Budget Hearings (Joint Budget Committee)
October 26, 2022
Actions Taken (click to jump to that discussion)
- Energy and Environment approved
- Geological Survey approved
- Liquified Petroleum Gas Board approved
- Oil and Gas Commission approved
- Transformation and Shared Services approved
- GIS approved
- Building Authority approved with amendments
- Information Systems approved with amendments
- Statewide Shared Services approved
Sen Irvin: Okay, call the meeting to order. Let’s see. All right. We’re going to go right to C. And Mr. Parrish, we are going to Department of Energy and Environment. So if they want to go ahead and come on up. Hi.
Energy and Environment
B Parrish: Thank you, madam chair. We’re on page 36 in your manual. On page 36, this is the Department of Energy and Environment. The first section we’ll go over is shared services. The Department of Energy and Environment is a cabinet-level department. As a result of transformation, the department was combined from divisions of programs within the Division of Environmental Quality, Arkansas Geological Survey, Oil and Gas Commission, and Liquefied Petroleum Gas Board. Cabinets provided a new shared services section to eliminate duplication of services and provide efficiencies. And on page 36, this shows state contracts awarded to minority-owned businesses, an employment summary, and publications. If you go to page 37, this is the shared services request. And this section provides, again, shared services, which pulls resources for the benefit of all divisions and programs within the department, supported by a pay-in account. On the next page is a continued request. And then on page 39 is the appropriation summary. If you look at the bottom of the third column, the total authorized in 2023 was $8.2 million. The request in 2024 is $7.6 million. That’s a 7% decrease. And the executive recommendation provides for that agency request.
B Parrish: Looking at the change levels on each line item, regular salaries in 2023 is authorized at $6.2 million. The request in 2024 is $4.1 million. That’s a 33% decrease. Personal services match was authorized at $2 million. The request is $1.4 million. That’s a 29% decrease. And this is a reallocation of positions from shared services to various divisions or programs throughout the department. Next line item is operating expenses. It goes from 0 to $1.25 million. Conference and travel is from 0 to $85,000. Professional fees goes from 0 to $450,000. Capital outlay goes from 0 to $250,000. And this is all a reallocation of spending authority from the Solid Waste Management Recycling program. And that’s to allow the department to fund shared services needs. Madam Chair, that’s the shared services request. Now we’ll move to the Division of Environmental Quality. That’s on page 40 of your manual. This division is the primary environmental regulatory agency for the state. It’s responsible for implementing the state’s environmental laws and regulations as established by the legislature and the Arkansas Pollution Control and Ecology Commission. And on this page, it shows state contracts awarded to minority-owned businesses and employment summary and publications.
B Parrish: Page 41 begins their department appropriation summary. You’ll see on page 42 the totals. The division has 39 appropriation requests. 11 have a change level, and a few others only request a salary match adjustment to continue into the new biennial. The total authorized budget in 2023 is almost $164 million in spending authority. And the division requests $167 million for the biennium. That’s a 2% increase over what was authorized. There are a few requests for increases, but those are mostly for salary match adjustments. Most of the change levels are reallocations of spending authority among different appropriation sections. The executive recommendation provides for these requests in all but one section. The division is funded primarily from federal grants, investments, special revenue, fees for services, and some general revenue. If you go to page 44, it’s the first request. This is for state operations, and this section provides for administration of the division. It’s supported by a general revenue fund.
B Parrish: On page 45 is our corporation summary. In the bottom of the third column, you’ll see that in 2023 what was authorized was $2.7 million. The request in 2024 is for $3.6 million. That’s a 33% increase, that’s for both years of the biennium and the executive recommendation provides for this request. Looking at change levels on the line items, the first one is regular salaries. $1.7 was authorized. The request in 2024 is $2.3. That’s a 33% increase. Personal services matching was $587,000. The request is for $789,000. That’s a 34% increase. And these are salary match adjustments carrying over into the new biennium but also a transfer of positions from shared services. The next line item is operating expenses. $353,000 was authorized. The request in 2024 was $403,000. That’s a 14% increase. This is a reallocation of spending authority from the Electronic Waste Recycling Infrastructure section. That’s later on in the manual.
B Parrish: And then the next line item is professional fees. $4,100 is what was authorized. $79,000 is the request. And again, this is another reallocation from the Electronic Waste Recycling and also appropriation from the Solid Waste Performance Bond sections. Looking at fund sources, the fund balance going into 2022 was $1.1 million. The fund collected general revenue in the amount of $4 million, fees in the amount of $44,000. There are interagency and intra-agency transfers of $14,000 and $275,000. Those are funds received from the Game and Fish and Oil and Gas Commission. And division spent $2.2 million in fiscal year 2022. That leaves a balance of $1.37 million going into 2023. The next request for the change level is on page 46. It’s the next page for federal operations, and this section is utilized for the federal portion of program activities supported by a federal fund. On page 47 is their summary. What was authorized in 2023, the total was $7.8 million. In 2024, the request is for $9.9 million. That’s a 26% increase. This is for both years of the biennium and the executive recommendation provides for that request. Regular salaries is where the first change level is. $3.5 million was authorized in 2023. In 2024, the request is $4.8 million. That’s a 37% increase. Personal services matching was authorized at $1.2 million. The request in 2024 is $1.7 million. That’s a 43% increase. And in 2025, it goes up to a 48% increase. These are salary match adjustments and transfers from shared services.
B Parrish: The next line item is operating expenses. $1 million was authorized. $1.1 million is the request. It’s a 9% increase. Professional fees goes from $484,000 authorized to $584,000. That’s a 21% increase. And these are reallocations from the Solid Waste Performance Bond sections. And looking at the funding sources table, the fund balance going into 2022 was $622,000. The fund collected federal revenue in the amount of $7 million. The division spent $5.99 million in fiscal year 2022, and that leaves a balance of $230,000 going into 2023. On the next page is an exchange level. It’s page 48. We’re at wastewater licensing, and this provides for that program. It’s supported by a special revenue fund. On page 49 is the summary. In 2023, $165,000 was authorized. The request in 2024 is $316,000, so it almost doubles. That’s for both the years of the biennium, and the executive recommendation provides for this request. The change levels begin with regular salaries. $62,000 is authorized. $90,000 is the request. That’s a 45% increase. Personal services matching was authorized at $21,000. The request is for $44,000. That doubles. Operating expenses was $26,000. It goes up to $76,000, so that triples. And then professional fees was authorized to $50,000. The request is for $100,000. So that doubles. All reallocations are from the Solid Waste Performance Bond sections.
B Parrish: And looking at the fund sources table, the fund balance going into fiscal year 2022 was $483,000. The fund collected– well, the other line shows $144,000. Those are fees from examination and licensing renewals of wastewater treatment plant operators. The division spent $108,000 in fiscal year 2022, and that leaves a balance of $519,000 going into 2023. The next change level is on page 52. So we’re going to skip over land reclamation. If you go to page 52, this is the Hazardous Waste Permit program. And this section ensures that generators that have hazardous waste are complying with the law supported by a special revenue fund. On page 53 is the appropriation summary. In 2023, a total of $1.3 [million] was authorized, and the request in 2024 is $1.7 million. That’s a 27% increase. That’s for both years of the biennium. The executive recommendation provides for the agency request. Change levels begin with regular salaries. $706,000 was authorized. The request for 2024 is $882,000. That’s a 25% increase. Personal services matching was $236,000. The request is for $326,000. That’s a 38% increase. These are salary match adjustments and the position transfer from shared services. There’s also a reallocation of $170,000 in appropriation from the Solid Waste Performance Bond section.
B Parrish: Looking at operating expenses, $141,000 was authorized. $191,000 is the request. That’s a 35% increase. And in professional fees, $47,000 was authorized. And in 2024, $97,000 is the request. So that doubles. And these are reallocations from the Solid Waste Performance Bonds section. Look at funding sources, the fund balance going into 2022 was $3.6 million. And the fund collected special revenue in the amount of $1.26 million. Those are fees from permits and certifications. The division spent $1.12 million in fiscal year 2022, and that leaves a balance of $3.56 million going into 2023. The next change level is on page 60. You go to page 60 in your manual. On page 60 is fee administration, and this section collects fees for air, water, and solid waste permitting, monitoring, and inspection activities supported by a trust fund. On page 61 is the department appropriation summary. In 2023, $13.8 million was authorized. The request in 2024 is for $15.7 million. That’s a 14% increase. in 2025, there’s a 15% increase or just a little bit more. The executive recommendation provides for the agency request. Change levels begin with regular salaries. In 2023, $6.9 was authorized. In 2024, the request is for $8 million. That’s a 16% increase. For personal services match, $2.3 was authorized. $2.9 is requested in 2024, and a little over $3 million is requested in 2025. That’s a 24% increase in 2024 and a 29% increase in 2025. These are salary match adjustments and a transfer of eight positions from shared services. Operating expenses was at $2.2 million. The request is $2.3. That’s a 4% increase. And professional fees was $500,000. That goes up to $600,000. That’s a 20% increase. And these are lines that are received for reallocation from the Solid Waste Performance Bond section.
B Parrish: If you look at the funding sources table, the fund balance going into fiscal year 2022 was $7.26 million. The fund collected fees in the amount of $11 million. They also had investments in the amount of $6.5 million. The division spent almost $10 million in fiscal year 2022, and that leaves a balance of $13 million going into 2023. The next page is page 62. These are Solid Waste Performance Bonds. And this section is used for the closure of abandoned or non-compliant solid waste disposal facilities supported by a trust fund. On page 63 is the summary. And this is one of those sections that’s using a lot of appropriations to be reallocated to different sections throughout the department. So you’ll see that in 2023 it was authorized as $3 million. The request is for $2 million. So it’s a 33% decrease. And again, it’s because this appropriation is being reallocated to other sections. $15,000 of that’s being reallocated to state operations, $200,000 to federal operations, $137,000 to wastewater licensing, $265,000 hazardous waste permit program, $333,000 to fee administration, and then $50,000– we haven’t gotten to this yet, but that’s the asbestos control program that will be later in the manual.
B Parrish: And the executive recommendation provides for these requests. Looking at funding sources, the fund balance going into fiscal year 2022 was $9,916. The fund had no deposits, and the division spent 0 in 2022. That leaves a balance of $9,000 going into 2023. On the page 68 is the next request. Page 68 is an exchange level. This is for the asbestos control program, and this provides for administration for a program for licensing contractors engaged in the removal of asbestos materials and facilities. Page 69 is the summary. In 2023, $458,000 was authorized. The request in 2024 is for $509,000. That’s an 11% increase for both years of the biennium. And the executive recommendation provides for this request. Change levels begin with operating expenses. $29,000 was authorized. The request in 2024 is $54,000, so that’s an 85% increase. And then professional fees was $2,100.The request is for $27,000. And these are both reallocations from the Solid Waste Performance Bonds section that we went over earlier. Looking at fund sources, the fund balance going into 2022 was $1.39 million. The fund collected special revenue in the amount of $336,000. The division spent $175,000 in 2022. So that leaves a balance of $1.55 million going into 2023.
B Parrish: The next page is page 70. This is the solid waste management recycling program, and this section assists cities and counties in solid waste management planning supported by a trust fund. On page 71 is their summary. And this is another section where you’ll see an overall decrease because appropriation is being reallocated to different sections throughout the department. So the total authorized in 2023 is $8.1. The request for 2024 is $5.9. That’s a 28% decrease that carries over into 25. The change levels begin with regular salaries. What was authorized in 2023 is $593,000. The requests in 2024 is $669,000. So that does go up 13%. Personal services match was $201,000. The request is for $246,000. That goes up 22%. Operating expenses was at $97,000. The request is for $172,000. That goes up 77%. And professional fees was at 0. The request for $50,000. These are all lines that receive reallocation from the electric waste line that’s at the bottom of the table. So there’s a line item below where they’re moving some appropriation from this line up to these other line items.
B Parrish: And then the electronic waste recycling infrastructure line goes from $2.5 million to 0, again, because that’s being reallocated up. But it’s also being sent to different sections throughout the department. They’re going to send $110,000 to state operations, $178,000 to regulated substance storage tank program, and then the bulk of it, $2 million, from this line item will go to the shared services section. So we’re now at funding sources. The fund balance going into 2022 was $5.3 million. The fund collected special revenue in the amount of $5.4 million. Those are landfill disposal fees. And the division spent $4.6 million in 2022. That leaves a balance of $5.3 million going into 2023. The next change level is on page 72. This is the next page. This is a regulated substance storage tank program. And this section administers laws, rules, and regulations relating to underground storage tanks. It’s supported by a program fund. And on page 73 is the summary. It was authorized in 2023. It was a little over $1 million. The request for 2024 is for $1.3 million. That’s a 27% increase. And that’s for both years of the biennium. The executive recommendation provides for this request. Change levels begin with regular salaries. $732,000 was authorized. In 2024, $864,000 is request. It’s an 18% increase. Personal services match is $262,000 authorized. $322,000 is the request. It’s a 23% increase. Operating expenses was $71,000. The request in 2024 is $121,000. That’s a 70% increase. And then professional fees goes from 0 to $50,000. And these are allocations from the electronic recycling line in the solid waste management section that we went over earlier.
B Parrish: Funding sources, the table at the bottom, the fund balance going into 2022 was $2 million. The fund collected special revenue in the amount of $963,000. Those were registration and license fees. The division spent $961,000 in 2022, and that leaves a balance of $2 million going into 23. On page 100 is the next request, so you have to skip forward to page 100. And on page 100 is the environmental site remediation trust section. And this provides a spending authority use private funding for environmental remediation activities. It’s supported by a trust fund. On page 101 is the request. In 2023, $2 million was authorized. The request in 2024 is, again, for $2 million. So there’s no change level in the agency request. However, the executive recommendation is to discontinue this appropriation. There was a substantive bill that creates a tax credit program and a program fund for this appropriation, but it was never enacted. This is an unfunded appropriation. If you now go to page 120. On page 120 is federal operations. And this section provides for the Weatherization Assistance Program and Low Income Home Energy Assistance Program. It’s supported by a federal fund. On page 121 is the request. You’ll see in 2023 that $39.3 was authorized. The request in 2024 is $39.6 million. So that’s just a 1% increase overall. And executive recommendation provides for that request. The change levels begin with regular salaries. $411,000 is authorized. The request for 2024 is $629,000. That’s a 53% increase. And personal services matching was authorized at $148,000. The request in 2024 is for $236,000. That’s a 59% increase. These are salary match adjustments and a transfer of three positions from the shared services section. Looking at fund sources at the table at the bottom, the fund balance going into 2022 was $7.4 million. The fund collected federal revenue in the amount is $36.5 million. The division spent $35.3 million in 2022. And that leaves a balance of $8.3 million going into 2023. Madam Chair, those are all the change levels for this division.
