Legislature(1993 - 1994)
03/29/1994 01:00 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 introduction..." Number 060 KEITH KELTON, DIRECTOR, DIVISION OF FACILITY CONSTRUCTION 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 change..." 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 those"? 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 appropriation." 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 subaccounts." 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 objections. Chairman Olberg called a brief at ease from 1:26 p.m. to 1:27 p.m., when he brought forth SB 294.