousand  for  the  Kodiak  warehouse                                                                   
compound upgrades.                                                                                                              
9:41:04 AM                                                                                                                    
Ms. Rehfeld  discussed  the Department  of Health and  Social                                                                   
Services (DHSS)  and their decision  to split the  $7 million                                                                   
allocation.  She  continued  with  the  deferred  maintenance                                                                   
allocation  for   the  Department  of  Labor   and  Workforce                                                                   
Development  (DLWD)  including  $1  million  for  the  Alaska                                                                   
Vocational Technical  Center. The Department of  Military and                                                                   
Veterans  Affairs  (DMVA)  allocates $4  million  in  general                                                                   
funds and $6.3  million in federal funds to  support a number                                                                   
of components.                                                                                                                  
Ms.  Rehfeld   explained  that  the  Department   of  Natural                                                                   
Resources proposed  to receive  a $4 million allocation.  The                                                                   
Department  of   Public  Safety   (DPS)  proposed   a  single                                                                   
allocation  of  $1.3  million  to  statewide  facilities  for                                                                   
statewide  deferred maintenance.  Ms.  Rehfeld addressed  the                                                                   
Department of Transportation and  Public Facilities (DOT) and                                                                   
the proposed allocation of $25  million of the entire package                                                                   
allocated across  the various modes of  transportation within                                                                   
the department.  The airport deferred maintenance  request is                                                                   
$3.5  million,  the Alaska  Marine  Highway  Vessel  Facility                                                                   
request of  $3 million,  facilities deferred maintenance  for                                                                   
$1 million,  harbor deferred  maintenance for $600  thousand,                                                                   
and  highway deferred  maintenance package  request of  $16.9                                                                   
9:43:46 AM                                                                                                                    
Co-Chair Hoffman  acknowledged the committee's  initiation of                                                                   
a boost in  the department's deferred maintenance  last year.                                                                   
He asked the  department to comment. Co-Chair  Stedman echoed                                                                   
Co-Chair Hoffman's  request and noted imbedded  policy issues                                                                   
such as  harbor maintenance  listed on  Page 57. Ms.  Rehfeld                                                                   
suggested   that   the  department   discuss   the   specific                                                                   
LAURA  BAKER,  DEPUTY DIRECTOR,  DIVISION  OF  ADMINISTRATIVE                                                                   
SERVICES, TRANSPORTATION,  discussed the estimates.  Co-Chair                                                                   
Stedman requested further information  on harbor maintenance.                                                                   
Ms.  Baker  replied  that  the  harbor  deferred  maintenance                                                                   
funding addresses  the top priority item on  the harbor list,                                                                   
which  is   the  Port  Alexander   Inner  Float   repair  and                                                                   
replacement.  The float is  used by  school children  and the                                                                   
boarding ramp  is not Americans with Disabilities'  Act (ADA)                                                                   
compliant. The project total is estimated at $630 thousand.                                                                     
9:46:33 AM                                                                                                                    
Co-Chair   Stedman   acknowledged  that   municipal   harbors                                                                   
received funding  for deferred maintenance. He  informed that                                                                   
many harbors  have been  privatized. These remaining  harbors                                                                   
contain areas that through moorage  could support the harbors                                                                   
themselves. He  felt concern  about policies regarding  small                                                                   
harbors and  docks. Ms. Baker  offered to follow up  with the                                                                   
committee on  the concern including outstanding  projects and                                                                   
plans.  Co-Chair  Hoffman  requested   that  time  frames  on                                                                   
transfers be included in the follow up.                                                                                         
Co-Chair  Stedman asked  about  the follow  up. He  expressed                                                                   
opposition to  the state funding  private docks.  He provided                                                                   
the example of Baranof Warm Springs.  Ms. Baker answered that                                                                   
she  would   include  that   information.  Co-Chair   Stedman                                                                   
remarked  that the committee  could commune  and discuss  the                                                                   
issue  further.  He  stressed   that  he  is  philosophically                                                                   
opposed to the  state building and maintaining  private docs.                                                                   
Ms. Baker  agreed to schedule a  meeting to follow up  on the                                                                   
Co-Chair Hoffman  requested comment upon funds  in the budget                                                                   
to address deferred  maintenance of pot holes  throughout the                                                                   
state. He  remarked that  the program  was well received.  He                                                                   
received  requests for  additional funds  for roads  and road                                                                   
construction,  especially  for  the road  to  Dillingham.  He                                                                   
opined that  Alaskan citizens prefer  to have funds  spent on                                                                   
the repair and construction of roads.                                                                                           
Ms.  Baker informed  about an  updated  report regarding  the                                                                   
