Legislature(1993 - 1994)

03/29/1994 01:00 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SB 330 - WATER QUALITY FUNDS AND GRANTS                                      
  KELLY GOODE, STAFF TO SENATOR HALFORD, stated  "By way of                    
  background, in 1987 Senator Halford sponsored by request of                  
  DEC (Department of Environmental Conservation), the Alaska                   
  Clean Water Fund.  This year DEC came again to Senator                       
  Halford and asked him to sponsor the bill before you.  The                   
  bill (SB 330) received one change...it's a Rules Committee                   
  substitute and it did not affect the actual bill, it                         
  affected the existing language in the law.  It was a very                    
  simple change and it changed the word `guaranteeing' to the                  
  words `collateral security' on page 3, line 16.  That was                    
  the only change made in the Senate from the original                         
  Number 060                                                                   
  AND OPERATION, said  "We want to thank the Senator for                       
  introducing this piece of legislation...  This bill affects                  
  two statutes.  It's our municipal matching grants program,                   
  which builds water and sewage treatment facilities to a 50                   
  percent matching ratio with incorporated communities and it                  
  affects the Alaska Clean Water Fund.  That is a loan program                 
  which currently provides money, primarily from the federal                   
  government, to build wastewater facilities through a loan                    
  provision, again to incorporated communities.  The                           
  amendments to the loan fund are to get us positioned to take                 
  advantage of upcoming federal legislation.  There's three                    
  competing bills in U.S. Congress right now which will                        
  establish a similar water loan program to the wastewater                     
  program.  This amendment to our statute, if passed, would                    
  allow us to be in the position to accept and administer the                  
  federal program, assuming it's adopted this year...                          
  Basically, what both of these provisions are attempting to                   
  do, is make it easier for Alaskan communities to obtain                      
  funding for building water and sewage treatment plants.  I'm                 
  talking about incorporated communities primarily, first                      
  class are the one's that have been able to take advantage of                 
  it.  Some of these changes will be able to accommodate some                  
  of the larger second class communities as well."                             
  Representative Sanders joined the committee at 1:10 p.m. and                 
  Representative Williams at 1:11 p.m.                                         
  MR. KELTON continued, "The actual bill has 17 sections to                    
  it.  The first five sections relate to the matching grants                   
  programs.  Basically we're accomplishing two things in this                  
  change.  The existing statute has been around since 1972 and                 
  has been amended probably a half a dozen times for various                   
  legislative add-ons and program changes from the federal                     
  law.  It's become very convoluted and redundant.  So one of                  
  the major emphasis is to rewrite that and streamline it...as                 
  well as cleaning a major provision.  When the bill was first                 
  adopted back in 1972, it was to address the federal EPA                      
  (Environmental Protection Agency) construction grants                        
  program that at that time provided 75 percent grant funding                  
  to communities to build wastewater facilities.  The EPA                      
  program is long since history, but the provision still                       
  remains in our statutes related to that.  That provision                     
  says, `State funding can be no more than half of the                         
  nonfederal participation.'  So when they have 75 percent                     
  federal funding, that meant the remaining 25 was split                       
  equally between the state and local government.  Since that                  
  program was now gone, we've created a set of circumstances                   
  where communities are really not interested in trying to get                 
  the federal dollars...  So we are recommending that the                      
  federal limitation be taken out of the statute and say,                      
  `State money can be matched by either local or federal                       
  dollars up to any limit that they can obtain.'  So they'll                   
  go out and seek as many federal dollars as they can.  We                     
  think that that will actually save the state money in the                    
  long run...  The other provision that we're actively looking                 
  for change on:  The 50 percent matching grants provisions in                 
  this bill had been applied uniformly to all communities,                     
  regardless of size.  That has posed a problem for the                        
  smaller communities.  Generally, a community under 1,000 has                 
  no ability to raise the 50 percent match that's been                         
  associated with this program.  So we're proposing and these                  
  percentages are strictly a starting point, anybody who wants                 
  to propose alternatives is certainly welcome to do so.                       
  We're trying to target this legislation a little closer to                   
  the governor's matching grants bill.  So what we're                          
  proposing is communities under 1,000 would only have to come                 
  up with a 15 percent local match.  And communities between                   
  1,000 and 5,000 would have a 30 percent local match.                         
  Anything over 5,000, the percentage would stay the same.                     
  This would enable a lot of the smaller communities to be                     
  able to take advantage of the state's program to build their                 
  water and sewer system.  The larger communities have never                   
  had a problem.  The smaller communities are served by the                    
  Village Safe Water Program.  There's been a group of                         
  communities between 1,000 and 5,000 that really had                          
  difficulty in financing their sanitation improvements..."                    