Sen Irvin: All right. Thank you. Are there questions? Representative Cavenaugh, you’re recognized for a question.
Rep Cavenaugh: Thank you, Mr. Chair. I’m over here to your far right. I’ll get closer so you can see my face. So I have several questions for your agency. A lot of them revolve around your fund balances. You have some fund balances with substantial balances. You have one with 2,800 years’ worth of excess funding. So my question is, with these balances, when you have such large years of reserve, what are you going to do? Are you going to be giving some of those fees back to the people that you get them from?
Keogh: Well, thank you. That’s an excellent question. We have several funds within the Department of Energy and Environment that are trust accounts. These are accounts that we hold. The fees come in, are collected, but these monies have to reach a certain level of funds to be able to be fiscally sound to cover environmental obligations, potentially clean up remediation sites where sites go bankrupt or other situations. So these often stand in lieu of private companies having to have their own insurance at higher cost. And so we work closely with those that we regulate around those fee structures to make sure they’re modest fees but that we have the necessary revenues to support the spend, should it be necessary. So I guess, to your point, in those cases, it’s like having an insurance or trust account that protects the state should there be an emergency.
Rep Cavenaugh: But if it’s well over what your historic spend has been– I’m just going to give you an example. And this is a little bit different. This is from the land reclamation. You have a fund balance based on your spending for 119 years. Your actual spend is $3,800. You’re asking for an appropriation of $950,000. Your most historic spend has been in 2013-2014 for $99,000. Why do you need an appropriation over that much when you have a fund balance that could sustain you based on your spending for some time?
Keogh: I’m sorry. Can you clarify what page you’re on? I’m not sure which fund.
Rep Cavenaugh: I’m sorry. Yeah, page 51.
Sen Irvin: And I’m sorry. If you’ll identify yourself for the record, please.
Keogh: I’m sorry, Chair. My name is Becky Keogh. I’m a department secretary for Department of Energy and Environment. I have with me at the table Shane Corey, Chief Council, and Aaron Black, our chief compliance fiscal officer.
Sen Irvin: Thank you. Representative Cavenaugh, continue.
Rep Cavenaugh: Thank you. That was page 51–sorry.
Corey: On page 51, I believe we’re talking about the land reclamation fund. I do understand that there are years’ worth of expenditures in there. However, I think it is really dealing with the size of a project because, while we haven’t had to spend a lot of money out of this fund in the past few years, which I think is a good thing for the agency, if we had to undertake a substantial remediation, it could easily take up the $950,000 that’s in there. These are open-cut mines that are done on land surfaces, sometimes near water bodies, creeks, etc. So I do agree that there’s an adequate amount of funding in there. But on the flip side of that, one or two projects, if the state was in a place to actually close some of those open cut mining areas–
Rep Cavenaugh: Well, your highest spend has been in 2013-2014, and that was $99,510.
Corey: Right. That’s an excellent point. And we hope to keep it that way because there aren’t a whole lot of sites that the Department or the Division of Environmental Quality has to clean up under this particular program.
Rep Cavenaugh: But if we reduce the appropriation, if some emergency came up, there’s nothing that prohibits you for coming back to the ALC and asking for additional appropriation, is there?
Corey: No, ma’am.
Rep Cavenaugh: Okay. I want to talk about– if I can, Madam Chair.
Sen Irvin: Yes.
Rep Cavenaugh: I’d like to speak about page number 57. And this is the coal surface mining because this is the one you have over 2,800 years’ worth of fund balance, even though it’s minor, based on what your actual spend is. And if you’ve been watching Budget, fund balance is the name of the game this year.
Corey: And I can tell you this particular program is a federally funded program. So these are federal monies for the coal mining program that the Division of Environmental Quality Office of Mining regulates. So really these appropriation amounts are in the event we needed to step in and take care and close up a coal mine site.
Rep Cavenaugh: Do you know the last time you had to step down and close a coal mine out in the state of Arkansas?
Corey: It hasn’t happened since I’ve been in the Division or the Department of Energy and Environment. But I know that we have several that we are in active litigation with or about to be in litigation. We’re trying to get some of those operators to close the mines using financial assurances we have on file.
Rep Cavenaugh: And this one is just for the– is it not just for the operation of it? Because you’re only requesting is $15,000. That’s not the fund that you would use in case the mine was closed, correct?
Corey: Maybe I’m looking at the wrong one.
Keogh: Are you on page 58 or 59?
Rep Cavenaugh: I’m on 57.
Keogh: 57. Okay. He was in the trust fund. Sorry.
Corey: Yes, you’re correct. That’s not when we would use to close. That might be one we needed to use in the event we needed to– rainwater was overflowing or–
Sen Irvin: Pull that mic up. I’m sorry. We can’t hear you.
Corey: That’s okay. I apologize. I believe you’re right. That’s not a fund that we would use to close the mine, but it is a fund that we could use in the event there are some minor remediation efforts that need to be taken on that site.
Rep Cavenaugh: Okay.
Keogh: I can elaborate a little bit also. When he talked about our federal program, this comes out of the Office of Surface Mining, and it’s a safety program. And some of these old abandoned mines where there might be holes in the ground, and those are identified. So we have had a number of programs where we’ve gone back in and done restoration. We have a certain state match that we have to retain to be able to get that federal funding. And that’s the only concern I have is that these funds do serve as those matches. So we want to make sure that we have the appropriate ability to spend our statement, should we need to. So that’s the other provision that the federal government will audit us and verify that we have the authority, not only just the funds, but the authority to spend it, should we have to.
Rep Cavenaugh: I don’t think 57 has to do with that, page 57, because, when you look at the description of it, this is funds derived from permit fees from surface coal. This is not dealing with your federal funds. And you might want to use it for a state match. But if all you’re asking for appropriation is $15,000, that’s not much of a state match.
Keogh: Okay. Thank you.
Rep Cavenaugh: Madam Chair, I have several more questions. I’ll get back in the queue. Thank you.
Sen Irvin: Okay. Representative Hillman. Oh, sorry. Representative Crawford.
Rep Crawford: Thank you, Madam Chair. My question is on page 99 talking about the EV infrastructure. And I know this is federal funds coming for construction, installation, electric vehicle charging. But my question is the concern that comes after all of this, and that is the disposal of the batteries. Can you use part of the federal money to help in the landfills, or is there a plan in place for that?
Keogh: I think that’s a very valid question. We are working with Department of Energy and other EPA regarding the safety of battery and potential methods for disposal or management. A lot of times you can send them to a battery reprocessing facility, and that’s being funded now through some of the federal funds that are coming out. So those are possibilities that we would work with the federal government on procedures and in our industry to make sure that they have adequate resources to be able to get those batteries collected and put through proper treatment facilities so that we don’t see impact on our groundwater or don’t see impact on our landfill. So there would be, I, suspect, restrictions in certain landfills that they could not take certain batteries because of the components of the battery, similar to electronics. So we want to make sure that we keep our landfills safe. But those are good questions. It’s a developing answer or solution, but I know there are some battery recyclers out there. But as batteries become more prevalent, that is a concern that we’re dealing with on the front end. So thank you for the question.
Rep Crawford: Thank you. Follow up, please. Do you have any idea, like, will this be in place 2023, 2024? Will we need some legislation coming up in 2023 to help with this? Do you have any idea?
Keogh: Well, I’d like to get back to you on that question. I think it’s a good question. But based on the investment at the federal level, I suspect that we will see some investment across neighboring states, if not in Arkansas, for these facilities. And then we’ll go through the permitting processes to make sure that they’re operated in a manner that conforms to regulation. But let me get back to you specifically on the time frame and if legislation would be helpful.
Rep Crawford: All right. Thank you.
Sen Irvin: Representative Wooten.
Rep Wooten: Thank you, Madam Chairman. Madam Secretary, I’ve got several questions relative to fund balances, interest income, and personnel. On page 42, you show interest income of actual for 2021-2022, $171,000. But you don’t have anything budgeted. Why is that in 2024-2025? Why is there no interest income shown?
Keogh: I’m going to ask my chief counsel to respond to that.
Corey: Thank you. The reason there’s no interest shown is it goes back to the respective trust fund in which it was generated. And to be honest, that $170,000, I think, is a little bit misleading. I think our actual interest income was about 88,000. Part of that were refunds from DFA that got processed and were caught in an interest category. But the reality is the interest part of that goes back to the respective trust fund in which it was created.
Rep Wooten: Now say that again.
Corey: So the interest is generated–
Rep Wooten: The real amount is $15,000?
Corey: No, the real amount is about $80,000.
Rep Wooten: About $80,000?
Corey: Yes, sir.
Rep Wooten: What about the $40 million that you’ve got in the Petroleum Storage Fund, Page 75. Where is the interest on that?
Corey: The interest for all of those funds go back into the respective funds.
Rep Wooten: Go back where?
Corey: Into whatever fund the fees are sitting in. So if it’s in, say, for example–
Rep Wooten: Well, you don’t show it. Here’s what I want from you.
Corey: It is the $80,000 that’s going back into the fund.
Rep Wooten: Here’s what I’d like to add, Madam Chairman. I’d like a list, total dollar of fund balances. I don’t care what group it is. I want to know your total balance. And then I want to know the interest that you earned last year on that money. Now, you may not have gotten that money back to a specific fund, but interest was earned somewhere on that money. And I don’t know what is so top secret about interest, but there’s some reason somebody is not reporting it all. I commend you for the fact that you show the $171,000, but then you start making excuses about, it’s really just $80,000.
Corey: I think I was trying–
Rep Wooten: Where did the other $100,000 go?
Corey: It was money that came back into that fund. The $170,000 came back into the respective funds. $100,000 of it was actually–
Rep Wooten: Where did it come from?
Rep Wooten: On what?
Corey: $80,000 interest. The rest of it is refund.
Rep Wooten: What funds did that money come from?
Corey: I think Mr. Black can probably tell you specifically where we invest to the dollar.
Rep Wooten: What I like from you, then, if you’re the one that’s going to do it, I want a total number fund balance on your account. I don’t want to know them individually. I just want one lump total. And then I want to know the interest that’s been earned on that money. And then also why on page 75, if I may, Madam Chairman–
Sen Irvin: We have a whole list of speakers. So one more question, then I’m going to put you back to the queue.
Rep Wooten: On the petroleum storage fund, you show a budgeted amount of $41 million in storage funds. That’s an eight-year budgeted fund balance. Are you all still charging a fee on each gallon of gasoline that’s sold or diesel that comes through the pipelines? Is that where the money is coming from?
Keogh: I’ll take that question. There is a fee that’s charged at the pump per gallon sold. It’s 2/10 of a cent that goes in, collects, and builds that. The way that fund is established, we have to, by federal law ,maintain financial assurance on clean-ups of regulated tanks. So that fund operates with a minimum and a maximum. So if it collects more than the maximum in law, then the commission would act to remove that fee or reduce that fee. If it gets below a certain level, the commission by law, by state law, by your own action, is required to have the commission raise that fee to be able to generate the revenue to keep it between 15 and–
Sen Irvin: Okay, I’m going to go to Representative Springer. Representative Wooten, I’ll come back to you. Representative Springer, you’re recognized.
Rep Springer: Good morning. Over here. Thank you, Madam Chair. I’m on page 21 of your appropriation requests and I’m looking down under fee administration and the positions that you have allocated here. You have 131 positions. I have a two-fold question, Madam Chair. The first question is, these individuals that hold that position, could you kind of tell me what they do and then what are the qualifications for the persons in order to hold that position? You have it under fee administration, 131 positions. Then it goes up to 152 for the requested appropriation, and then it maintains in the subsequent years. So I’m trying to find out, who are these persons that hold these positions and what are the qualifications in order for those persons to hold those particular positions?
Keogh: Can you clarify the page number again? I’m sorry.
Rep Springer: Page 41.
Rep Springer: 41, 4-1.
Keogh: 41. Thank you. We were on the wrong page, I believe.
Rep Springer: I apologize. I thought it said four. I’m in this book.
Keogh: Okay. This is our permit fee program. This is the core work that our division of environmental quality operates. So the makeup of these staff include a lot of professional technical staff. We have a number of engineers that we currently employ. We have other supporting staff that would include various administrative functions to process permits to bill for the fees and to be able to execute that work. So in terms of the number– and this covers our federally delegated programs like our air, water, and land permitting programs that we operate in lieu of the federal government. I don’t know if that answers your question, but–
Rep Springer: Not quite. Madam Chair, I would like to have a breakdown of those individuals, their title, what they do, and the qualifications to be hired into their position. I’m trying to determine what the qualifications are to hold these particular positions because I’m going back and looking at your employment summary.
Sen Irvin: Can you be specific about– you want it for the entire agency?
Rep Springer: Yeah, I want these 131 positions that I see here on page–
Keogh: So these are for permitting staff. Because I’m going to say a large number of our engineers, they have to hold at least 4-year college of engineering type degree. Also, many of them have to be licensed as professional engineers. These are staff that we honestly work diligently to retain because it’s a competitive marketplace out there, particularly right now. And we find it difficult to not only attract, but also to retain these folks. But fortunately, we’ve got a great team and they’re doing great work.
Rep Springer: Thank you. I understand that, but I still would like a breakdown of who those 131 individuals are, and what their positions– and what the qualifications to hold those positions are. Thank you.
Keogh: All right, thank you.
Sen Irvin: If you’ll just get that to the staff. Representative Fortner, you’re recognized.
