03/19/1993 01:30 PM House CRA

  HB 32:  SCHOOL CONSTRUCTION DEBT REIMBURSEMENT                               
                                                                               
  Number 417                                                                   
                                                                               
  REPRESENTATIVE PAT CARNEY, PRIME SPONSOR OF HB 32, read his                  
  sponsor statement for the record.  (A copy of the sponsor                    
  statement may be found in the House Community and Regional                   
  Affairs Committee Room, Capitol 110, and after the                           
  adjournment of the second session of the 18th Alaska State                   
  Legislature, in the Legislative Reference Library.)  He                      
  added, "I have a little trouble understanding why there's a                  
  big fiscal note because they're already reimbursing                          
  municipalities for school construction for past bonded                       
  indebtedness that was covered by state law."                                 
                                                                               
  Number 460                                                                   
                                                                               
  REPRESENTATIVE CARNEY continued, "This legislation (HB 32)                   
  is strictly a judgement call, I think, on the part of the                    
  committee.  The only decision we have to make, I think, is                   
  whether or not organized municipalities that pay taxes                       
  should have an opportunity to get state reimbursement for                    
  school construction.  Everyone knows that the current system                 
  isn't working.  I think if we make a decision to spend some                  
  BP money or some other money for school construction                         
  statewide, even then we aren't assured that our urban areas                  
  will be adequately taken care of.  ...The decision will have                 
  to be made at a later date in finance, about what we                         
  ultimately do about this problem."                                           
                                                                               
  REPRESENTATIVE DAVIES said he strongly supported HB 32 and                   
  added, "Under the present system, even if the governor's                     
  proposal to spend $150 million a year in additional money                    
  were to go into effect under the current system of                           
  priorities, we don't believe that schools will be                            
  constructed (fast enough) to meet the need in Fairbanks."                    
                                                                               
  Number 499                                                                   
                                                                               
  CHAIRMAN OLBERG requested clarification of the school                        
  appropriation process and asked, "Aren't we already doing                    
  this?"                                                                       
                                                                               
  REPRESENTATIVE CARNEY said, "The current funding has to do                   
  with commitments made in the past...this legislation (HB 32)                 
  will not affect this year's budget at all.  It won't affect                  
  the budget until two years after the bonds are sold by the                   
  municipalities.  ...Then the municipalities gets                             
  reimbursement from the state for 70 percent.  Even at the                    
  best, it would be three to four years before we see any cost                 
  to the state in the way of bonded indebtedness                               
  reimbursement."                                                              
                                                                               
  CHAIRMAN OLBERG asked, "Does this fall in the category of                    
  binding a future legislature?"                                               
                                                                               
  REPRESENTATIVE CARNEY replied, "We can always under-fund,                    
  Mr. Chairman, we're doing that right now."                                   
                                                                               
  Number 515                                                                   
                                                                               
  REPRESENTATIVE DAVIES commented, "The state has been paying                  
  off its indebtedness at a fairly rapid rate.  The usual rule                 
  of thumb is...to have that down less than five percent of                    
  your rolling GF (general fund) dollars.  This wouldn't have                  
  any effect on our annual budgets until a couple of years                     
  from now.  At that time we will have paid down our bonded                    
  indebtedness...below that magic five percent number."                        
                                                                               
  Number 530                                                                   
                                                                               
  VICE CHAIR JERRY SANDERS said, "I think the situation                        
  they're describing would explain the fiscal note.  I think,                  
  by the time we'd be paying this two or three years from now,                 
  the state intended to be out of this business and not have                   
  anybody paying that and they'd have to reinstitute it."                      
                                                                               
  REPRESENTATIVE TOOHEY asked about the list distributed to                    
  the committee members.  (A copy of the list may be found in                  
  the House Community and Regional Affairs Committee Room,                     
  Capitol 110, and after the adjournment of the second session                 
  of the 18th Alaska State Legislature, in the Legislative                     
  Reference Library.)                                                          
                                                                               
  REPRESENTATIVE CARNEY said, "This is a list of the proposed                  
  schools to be funded under the Governor's proposal for                       
  priority one schools and if you'll notice, it puts almost no                 
  money into the areas where the heaviest population is."                      
                                                                               
  Number 565                                                                   
                                                                               
  CHAIRMAN OLBERG asked, "Does the present reimbursement                       
  system exist in statute, the debt reimbursement that's being                 
  done now, or is that an annual capital appropriation that is                 
  subject to legislative whim?"                                                
                                                                               
  REPRESENTATIVE CARNEY said, "It is covered in the statute                    
  but it is legislative whim, the amount to be funded in                       
  relationship to the total amount we're committed to."                        
                                                                               
  REPRESENTATIVE DAVIES pointed out, "Last year (1992) the                     
  total amount that we funded for statewide school                             
  construction was only about 27 million dollars.  We                          
  anticipate in the Fairbanks area we will need to construct                   
  in this next decade 100 million dollars worth of schools."                   
                                                                               
  CHAIRMAN OLBERG said, "I need to do a little bit of homework                 
  on this (HB 32)."  Then offered to bring up HB 32 again                      
  Tuesday, March 23, 1993.                                                     
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN OLBERG adjourned the meeting at 3:54 p.m.