JAC Index 021016am1 General appropriation bill 2/10/2016 8:08:50 AM Meeting called to order Chairman for the day is Co-Chair Harshman Harshman: I asked for callback from DOT. Agar: Roll call – Perkins excused. (arrived at 8:10) Harshman: Presenters are Dennis Byrne and Tory Meisel Byrne: Do you have a specific question? Harshman: Asked for information. Checking for reports received. Meisel: Operating two Cessna. Just over 5000 hours. One at 5200, one at 5125. Cycles at about 8000 on first and 7500 on the second. Cycles are landings. Planes are at midpoint life. Nicholas: Engineer overhaul under contract? Meisel: yes. 10 year enrollment in program. Approximate cost of 700,000 to engine overhaul. 1.2M estimate but we do not pay the difference. Realize savings by being in the program. Harshman: Charges? If elected or engineer is on plane, what is the cost per hour. 1400 Meisel: yes, 1400 per hour charge, flight hour Harshman: Real operating cost is 3300 Meisel: 3300, with depreciation factored in it is 3600-3800 cost. Business aircraft depreciated over six year period with heavy bonus the first year, tax rules. Tried to back that out. Harshman: We charge everyone the same rate. Fuel, engine parts. Big other cost is pilots? Part of the difference Meisel: pilots, aircraft acquisition cost, hanger facility, fuel farm, office space for the flight ops. Harshman: how many pilots Meisel: six , one more is coming on board. We have had two pilots resign, have chose not to refill one position. Byren: I transferred that positin to air service program. Harshman: GF? Commission funded? Byrne: paid with highway funds. Wasserburger: Transfer? Byren: Air service development program which oversees air service enhancement program. Purchased in 2002. Meisel: 5200 hours on one plane, 5100 on the other. Approximate. Harshman: If we sold one plane and got into a charter or jet rental. People think Governor should be in every town. There is a lot of other flying, 519 legs in the last 16 months, half a million in billed costs, 3.2 M in true costs. Is it necessary all the time to fly with some of these agencies? It may be cost effective at 1400 per hour but not at the true cost. Meisel: Report presented in 2014 addressed that. Showed some thresholds. Next most economical option was the use of a fractional. The threshold of use is about 200, 250 hours. Harshman: How many hours in the last six months? Meisel: 350 in last six months Harshman: page of report? Meisel: page 8 Harshman: Economy at how many hours? Meisel: flying less than 200 hours would be more economical on a charter. Not a lot of options within the state. Department currently has a 24/7 availability. Operating one aircraft versus 2 – economies of scale. Overhead still exists. Can operate 4 planes for about the same overhead. The overhead is the subsidized cost. Harshman: 350 hours by the two planes = 175 hours. This is less than the threshold Meisel: no, that is for six months. The threshold is for one year Greear: Clarification of costs. Shouldn’t the assumption be the actual cost, not the cost charged? Meisel: Reviewing. Greear: in determining a break- even point, need to use the true cost. Not an assumption. Harshman: There is a lot of politics outside this room with K-12, elderly, etc. The point is not politics. The point is efficiencies. We want to save the state money and provide service to the Governor. Byrne: I agree with being conservative and issues with revenue. Traveling by car extends the time they are out and are not productive. Efficiencies beyond the cost of the aircraft. We buy wholesale fuel, use the right flight paths. I do not think there are several million dollars to be saved. These aircraft are 14 years old, depreciated at this point. We do not plan to replace those aircraft any time soon. Harshman: Depreciation at about 400, the remainder of costs is 3200. Depreciation is a small part. Meisel: Assumption is based on the 1400 as a direct cost, of fuel and maintenance. Comparison was done with the higher cost. Greear: how do I see that in the report? Meisel: financials, starting about page 17. Connolly: Economies of scale and lack of alternative options. Has the state thought of renting the plane when not in use? Meisel: For the state to charge full cost and make plane available for charter, state would have to obtain a FFA certification. FFA looks at for profit or supporting an operation. 