Used tire program
Rep Fortner: Thank you, Madam Chair. I’m over here on this side. Thank you for coming, guys. I have a question on page number 106. This is about the used tire recycling program.
Corey: Could you repeat that page number?
Rep Fortner: Page number 106, the used tire recycling program. Okay. All right, what my question is, there’s a statement there that at least 90% of the money available in the used tire recycling fund shall be reimbursed to tire programs. Could you clarify that for me just a bit? Does that reimbursement go to the tire dealer to help them or does it go to the people that receive the used tires from the dealer and dispose of them?
Corey: I will try my best to explain this, but that’s actually a statement from the existing statute. So the way that the existing program works, best I can understand is that when the retailer collects the fee, the retailer actually gets to collect and keep 5% of that for their administrative cost. Of that 95%, 93% of that 95% then goes into the Used Tire Fund. And 7% goes to DEQ for admin costs and other expenses of remediating, of running that program. Then there’s a piece in the statute that says of that 93%, at least 90% of that 93% shall be used to reimburse districts, administer the program, and something generic like otherwise administer the provisions of this act. So in essence, basically, 90% of the 93% either goes back to a district, is used by DEQ, or it is some other type of remediation effort regarding tires. It’s one line taken out of an existing statute that got dropped into the budget request commentary that’s probably a little bit out of context. So, I think Bailey Taylor is here, and I know Secretary Keogh and her previous experience running DEQ can probably tell you exactly how much we have, but I think that most of that 90% or close to that 90% of the 93% is dispersed to tire districts.
Rep Fortner: Follow up. Either I didn’t understand– probably I didn’t understand your explanation. I want to know who gets that money, and is it used to properly dispose or reclaim or reuse those tires or are those tires just piling up in a mountain somewhere? That’s what I want to know.
Corey: So the entity which receives the money are the tire districts. And I believe that of the 10 or so tire districts, obviously, we have some issues that we’re working on with a couple of those tire districts, one in particular I know we’re all familiar with. But for the most part, that money goes to the tire districts and they are using it to administer the Used Tire Program.
Rep Fortner: Are they held accountable? Because I don’t see anything being done with those tires.
Sen Irvin: I can say that– let me just jump in here. There’s a group of legislators that are working on this issue. There is an audit, I believe, that has been requested that is ongoing that should be finished in January regarding the solid waste districts and the tire program to really do a deep dive and to reevaluate to see if this is working or not working. To the point of your questions, the money is supposed to go to the solid waste districts. They are supposed to operate a program to collect the tires and then to dispose of them properly. There are audits done by ADEQ, as in regards to if they’re being disposed properly or not, and to hold them accountable for that. So there are some issues that we’re working through, and there is an audit that has been requested that’s ongoing with Legislative Audit. I hope that helps to answer a little bit of your questions.
Rep Fortner: Okay. I’ll wait patiently for the results. But the other thing that I’d like to address, they charge $3 for you to buy a new tire, and they charge $1 if you buy a used one. I assure you, it doesn’t cost any less to dispose of a used tire, whether you buy a new one or a used one. Thank you.
Sen Irvin: Yeah, there’s issues. I agree. We have issues that need to be reevaluated. And like I said, I know that Representative Wardlaw, Representative Gray, Representative Fite, several of us are working on this issue, but I appreciate the concern. Stay tuned. Representative Speaks, you’re recognized. And then I have Representative Evans, and I have a list of folks.
Rep Speaks: Thank you, Madam Chair. I’m over here. On page 41, the wastewater licensing, that has gone up 48%. Have you raised the cost for these licensing or what’s happening here?
Corey: On page 41, and what has gone up 40–
Rep Speaks: It’s wastewater licensing.
Corey: We have not raised fees on wastewater licensing. The costs to administer the tests have gone up. There are a lot of things that we do internally that have gone up, but we have not increased the fees on that. That’s actually set by law and one of the things that I know several people are looking at for the next session. But we have not increased those fees at this point.
Rep Speaks: Why would they have almost doubled?
Corey: Well, I think I would have to look specifically into this line item. I can tell you that we pay a third party to administer the tests. And for example, the cost that we charge doesn’t even cover at this point what we’re paying to administer that test. So it may be program expenses. But if you would like, I’d be happy to get you a detailed explanation of that particular line item.
Rep Speaks: I would like that. Thank you very much. Thank you.
Sen Irvin: Thank you. Again, send any of the information requested to our staff. We will get it out to all the members. Representative Evans, you’re recognized for a question.
Employees and staff
Rep Evans: Thank you, Madam Chair. Madam Secretary, as Mr. Parrish was presenting your budget request, continually I heard him mention that increases were noted to reallocations of salaries and to personal matching. When I go through some of these different departments, I’m not seeing a large increase in positions. Most of the time we’re seeing maybe one, sometimes a decrease of one, sometimes they stay flat within that particular department. But when you look at the increase on most of these departments, they’re anywhere from 10 to 20 percent of an increase in regular salary. So am I to assume that you’re proposing a 10 to 20 percent raise for all of your staff or is there something about this reallocation that’s throwing these numbers off?
Corey: If you don’t mind, I’ll try to answer that. So the reality is we saw an 11% increase among our existing staff already over the past year. So anytime that there is a raise either through annual evaluations, etc., I know there were several raises this past year. Anytime there is a raise for a state employee, that increases our costs. So these are increases in appropriations to be able to fund the raises that employees, not just the DEQ, but throughout the state already received. So these are basically anticipated costs. And, I believe, and I don’t know if the proposed pay plan is in there or not– I don’t believe it is– but these are basically just to cover the amount of existing salaries going into next year based on current salaries at this time.
Rep Evans: So you’re saying that all state employees received already up to 11% increase that you’re having to now cover?
Corey: I’m saying between matching, between the COLA that was given, between the merit raise that were given on our state side that was around–
Rep Evans: That has not been consistent with the other agencies that we’ve seen over the last couple of weeks.
Corey: That’s about–
Rep Evans: It’s a much larger number than we’re seeing amongst the other agencies that have been present. So I didn’t know if this would be something that your particular agency had chose to do.
Corey: I think it was over the past two fiscal years, just to clarify. And I don’t believe that we gave anyone higher than a 5% merit either. So it was a combination of a couple of years of accumulating merit increases with COLAs.
Keogh: I will add to that too. I know I mentioned briefly earlier about our engineering and technical staff. There was an adjustment across state government. We happen to be one of the larger employers of engineers in the state outside of the Department of Transportation. I think we’re second to them. And so we did have some adjustments that were made to their salaries, again, to be able to put them more competitive. I won’t say they’re competitive yet, but they’re more competitive in the marketplace. Obviously, the pressure on engineering talent with all the federal investment going on forward is going to get even more difficult. I think we probably are seeing a little bit higher impact but that is justified based on the nature of all the type of employees that we have and their career choices with their degree programs and their competitiveness in the marketplace.
Rep Evans: Yes, ma’am. Just as an example, under, for instance, the hazardous waste permit program, which as Representative Springer had asked a lot about, these positions that are within these permit departments, I wouldn’t assume those would be engineers, but maybe they are. For the 2022-2023 budget, the average compensation per 12 allocated positions was $56,393. Your request for the 2023-2024 budget for the same number of employees is $67,880. That’s roughly $12,500 increase.
Keogh: Those are mostly engineering staff. They do permitting for some of our larger facilities that manage hazardous waste.
Rep Evans: That’s a nice increase. Thank you very much. Thank you, Madam Chair.
Sen Irvin: Representative Fite. Sorry, it’s Representative Vaught. Sorry.
Rep Vaught: I’m on page 55, and I see that your actual was $2.3 and it looks like you were budgeted for $2.5. And now you’re asking for $5.7. Can you explain to me why such a great big jump? And it looks like your federal revenue is only $2.3.
Corey: I do know that we received additional federal money for this particular program. I’ll have to get back to with you on the specifics as to what the fund balance–
Black: Representative, this is our reclamation for mining. The mining money in the federal government is a little unique in that they hold past years where we have unexpended revenue, and they’ve encouraged us to clean up those past years where we’ve had small amounts of revenue sitting there. This increase is set to allow the Mining Division to do more projects for reclamation and use old federal money.
Rep Vaught: And when do you foresee this starting to happen?
Black: We’re working on adding contractors now. I’m working with them on that. So definitely the Feds have encouraged us to do it sooner rather than later.
Rep Vaught: And I noticed that you don’t have much of a fund balance on this one.
Black: Well, it’s held by the Feds. It’s not held in our state treasury. So you don’t see it here on the budget.
Rep Vaught: Okay. Can I have one more follow-up, ma’am?
Sen Irvin: Yes.
Rep Vaught: On page 65, it shows that you had one employee, and the salary appears to be $1,078. But it looks like you’re keeping it to one employee, but raising it to $116. Is this kind of what Representative Evans was speaking to a minute ago? Can you explain that to me?
Black: This is where we have moved back an employee out of shared services into this position.
Rep Vaught: Okay. But it doesn’t appear to look as though you’re gaining an employee. It looks like you had an employee, then you were budgeted no employee, and now then you’re authorized for two, and it looks like the agency is only asking for one. Am I reading something wrong?
Black: No, I think you’re reading it right. I’m just wondering if for part of the time when we had one, was there actually somebody in that position or maybe only for a portion of the year that they were paid anything. But we’re happy to get back with you. I think there are a lot of positions. There are, give or take, 43 positions that when we started with transformation, we moved into a shared service role. After really looking at it, we kind of realized– actually, we moved 109 positions to a shared services role. When we actually looked at them and looked at their job duties, we realized a lot of those weren’t really shared services positions. They needed to go back to the respective entity they came from, like oil and gas, the Division of Environmental Quality, etc. So a lot of these have changes where we’re basically simply moving them back from a shared service role at ENE to the respective entity they came from, Gil and gas, LP Gas Board has one, geological survey has a few, and then a lot of the DEQ programs have that. So I think we’re seeing kind of a combination of maybe the position wasn’t filled in the prior years, and then once it’s been filled, it might have been a shared service role that we’re proposing to move back to the DEQ level at this point.
Rep Vaught: Can you give me a description of what this person does also whenever you get us the information? Thank you.
Sen Irvin: Thank you, Representative Hodges.
Rep Hodges: Thank you, Madam Chair. My question is on page 120, 121, the weatherization assistance program. A couple of questions tied into one. I’m just curious, maybe ignorance on my part, it shows that it has $39,366– I mean, $39 million budgeted, $33 [million] authorized, but yet they have an excess appropriation funding of almost $11 million. I was just curious why they got less amount authorized than they budgeted, that’s the first question, when they have excess appropriation.
Corey: Excuse me. That’s the amount we anticipate. This is all federal money and a federal award. I think it has to do with what we– sometimes receive additional federal funding. As programs go, the IIJA actually added money to this specific program. But I think the difference there in the authorized and the budget, sometimes what we anticipate ends up being different than the amount we actually receive from the federal government.
Rep Hodges: Okay. My second question is, if I may have a follow-up, Madam Chair?
Sen Irvin: Yeah. Let’s move.
Rep Hodges: How is this money allocated as far as to these programs that are being assisted, the request process, and how is it distributed to assist in weatherization for those that are in need of this service?
Corey: So at a high level, we work with community action agencies. There’s an application process where people can go in and make an application to see if they’re qualified for these programs. To be honest, I’m not the best person to answer that question. We have a whole program of people that can give you the ins and out. And I would be happy to have one of them contact you to walk through that particular program if that would be helpful.
Rep Hodges: Yeah, that would be great if you could do that. Thank you. Thank you, Madam Chair.
Rep Wardlaw: Senator Hammer, you’re recognized.
Sen Hammer: Thank you, Mr. Chair. Couple questions. You just said that you realized that there was a position that had originally been allocated to shared services, but you decided that’s not where they fit. They brought them back. How many positions did you reclaim? I’m over here to your left. Good morning. Morning. How many positions have you redirected back out of shared services? Was it one or was it multiple?
Corey: So a total of–
Keogh: I’m sorry, I think you got it.
Corey: It’s a total of 43 are being removed from shared service back to the respective agencies. Of that 43, 6 specifically go to AGS. Four go back to Oil and Gas, one goes back to the LP Gas Board, and 29 goes back to the Division of Environmental Quality.
Sen Hammer: Had the money previously been redirected to shared services that would have been affiliated with their salaries?
Corey: Yes. So the money is, instead of, like the four for oil and gas, instead of oil and gas paying those four directly, they were paid into a shared service account that then paid that salary. So it’s net neutral in terms of money and funding. It’s just putting them back under and with the respective entities they came from.
Sen Hammer: You don’t know by chance if shared services reduced their ends of the budget because their budget would have went up affiliated with the salaries if they were moved over there. Do you know if it was reduced when they were transferred back to you?
Corey: It was.
Sen Hammer: Equal amount to what started off?
Corey: When I’m using shared services, just to clarify, I’m talking about the shared services within the Department of Energy and Environment, not TSS. So these are moved from what we call a shared service line or 9905 line back to an entity line. So we reduced our shared service within E&E to account for those positions that were then going back to their respective entities.
Sen Hammer: Okay. And then the last question would be on Lean. You were the first state agency, if I remember right, to implement Lean over there. Can you give me an update on how that is. And any of the raises that were referenced a while ago by Representative Evans, are they qualified to receive pay increases based upon their production through the liens program? And just kind of give me a high-level overview of that, please.
Keogh: Thank you for that question. We did work early as I came on board to learn how to implement Lean across state government. We partnered with other state agencies, for instance, Arizona, other states that were doing similar work, also our federal partners. So Lean is a process where you evaluate your workflow, you evaluate how you do your work. You bring the employees together and you identify those critical elements that you absolutely must maintain, but then you also look for duplication, replication, and wasted time, if you will, in the process. As a result of that, we took 500 days of backlog out of some of our permitting programs. It was very effective, just allowing our employees to understand the process and work through that. So that was an extreme example, but in other cases, we used it to reduce the amount of time it took us to hire employees. That’s been a success where we were able to get through the interview process and follow all the required steps under state government, but still capture that talent that we needed so desperately in our department in a faster way, giving more certainty to those applicants. So those continue to be a process. We continue to have metrics on the processing time of permitting actions and other activities across our department. As far as your last question about how does that translate into salary increases, that’s where we look at our performance bonus pay at the end of each year. Those kind of metrics and those kind of efforts by individual employees are recognized, and they’re graded that way. So one of our top– our five performer would be recognized for their ability to advance lean and efficient streamlined operations compared to someone that’s just doing the basic workflow so that we try to build it in and show performance on an individual basis through our raise system that we adopt each year.
