04/25/2001 01:48 PM House FIN

HOUSE BILL NO. 234                                                                                                            
                                                                                                                                
     "An Act relating to the financing of construction and                                                                      
     renovation of certain public facilities; and providing                                                                     
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair Williams provided members  with a proposed committee                                                                   
substitute,  work draft  22-LS0863\O,  Cook, 4/25/01(copy  on                                                                   
file). He observed that the legislation  would fund ports and                                                                   
harbors, public  schools, and  the University of  Alaska with                                                                   
tobacco securitizations.  He noted that bonding  language for                                                                   
ports and harbors was added by  the Senate and objected to by                                                                   
communities.                                                                                                                    
                                                                                                                                
Vice-Chair Bunde  noted that he  was working on  an amendment                                                                   
to utilize the 20 percent that  had not been securitized as a                                                                   
revenue stream for tobacco cessation programs.                                                                                  
                                                                                                                                
Representative   Croft  expressed   support  for   Vice-Chair                                                                   
Bunde's  proposal.  He  also observed  that  the  legislation                                                                   
contains funding  for ports  and harbors  and stated  that he                                                                   
was more comfortable with using  the funding to support major                                                                   
maintenance and school construction.                                                                                            
                                                                                                                                
JOHN  BITNEY,  LEGISLATIVE LIAISON,  ALASKA  HOUSING  FINANCE                                                                   
CORPORATION  (AHFC),  DEPARTMENT  OF  REVENUE  spoke  to  the                                                                   
proposal  to use the  remaining funds  for tobacco  cessation                                                                   
programs.  He  explained that  North  Tobacco  Securitization                                                                   
Corporation  is a subsidiary  of AHFC.  The main question  to                                                                   
evaluate  is whether  or not  the  bonds are  taxable or  tax                                                                   
exempt. Projects included in the  legislation are tax-exempt.                                                                   
He thought that the cessation  programs would be at a taxable                                                                   
rate, which would lower the yield.                                                                                              
                                                                                                                                
Co-Chair   Mulder  observed  that   the  proposed   committee                                                                   
substitute proposes  $127 million  dollars and questioned  if                                                                   
the number was realistic based  on a 40 percent revenue sale.                                                                   
                                                                                                                                
Mr. Bitney  clarified that  the debt  schedule runs  to 2041,                                                                   
which is  longer than  one used for  the $93 million  dollars                                                                   
appropriated in FY01. He thought  that the number was doable.                                                                   
The  schedule   matches  the  legislation,  which   was  $250                                                                   
thousand dollars  more than  the Governor's. He  acknowledged                                                                   
that the coverage ratio is considered thin.                                                                                     
                                                                                                                                
HB  234  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.