Legislature(2007 - 2008)HOUSE FINANCE 519
03/26/2008 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB249 | |
| HB396 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 278 | TELECONFERENCED | |
| + | HB 367 | TELECONFERENCED | |
| += | HB 396 | TELECONFERENCED | |
| + | HB 400 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 249 | TELECONFERENCED | |
SENATE BILL NO. 249
An Act establishing the Alaska capstone avionics
revolving loan fund and relating to the fund; and
providing for an effective date.
Representative Thomas asked if Fish and Game and other
Alaska enforcement aircraft that does not want to be
identifiable would be exempt from the program.
FRANK RICHARDS, DEPUTY COMMISSIONER OF HIGHWAYS & PUBLIC
FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, said there was a Department of Fish and Game
amendment to equip seven aircraft, but he thought
Representative Thomas might be referring to Department of
Public Safety law enforcement aircraft. The Department was
reluctant to equip planes that they did not want to be
tracked. He said the Federal Aviation Administration (FAA)
was working on technology to prevent transmission so that
certain aircraft could be equipped and not be tracked.
Representative Thomas thought if the avionics program was
being brought forward for safety reasons it seemed
counterproductive to have aircraft that could not be seen.
Representative Gara asked if the program had ever been a
grant program. Mr. Richards replied that initially the
aviation community had talked about a grant program.
Representative Gara wondered what the interest rate would be
and if the program would lose or make money.
GREG WINEGAR, DIRECTOR, DIVISION OF INVESTMENTS, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, said the
interest rate would be 4%. All expenses would be paid for
out of the fund. At sunset in 2020 the earnings would return
to the General Fund. There was a discussion about inflation
proofing the fund so that it would not cost the State over
time.
1:53:41 PM
Co-Chair Chenault referred to the language in the bill
establishing the interest rate at not less than 4% and
questioned who within the Department under what authority
would establish the exact interest rate. He wanted to know
why the bill did not establish the rate. Mr. Winegar replied
that the rate could be stipulated in the law, or regulations
could establish it. The Division came up with 4% because it
was low and provided for reasonable repayment amounts, while
ensuring that the fund paid its own way.
1:55:19 PM
Representative Gara wanted a standard, such as "prime plus
one and a half," that would adequately capitalize the fund
so that by 2020 the State would get its money back. The
statute gives no guidance. Mr. Winegar replied that the
language is patterned on other similar loan programs. He
said a number of variables played into the decision. Until
the funds are loaned out they are invested by the Department
of Revenue, and those earnings will also be retained by the
fund. The numbers had been run with conservative default
rates and he was confident that the original principal plus
a substantial amount of earnings would go back to the
General Fund.
Representative Gara proposed language stipulating that the
rate would reflect an amount that would protect the
purchasing power of the endowment. Mr. Winegar thought the
language already in the bill was sufficient. Representative
Crawford stated the goal was to make the skies safer and he
wanted to see the avionics operating. If inflation continues
at about 3-4%, he thought the 4% minimum would work.
Mr. Winegar responded further that the FAA has done studies
estimating that savings from lost lives and search and
rescue costs would be well over $800 million to the State
over a 27-year period.
1:59:34 PM
Representative Gara reiterated his concerns with not putting
standards for rates in legislation.
Co-Chair Chenault asked if $4.8 million would be enough
considering the goal is to equip 4,000 aircraft. Mr. Winegar
replied that the amount would probably not cover equipping
all of the aircraft. However, a revolving fund allows
leveraging the money; the Division could potentially make
about $13 million in loans with that amount. If loan demand
is higher, they may need to come back.
Co-Chair Chenault thought the program should move forwarding
order to save Alaskan lives.
Representative Kelly stated his support for the program.
2:03:46 PM
Co-Chair Meyer referred to the fiscal notes.
Representative Joule asked if an aircraft equipped with
avionics would be easier to locate if it had an accident.
Mr. Richards answered that it would be.
Vice-Chair Stoltze MOVED to REPORT SB 249 out of Committee
with individual recommendations and with the accompanying
fiscal notes.
Vice-Chair Stoltze OBJECTED for discussion.
Vice-Chair Stoltze reported that airplane accidents have
killed more of his friends than car accidents. He referred
to accidents that had happened. Many Alaskans shared those
experiences. He thought the program was a priority.
Vice-Chair Stoltze REMOVED his OBJECTION. There being NO
further OBJECTION, it was so ordered.
SB 249 was REPORTED out of Committee with a "do pass"
recommendation and with attached new zero fiscal note by the
Department of Transportation and Public Facilities and
fiscal note #1 by the Department of Commerce, Community and
Economic Development.
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