Sen Hammer: Okay, thank you. Thank you, Mr. Chair.
Rep Wardlaw: Representative Dotson, you’re recognized.
Rep Dotson: Thank you, Mr. Chair. On page 63, your Solid Waste Performance Bonds fund. Just looking back over the last several years, it doesn’t look like you’ve used or spent anything out of that for at least the last half dozen years or the last 10. And as far as I can tell, that was operating expenses and professional fees and services when you did. But you’re not even requesting those line items on this particular budget, and you didn’t spend anything last year. You only have $9,916 in the fund balance. Why do you need $2 million in appropriation for the next two years?
Corey: Representative Dotson, this particular fund is actually the fund in which if we had to call a financial assurance from an entity, it would be put into this particular line. And then we would use the money in this line for basically foreclosure and insurance policy type thing. So this is not something that we necessarily plan on using, but it is a fund that creates a placeholder so that if we had to call an entity’s financial assurance, it has a place to go. And then we have the authority to spend that particular financial insurance on the program or to fulfill the purposes of the program.
Rep Dotson: Okay. So the salaries, all those various line items that are on page 62 there, why aren’t they reflected on page 63?
Black: Those are the reallocations out of this program. So they’re not proposed to be allocated within this program. Does that make sense?
Rep Dotson: If you had to call a surety bond, then this is how the funding would flow on page 62?
Black: I think what you’re seeing on page 62 is the current appropriation is a $3 million appropriation that includes all of these things. What we’re proposing next fiscal year for the next biennium would be to reduce that to $2 million. And then this shows where the other million went within other programs in the department.
Rep Dotson: Okay, I see that now. Got you. So that’s in a different appropriation?
Rep Dotson: Got you. All right.
Black: Those are moved to different appropriations.
Rep Dotson: And then page 85, your small business loans in the loan revolving fund. Looking at this over the last 10 years or so, it looks as if the last time you used any of this was in 2015. And you’ve only used this fund three times over the last 10 years. 2012, you gave out a loan of $60. In 2013-2014, a loan of $1,000. And 2015-2016 a loan of $1,500. And then just as far as the overall small business loans in 2012, I’m thinking $11,155. But you’re asking for over half a million dollars in appropriation and you have what looks like a fairly large fund balance there. Can you explain to me what happens with this program, why you’re not giving out any loans if you have such a large balance? And if you are, where that’s reflected?
Keogh: Those are great questions. This fund as I recall and this is where age or experience may harm me more than help me. But I recall that when this fund was established, if many of you all know, it really came about when gas stations had to upgrade their underground storage tanks to meet certain federal requirements, and it was a big cost, especially the small mom-and-pop operators, gas station owners. I mean, the big corporations could handle that expense, but our independent owned gas stations were really struggling to meet that and many of them were actually shutting down because of those costly required upgrades. So this loan program was established to provide a loan program that would help facilitate that they could pay back based on the earnings.
Rep Dotson: So you’re not using it anymore?
Keogh: Those upgrades have all been done so there’s not as much interest in it. And honestly, I think we had some problems with getting some of those loans paid back to the fund which therefore the revolving aspect of the loan program was stopped. So the program was put on hold to reallocate or reevaluate how would we use this fund going forward because it wasn’t limited to that. But that was kind of the first pass at seeing how a small business loan program would work. So we’ve been working on that in the department, in fact just recently, to see because we know there are some cost burdens coming out on small business with some of the federal requirements that have come forward. And so we want to, before we were to just eliminate the program altogether, we want to make sure that if we can use this money that they would have access to those loans and it would allow them to comply. This is about compliance, helping our smaller businesses comply with these federal mandates that we carry out through our delegated program. So I guess I would say more to come on this as we go through this evaluation to see if we want to– at this point, we want to continue the program because we think there is some loan opportunities that would help our citizens and businesses. But at some point, we may come back to you and tell you that this program is not needed anymore.
Rep Dotson: Would the existing statute that was passed back in 1997 for this program cover all of those additional or those variations?
Keogh: It was written more generically so it would cover different uses but it was just kind of a pilot– the first effort was more of a demonstration to see how it would work. And to be honest with you, I think we felt like it needed a lot of rework. But I think the legislation today will look at it again, perhaps with your assistance, to see if it will meet the needs of the future going forward.
Rep Dotson: All right. Thank you.
Rep Wardlaw: Senator Chesterfield, you’re recognized.
Votes and amendments
Sen Chesterfield: Mr. Chair, I move immediate consideration of executive rec.
Rep Wardlaw: I would have to have a motion to take immediate consideration.
Sen Chesterfield: I move immediate consideration. Oh, I move Executive Rec.
Rep Wardlaw: Okay. And now that’s proper motion. Do I have a second? Second. Now your second part? You move immediate consideration?
Sen Chesterfield: Yes.
Rep Wardlaw: That’s a proper motion. Do I have a second? I have a second. All those in favor, say aye. All opposed? I have to rule the no’s have it. I have to have two-thirds. Are you leaving your motion on the floor? Are you withdrawing it so we can go back to questions? Okay, members, so we have a motion on the floor. Is there any discussion on the motion? Representative Cavenaugh?
Rep Cavenaugh: Yes, I have a substitute motion.
Rep Wardlaw: You’re recognized.
Rep Cavenaugh: I would like to make a substitute motion to accept executive rec, with the exception of page 91, that we’re going to reduce that appropriation to $2.5 million; that on page 75 in operating expenses, we’re going to reduce that to $12 million; On professional fees, also on 75, that we reduce that to $1 million; on page 77, that we will then reduce that appropriation to the federal funding level of $1.5 million; and on page 79, I would like to reduce that contractual service line item number to $12 million.
Rep Wardlaw: That’s a proper motion. Do I have second? I have a second. I’ll take Representative Wooten’s substitute to a substitute before I take a division because we’re not voting.
Rep Wooten: I move that we flag this whole budget. Hold it up until session. This is complicated. I’ve got one section here where there’s $27,000 in pay raises and increasing positions from $131 to $152. So something’s not adding up in all of this budget. So I move that we hold it until session or I want to flag it, whatever it takes to do the whole budget.
Rep Wardlaw: Okay. Representative Wooten, I’m being advised by staff what that means. And I want the whole committee to understand what that motion would mean is they would not have an appropriation bill for General Joint Budget Committee. That bill would have to be ran by a member. So do I have a second to the substitute a substitute? Seeing no second, that motion dies from the lack of a second. So I will go back to Senator Chesterfield.
Rep Cavenaugh: No, Cavenaugh.
Rep Wardlaw: I’m going back to Cavenaugh’s motion. Senator Chesterfield has a motion to deal with the voting of that bill. Members, I am aware of where I’m at. I need three hands for that motion to stand. I have it. So members, we will be voting by division. So with that, Kevin, will you call the roll starting with the Senate?
Parrish: Senator Hill. Senator Blake Johnson. Not seeing Senator Blake Johnson. His first alternate, Senator Sullivan. Senator Wallace. Senator Chesterfield. Senator Elliott. Not seeing Senator Elliott, her first alternate, Senator Tucker. Senator English. Senator Mark Johnson. Senator Ballinger. First alternate Senator Fulfer. Sorry. Senator Davis. Senator Hester. Senator Leding. Senator Garner. Senator Flowers. Senator Sample. First alternate Senator Gilmore. Senator Bledsoe. Senator Caldwell. Senator Dismang. Senator Flippo. Senator Hammer. Senator Hendren. Senator Hickey. Senator Ingram. Senator Pitsch. Senator Rapert. Senator Stubblefield. Senator Teague.
Sen Irvin: All right. With that, the motion fails and so we automatically go back to executive rec. So motion. Is there a second? Okay. Start with the House. Do we have to three hands? One, two, three. Three hands.
Parrish: Representative Bragg. First alternate Representative Warren. Second alternate Representative Gonzalez. Representative Cozart. Alternate Representative McClure. Representative Fielding. First alternate Representative Bentley. Second alternate Representative Dalby. Representative Holcomb. Representative Vaught. Representative Deborah Ferguson. Representative Gray. Not seeing Representative Gray. Representative Smith. Representative Hillman. Representative Gazaway. Not seeing Representative Gazaway. First alternate Representative Tollett. Representative Hodges. Representative Jett. Representative Payton. Representative Tosh. Representative Ladyman. Not seeing Representative Ladyman. First alternate Representative Christiansen. Representative Murdock. Representative Beck. Representative Lanny Fite. Is Lanny Fite here? Fist alternate Representative Hawks. Representative Lowrey. First alternate Representative Allen. Second alternate Representative Brown. Representative Meeks. Representative McGee. First alternate Representative Collins. Representative Ennett. Okay. Representative Love. Representative Scott. Representative Springer. Representative Wooten. Representative Boyd. First alternate Representative McCollum. Second alternate Representative Cloud. Representative Coleman. Representative Penzo. Representative Fortner. Representative Garner. Representative Johnson. Representative Dotson. Representative Deffenbaugh. Not seeing Representative Deffenbaugh. First alternate Representative Godfrey. Second alternate Representative Underwood. Representative Charlene Fite. First alternate Representative Hawk. Representative McNair. Representative Whitaker. First alternate Representative Crawford. Representative Miller. First alternate Representative Wing. Representative Shepherd. Second alternate Representative Berry. Representative Cavenaugh. Representative Eaves. Representative Eubanks. Representative Evans. Representative Kenneth Ferguson. Representative Flowers. Representative Jean. Representative McCollum. Representative Milligan. Representative Richmond. Representative Speaks. Representative Womack.
Sen Irvin: All right. That motion fails. All right, thank you. We’ll just move on. We’ll go on to– that’s in order. Representative Cavenaugh, you’re recognized for a motion.
Rep Cavenaugh: We’d like to make a motion– or I would, not we. I’d like to make a motion on accepting executive rec with the exception on their general revenue amount to take that to $4 million. Page 42.
Sen Irvin: Okay, page 42. I’m going to assume there’s some questions that may be asked of you by membership. So page 42, executive rec and you’re going to take–
Rep Cavenaugh: Their general revenue funding down to $4 million.
Sen Irvin: Okay. To $4 million. That’s not an appropriation. Mr. Anderson, you’re recognized. You’re actually looking at the funding in general revenue. That’s not an appropriation. The appropriation chart is at the top. You’re looking at funding source.
Rep Cavenaugh: Funding. My motion would be to take their funding in general– take executive rec, change their funding in the general revenue down to $4 million.
Sen Irvin: Mr. Anderson, you’re recognized to address that.
Parrish: Yes, ma’am, I understand your motion. I just wanted to make clear that that will be a recommendation for funding because RSA ultimately will determine the amount in there. So that will be a recommendation by this committee for the funding level for that.
Sen Irvin: Do you want to clarify just to say that you’re making a motion for executive rec with the recommendation that the $4.2–200,841, the recommendation would be to take that to $4 million through the RSA process? Is that your recommendation? That’s your motion? Okay. Are there any other questions? Senator Hammer, you’re recognized for a question.
Sen Hammer: May I ask a question to Representative Cavenaugh through the chair?
Sen Irvin: Yes, that’s what we’re doing right now.
Sen Hammer: All right, Representative Cavenaugh, could you just give me some insight as far as what your end game is behind your motion, what you’re hoping to achieve by doing it?
Sen Irvin: Sorry.
Rep Cavenaugh: Yes, Senator Hammer, what my end game is is to be able to go ahead and do an appropriation bill so that we’ll have this ready for Joint Budget. Then it will allow us during the session to be able to work out the other issues that we have. But this way at least we still have a budget bill that we can have ready for session.
Sen Hammer: Follow-up, Madam Chair?
Sen Irvin: Yes.
Sen Hammer: Could we not do that with the numbers as they are and achieve the same goal? And what I’m concerned about is that if we cut it, what do you hope to realize out of cutting it? Not that I’m maybe against it, I just want to know, are you going after the salary issues have been discussed this morning, or what your intent is? If you don’t mind, please.
Rep Cavenaugh: Well, we have several issues in these budgets. One of them is the salaries, the positions. The other issue is large fund balances. Some do deal with general revenue balances. So there are quite a few issues inside this agency’s budget that we need to be able to address.
Sen Hammer: I know it’s a little bit out-of-order, Madam Chair, but agency response might be insightful, but I defer to the chair. Thank you.
Sen Irvin: I’ll allow it. Mr. Corey.
Corey: Thank you. Maybe the best thing is and what we would suggest is, if we pull this for the moment, give us an opportunity to get with the members that have questions, provide answers. And maybe I know this is a little bit out of line or out of the norm, but maybe come back. I think we have rational explanations and answers for you, but I want to have the opportunity for us to provide that to you one on one or offline if that’s acceptable to you.
Rep Cavenaugh: That’s fine.
Sen Irvin: Representative Cavenaugh, are you okay with that?
Rep Cavenaugh: Yes, Madam Chair.
Sen Irvin: Okay. So do you want to withdraw your motion?
Rep Cavenaugh: I’ll withdraw my motion.
Sen Irvin: Okay. So what we’ll do is just bypass and then– Senator Chesterfield.
Sen Chesterfield: Thank you, Mr. Chair. I thought we were almost at a compromise here.
Sen Irvin: I think we are.
Sen Chesterfield: If we are at that compromise– I can live with the $47,000 thing. I don’t understand it. But in order to get you a budget, I’ll live with it. So I would ask that you withdraw your request to put it down. Let us move apace with this vote, because I think we may have a compromise, if I am not mistaken. And we can move ahead. Thank you.
Sen Irvin: We can’t have another motion for executive rec because that motion failed. So it would have to be something different. Right. So that’s what has occurred.
Corey: I’ll be happy to respond, but I think I’m a little bit lost.