135 Operating Certificate. state competing with private sector. Connolly: comments you made that there were not private options. Meisel: I do not know that this is the right aircraft for that type of operation. Burns: What makes up the 1400 costs? Meisel: the 1400 per hour charge is fuel, maintenance, which are direct operating cost, consumables. Harshman: If we sold a plane, what would be the value? Meisel: About 2.5 m per aircraft. It could vary by 500,000 depending on the buyer Harshman: How many pilots? Meisel: For 24/7 we would need 5 or 4 pilots. Harshman: Subsidized costs. 350 hours per year. 2000 per hour subsidized costs. Savings of 4 or 5 M per biennium Meisel: If one aircraft left, we would fly substantially more hours and the plane might not be available to the elected officials. Both aircraft are out 40-42% of the time. We operate a Monday to Friday schedule. Byrne: cost savings would be pilots’ salaries and benefits. Greear: 7 pilots at 500,000 per year Meisel: cost analysis based on one plane so double that number. Straight salary 420,000 per year for 7 pilots. (without benefits) Harshman: We appreciate the update. Byrne: would you like a hard copy? Wasserburger would like a hard copy. Five minute break 2/10/2016 8:40:33 AM 2/10/2016 9:38:51 AM Harshman: Do global cuts upfront, address penny plan Moved by Ross, seconded by Burkhart Richards: Department of Health exempted, all non-GF agencies, WDE School Foundation lighter hit, ETS all exception requests. Also, agencies with no 100 monies and all 900, so different treatment. Williams: Global cuts applied to standard budget first, then additional cuts. Richards: penny plan, $28M; 900 series reduction $7M; travel reduction $1.1M; vehicles, $203,000. Family Literacy, $3.2M Connolly: motion to eliminate 900 series cut; seconded. Failed. Section 1. Office of the Governor, page 5, line 6, restore $10,000 one year. Seconded. Adopted. Harshman: motion to restore $100,000 coal port fund, biennium amount. Seconded. Nicholas: 300 series, energy value added, includes coal port fund. Williams: FY15-16 one time money. Motion adopted. Harshman: Motion for large project project monies. LSRA, $20M. seconded. Burns: why not Business Council? Will withdraw until Business Council Nicholas: Motion to use $1M to develop energy strategy initiative, deep ports come out of that monies. Use from 300 budget balancers, seconded. Carried. Section 2, Secretary of State AWEC position Section 4, State Treasurer Burkhart: Motion to use as much as possible from investment account for 901 series general fund monies as appropriate. Seconded. Deduct custodial fees from investment income. Footnote. Failed. Section 10. Department of Agriculture. Harshman: Motion for predator program be cut by $2M, seconded. Wasserburger: coyote control is money well spent in protecting sheep. Burkhart: monies is for grants to local predator programs. Nicholas: amend to $1M, seconded. Passed. Motion, as amended. Adopted. Section 11, Department of Revenue Connolly: put back tax exemption for the poor in all counties, seconded. Failed. Section 14, Miners’ Hospital Board Hastert: Remove 2 part time positions, add two full time and add $45,000, no general fund. Seconded. Motion carried. Section 24, State Parks and Cultural Resources Burns: We the People program motion to advance to $100,000. Seconded. Monies used for in-state competitions for regional participation. Motion adopted. Section 045, Department of Transportation Harshman: Motion to charge full rate on 4 elected offices agencies, not governor, for plane usage, seconded. Nicholas: charge all who use the plane full rate. Burns: Charge $2500 to all for one flight, seconded. Failed. Motion failed. Burns: $2000 per hour for all agencies, seconded. Nicholas: Use at least half operating cost Motion failed. Section 48, Department of Health Wasserburger: $640,000 biennium study cost for WY employees health insurance claims, seconded. Harshman: allow department to conduct study with federal reversions from FY16, up to $640,000, friendly amendment. Wasserburger: health insurance costly, develop multi-payer database. Nicholas: Motion to cap at $350,000 general fund reversions, seconded. Failed. Obrecht: New program in budget bill, problems Motion failed. Harshman: MMIS match, 90% federal, 10% state, FY2016 reversions can be utilized motion; seconded. Adopted. Harshman: community health centers for low income people. Up to $500,000 of any reversions could be utilized motion, seconded. Motion failed. Harshman: department study results on potential of utilizing state health insurance plan for Wyoming citizens, seconded. Obrecht: some concern. Motion adopted. 2/10/2016 11:01:14 AM Adjourned until 12:30 p.m.