Legislature(1999 - 2000)
04/19/2000 09:21 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE CS FOR CS FOR HOUSE BILL NO. 304(RES)
"An Act relating to issuance and sale of revenue bonds
to fund drinking water projects, to the Alaska clean
water fund, to creation of an Alaska clean water
administrative fund and an Alaska drinking water
administrative fund, to fees to be charged in
connection with loans made from the Alaska clean water
fund and the Alaska drinking water fund, and to
clarification of the character and permissible uses of
the Alaska drinking water fund; amending Rule 3,
Alaska Rules of Civil Procedure; and providing for an
effective date."
DAN EASTON, Director, Division of Facility Construction &
Operation, Department of Environmental Conservation,
explained that HB 304 addresses the low interest loan
program. Low interest State loans from the Alaska Drinking
Water Fund and the Alaska Clean Water Fund offer
municipalities the means to build drinking water and sewage
facility projects. The bill would allow the State to use
revenue bonds to capitalize the Alaska Drinking Water Fund.
He continued, both the Drinking Water and Clean Water funds
are capitalized by annual federal grants that require a 20%
State match. Bond revenues will help provide the State
match for federal drinking water project money. However,
the State is only authorized to sell bonds for the Clean
Water Fund. It would make sense to extend the leveraging
power to the Drinking Water Fund.
As with existing law, the bill would require the State Bond
Committee to conduct its activities in the best interests
of the State, in a manner that would accomplish the most
advantageous sale of the bonds. The legislation would
provide for a new, self-supporting structure to pay for the
costs of operating these important loan programs.
Mr. Easton advised that the bill had been amended in the
Senate Resources Committee to stipulate how to charge
interest to private and public utilities.
Co-Chair Torgerson asked if the Department was supportive
of the amendment adopted in the Senate Resources Committee.
Mr. Easton replied that the Department could administer the
bill either way. It becomes a question of whether the
State wants to "level the playing field" between a
privately owned utility and the public owned utilities.
The amendment does not address that concern. He noted that
the agency does not have a position on the amendment.
Senator P. Kelly suggested that the private utility owners
would have to pay the higher costs, which would need to be
passed on to the customer. He recommended deleting the
previous adopted amendment.
Senator Adams asked if that language was the only
difference between the two versions. He recommended
adopting the previous version of the bill.
Mr. Easton stated that was the only change from the House
version.
Tape: SFC - 00 #99, Side B 10:24 am
Senator Green questioned if there would be an advantage to
privately owned, publicly regulated utilities.
Senator P. Kelly noted that the Senate Resources Committee
version was attempting to address information proposed by
the State Bond Council. Whether private or public, there
would be no accrual; costs can not accrue to the utility
owner. The costs will be passed on. The only people
affected would be the ratepayers. He agreed that the
playing field would not be leveled between utility owners.
Senator Leman commented that if the State allows private
utilities to borrow at similar rates as the municipalities,
they could make less money available for others needs. He
asked if that would be a danger.
Mr. Easton replied that the funds have done well. It is
expected that they will continue to grow and that "sharing
the pie" would not be a problem.
Senator Green addressed the investment, borrowing and
funding choices and how that would affect the whole.
Senator P. Kelly mentioned that the party with the
advantage or disadvantage would be the ratepayer. It has
been clarified that the utility owner does not receive
either the advantage or the disadvantage accrued.
Senator Leman stated that any utility would want an
"advantage" in order to keep their customers satisfied. It
would be to their advantage to finance less costly money.
He reiterated that the utilities should have a level
playing field in the State of Alaska.
Senator P. Kelly MOVED a conceptual Amendment #1 to the "M"
version of the legislation, Page 7, Lines 21-22. The
language would delete the underlined words and insert
"interest rates for each class of borrowers shall be
established as the same percentage of market rate index as
appropriate to that class of borrowers". He noted that
language would need to be changed on Page 11, Lines 10-11,
following "fund".
Senator Green OBJECTED.
Senator Phillips asked the concern.
Senator P. Kelly replied that the issue is that language
would provide higher rates of interest to private
regulating utilities. All those rates would be passed on
to customers. He believed that the revised language would
level the playing field.
Senator Phillips asked if the loan program was available to
both the private and the public utility companies.
Senator P. Kelly replied it was.
SENATOR HALFORD explained that the language would open a
new program to private utilities. He noted that the
concern is that private utilities reduce the total amount
money available for the public utilities. Opening to a new
class would not be a beneficial action. Private utilities
save under the version of the bill before the Committee,
whereas, the amendment could jeopardize that fund.
Senator P. Kelly pointed out that Mr. Easton had indicated
that would not be an issue.
Senator Wilken declared a conflict of interest and
requested to abstain from voting.
Senator Leman OBJECTED.
Co-Chair Torgerson noted that Senator Wilken's conflict
would be indicated in the record.
A roll call vote was taken on the motion to adopt Amendment
#1.
IN FAVOR: Wilken, P. Kelly, Leman, Adams, Torgerson
OPPOSED: Green, Phillips
Senator Donley abstained from voting.
Senator Parnell was not present for the vote.
The MOTION PASSED (5-2).
Senator Leman referenced Page 8, noting that on Line 8,
"waste water" should instead be "wastewater".
ANDY WARWICK, (Testified via Teleconference), Clean Water
Fund/Drinking Water Fund, Department of Environmental
Conservation, Fairbanks, offered to answer questions of the
Committee.
MIKE BURNS, (Testified via Teleconference), Program
Manager, Municipal Matching Grants, Division of Facility
Construction & Operation, Department of Environmental
Conservation, Anchorage, voiced appreciation for actions
that the Committee had taken. He offered to answer any
questions of the Committee.
Senator Leman MOVED to report SCS CS HB 304 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
SCS CS HB 304 (FIN) was reported out of Committee with
"individual recommendations" and with fiscal notes by
Department of Environmental Conservation dated 4/10/00 and
Department of Revenue dated 12/22/99.
| Document Name | Date/Time | Subjects |
|---|