Sen Irvin: Okay. We can take a motion to expunge the vote. We could take a motion to expunge the vote by which the motion for executive rec failed, if you would like to do that. So moved. But this is to expunge the vote by which executive rec failed. Okay, so there’s a motion to expunge the vote by which executive rec failed. There’s a second. All those in favor, say aye. And opposed? Ayes have it. Moving on. But I would like for the agency to get with the members that had all the questions. And I appreciate that. Thank you. Correct. That was to expunge– right. I’m just directing the agency to get with the members that have questions. Now we go to the motion for executive rec. So moved and second. All those in favor, say aye. And opposed. Ayes have it. All right, moving on. I see one hand. We’re moving on. Representative Wooten, you’re recognized for a question. I’ve moved on. All right. If the agency can get with the membership, please, and get all the issues worked out and there can be adjustments made to those budget bills, that’s fine. In the meantime, thank you. We’re going to move on to the next item on the agenda. Mr. Parrish, you’re recognized for Arkansas Geological survey. Ms. Becky White, state geologist.
Arkansas Geological Survey
Parrish: Thank you, Madam Chair. We’re on page 124. Page 124. We’re still with the Department of Energy and Environment. This is the Arkansas Geological Survey Division within that department. And on page 124 begins the request. The mission of this division is to provide geological information in order to develop and enable effective management of the state’s mineral, fossil fuel, and water resources while protecting the environment. On this page it shows state contracts awarded to minority-owned businesses, an employment summary and publications. On page 125 is the department appropriation summary. This division has seven appropriation requests. Only two have a change level from the agency. And the executive recommends a brand new appropriation section. The last two of these items are dealing with a move to a facility that’s being constructed. The agency built their appropriation into the operations section for this move, but the executive recommends a new cash section just for those moving expenses. The total authorized budget in fiscal year 2023 is $1.9 million in spending authority. The division requests over $3 million for the biennium. That’s a 63% increase. The executive recommendation is different from the agency request in two sections regarding that move, but it does support the net appropriation increase request. That’s over $3 million in spending authority for the biennium. The division is funded primarily from general revenue, cash funds, and federal grants.
Parrish: The first request with a change level is state operations. It’s page 126. So if you go to page 126, you’ll see that request. And on page 127 is the appropriation summary. What’s authorized in 2023 for total is $1.4 million. The request in 2024 is $2.5 million. That’s a 74% increase. The executive recommendation is for only a 34% increase at $1.9 million, and we’ll get into those change levels with each line item. In regular salaries, the authorized request was at $858,000– I’m sorry, the authorized amount was $858,000. The request for 2024 is $1.2. That is a 41% increase. Personal services matching, $273,000 is what’s authorized. The request in 2024 is $420,000. That’s a 54% increase. These are salary match adjustments that were made in the current biennium being requested to move forward to the next biennium. It’s also a transfer of six positions from the shared services section into this division. And the executive recommendation provides for this agency request. So for these two line items, the executive recommendation provides for it. The next line item is extra help. What’s authorized in 2023 is $11,600. In 2024, the request is for $36,000. That nearly triples. And this is to increase their unfunded appropriation for moving the agency to a new facility that is being constructed. The agency says that they will sell assets and make budget transfers to provide for the funding. The executive recommendation is to not approve this increase, that is they don’t want to increase the appropriation over the $11,000 that was authorized in 2023. Next line item is operating expenses. $234,000 was authorized. The request in 2024 is $637,000. That nearly triples. This is reallocations to simplify their budgeting process within the division that will come from the line items below. So you’ll see the water quality, stream gauging, groundwater survey, and mineral exploration, those line items go down to zero to be transferred up to operating expenses. They also receive an increase of another $300,000 in unfunded appropriation for moving the agency to the new facility. Again, the executive recommendation for this line item is no change level over authorized. Looking at capital outlay, 0 is what was authorized in 2023. The request is for $275,000. Again, this is an increase of the unfunded appropriation for the agency move. The exec’s recommendation, again, is to keep the spending authority at 0. And you’ll see– I’ll just note one more time– water quality, stream gauging, groundwater survey, mineral exploration goes from anywhere from between $20,000 and $32,000 down to 0. And the executive recommendation does not recommend reallocating these line items.
Parrish: The fund collected and spent or transferred $1.8 million in general revenue. If you go to page 136, page 136 is the next change level. This is a new section that is an executive recommendation to provide for the agency moving the state core samples to a new facility being constructed. It’s supported by a cash fund. You’ll see what was authorized in 2023 is 0, and the request is 0. That’s because there is no agency request, but the executive recommendation mirrors what the agency requested in that last section. So this is an executive recommendation of $601,000 to provide the requested spending authority in a new section for those moving expenses. The funding, again, would come from a sale of agency assets and budget transfers. And I did speak with the department this morning, and they were inclined to agree with the executive recommendation that instead of building that appropriation into their operation section, that they are okay with having the executive recommendation to have a brand-new cash operations section just for those moving expenses.
Parrish: Moving to the next page, it’s geological research, landslide, sinkhole. And this section is to provide knowledge of geohazards like mudslides and sinkholes. On page 139 is their– I’m sorry, page 139 is the appropriation summary. And in 2023, it looks like $157,000 was authorized. The request in 2024 is $240,000. That’s for both years of the biennium, and the executive recommendation provides for this request. The change levels begin with extra help. $9,500 was authorized. The request in 2024 is for $27,000. So that does triple. Personal services match was $17,000. The request in 2024 is $20,000. That’s a 17% increase. Geological research was $81,000, and the request in 2024 is $143,000. So that’s a 76% increase. And this is all to spend a grant from FEMA. If you look at the fund balance going into 2022, it’s $68,000. The fund collected cash funds in the amount of $156,000. The agency spent $107,022, and that leaves a fund balance of $118,000 going into 2023. Mr. Chair, that is the last change level for Geological Survey.
Rep Wardlaw: Thank you, Billy. This committee has no idea how you had to study that to be able to do it that way and you did it perfectly. Thank you. Senator Hammer, you’re recognized.
Sen Hammer: Thank you, Mr. Chair. A couple of questions. Number one, the shared services movement that you talked about, is it the same thing as the last presentation that is within the agency that you’ve moved the personnel?
Keogh: I believe the answer is yes. I’m going to let chief counsel respond directly to that question.
Sen Hammer: Thank you.
Corey: That is correct. And I think that’s why you’re seeing a higher percentage, because we have more positions going back to these entities. It shows a 17% increase, where in reality we’re adding six more people back into the AGS budget that was in the shared service budget.
Sen Hammer: I’m just curious–
Corey: So it’s on–
Sen Hammer: I’m sorry.
Corey: They’re neutral at the end of the day. It’s just they’re coming out of the shared service, going back into the specific entity in this case, AGS.
Sen Hammer: And I’m just curious, the original decision to move them that now retrospectively it would appear that it wasn’t the best move, what precipitated the idea that they should have been moved in the first place?
Corey: So when we started with consolidation, I think we had an idea of how it would work, and we moved, in this case specifically, all of the IT folks and our GIS folks into a shared service role. I think as we’ve gone through transformation, we understand that those people are so specific to that entity or the agency they’re working for, they’re better off being there. We did consolidate some of the management level of IT and GIS and left that at the shared service, but the employee who is doing all the GIS mapping for AGS, for example, we felt that would be better if they were left in the AGS or moved back to the AGS budget. The other thing it does is it allows a little bit more flexibility in the sense that, specifically on the DEQ side, where once you move them into a shared service fund, they have to be paid out of that cost center, and if we have federal grants that are available, we can’t shift them to those federal cost centers, so they basically end up being tied to the state revenue fund. So I think it’s a reflection of two things, the work they’re actually doing, and the ability to make sure that where we can we’re allocating those employees back to a federal cost center as opposed to a state revenue cost center.
Sen Hammer: Okay, very good. And the last thing, you mentioned something about selling assets in the presentation. What assets are we looking at selling and dollar value and where is that money going to be redirected to again, please?
Keogh: Okay, I’m going to take that one and then if Shane wants to add to it, that’s fine. Yeah. We have sold a building that– the Geological Survey professional staff has now been moved and we’ve combined our staff all at our North Shore location. So the main building where that staff worked has been sold. There’s an additional warehouse building that stores assets of the AGS, a lot of things, and that’s the building that we’re looking at now in terms of needing to move those assets into a building. The building that currently was housing that is in disrepair, significant disrepair–
Sen Hammer: That’s the one off Roosevelt?
Keogh: –and those assets are at risk. I’m sorry.
Sen Hammer: Is that the one off Roosevelt?
Keogh: Yeah, I believe so.
Sen Hammer: Okay.
Keogh: The one off Thayer. The one off Roosevelt has actually been sold. Thank you.
Sen Hammer: All right. Thank you. I appreciate it. Thank you, Mr. Chair.
Rep Wardlaw: Representative Meeks.
Rep Meeks: Thank you. Way over here on your far right. So on page 127, you all have requested extra help of $36,000 for the– I’m assuming it’s for the move from the presentation, is that correct? And the executive said they’re only going to give you $11,000. Am I understanding that correctly?
Corey: Yes, but they then also gave us the cash operations line that basically is another way of doing the same request.
Rep Meeks: Okay, so you’ll get the help you need in order to facilitate the move.
Corey: Yes, sir.
Rep Meeks: And then the other question I have is on that cash appropriation. Let me get over here. That cash appropriation is good for two years. Do we need both years in order to get that move done? Or the second year, is it just in case?
Corey: We believe that we probably need both. The sale of the AGS building, it actually hasn’t closed yet. It should close this month. And then in addition to that, we have the warehouse facility that will have to be marketed and sold. And there are core samples and all kinds of things in that building that will take a substantial amount of time to actually move once we have a new place for them to go to.
Rep Meeks: Okay. All right. So probably after the two years then, you probably won’t need the appropriation going forward, but you’ll need the two years, you think, just to make sure you’ve got plenty of time to get the move done.
Corey: Yes, sir.
Rep Meeks: Okay. All right. Thank you.
Rep Wardlaw: Representative Cavenaugh, you’re recognized.
Rep Cavenaugh: Thank you, Mr. Chair. My question is on page 133, the State Farm Grant, that’s got just a very minimal excess fund balance in it. Doesn’t appear we’ve really used this and sometime and you only had $16 in it last time. What are we using this for?
Corey: Our state geologist, Scott Ausbrooks, is in the room, but that’s an actual award or grant that AGS receives from Farm Bureau– or excuse me State Farm, and it is used for– Scott, if you want to come up here and elaborate. But my understanding is we didn’t use it last year because of COVID-related issues. However, this is just– everybody understands, this is an actual grant that AGS receives to do this particular work.
Ausbrooks: Scott Ausbrooks, director and state geologist. Yes, ma’am.
Rep Cavenaugh: Yes. So what is this?
Ausbrooks: State Farm has an outreach program to educate and bring awareness to disasters. Earthquake is one part of that. We’ve had this fund for many years, and we’ve used it, and it has been utilized for education and outreach. Pamphlets, handouts, holding town hall type meetings and stuff. The pandemic has definitely put a crimp on that, and that’s why you see the decrease. Also, we send them in a report of what we’ve done to this point as far as our outreach, who we talk to, how many folks, stuff like that. At this point now we’ve reached back out to State Farm. As far as the next thing, what we would do is we would say, “Okay, we’ve done this amount. We’ll reapply for another $5,000 or something like that to continue this mission.”
Rep Cavenaugh: Okay, so your grants are $5,000. Is that what they historically have given you?
Ausbrooks: It’s been about that. I think this is the third one, if I’m correct in that, ma’am. I can get those numbers for you if needed. But it’s typically $5,000 to $6,000.
Rep Cavenaugh: Okay, thank you.
Ausbrooks: Yes, ma’am.
Rep Cavenaugh: And I have one question, Madam Chair.
Sen Irvin: Yes, ma’am.
Rep Cavenaugh: On page 137, talking about the move, how long do you project the move to take you?
Keogh: I think the move is anticipated– the staff has already been moved. Now as far as the asset move, as our chief counsel mentioned, there’s an extensive amount of materials that have to be moved, and they’re in somewhat, I guess, tenuous conditions, so we want to make sure they get moved in a sound way. We believe it will extend into the next fiscal year but hopefully be completed within this two-year biennium.
Rep Cavenaugh: So you’re thinking you’ll be done by the fiscal year 2025?
Rep Cavenaugh: Okay. Thank you.
Keogh: Shane, did you want to elaborate on that?
Sen Irvin: Representative Wooten, you’re recognized for question.
Rep Wooten: Thank you, Madam Chairman. I need a clarification on your positions. You have 13 actual, budgeted 14, now you’re asking for 20. Is any of that 20 the additional that you moved out of? Let me ask you to clarify for myself, in the central office or the shared services, that’s 109, and you’re cutting that to 66. Now, 6 of those, is that where that’s coming from?
Rep Wooten: And are you moving the salaries and the funding–
Rep Wooten: –down there to compensate–
Rep Wooten: –in other words?
Corey: Reduced in the shared services and added to–
Rep Wooten: So the 33 reduction is moving your shared services back out into the–
Corey: And then that’s why you see an increase on the other side. It looks like an increase because we’re increasing the baseline.
Rep Wooten: So it’s not new positions that you’re asking, it’s–
Corey: It’s all net neutral.
Rep Wooten: Okay, you already have them.
Corey: Yes, sir.
Rep Wooten: All right. And I noticed that you don’t have any– but we only have three that’s over two years vacant and two in your central office or– well you used to call that the central office.
Corey: Yes, sir.
Rep Wooten: And I did the same thing you’re doing at commerce. When I got there, they had 35 in the central office. When I left, we had 3. All right. Thank you, Mr. Chairman. Thank you all.
Corey: Thank you.
Sen Irvin: Thank you. Representative Meeks, you’re recognized for a question.
Rep Meeks: I want to make a motion for executive rec.
Sen Irvin: Okay. Is there a second? All those in favor say aye. And opposed. Ayes have it. Executive rec motion carries. Moving on. Thank you. We have, Mr. Parrish, the Liquified Petroleum Gas Board.
Liquefied Petroleum Gas Board
Parrish: Thank you, Madam Chair. We’re on page 140. We are still within Department of Energy and Environment. This is the Liquefied Petroleum Gas Board.