$12.4 million added to the highway  and aviation base budget.                                                                   
A portion  of the  funds were  used to  offset the  potential                                                                   
supplemental  need  this year.  She  offered  to provide  the                                                                   
report  to the  committee. The  funds recently  added to  the                                                                   
operating budget in July will  address work required on roads                                                                   
this construction season and fiscal year.                                                                                       
9:51:46 AM                                                                                                                    
Co-Chair  Hoffman asked  about  the $1  million for  deferred                                                                   
maintenance and  critical repairs.  Ms. Baker responded  that                                                                   
the facilities'  deferred maintenance  of $1 million  will be                                                                   
spread   across  the   regions   adding  sprinkler   systems,                                                                   
ventilation   systems,  compliance   for  the   Environmental                                                                   
Protection  Agency (EPA),  and  the addition  of an  overhead                                                                   
hoist for  the Tok  equipment building.  She stated  that she                                                                   
was available to discuss the issue  further. Co-Chair Hoffman                                                                   
asked   about  the   $16.9  million   for  highway   deferred                                                                   
maintenance and  the $37.5  million for maintaining  existing                                                                   
facilities. Ms.  Rehfeld answered  that OMB plans  to provide                                                                   
the  committee  with a  list  including  a breakdown  of  the                                                                   
requested projects.                                                                                                             
9:54:12 AM                                                                                                                    
Senator  Olson  asked  why  only  $3.5  million  dollars  was                                                                   
requested out of a $94 million  backlog.  Ms. Baker responded                                                                   
that current  needs in the  department are approximately  $94                                                                   
million. She agreed that the portion  for aviation was small,                                                                   
but the allocation  was based on needs by mode.  The aviation                                                                   
portion  in the  deferred maintenance  allocation includes  a                                                                   
number of projects at the top of the list.                                                                                      
Co-Chair  Stedman  requested information  about  the  process                                                                   
used to  identify and  recommend certain  agencies.  He asked                                                                   
how the process integrates with  last year's reduced deferred                                                                   
maintenance budget. He elucidated  that the state now has the                                                                   
responsibility  to "catch  up" and restructure  for  the next                                                                   
Ms. Rehfeld defined the five year  plan with the goal of $100                                                                   
million appropriated  each year  to address the  backlog. The                                                                   
general  allocation was  based on square  footage by  agency.                                                                   
She noted  that adjustments did  occur, but allocations  must                                                                   
be scrutinized  because some agencies have greater  needs for                                                                   
deferred maintenance funding.                                                                                                   
Co-Chair  Hoffman asked  how  the allocation  values  between                                                                   
departments are  determined. Ms. Rehfeld maintained  that the                                                                   
allocations were  determined by observing the  footage of the                                                                   
facilities  within  the agency.  Co-Chair  Stedman  expressed                                                                   
curiosity  about  the  ages  and  condition  of  the  various                                                                   
agencies. Ms.  Rehfeld agreed that  the age and  condition of                                                                   
the  agencies   must  be  reviewed  carefully   to  determine                                                                   
10:00:49 AM                                                                                                                   
Senator Thomas  asked about  the intention  to move  the 2011                                                                   
maintenance  list to  2010. Ms.  Rehfeld  responded that  the                                                                   
governor is proposing  that the second year of  the five year                                                                   
plan begin  in FY12.  She explained  that FY11  is the  first                                                                   
year  requesting an  accelerated start  date. Senator  Thomas                                                                   
noted the lack of steady funding  during the various years in                                                                   
the five year plan. He provided examples.                                                                                       
Ms. Rehfeld  informed  about the various  agencies'  ten year                                                                   
plans.   She   explained   why   some   years   show   higher                                                                   
appropriations.  Senator Thomas  observed  that the  projects                                                                   
are   more  similar   to  capital   projects  than   deferred                                                                   
maintenance projects.                                                                                                           
10:03:14 AM                                                                                                                   
Senator  Egan  asked  a  policy  question  regarding  various                                                                   
projects  and  the  corrosive  salt  used  on  the  Southeast                                                                   
Alaskan  roads in  the  winter. He  observed  that the  state                                                                   
saves money  by resorting to  the less expensive  salt versus                                                                   
the newer varieties  of ice control. The burden  is passed on                                                                   
to the owner  of the vehicle. Ms. Rehfeld commented  that DOT                                                                   
is the  best contact, as  they have had  issues with  the EPA                                                                   
