Legislature(1993 - 1994)
03/31/1993 01:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 55 An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date. Review of CS HB 55 (FIN), work draft #8-GH1038\K dated 3/31/93. Co-Chair Larson distributed to the Committee a handout which listing the non-formula/general fund to date comparison. [Attachment #1]. He noted, the House FY 94 proposed budget is currently $33.193 million dollars below FY 93 authorized plus supplemental. The House proposed budget is $16.313 million dollars below the Governor's FY 94 budget. The Committee reviewed each section of CS HB 55 (FIN) work draft dated, 3/31/93. 1 Co-Chair Larson pointed out Sections #1 - #6 were the same as that proposed by the Governor. Sections #1 - #6 were adopted. Sections #7 - #10 were adopted by the Committee. Section #11 (b) was held open for further discussion. Co- Chair Larson understood that of the $11.143 million dollars, $983.4 thousand dollars would be used for acquisition and $966.3 thousand dollars would be used for improvements at Wildwood. MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION, clarified that Wildwood would be covered in language indicated in 11 (b) "the Department of Natural Resources" for improvement and acquisition. Representative Brown questioned the language "lease payments". Co-Chair Larson responded that the contract which was negotiated, explained that the city would float the bonds for thirty years during which time the State would pay lease payments equal to the principle and interest. At the end of the thirty years, the leases would be turned over to the State of Alaska from each city. Co-Chair Larson suggested leaving Section #11 open for further discussion. Representative Brown referenced Section #7, inquired the from revenue anticipation notes and interest involved. Mr. Greany explained Section #7 was a provision which would provide the Department of Revenue short term borrowing abilities to cover treasury cash flow short-falls. The Committee adopted Section #12. Section #13 is a new section to the proposed Governor's amendments. CHERYL FRASCA, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, advised that Section #13 addresses an IRS requirement needed to make an appropriation. BRIAN ANDREWS, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE, clarified Section #11 (b) references two certificates of participation while the Department of Natural Resources is the leaser of those properties and the Department of Administration is the Lessee of the properties. Mr. Andrews provided the Committee with a Letter of Memorandum from the Commissioner of Revenue, Darrel Rexwinkel, to Cheryl Frasca, Division of Budget Review. [Attachment #2]. Section #7 consists of a catch-all phrase addressing revenue anticipation notes. Revenue from those projects would be allocated to paying debt service allowing a bond committee to issue that debt. 2 Representative Brown asked what statute authority would authorize the certificate of participation. Mr. Andrews noted AS 37.15.011. Representative Brown asked if the renovations at Wildwood should proceed, given the previous action taken by the House Finance Committee. Mr. Andrews stated that the Department of Corrections had requested financing the facilities from the bonding committee. He advised that if the State was not willing to appropriate the debt service for the certificates of participation, there would be a severe impact on the credit rating. Representative Martin disagreed. Representative Hanley understood that the State has a legal obligation to pay the debt or the bond rating would be affected. Mr. Andrews advised that the proceeds from the sale of the bonds are dedicated to the improvements. Mr. Andrews referenced Section #13, explaining that the State entered into a swap arrangement with the international airport bonds. A fixed rate obligation was established to pay those bonds. At that time, there was a swap in which the other party paid the fixed rate obligation and the State paid a variable rate obligation with lower interest rates. Section #13 was left open to incorporate a technical language change. The Committee adopted Section #14. Section #15 provides a statutory change from the Governor's language making income from the permanent fund go directly to the earnings reserve. Inflation proofing will come from the earnings reserve. The Committee adopted Section #15. Mr. Greany noted that Section #16 determines inflation proofing. The Committee adopted Section #16. Co-Chair Larson pointed out, Section #17 is the same as that proposed by the Governor. Representative Hanley asked for further clarification of Section #17. Ms. Frasca explained the 1989 reference was to the original legislation which established the STEP program. Those unexpected funds will lapse back into the Unemployment Insurance Account at the end of the fiscal year. Section Co-Chair Larson referenced Section #19 pointing out a deletion of "$4,926,300" and inserting of "$1,991,700" appropriation from the Commercial Fishing Revolving Loan Fund to the general fund. The additional change made to Section #19 would no longer indicate the drop off from the ARLF. Section #19 would conform to Representative Ulmer's proposed legislation, HB 123. 