Sen Irvin: Thank you.
Parrish: This board enforces laws and safety requirements to regulate the manufacture, sale, and installation and use of containers and equipment in the storage, transportation, dispensing, and utilization of liquid petroleum gases. On page 140, it shows state contracts awarded to minority-owned businesses and employment summary and publications. On the next page, 141, is their first request. This is for their operations, and it provides for the administration of the division. It’s supported by a special revenue fund. On page 142 is their operations summary. In 2023, $455,000 was authorized. For 2024, the request is $625,000. That’s a 37% increase. That’s for both years of the biennium. And the executive recommendation provides for this request. Looking at the change levels on line items, the first one is regular salaries. $239,000 was authorized. The request is for $300,000. That’s a 26% increase. The next line item is personal services match. $82,000 was authorized. The request is for $111,000. That’s a 35% increase. These are salary match adjustments and a reallocation of one position from shared services. The next line item is capital outlay. What was authorized in 2023 was 0. The request for 2024 and 25 is $80,000, and this is to purchase vehicles. Looking at fund sources, the table at the bottom, the fund balance going into 2022 was $1.7 million. The fund collected special revenue in the amount of $665,000. That’s fees from inspections, permits, and licensing. The board spent $444,022. That leaves a balance of $1.9 million going into 2023. Madam Chair, that’s the only request.
Sen Irvin: All right. Are there any questions from members of the committee? Representative Cavenaugh.
Rep Cavenaugh: Thank you, Madam Chair. I’m going to deal with page 149, the Well Plugging Program. We’re not there?
Sen Irvin: We’re not there yet.
Rep Cavenaugh: Oh, sorry.
Sen Irvin: It’s okay. Pages 142, any other questions? All right. Seeing none, do I have a motion for motion– executive rec? A second? All those in favor say aye. And opposed. Ayes have it. Motion carries. Moving on to Oil and Gas Commission, Mr. Parrish.
Oil and Gas Commission
Parrish: Thank you, Madam Chair. We’re on page 143. Page 143, this is the Oil and Gas Commission within the Department of Energy and Environment. This commission protects the rights and interests of mineral owners and regulates oil, gas and brine production industries to ensure compliance with the state and federal laws. On page 143 through 144, it shows state contracts awarded to minority-owned businesses and employment summary and publications. On page 145 is the department appropriation summary. The total authorized in 2023 was $16.9 million. The commission has three appropriation requests. Only one has a change level. Again, the total authorized budget was $16.9 million in spending authority. The commission requests almost $17.5 million for the biennium. That’s a 3% increase. The executive recommendation provides for that request. And the division is funded primarily from special revenue. That’s fees paid by oil and gas production companies.
Sen Irvin: Are there any questions? Sorry, are you finished? No, go ahead.
Parrish: The first change level begins on page 146. This is their operations section. It provides for the administration. On page 147 is the summary. What was authorized in 2023 was $4.2 million. The request in 2024 is $4.7 million. That’s a 13% increase for both years of the biennium. The executive recommendations provide for that request. The change levels begin with regular salaries. $1.5 was authorized. $1.8 is the request. That’s a 19% increase. Personal services match, $537 was authorized. $682 is the request. That’s a 27% increase. Those are salary match adjustments and a reallocation of four positions from shared services. Next is capital outlay. $75,000 was authorized. $160,000 is the request. That doubles and that’s to purchase two vehicles. Looking at fund sources, the fund amount going into 2022 was $37.5 million. The fund collected special revenue to the amount of $2.76 million. That’s fees, permits, assessments on taxes– I’m sorry, assessments and taxes levied on saltwater use in bromine production. And the division spent $3.2 million in 2022. That leaves a balance of $26.7 million going into 2023. And Madam Chair, that is the end.
Sen Irvin: All right. Are there questions? Representative Cavenaugh, you’re recognized.
Rep Cavenaugh: Thank you, Madam Chair. Now, I’m going to ask about the well plugging. Thank you. I remember we did the $10 million one-time transfer. Can you tell me how that’s going and what our projection is going to be for being able to move forward with that?
Keogh: Yes. The $10 million is the state transfer of funds. We also have now received some federal funding for a specific well plugging program as well. But as far as specific update, Shane, would you like to give her an update on where we are? I know we’ve been getting contractors in place, which is challenging right now, that can carry out that work in a time-efficient manner.
Rep Cavenaugh: If you don’t mind, real quick, can you tell me how much federal funds we actually got because I wasn’t aware we actually got some money from the federal to help with this too?
Corey: So long story short, what’s happened in the past year is under the Infrastructure Act, Oil and Gas Commission received $5 million in federal monies for a specific well plugging program in Stephens, Arkansas. ALC approved that last week on Friday. That has really kind of taken a lot of our efforts into making the application for that. We do have our state plugging program going on. We’ve been adding contractors. And realistically speaking, because of weather conditions, we’ll start plugging with both programs in the spring as soon as– it’s hard to plug wells in the winter with the rain, etc.
Rep Cavenaugh: Do we have an approximation of how many we’re going to plug that we’ve got lined up?
Corey: So in the state side, the abandoned orphan well plugging program, we have about 400 wells.
Rep Cavenaugh: I knew it was quite a number. So that’s why I was curious.
Corey: The Stephens project, there are a lot of unidentified wells, but we estimate about 230 on the federal side for that project.
Rep Cavenaugh: Okay, thank you.
Sen Irvin: Okay. All right. Seeing no other questions, motion. And second. All those in favor say aye. And opposed. Ayes have it. Motion carries. Executive rec is adopted. All right, moving on.
Parrish: I think we’re done.
Sen Irvin: Thank you all. Thank you for being here. And again, if you’ll just get with the individual members of the House or Senate with their questions, that would be appreciated. Thank you so much.
Keogh: Thank you, Chair. I know it’s a complicated budget. We appreciate your patience, and we’ll look forward to responding to those questions.
Sen Irvin: Thank you.
Keogh: Thank you.
Sen Irvin: Thanks. All right. Mr. Penman. Department of Transformation and Shared Services. If Mr. Mitch Rouse wants to head to the table, we would welcome you. Mr. Penman, you’re recognized.
Transformation and Shared Services
Penman: Thank you, Madam Chair. We will start with the Department of Transformation and Shared Services. Our first section begins on page 152 with the department appropriation summary on page 153. There are two appropriations as you see. One of them has change levels other than carrying forward salary and match adjustments from the current biennium. The agency is requesting a total appropriation of $4.2 million for FY 2024 and FY 2025, and the executive recommendation provides for the agency request with the exception of position reclassifications and the associated appropriation. Our first appropriation begins on page 154 with an appropriation summary on page 155. This is for the Secretary’s Office, and it’s funded by State Central Services and is there to help create more efficient government through improving service delivery and collaboration across state government. The agency is requesting appropriation in the amount of $728,000 for FY 2024 and $731,000 for FY 2025, and the executive recommendation provides for the agency request. Our next appropriation begins on page 156 with the appropriation summary on 157. This is for their administration appropriation. This provides for the administration of DTSS and is also funded by State Central Services. The agency is requesting appropriation in the amount of $3.5 million for FY 2024 and FY 2025. And if you look at the summary on page 156, their request includes a number of changes, including various personnel changes, including the transfer of one position, a discontinuation of one position, and then an increase of 20 extra help positions, with an increase in extra help and personal services matching each year for the Arkansas Public Service Internship Program. And the executive recommendation provides for the agency request with the exception of position reclassifications and associated appropriation. And Madam Chair, that concludes my presentation for DTSS Administration.
Sen Irvin: All right, thank you. Representative Springer, you have a question?
Rep Springer: Yes, ma’am. Thank you. Hello. I’m interested in the internship program that you’re requesting the 20 positions. What are the qualifications and is there information somewhere that someone can find out about the program?
Rouse: So this is Mitch Rouse, Secretary of DTSS. Yeah, we can get you that information on the internship program. That started last year, so we’ve had two rounds of it, where we bring interns in in the summer, spread them out over several departments, including the governor’s office, and there’s usually a sign-up period at the beginning of the year. So starting in 2023, there’ll be a time where we’re trying to recruit and get some folks to be part of that program.
Rep Springer: What are the qualifications for participation?
Rouse: I think just you’re in college, right? You’re in college and you’re interested in state government. There’s an application process where they list the departments and particular skills that they might be interested in. And then we try to just take those applicants and place them at departments where they have openings. Usually about two or three interns with each department. I believe last year, every applicant we got was accepted, right? No? Close to? Close to. Almost every applicant we got was accepted.
Rep Springer: I’m sorry, Madam Chair. Last question. So explain again, how is it communicated to the public so persons will know about it?
Rouse: So they put it out on our website. They put it on job boards. They put it out on any kind of open-position market that we can do. We try to go to colleges and recruit there. And, of course, we’ll use anybody here in the legislature if they want to promote somebody or they have somebody that might be interested.
Rep Springer: Thank you.
Sen Irvin: Thank you. Okay. Are there any questions? Motion for executive rec? Second? All those in favor say aye. And opposed. Ayes have it. Motion carries. Representative Wooten, did you have a question? I’m sorry. Okay. Moving on, Mr. Penman. We have Arkansas Geographic Information.
Penman: Thank you, Madam Chair. Our next appropriation begins on page– our next division, sorry, begins on page 158. This is Geographic Information System Division. Their appropriation summary is on page 159. And as you can see, they also have two appropriations, one of which has change levels. The agency is requesting $3.3 million for FY 2024 and FY 2025. And the executive recommendation provides for the agency request with the exception of various personnel changes and half of a requested increase in operating expenses in their operations appropriation. Our first appropriation on page 160 with summary on page 161, this is for GeoStore and Framework appropriation. This is funded by the Geographic Information Systems Fund that consists of funds approved by the General Assembly, carry forward from Geographic Information Systems operations appropriation, federal funds, and any other funds available by law. This is used to carry out the duties, responsibilities, and authority of information systems and to create, update, and maintain the Arkansas Spatial Data Infrastructure. The agency is requesting to continue their appropriation in the amount of $1.2 million for each fiscal year, and the executive recommendation provides for the agency request.
Penman: Our next appropriation begins on page 162. This is their operations appropriation. The appropriation summary is on page 163. This provides for operations of the office, and it is funded by general revenue for miscellaneous agencies. The agency is requesting appropriation in the amount of $2.1 million and FY 2024 and FY 2025, and general revenue funding in the amount of $2.1 million in FY 2024 and FY 2025. There on page 162, you’ll see the following changes that are part of the agency request, including a transfer of one position, various personnel changes, including reclassifications and upgrades, increase of their general revenue funding, and an increase of $450,000 in their operating expenses to support digital aerial photography. The executive recommendation provides for the agency request, with the exception of the various personnel changes that would include reclassifications and upgrades and for a $225,000 increase in their operating expenses. And the executive recommendation also provides for general revenue in the amount of $1.3 million for FY 2024 and FY 2025. And Madam Chair, that concludes my presentation for GIS.
Sen Irvin: All right. Thank you. Are there any questions? Representative Cavenaugh, you’re recognized.
Rep Cavenaugh: Thank you, Madam Chair. Dealing on 161, the GeoStore, can you explain exactly what we’re doing with that? We got the explanation, but what does it actually do? The agency can come up.
Johnson (GIS): Good morning. Shelby Johnson, director of GIS. The actual technology is our online warehouse of geographic information about Arkansas. And then the fund, we use that to develop new framework information that’s commonly used by all of the other departments and divisions in state government, as well as cities and counties. So within that library of online information, we have our aerial imagery, tax parcels, all sorts of different boundaries, our election geography, things like that. So it’s a place where all of our different colleagues in the various departments can come get that information, use that information. We try to keep it updated all the time.
Rep Cavenaugh: Do we update that ourself or is it outsourced?
Johnson (GIS): For some of the more sophisticated work, like the aerial imagery, we outsource that. That’s some very sophisticated work. But most of the other work, we in-house that. A good example of that would be our municipal boundaries. So if Walnut Ridge did an annexation tomorrow, we would run that through, and we’d map that out and then put it into the system next month to update the municipal boundary for the city.
Rep Cavenaugh: Okay. Thank you.
Sen Irvin: All right. Thank you. Any other questions? Seeing none, is there a motion and a second for executive rec? All those in favor, say aye. And opposed? Ayes have it. Motion carries for executive rec. Thank you. Moving on to the next. Ms. Laidlaw.
Penman: Thank you, Madam Chair. Our next appropriation– or next division, sorry, is going to be Building Authority Division. They begin on page 165, with their appropriation summary on 166. As you can see, the division has nine total appropriations. The division is asking for $4.1 million in FY 2024 and FY 2025, and the executive recommendation provides for the agency request. And in the interest of time, I can go over those appropriations that only have change levels.
Penman: Our first appropriation with change levels is going to begin on page 169. This is their state operations appropriation. The appropriation summary is on page 170. This is funded by general revenue for miscellaneous agencies, and it provides for the operations of the Division of Building Authority that includes administration, leasing, architectural, construction, finance, engineering, and building maintenance. The agency request includes the following changes: asking for various personnel changes, including discontinuation of two positions, including a decrease in regular salaries and personal services matching, and a decrease in general revenue. The agency is requesting appropriation the amount of $2.1 million for FY 2024 and FY 2025, and the executive recommendation provides for the agency request.
Penman: Our next appropriation with change levels begins on page 171, with appropriation summary on 172. This is for building maintenance. This is funded by rental income and reimbursements from the DBA-operated buildings, and supports the property management function of the division. The agency is requesting appropriation in the amount of $21 million for FY 2024 and FY 2025, and their request includes the following changes: a discontinuation of six positions with decrease in salaries and match, along with various personnel changes including reclassifications. And the executive recommendation provides for the agency request, with the exception of position reclassifications.
Penman: Our next appropriation with change levels begins on page 175 with appropriation summary on page 176. This is the justice building operations appropriation. This provides for operations of the justice building, and funding is provided under the special language provision for transfers from State Central Services to Building Authority. The agency is requesting appropriation in the amount of $700,000 for FY 2024 and FY 2025, and their request includes the discontinuation of one historically unfilled position, with accompanying reductions in salaries and match. And the executive recommendation provides for the agency request.
