Legislature(2005 - 2006)HOUSE FINANCE 519
02/02/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB361 | |
| HB381 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 361 | TELECONFERENCED | |
| *+ | HB 381 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 361
"An Act relating to the dividend paid to the state by
the Alaska Housing Finance Corporation; and providing
for an effective date."
Representative Foster MOVED to ADOPT the proposed Committee
Substitute (CS) for HB 361, labeled 24-GH2058\G, Cook,
2/1/06. There being NO OBJECTION, it was so ordered.
DAN FAUSKE, EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, related that CSHB 361
would amend the agreement between the Alaska Housing Finance
Corporation (AHFC) and the state, calling for the transfer
of AHFC's net income to the state general fund in the form
of an annual dividend that funds debt service for certain
bonds and capital projects.
JOE DUBLER, DIRECTOR, FINANCE, ALASKA HOUSING FINANCE
CORPORATION, explained that the bill is an adjustment to the
current transfer plan that AHFC has in place in statute
18.56.089(c), which references net income and how it is paid
to the state. The Governmental Accounting Standards Board
(GASB) has adopted statement number 34, which changed the
financial statement presentation of the net income of
governmental entities to "change in net assets". The term
net income no longer exists on AHFC's financial statements.
FY 07 is when the first payment will be made based on net
income; prior years were all a static $103 million. The
bill would conform the statute to current Generally Accepted
Accounting Principles (GAAP).
Mr. Dubler explained that another change involves what used
to be the Balance Sheet, now called the Statement of Net
Assets. Pre-GASB 34, accounting by AHFC involved multiple
equity accounts including contributed capital and retained
earnings. Contributed capital represented the original
investment by the state in AHFC, and retained earnings was
accumulated profits. In determining the transfer prior to
GASB 34, net income was the baseline. Using the change in
net assets line item from the current financial presentation
incorporates items that, before GASB 34, were not included
in net income. Such items were direct cash transfers to the
state that were presented as direct reductions in
contributed capital, as they did not represent operating
activity of AHFC. GASB 34 does not allow that accounting
treatment for those items and requires that they flow
through the Statement of Net Assets as Expenses of one form
or another. The bill modifies the transfer plan statute to
use an "Adjusted Change in Net Assets" as the baseline for
the transfer, which incorporates all of the expenses that
were under pre-GASB 34 rules included in net income and
excludes those expenditures that were not. Without the
passage of HB 361, the dividend paid to the state by AHFC
will be $38.1 million. With the legislation, the dividend
will be $80.6 million.
1:58:41 PM
Mr. Dubler referred to Section 1, line 9, the addition of
the words "or other capital projects". He maintained that
the language is too restrictive without that wording. Mr.
Fauske added that the bill is needed in order to justify
sending over $80 million to the state and it is an advantage
to AHFC on Wall Street. The bill also helps conform to the
intent of the original legislation passed two years ago.
Co-Chair Meyer noted the new fiscal note and a change in
revenue of $42,500,000.
2:01:35 PM
Representative Joule questioned the creation of new
subsidiaries in the CS.
Mr. Fauske responded that the language in the new CS is the
same as in the original bill. He explained that the
rationale behind adding the wording "or other capital
projects" would give the legislature more room to expand use
of proceeds such as the tobacco bond bill.
Co-Chair Meyer repeated that the CS is just expanding what
is already in statute. Mr. Fauske further explained how the
bill would expand the dividend paid to the state by AHFC.
2:05:15 PM
Representative Kerttula asked what would happen to the money
if this change were not made. Mr. Fauske replied that the
money would stay within the corporation. Representative
Kerttula questioned how AHFC would use the money. Mr.
Fauske related that even though business is vibrant, the
market is changing and the bottom line is changing. This
bill represents an attempt to pay a percent of net income.
The money could be used for many things, but affordability
is always an issue. Representative Kerttula agreed that the
program should not be under-funded.
2:09:08 PM
BRYAN BUTCHER, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, pointed out that this legislation is in line
with the original intent of the bill.
2:09:53 PM
At-ease.
2:11:41 PM
Representative Foster MOVED to report CSHB 361 out of
committee with individual recommendations and with the
accompanying fiscal note dated 2/1/06. There being NO
OBJECTION, it was so ordered.
HB 361 was REPORTED out of Committee with a "no
recommendation" recommendation and with a new fiscal note by
the Department of Revenue.
2:12:59 PM
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