3 (Tape Change HFC 93-85, Side 2). Mr. Greany added that HB 123 would address individual fisheries loan quotas providing for administrative costs of each program. Representative Brown questioned what the original bill recommended for ARLF. Co-Chair Larson said the legislation provided $5.28 million dollars for Commercial Fishing Revolving Loan Fund. The Agricultural Revolving Loan Fund original figure was $1.5 million dollars and was moved to the general fund. Co-Chair Larson explained it would conform with the past legislative practices. Ms. Frasca reminded the Committee at one time there were other loan programs which returned money to the general fund. Currently, they are inactive and the Alaska Statute states, the return goes automatically into the general fund. Mr. Greany provided the Committee with the FY 94 Loan Program - Cash Flows spreadsheet. [Attachment #3]. JOHN BITNEY, AID TO REPRESENTATIVE RON LARSON, provided the Committee with a memo from Representative Ulmer regarding HB 123 and the changes being made to the Commercial Fishing Revolving Loan Fund. [Attachment #4]. The Committee adopted Section #19. Co-Chair Larson noted a change to Section #20. The Governor's proposed bill allocated $26.8 million dollars which is $100 thousand dollars more than that recommended in HB 55. Representative Therriault provided the Committee with a handout illustrating, "The Oil and Hazardous Substance Release Response Fund". [Attachment #5]. The Committee adopted Section #20. Co-Chair Larson pointed out that Section #21 was the same as that proposed by the Governor. Mr. Greany commented that the effective date would be July 1, 1993, although the entire bill takes effect when signed by the Governor. Representative Brown recommended leaving the mitigation account in the general fund and not appropriating it to the Oil and Hazardous Substance Release Response Fund. She suggested holding Section #21 open until Section #22 is adopted. Representative Brown noted her opposition to placing general fund monies into the 470 fund. Mr. Greany pointed out that Section #22 (b) gets the money for the response ferry from the 470 fund to the Vessel Replacement Fund. The capital project to construct a ferry would require an additional transaction appropriation which would take the money from that fund to ferry construction. Representative Brown said language written in Section #22 4 indicates an appropriation. Mr. Greany stated that Section Marine Highway Vessel Replacement Fund. JIM AYERS, SYSTEM DIRECTOR, ALASKA MARINE HIGHWAY SYSTEM, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, noted that the language and intent of the Vessel Replacement Fund clarifies that the Alaska Marine Highway System can not expend money out of that fund without a legislative appropriation. He pointed out that this would be the second appropriation. Representative Therriault recommended changing Page 4, Line 27 inserting "the mitigation account" and deleting "the oil and hazardous substance release response fund". Representative Brown suggested holding Section #21 and Section #22 open. Co-Chair MacLean asked why the capital budget authorized only $6.4 million dollars for the VRF. Mr. Ayers stated that the capital budget provides $66.4 million dollars total, $7.5 million dollars come from the Vessel Replacement Fund and the balance would be ISTEA monies. Co-Chair Larson stated that Section #21 and Section #22 would be held open for further discussion. Co-Chair Larson noted the Committee's intention to change Section #23, from "$10,508,600" dollar to "$10,772,900". Mr. Greany stated that Section #23 does not need to be adjusted. It currently reflects the previous action of the Committee. The Committee adopted Section #23 unamended. Ms. Frasca noted that Section #24 and Section #25 were adopted. This would distinguish disaster relief and fire suppression from agency operations in that Department. The Committee adopted Section #25. Mr. Greany explained Section #26 was additional and had been moved to the front section of the budget, which would conform with the back section on the services of information programs from the general fund and inter-agency receipts. The Committee adopted Section #26. [Attachment #6]. Section #27 and Section #28 were the same as those proposed in the Governor's FY 94 budget. The Committee adopted Sections #27 and #28. Representative Hanley noted that Section #29 was an appropriation from the Mental Health Income Account to the unreserve portions of the general fund for statewide indirect cost recovery. Mr. Greany explained that the 5 unreserved portion of the general fund was pure general fund not earmarked for any other expenditures. Section #29 was adopted by the Committee. Representative Therriault pointed out that Section #30 would require an adjustment to reflect the changes made by the DEC Subcommittee. This would require a deletion of "$6,491,500" and inserting "$4,451,300". Section #30 was held open for further discussion. (Tape Change HFC 93-86, Side 1). Co-Chair Larson noted that Sections #31, #32, #33 and #34 were the same as those recommended by the Governor. The Committee adopted all four sections. Representative Navarre MOVED a change to the language to Section #35, Page 6, Line 29, deleting "earnings reserve account" and inserting "permanent fund corporate receipts" and to Line 30, Page 6, Section #35, adding before the word "oil" inserting "royalty". There being NO OBJECTIONS, it was accepted. Section #35 was adopted by the Committee. Section #36 was adopted by the Committee. Section #37 incorporated a change proposed by the Governor to Section "22 (b)". The Committee adopted Section #37. Co-Chair Larson summarized the work of the House Finance Committee. Sections #11, #13, #21, #22 and #30 were held open for further deliberation. Representative Therriault MOVED the proposed change to Section #30. Representative Brown OBJECTED for the record asking not to force the vote. Section #30 was adopted by the Committee. Co-Chair MacLean MOVED to incorporate all sections adopted by the Committee into CS HB 55 (FIN) except for Section #11, ordered.
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