Penman: Our next appropriation with change levels will be on page 179. This is critical maintenance, and the appropriation summary is on page 180. This is used for critical maintenance of Building Authority-owned or operated buildings, with funding coming from rental income paid by state agencies housed in DBA-operated buildings. The agency is requesting appropriation of $6.5 million for each year of the biennium, which includes an increase in their critical maintenance line item to allow the division to reinvest in repairs and improvements to meet tenant space needs as they arise. And Madam Chair, that concludes my presentation for Building Authority.
Sen Irvin: All right. Thank you. Representative Cavenaugh, you’re recognized for a question.
Rep Cavenaugh: Thank you, Madam Chair. My question is probably going to be for the agency.
Sen Irvin: Okay. If you’ll just come to the table and identify yourself for the record, you may proceed.
Laidlaw: Anne Laidlaw, director of Division of Building Authority.
Rep Cavenaugh: Thank you for being here.
Laidlaw: Yes, ma’am.
Rep Cavenaugh: My question is going to be on– one of my first questions is on the Justice building construction on page 168. How long is that construction going to last?
Laidlaw: We had hoped that it would be finishing up before the end of the calendar year, but it looks like it’s going to run over into the first few months of the new calendar year. So we’re hoping later in February the project will be completed.
Rep Cavenaugh: In 2023?
Laidlaw: Yes, ma’am.
Rep Cavenaugh: Why are we asking for appropriation in 2024 and 25?
Laidlaw: As long as we have the bond funds and we have those funds to spend, they just carried it forward just because we don’t know how long those funds will be available. If we don’t expend all the funds, they’re still available to continue to make improvements in the building. There were some areas in that project that were not going to be completely finished out based on pricing that we had at the time. But if we still have bond funds that are available, they will be able to continue to finish some of those areas that may be left unfinished otherwise.
Rep Cavenaugh: How long do you project those bond funds to be available?
Laidlaw: We have several years that the bond funds are available. I don’t have the exact date that those funds would expire, but there is a date that we would have to expend before they were returned.
Rep Cavenaugh: Okay. So do you know how much of the bond funds you’re going to have available?
Laidlaw: Right now it looks like we’re probably going to expend all the funds.
Rep Cavenaugh: Okay. So the question I’m asking is then why do we need a $15.2 million appropriation if you even said your bond funds were $8 million?
Laidlaw: At the time that we were preparing the budgets, we didn’t know where we were going to be with the construction and change orders. And so that’s just something that’s progressed over the last few months.
Rep Cavenaugh: Okay. So for 2023, 2024, we could reduce that from the $15.2 probably down to your $8 million for your bonds.
Laidlaw: Yes, ma’am.
Rep Cavenaugh: And do you even need it for 2024-25?
Laidlaw: At this point, I’d hate to say that we don’t, but certainly, if we don’t have any bond funds left, we won’t be spending anything.
Rep Cavenaugh: But we could also reduce that to $8 million because that’s what your bond funds are?
Laidlaw: Yes, ma’am.
Rep Cavenaugh: You’ve asked us for $15.2.
Laidlaw: Yes, ma’am. That’s correct.
Rep Cavenaugh: Would you be opposed to that motion?
Laidlaw: If it’s what we need to do, we will certainly work with y’all.
Rep Cavenaugh: Okay. Thank you. Madam Chair, I have another question, please.
Sen Irvin: Okay.
Rep Cavenaugh: This is dealing on 172, which is the building maintenance. On our operating expense, it looks like our historic spend has been about $7.3 million, and we’re asking for $13.6. I don’t have my glasses on, so my numbers are running together. Why are we needing so much over that?
Laidlaw: Our budget is basically set based on the revenues that we will generate through our rent collections. Buildings obviously continue to have significant repairs. Maintenance and replacements need to be done, as well as numerous capital projects for tenant improvements. So as long as we are collecting the funds, we’re trying to keep our appropriation flexible so that as we need to continue to make those improvements on our buildings, we have the appropriation to do so.
Rep Cavenaugh: Okay. That brings up a question because you have a fund balance–
Laidlaw: Yes, ma’am. It’s–
Rep Cavenaugh: –of $9.9 million. And it appears that it will continue to grow. So if your fund balance continues to grow, why do we need– because you have it available. So what are we going to do with the fund balance? How does it be used beyond this?
Laidlaw: We transfer savings to capital reserve. There’s another fund that’s listed here. That’s our critical maintenance. We actually transfer to that fund so we can make capital improvements. So that’s self-funded by us by savings that we generate through our operations.
Rep Cavenaugh: Okay. That happened to bring another question I’ve had about critical. So my question is– this is actually on acquisitions and maintenance– and you have that you’re requesting construction and maintenance, $2.5 million. What are we looking to construct?
Laidlaw: We are not right now.
Rep Cavenaugh: Okay. You’re just putting that out there as a placeholder in case you need it?
Laidlaw: Yes, ma’am.
Rep Cavenaugh: What would your professional fees be for $1.5 million?
Laidlaw: For $1.5 million?
Rep Cavenaugh: Yes, ma’am.
Laidlaw: It was based on a project that was actually proposed several years ago that we did not complete. So that has continued with that project. I think it was around $10 million.
Rep Cavenaugh: The reason I ask is your historic spend is $1.3 million in that area, and you’re asking for $4.3 million, which is quite a bit over what your historic spend has been.
Laidlaw: Right. We just have not been acquiring buildings through that fund for some time. We did purchase some land, but that’s it. We haven’t done that in a while.
Rep Cavenaugh: Okay. Madam Chair, I’m going to have a motion at the proper time.
Sen Irvin: I’ll come back to you then. Representative Wooten, and then I have–
Rep Wooten: Thank you, Madam Chairman. Ms. Laidlaw, on page 166, I’m a little confused. You show actual positions of 61. You show an authorized of 72. But on the report I have, you show 71 vacancies– I mean, I’m sorry, 21 vacancies, which would make it a total number of 82. But then you’re showing you’re just requesting 63. So I can’t quite follow what you’re trying to do here.
Laidlaw: And I may not be able to answer your question very well, since that’s on the HR and the personnel side of things. But at one time, our agency had personnel around 82. We have not been able to fill and have not tried to fill a lot of those positions for some time, particularly as we’ve gone through transformation. So we’ve offered to return positions that we have not filled for several years. We still have a number of positions to fill because within our building operations and maintenance, we staff all of those buildings with staff. We also have skilled trades, so we’re continuing to try to fill positions. We have quite a few right now that we are trying to fill.
Rep Wooten: Okay. Okay. With what you just said, these 10 positions, I have 10 that have been vacant for over two years. Is that 10 you’re giving up?
Laidlaw: Yes, sir.
Rep Wooten: So that would add up to 82. Okay.
Laidlaw: It’s a big change for us. Yes, sir.
Rep Wooten: All right. So you’re relinquishing those 10?
Laidlaw: Yes, sir.
Rep Wooten: Okay. Thank you. Thank you, Madam Chairman. I cleared that up.
Sen Irvin: Senator Chesterfield, you’re recognized.
Sen Chesterfield: Yes. Thank you, Madam Chair. Through the chair to Representative Cavenaugh, could you tell me the page and the line number you’re talking about reducing to $8 million?
Sen Irvin: Okay. That’s a question for Representative Cavenaugh.
Rep Cavenaugh: Yes. Senator–
Sen Irvin: 168, I believe.
Rep Cavenaugh: Yes. Senator Chesterfield, it’s 168.
Sen Chesterfield: 168. All right.
Rep Cavenaugh: Yes. Their bond proceeds are $8 million. And that’s really all they would be able to spend because they’re almost done with the project. So leaving them enough appropriation so if they did have some bonds proceeds left over, they would be able to spend them into 2024 and 25.
Sen Chesterfield: Okay. So the bond proceeds are $8 million.
Rep Cavenaugh: Yes, ma’am.
Sen Chesterfield: And we have the construction at the top at $15 [million]. So you’re not talking about cutting the $15 [million] to $8 [million]? Or are you?
Rep Cavenaugh: Yes, ma’am. Their appropriation to $8 [million] because they’re going to be done with the building by early next year. She said March of 2023. So there’s not really anything left in the construction per se for these years. And then she said that they were going to be using– if there were any bond proceeds left over, they would be using those for some additional, maybe something inside the building that needs to be repaired. But she doesn’t project they’re going to have any of these bond proceeds left over, but I’m willing to give them the $8 million appropriation in case they do.
Sen Chesterfield: Then to the agency. Ms. Laidlaw
Laidlaw: Yes, ma’am.
Sen Chesterfield: Why was the request for $15.29 and the executive rec is the same if the money is not needed? I need some clarity there because I worry when we start cutting appropriations and then we bring back more work for ourselves to do later. So help me understand how you got to the $15.29.
Laidlaw: I don’t know that I can answer that question clearly for you. I know at the time that we were planning this, the project was under design. We were not sure what our bond issue was actually going to generate in funds. That cash fund also is what we received the funds in to repay to the bonds. So it’s not just money that we’re using to spend for the construction. It’s also repayment of the bonds.
Sen Chesterfield: Of the bonds itself. So the 15 was a part of the repayment?
Laidlaw: That’s a combination of the two figures.
Sen Chesterfield: So if we cut it to 8, are you going to be able to repay the bonds?
Laidlaw: Yes, ma’am.
Sen Chesterfield: You will be able to?
Laidlaw: Yes, ma’am.
Sen Chesterfield: So you don’t need the money?
Laidlaw: We don’t need $15 million.
Sen Chesterfield: Okay. Then why did you ask for it?
Laidlaw: I think it was a timing matter of we were in the process of getting the bond proceeds for that project as well as the current bond debt. And we aren’t the bonding authority. That’s done through development finance authority. And so I think it was just out of caution that that number was probably more generous than needed because at the time we didn’t know.
Sen Chesterfield: Okay. Is there anything built in here for maintenance and operations?
Laidlaw: Yes, ma’am. That’s down under our Justice building operations. That’s for us to operate the building and includes the salaries and the staffing there. And then the maintenance is also for capital projects that may come up with mechanical replacements and things like that. So there are two other funds that allow us to operate and maintain the building.
Sen Chesterfield: So with the fluctuation of the market, the fluctuation of materials–
Laidlaw: It’s been difficult. Yes, ma’am.
Sen Chesterfield: But you’ve already done the due diligence.
Laidlaw: Yes, ma’am. The project–
Sen Chesterfield: And so we’re not having to deal with that kind of fluctuation? Is that what you’re telling me?
Laidlaw: Yes, ma’am. I think at this point, where we are with the construction project is that we– that’s why I do not think there’s going to be much bond proceeds left because of the construction costs and the changes that we’ve gone through with this contract. Thank you.
Sen Chesterfield: All right. If you’re comfortable, I am too. Thank you, Madam Chair. Motion at the proper time–
Sen Irvin: DFA.
Sen Chesterfield: –or whatever Cavenaugh was going to do.
Sen Irvin: DFA, do you have any input here?
Sen Chesterfield: Input in this?
Sen Irvin: Okay.
Sen Chesterfield: You all are good with it? Okay. Thank you, Madam Chair.
Sen Irvin: Representative Cavenaugh has a few more questions, and then we’ll get back, I think. Okay. We’re landing. Representative Cavenaugh.
Rep Cavenaugh: Thank you. My question’s going to be dealing with page 182, which is a sustainable building design revolving loan program. I don’t see where in historic that we’ve spent any of that money since ’15, ’16. Can you tell me how much outstanding loans that we have?
Laidlaw: I cannot give you the exact amount. We do probably have about six outstanding loans that are still repaying. They have a 10-year period to repay those loans. So one of our loan items is reflecting the loan repayments that we receive. So I think there’s probably about six active loans still out there.
Rep Cavenaugh: Do you know how much those loan balances are?
Laidlaw: No, ma’am, but I’ll be happy to get that for you.
Rep Cavenaugh: Okay. Because I’m wondering, if we’re not giving out new loans, why we need $10.7 million?
Rep Cavenaugh: We did that based on the funds that are available in the program right now that can be loaned. We have not had many requests for that money lately. I think it’s probably just a period of change and folks aren’t really sure. A lot more interest has come from our institutions of higher education where they have facilities on their campuses they do need to. But that money is restricted to energy projects that have to show at least a 10% decrease in their energy consumption in order to qualify. So it does narrow the pool of projects that are eligible for that fund.
Rep Cavenaugh: This fund balance, can it be used for anything else or it has to be used for this program at all?
Laidlaw: Yes, ma’am. Yes, ma’am.
Rep Cavenaugh: If we don’t have the money after several years, nobody’s asking, there’s nothing that allows us to use this fund balance somewhere else?
Laidlaw: No, ma’am. Those funds can only be used for that program.
Rep Cavenaugh: Okay. All right. Thank you.
Sen Irvin: I mean, unless you change the law.
Laidlaw: Unless you change the law.
Sen Irvin: This isn’t federal money, right?
Laidlaw: These were a lot of RF funds that were used to fund that. Yes, ma’am.
Sen Irvin: All right. All right. Seeing none, Senator Chesterfield, you’re recognized for a motion.
Sen Chesterfield: I move executive rec.
Sen Irvin: Okay. Sorry, Representative Cavenaugh. Okay. We’re going to just– she’s going to withdraw that. Representative Cavenaugh, I think we’re all on the same page. We’ll let you go ahead.
Rep Cavenaugh: All right. I’d take executive rec with the change on 168 of the construction down to $8 million on both years, 2023-2024 and 2024-25.
Sen Irvin: Okay. So if you look at page 168, line item under construction at the top, the $15.29 [million] agency or executive recommendation would move to $8 million instead of $15.29. Is that correct, Representative Cavenaugh?
Rep Cavenaugh: Yes.
Sen Irvin: Okay. That’s the motion. Is there a second? Second. All those in favor, say aye. And opposed. Ayes have it. Motion carries exec with that change. Thank you. All right, moving on. Mr. Penman, we have Information Systems.