  Number 210                                                                   
  MR. KELTON concluded, "The rest of the bill starting from                    
  section 6 through 13 addresses the Alaska Clean Water Fund                   
  and...there was an existing bill passed in '87...that                        
  allowed us to take advantage of the loan program waste water                 
  facility.  Basically, all we're doing now, other than some                   
  cleanup amendments under that statute, would be authorizing                  
  the state to adopt a program to administer the federal                       
  program on water supply loans should it pass this                            
  congressional session...  We strongly endorse this bill as a                 
  mechanism for providing financial alternatives for funding                   
  that aren't currently available."                                            
  Number 230                                                                   
  REPRESENTATIVE CON BUNDE asked about the specific funding                    
  sources of a water and sewer project in Kake.                                
  MR. KELTON replied, "In this particular case, they had a                     
  $500,000 appropriation from the state before they ever went                  
  and found the federal dollars.  It was a $1,000,000 project                  
  and as soon as they got a half a million dollars in federal                  
  dollars, they had $250,000 from the state that they couldn't                 
  spend, so they couldn't build the project.  They had to go                   
  out and obtain additional dollars or else give up the state                  
  money and in this case, they had no way of obtaining                         
  additional funds.  What happened in this case, $250,000 of                   
  the state's (dollars) were reappropriated and went through                   
  the Division of Administration's matching grants program so                  
  they could match the state dollars.  There's a real                          
  prohibition against seeking the federal dollars because it                   
  has always been easier to get the state dollars.  We're                      
  trying to reverse that..."                                                   
  REPRESENTATIVE BUNDE concurred, "That trend is going to                      
  Number 269                                                                   
  REPRESENTATIVE JOHN DAVIES asked, "Clean Water Fund, Clean                   
  Water Account, Drinking Water Fund, Drinking Water Account,                  
  could you help me understand the relationship between                        
  MR. KELTON replied, "When the legislation for the Clean                      
  Water Account and fund was first established, it was the                     
  legislature's desire to establish first, a program that                      
  would allow us to use the federal dollars and that is the                    
  fund.  In addition to that, it was desired by the                            
  legislature to establish a separate account that, should the                 
  legislature want to appropriate money to a loan program that                 
  went beyond the federal match requirement.  And the problem                  
  with doing it all under the fund, is the constitutional                      
  prohibition against having the dedicated revenue source.  We                 
  can have a dedicated fund, as long as we're doing it in                      
  compliance with the federal law.  Since they wanted to go                    
  further than the federal law, and by doing that they had to                  
  set up a separate account to go further than the federal law                 
  where the interest from loan repayments would not come back                  
  to the account, but would go back to the general funds.                      
  That's the reason for having the two distinctions.  All                      
  we've done in the Drinking Water portion of this is to                       
  duplicate the parallel structure that was already                            
  established under the Clean Water Account and fund.  Should                  
  it be the desire of the legislature not to maintain the                      
  account provisions of this, that would be an easy matter to                  
  strike both of those provisions...(as) state dollars are                     
  probably not going to ever be available to capitalize that                   
  account anyway, so it would probably be of no major                          
  consequence if those two sections were struck.  The only                     
  thing is if we were ever in a position where it wanted to be                 
  funded, you wouldn't have the mechanism to do it.  It                        
  doesn't cost us anything to leave."                                          
  REPRESENTATIVE DAVIES said, "So the funds are in fact                        
  dedicated funds under the authority of the federal                           
  MR. KELTON said, "That is correct.  There's approximately                    
  $62 million in the Clean Water Fund between state and                        
  federal dollars.  There is nothing available currently in                    
  the Drinking Water Fund."                                                    
  Number 322                                                                   
  CHAIRMAN OLBERG asked, "Is this the money that's                             
  appropriated and generically called Village Safe Water?  Is                  
  this the fund it processes through?"                                         
  MR. KELTON said, "No sir, that is an entirely separate                       
  program.  Village Safe Water Program are funds that come                     
  directly to the Department (of Environmental Conservation)                   
  for administration in village Alaska.  These funds are                       
  primarily to benefit the larger urban communities.  I should                 
  have mentioned one thing...on the loan program for the                       
  drinking water fund and account, one of the things that we                   
  see as a useful use for that money is to build water                         
  filtration systems for any place in the state that needs                     
  them.  The Clean Water Act requires that all surface waters                  
  be filtered.  This is posing some significant financial                      
  hardships on some of the larger seafood processing areas                     
  such as Unalaska, Kodiak, Cordova that all use surface                       
  waters.  By having this loan provision available, we will be                 
  able to provide them low interest loans to comply with this                  
  unfunded federal mandate."                                                   
  Number 348                                                                   
  REPRESENTATIVE BUNDE asked, "The Alaska Clean Water                          
  Account...is that a dedicated fund and how does that mesh                    
  with the prohibition against dedicated funds?"                               
  CHAIRMAN OLBERG said, "It's a separate account.  The general                 
  fund of the state of Alaska is made of probably hundreds of                  
  REPRESENTATIVE DAVIES pointed out, "The legislature can                      
  appropriate it for any purpose whatsoever."                                  
  Number 379                                                                   
  REPRESENTATIVE DAVIES moved that CSSB 330 be moved from                      
  committee with individual recommendations.  There were no                    
  Chairman Olberg called a brief at ease from 1:26 p.m. to                     
  1:27 p.m., when he brought forth SB 294.                                     

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