Legislature(2011 - 2012)BARNES 124
03/29/2011 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB196 | |
| HB178 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 196 | TELECONFERENCED | |
| += | HB 178 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 196-BULK FUEL LOANS/POWER PROJECT FUND
8:09:18 AM
CHAIR MUNOZ announced that the first order of business would be
HOUSE BILL NO. 196, "An Act relating to the power project fund
and to the bulk fuel revolving loan fund; establishing a bulk
fuel loan account and making the bulk fuel loan account and the
bulk fuel bridge loan account separate accounts in the bulk fuel
revolving loan fund; providing for technical assistance to rural
borrowers under the bulk fuel bridge loan program; relating to
the administration and investment of the bulk fuel revolving
loan fund by the division in the Department of Commerce,
Community, and Economic Development responsible for community
and regional affairs; and providing for an effective date."
8:09:48 AM
ADAM BERG, Staff, Representative Bryce Edgmon, Alaska State
Legislature, informed the committee that HB 196 has two new
fiscal notes. He explained that the goal of the fiscal notes is
to pay for the program with the interest from the Bulk Fuel
Revolving Loan Fund (BFRLF). With regard to concerns regarding
the deleted language on page 3, lines 14-16, Mr. Berg said he
spoke with the Offices of Representatives Dick and Gardner who
he understands now find the bill acceptable.
REPRESENTATIVE DICK confirmed that the deleted language does
help everyone and keeps the process simple.
REPRESENTATIVE GARDNER said that since she doesn't have much
experience with small rural areas, she would take her lead from
those who do. Still, she expressed some concern as it seems
appropriate to have local government involvement.
REPRESENTATIVE DICK emphasized that he wrestled with this issue,
but opined that requiring consultation with the local government
doesn't work for some communities at all. Therefore, at this
time it seems best to leave the language requiring a written
endorsement from the governing body of the community out.
8:13:33 AM
SCOTT RUBY, Director, Division of Community and Regional
Affairs, Department of Commerce, Community & Economic
Development (DCCED), directed attention to the Division of
Community and Regional Affairs' (DCRA) fiscal note. Currently,
the Bulk Fuel Bridge Loan Program is funded by a general fund
(GF) appropriation of $219,000. Those funds pay for the
contractor as well as travel for the contractor and staff when
providing technical assistance to communities. There is also a
reimbursable services agreement (RSA) with the Division of
Economic Development for $45,000 to pay for its accounting and
administration of the existing program. He explained that
initially, Rural Alaska Fuel Services (RAFS) managed everything.
In fact, the funds were in a bank account under RAFS' name
because they were grant funds. When that had to be brought into
the state system, which caused a statutory change, there was no
fiscal note to reflect the different form of administrative
costs. Therefore, [the state] continued to pay the contractor
at the rate that existed prior and then paid the Division of
Economic Development (DED) for its costs.
MR. RUBY pointed out that the expectation in 2013 is for program
administration, in terms of DCRA's portion, to cost $252,800.
Those funds would come from interest earned on the fund and
would pay for a DCRA staff person to administer the contract,
approve the loans, perform the due diligence on the loans prior
to approval, and administer the program. Of that $252,800,
$40,000 would pay for the travel of the contractor or DCRA staff
when he/she has to provide technical assistance when the
contractor is unable to do so. The fiscal note also specifies
$120,000 for contractual costs. The DED fiscal note relates
$80,000 for administration, which is based on an accounting
technician II position. He recalled that at the previous
meeting there was concern that the new cost of running the
program is about $333,000 versus the current cost of about
$272,000. The concern was that the program was being made more
efficient, but it was going to cost more to run the program. He
attributed the discrepancy to the fact that all the costs to run
the program aren't being reflected in the amount reported. For
instance, in the current funding scheme there is no funding for
a DCRA position to administer the program. Therefore, part of
that position administering the contract and the 11 positions is
currently being paid for out of DCRA's GF and isn't reflected in
the $219,000 cost. The other issue is that it may not be a
full-time position in DCRA to administer the new program, but
rather will be only three-quarters of a position. However,
fiscal notes require that a full position and the cost for it
would have to be added. Mr. Ruby said that DCRA doesn't have
the funding, the ability, or the prioritization to take on the
administration of the extra 60 loans with DCRA's existing staff.
8:18:02 AM
REPRESENTATIVE GARDNER opined that with the efficiency of one-
stop shopping, it still seems there should be a savings.
8:18:21 AM
REPRESENTATIVE DICK inquired as to how the added expense would
help fulfill the need to be more accountable.
MR. RUBY related that many of the efficiencies are efficiencies
perceived by the communities. Under HB 196, communities will
only have to complete one application, the loan approval time
will be shortened, and there's no danger of loans being held up
by short barge deliveries. With regard to accountability,
currently the 60 members under the AEA program [the BFRLF] don't
receive technical assistance funded by the Bulk Fuel Bridge Loan
Program. However, under HB 196 [those applying for the BFRLF]
would have access to this technical assistance on a routine
basis.
8:20:23 AM
REPRESENTATIVE AUSTERMAN directed attention to the fiscal note
from AEA, which relates that it takes $53,600 from the BFRLF to
run the program. He then directed attention to the fiscal notes
from the Division of Economic Development and the Division of
Community & Regional Affairs, which total around $333,000.
Representative Austerman said that he still doesn't understand.
He asked if AEA took $252,000 from the BFRLF annually to run the
[Bulk Fuel Bridge Loan Program].
MR. RUBY clarified that part of the funds are supplanting
$219,000 in GF that's available. Currently, DCRA receives a
$219,000 GF appropriation annually to administer the Bulk Fuel
Bridge Loan Program. However, under this fiscal note, those
funds would no longer be required; there would be a fund source
change and the funds would now come from the proceeds of the
loan program. In further response to Representative Austerman,
Mr. Ruby pointed out that the funding source for the fiscal note
[for DCRA] tries to reflect that by specifying that in 2013
there's a [decrement] of $219,000 and an increase in the fuel
loan.
REPRESENTATIVE AUSTERMAN pointed out that even with the
decrement of $219,000 the remainder is [$114,000], which is
about double the existing $53,000. Therefore, he surmised that
the cost to run the program under DCRA is double the cost to run
it under AEA.
MR. RUBY specified that it will cost approximately $60,000 more
to run the program under DCRA than AEA.
REPRESENTATIVE AUSTERMAN questioned the inefficiency of an
operation for which the cost doubles, although the goal is
efficiency.
8:24:20 AM
REPRESENTATIVE AUSTERMAN moved to report HB 196 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, it was so ordered.
8:24:40 AM
The committee took an at-ease from 8:24 a.m. to 8:26 a.m.
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