Penman: Thank you, Madam Chair. Our next division, this is going to be Information Systems Division. This begins on page 185 with their appropriation summary on page 186. The division has two appropriations, one of which has a change level, and the agency is requesting a total of $105 million for FY 2024 and FY 2025. And the executive recommendation provides for the agency request with the exception of various personnel changes that include reclassifications and associated appropriation.
Penman: Our first appropriation begins on page 187, and with the appropriation summary on page 189. This is for their operations. This is funded by the Information Systems Revolving Fund. And this is funded by non-revenue receipts derived from services provided to various agencies of federal, state, city, and county governments. The agency is requesting appropriation in the amount of $101 million for FY 2024 and FY 2025. And on page 27 you’ll see the list of various changes to the agency request, including various personnel changes. And on 188, they have an increase of $2 million in their operating expenses to better align expected growth and their data center operations, telecommunications, and cybersecurity services. And the Division is also asking for an increase of $1 million in their capital outlay line item to better align with current purchases. And the executive recommendation provides for the agency request with the exception of position reclassifications and associated appropriation.
Penman: Our next appropriation is going to be on page 190 with summary on 191. This is for equipment acquisition. This is funded out of the Information Technology Reserve fund. And the Division utilizes this appropriation for major equipment acquisition and information technology improvements, as stated in law. And this reserve fund, the Division is authorized to accumulate a reserve for equipment acquisition, breaks down in more detail the revolving fund on page 190. The agency is requesting to continue appropriation in the amount of $3.5 million for each year of the biennium, and the executive recommendation provides for the agency request. And Madam Chair, that concludes my presentation for Information Services.
Sen Irvin: Okay. Representative Cavenaugh, you’re recognized for questions.
Rep Cavenaugh: Thank you, Madam Chair. This probably for the agency will want to answer these questions. Thank you.
Sen Irvin: If you’ll state your name for the record. Thank you.
Askins: Good morning. Jonathan Askins, director of the Division of Information Systems.
Rep Cavenaugh: Thank you for being here. My question is going to be dealing on page 189, your operating expenses. Your actual spend is $8.2 million, and you’re asking for $11.2 million. Why are we needing that much over our actual spend?
Askins: So as we have created a new data center out at Data Center West, we’ve modernized all of our equipment. As we are going through that process, we feel like that we will need those additional funds for either additional networking, additional equipment, additional cybersecurity to support that data center.
Rep Cavenaugh: Okay. And is none of that included in your data processing? Because you’re increasing that from an actual spend to $2.7 and asking for $8.4?
Askins: No, ma’am, that is not included in the data processing.
Rep Cavenaugh: Okay. What is going to be included in the 8.4?
Askins: Just a moment, please. We’re getting our CFO up here.
Sen Irvin: If you’ll just state your name for the record. Thank you for being here.
Shipp: Good morning. Patty Shipp, DIS and TSS CFO. So we did not ask for an increase on that line. That is the same amount. So there’s no change there. That data processing GL is very specific. So you can only pay for very specific items using that GL. And as you can see, we didn’t use that. So we would not be adverse to lowering that particular one. We did not ask for an increase. It just remained constant.
Rep Cavenaugh: So would $5 million do you okay in that data processing?
Shipp: Yes, ma’am, it would.
Rep Cavenaugh: Okay. And if I may ask another question, on your telecommunications and technology, and it’s the same appropriation, but your historic spend has been like about $42 million or something like that. Are you looking to invest into more telecommunications above what your spend has been?
Askins: Yes, ma’am, we are. As we grow through our K-12 network, we continue to have increased demands on data per student. So we will need to continue to invest in our telecommunications. Yes, ma’am.
Rep Cavenaugh: Okay. Will you have to invest $17 million more each fiscal year to be able to do that over your spend? Your spend is $42 million. You’re asking for an appropriation of $59 million. So are you saying in each fiscal year of 2023-2024 and 2024-25 you’re going to spend an additional $17 million on telecommunications?
Askins: I’ll need to get back with you specific on specific numbers what that breakdown is, but–
Rep Cavenaugh: If you don’t mind, I’d appreciate that.
Askins: Sure. I can do that.
Rep Cavenaugh: And one follow-up question also. This is going to be on page 191 on your equipment acquisition. What is this fund used for for equipment acquisition? Because we’ve got equipment everywhere. So I’m just curious.
Shipp: Want me to answer that?
Askins: Yeah, go ahead.
Shipp: I’ll answer that. So this fund is specifically utilized for repayment of our ADVA loans. We transfer money from our operating, which is we call the MHCO100, which that’s the fund name. So each year we transfer money from that in an amount that is needed to pay our ADVA loans back or any specific purchases that would go through that fund. And those are available only to the extent of our depreciation amount. So, in essence, it’s for replacing equipment that has depreciated.
Rep Cavenaugh: Depreciated out over the years?
Shipp: Yes, ma’am.
Rep Cavenaugh: Is that a five to seven–
Rep Cavenaugh: Five-year depreciation? Thank you. Madam Chair, I’ll have a motion at the proper time.
Sen Irvin: Representative Wooten, you’re recognized for a question.
Rep Wooten: Yes. I’d like to talk about your personnel on page 189. I noticed you have 180 positions right now, actual pay average of $60,000, and in the request, it’s 207 positions for 72,000. Is that correct?
Askins: Yes, sir.
Rep Wooten: And what percent do you use for your personnel service matching numbers? What percentage is it? One of them is 34.8 and then the current one, or the request is 33% of the total. So do you use 34? I mean, you average around 35%?
Shipp: It’s the same as all the rest of the state.
Rep Wooten: Okay. Now, a follow-up, if I may, on the– well, the numbers don’t add up. I show on the report I have here that you had 216 positions authorized. You had 189 positions that you were using. This shows 180. But 37% of your 65 vacancies are over two years old. But when you add the 189 and the 65, that comes up to 254 positions. So what is your employment number over there? Is it 180, 189, or?
Shipp: We may need Ms. Kay to help us on this. But I can tell you that for the authorized positions of 216, we only budgeted 189 of those. We had to un-budget some for this year because of our receipts. And so we have to stay within that 189 budget. We also have many positions that we try to fill that historically are difficult to fill because they are technology positions, and we are competing with the public sector. It makes it very difficult for us to attract that talent.
Rep Wooten: So are you asking for an additional 27 positions?
Shipp: We actually gave up positions. We–
Rep Wooten: 27?
Shipp: We gave up nine. We transferred seven to other agencies, business areas within TSS, and two, we completely asked not to have back at all.
Rep Wooten: So is the $12,000 increase in pay because of the market conditions?
Askins: Absolutely. Yes, sir.
Rep Wooten: All right. Thank you. Thank you.
Sen Irvin: Thank you. Representative Cavenaugh, you’re recognized.
Rep Cavenaugh: Thank you, Madam Chair. It’s for a motion, if it’s at the proper time.
Sen Irvin: It is.
Rep Cavenaugh: Thank you. I’d like to make a motion to accept executive rec with the exception on page 189 on their data processing taking that to $5 million.
Sen Irvin: Okay. On data processing services?
Rep Cavenaugh: Yes.
Sen Irvin: Okay. So, members, page 189, you’re looking at data processing services. It is currently at $8.4 million. And you want to take that to $5 million. That’s your motion? Correct? Okay. Is there a second? Second. All those in favor, say aye. And opposed? I apologize. Okay. I think you said that it was going to be acceptable for that to occur. Okay. All right. Thank you. Motion carries. Okay. Moving on to statewide shared services. Mr. Penman, you’re recognized.
Statewide Shared Services
Staff: Thank you, Madam Chair. Our last division for DTSS today begins on page 192. This is statewide shared services. And you’ll see their appropriation summary on page 193. There are four total appropriations being heard today. Two of those have change levels other than carrying forward salary and match adjustments from the current biennium. Of those four being heard, the agency is requesting a total appropriation of $13.5 million for both FY 2024 and FY 2025, and the executive recommendation provides for $12.7 million for FY 2024 and $12.8 million for FY 2025. So our first appropriation we’ll start with begins on page 196, with appropriation summary on 197. This is for OPM and OSP operations. This provides for operations of DTSS, OPM, and State Procurement, providing said agencies with assistance and expertise in personnel, purchasing, and administering statutorily required controls. And this is also funded by State Central Services. The agency is requesting appropriation in the amount of $7.4 million for FY 2024, and $7.5 million for FY 2025, and includes various personnel changes. And the Executive Recommendation provides for the agency request with the exception of reclassifications and associated appropriation.
Staff: Our next appropriation is on Page 200 with appropriation summary on 201. That’s for statewide shared services, the travel card and purchasing card. This is funded by a miscellaneous revolving fund and is used for rebates from vendor banks, distribution to participating agencies, and for operating expenses connected with the administration of the purchase and corporate travel card program. The agency is requesting to continue their appropriation in the amount of $4 million each year of the biennium, and the executive recommendation provides for the agency request. Our next appropriation is on page 202, with appropriation summary on 203. This is for the marketing and redistribution appropriation. This is funded by the Property Sales Holding Fund which comes from fees charged on goods and services offered through the marketing and redistribution warehouse. The agency request includes various personnel changes, which would include reclassifications. It is requesting appropriation in the amount of $1.4 million for FY 2024 and FY 2025. And the executive recommendation provides for the agency request, with the exception of the position reclassifications and the associated appropriation. And our last appropriation that’s being reviewed today, this is IT expenses. It begins on page 206 with appropriation summary on 207. This provides for data processing, development, implementation, enhancement and operation of IT within DTSS, and it is funded by State Central Services with the agency requesting to continue $600,000 in appropriation each year of the biennium. And the executive recommendation provides for the agency request. And Madam Chair, that concludes my presentation for statewide shared services.
Sen Irvin: All right, Representative Cavenaugh, you have a question?
Rep Cavenaugh: Yes. Thank you, Madam Chair. My question is going to be on page 201 on the number of travel cards. I’ll need the agency, probably, or whoever can answer that. Yeah. My question is, how many of these cards do we have throughout the state that’s being used?
Staff: I can get that number to you. I don’t know it off the top of my head. But they issue them to– each department issues the number of P cards that they want to issue to their employees, and it kind of fluctuates between each department. But I can get you that total number.
Rep Cavenaugh: If you could give me that total number, because I know it says that each cardholder is $2,000 per cycle. So I’m just kind of curious how many of those we actually have. And one final question is on page 203. This is a fund balance that continues to grow. It’s just a growing fund balance. What can this fund balance be used for?
Shipp: So the fund balance in M&R is– it’s a revolving fund. So proceeds come in, and then they’re distributed out to the agencies that brought in items to be sold. We were in some dire straits in M&R a couple of years ago. There were some changes to their funding, and so their balance is now becoming much more healthy. There are several delayed maintenance items that need to be done at the facility. We have actually started some of those over the last year. One, for instance, is there’s been a great need for circulation of air through that warehouse, especially in the summer months. And we are doing a project to install permanent large fans in those areas to bring a much more satisfactory working condition for the people that work out there. So there’s quite a bit of deferred maintenance that will be accomplished over the next couple of years there.
Rep Cavenaugh: Okay. Because just over the next couple of years, it continues to grow. So I’m just curious, that’s all it can be used for? Is there a restriction on it? That’s why I’m kind of curious.
Shipp: Yes. It’s for operation of the M&R facility and payroll, things that are associated with M&R.
Rep Cavenaugh: Okay, thank you.
Sen Irvin: Is there someone here with M&R?
Staff: Well, technically, it’s under me. But I can help answer a question if that was unsatisfactory.
Sen Irvin: Okay. No, no, no. It’s just a question I have. I’d like to be able to– well, I’ll just get with you offline.
Sen Irvin: Representative Wooten.
Rep Wooten: I have some questions on your personnel for shared services. I noticed that you have 66 current employees. You’re averaging a pay of $55,000. You’re requesting 74 in the next biennium of $5.283 million. And that’s $71,000. You’re increasing $16,000 an employee?
Staff: I’ll have Director Barnhill come up, and I think she’s got some answers.
Sen Irvin: If you’ll just state your name for the record. Okay. You may proceed.
Barnhill: Thank you. Kay Barnhill, state personnel director. Okay, the positions you’re referring to, Mr. Wooten–
Sen Irvin: On page 197, Mr. Wooten?
Rep Wooten: Yeah. It’s on page 197. It shows 66 actual positions. They’re requesting 74. There’s a $16,000 difference.
Barnhill: Yes. So six of those positions, we are transferring from the Department of Finance Administration, and they are to work on the ASIS system on our human resource information system. We’re transferring them from DFA. So they’re technical IT positions with a higher salary, which has probably caused the rise that you mentioned.
Rep Wooten: Okay, so you have– I lost my place. You have 43 vacancies according to the report that Tony got from you all, Ms. Barnhill
Barnhill: For the entire department. Right. 43.
Rep Wooten: 43 vacancies.
Barnhill: Yes, sir.
Rep Wooten: What are those positions?
Barnhill: The vacant positions? They range from administrative specialists. We’ve got some TSS ERP analysts, which would be like a technical position that I’m talking about right now. They’re all kind of different positions with us.
Rep Wooten: So how many total positions of those can you relinquish of the 43? You need every one of them?
Barnhill: Okay. The 43 vacant positions, if I’m understanding correctly, were across the whole TSS department. Right? And we’re relinquishing one, two–
Rep Wooten: Well, no, the total department of the shared services was 138 vacancies, and 32% of those have been vacant for over two years. So for shared services, building authority, information system, and geographic information, there are 44 vacancies that are two years or older.
Barnhill: Right. That’s the listing I’m looking at.
Rep Wooten: And we had one that said they were giving up 10, the building services.
Staff: Yeah. DIS is giving up several, and Building Authority is giving up a few.
Rep Wooten: How many? What’s the total?
Staff: 16, I believe. 16. 16.
Rep Wooten: 16?
Staff: Yes, sir.
Rep Wooten: Okay. All right. Thank you, Madam Chair. Thank you.
Sen Irvin: All right. Thank you. There’s no other questions. There’s a motion for executive rec, and there’s a second. All those in favor say aye. And opposed? Ayes have it. Motion carries. Thank you. And with that, there’s no other business to come before the committee. We have special language at 1:30. We are adjourned.