and  other regulatory  agencies.  Ms.  Baker  added that  the                                                                   
department is  considering alternatives  to the salt  mixture                                                                   
used for icy roads. She offered  to provide more information,                                                                   
but maintained that  the belief about salting the  roads is a                                                                   
misconception.  Co-Chair Hoffman  asked if Frank Richards was                                                                   
available  for  questioning.  Ms. Baker  responded  that  Mr.                                                                   
Richards was not available. Co-Chair  Stedman agreed that the                                                                   
concern  about  salt  content  is also  expressed  in  Sitka,                                                                   
Ketchikan, and Anchorage  as the belief exists  that cars are                                                                   
dissolved by the brine mixture.                                                                                                 
10:06:32 AM                                                                                                                   
Co-Chair  Stedman   referenced  Page  46  and   the  deferred                                                                   
maintenance cost for the Mount  McKinley meat plant. He asked                                                                   
about the meat plant.                                                                                                           
Senator Olson  regressed to  a question  for (DOT)  about the                                                                   
road  between  Saint  Mary's  and  Mountain  Village  in  his                                                                   
district,  which is  in need of  repair. He  asked about  the                                                                   
state's  maintenance  of  the  road. Ms.  Baker  promised  to                                                                   
follow  up  with an  answer  as  she was  currently  unaware.                                                                   
Senator  Olson   commented  about   the  resistance   to  the                                                                   
maintenance possibly due to a  misunderstanding about whether                                                                   
equipment  is owned by  the state  or federal government.  He                                                                   
emphasized that  the road must  be maintained for  the safety                                                                   
of the local people.                                                                                                            
10:08:47 AM                                                                                                                   
LETA  SIMONS,   DIRECTOR,  DIVISION   OF  SUPPORT   SERVICES,                                                                   
DEPARTMENT OF  NATURAL RESOURCES, discussed the  Mt. McKinley                                                                   
meat plant. She explained that  the meat plant is an asset of                                                                   
the agricultural revolving loan  fund, which is an enterprise                                                                   
fund.  Mt.   McKinley  meat   plant  is   in  need   of  some                                                                   
improvements to maintain safety  standards and to retain good                                                                   
working conditions in the facility.                                                                                             
Co-Chair Stedman  reviewed the  list of deferred  maintenance                                                                   
repairs.  He opined  that most  of  the items  should have  a                                                                   
sinking fund available for replacement  reserves. He asked if                                                                   
the meat  factory had  a process to  replace equipment.   Ms.                                                                   
Simons noted that the plant was  an asset of the Agricultural                                                                   
Revolving  Loan   Fund.  The  fund's  focus   is  to  provide                                                                   
agricultural loans.                                                                                                             
Co-Chair Stedman  stated that the assets should  be protected                                                                   
by policies. He requested that  the department follow up with                                                                   
the  committee about  the  management of  the  organization's                                                                   
assets. Ms. Baker agreed to comply.                                                                                             
Senator  Huggins   agreed  with  Co-Chair   Stedman's  point.                                                                   
Senator Olson followed up that  the Mt McKinley meat plant is                                                                   
a valuable  processing plant. He  stated that he has  used it                                                                   
himself. He believed that the funding should continue.                                                                          
10:12:55 AM                                                                                                                   
Ms. Rehfeld  noted that a request  was not reflected  for the                                                                   
Alaska  Court  System, which  is  $2.5 million  for  deferred                                                                   
Co-Chair Hoffman  pointed out  a revised update  illustrating                                                                   
that  the  state will  have  $2.2  billion in  reserves.  The                                                                   
Senate  bipartisan  working  group   proposed  to  save  $1.5                                                                   
billion of  the $2.2  billion. The  governor agreed  that the                                                                   
responsible act is to save additional  dollars from FY10. The                                                                   
roller   coaster  effect   on  the  state   budget   may  not                                                                   
necessitate  $100  million  for   the  next  five  years.  He                                                                   
suggested  thinking  twice  about   expenditures  made  today                                                                   
versus later when the future price  of oil is yet unknown. He                                                                   
opined  that  the  state acted  responsibly  by  saving  $1.5                                                                   
billion of the additional revenues.                                                                                             
Senator Thomas  interjected that some departments  listed the                                                                   
total  estimated  deferred  maintenance   cost  listed  as  a                                                                   
number. He appreciated information presented in that form.                                                                      
10:15:51 AM    AT EASE                                                                                                        
10:16:50 AM    RECONVENED                                                                                                     

Document Name Date/Time Subjects