Legislature(2019 - 2020)ADAMS 519
03/18/2020 09:00 AM House FINANCE
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Audio | Topic |
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Start | |
Consideration of Governor's Appointee for the Alaska Mental Health Trust Authority: Anita Halterman | |
Consideration of Governor's Appointee for the Alaska Mental Health Trust Authority: Rhonda Boyles | |
HB268 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | TELECONFERENCED | ||
+ | TELECONFERENCED | ||
+= | HB 268 | TELECONFERENCED | |
HOUSE BILL NO. 268 "An Act relating to the Alaska Municipal Bond Bank Authority." 9:23:55 AM Co-Chair Johnston asked for a brief reintroduction of the bill. REPRESENTATIVE BART LEBON, SPONSOR, detailed that HB 268 would remove the project scope limitation on projects with the University of Alaska and gave them an opportunity during the current low interest rate environment to potentially refinance some of their debt. The bill would also increase the [project participation] cap from $87 million to $500 million [for the university]. In relation to regional health organizations, HB 268 would remove the 49 percent project participation limitation on the Alaska Municipal Bond Bank and increased participation to 100 percent, which would save regional health organizations money in refinancing or placing money through the bond bank without having to find partners that increased complexity and expense. The bill would increase the project limit from $102.5 million to $250 million for a single regional health organization project. Additionally, HB 268 would increase the total funding for regional health organizations to $500 million. He listed individuals available online to testify. 9:26:19 AM Co-Chair Johnston requested a fiscal note review. MYRON DOSCH, CHIEF FINANCIAL OFFICER, UNIVERSITY OF ALASKA (via teleconference), shared that the University of Alaska supported the bill and had previously submitted a letter of support. He spoke to the benefits of the bill if the university were to use the mechanism to obtain credit through the bond bank. For example, a $50 million bond over 30 years at interest rates as of March 5 would provide a benefit of about $50,000 per year or $1.5 million over the life of the bond. 9:27:55 AM DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND BANK AUTHORITY, DEPARTMENT OF REVENUE (via teleconference), reviewed the fiscal note from the Department of Revenue, OMB Component Number 121. The fiscal note included a "not to exceed" amount for the activity that could be generated by the proposed legislation. He explained that the bond bank had a floor of annual expenditures and expenditures increased as lending activity took place. He elaborated that there was a not to exceed amount rather than a budget the bond bank fully expected to expend during a fiscal cycle. The authorization for up to $360,000 per year would be directly related to any additional lending activity undertaken by the bond bank as a result of making additional loans to the university or regional health organizations. He furthered they would be provided for out of cost of issuance accounts that were funded from the proceeds of the bond issuance. He elaborated that they would be incorporated into the interest expense the borrower would be repaying. Program receipts, not general fund receipts, would provide for the potential annual expenditure. 9:29:43 AM Representative Josephson asked the bill sponsor to provide a hypothetical scenario relative to a regional health organization's use of the bill. Representative LeBon complied. He relayed that a number of projects were in the design or developmental stage. He used a hypothetical small regional health organization in Cordova (one of the locations for a potential project) as an example. The organization would go through its period of underwriting and showing justification for the project and would seek assistance from the Alaska Municipal Bond Bank. The bond bank would help in showing the repayment ability, the capacity to perform. The bond bank would work with stakeholders, potential clients, and potential users in surrounding communities that would benefit from the regional health organization. He detailed that it would all need to come together in a way that justified the project to a level where bond purchasers were interested in supporting the project. It would be necessary to show capacity to repay and establish the need and clientele base. The idea would be to enable a regional health organization to have a one-stop shop with the bond bank instead of going out to find two or three other partners. Co-Chair Johnston noted that Luke Welles from the Alaska Native Tribal Health Consortium was available online. Representative LeBon replied that Mr. Welles could answer Representative Josephson's question. Co-Chair Johnston asked if Mr. Welles had anything to add. LUKE WELLES, CHAIRMAN, ALASKA NATIVE TRIBAL HEALTH CONSORTIUM, (via teleconference), replied that Representative LeBon had provided a good answer. He explained that the bill offered another financing option for the projects. He elaborated there were five upcoming joint venture projects that represented about $700 million in potential construction over the next few years. The Indian Health Service would cover the cost of operating, maintenance, and staffing after the projects were built. It was incumbent on the regional health organizations to fund the capital infrastructure, which would open up new incoming revenues along with opening up new healthcare facilities in rural Alaska. Co-Chair Johnston asked Mr. Welles to put his name on the record. Mr. Welles complied. 9:32:38 AM AT EASE 9:34:29 AM RECONVENED Co-Chair Foster MOVED to REPORT CSHB 268(FIN) out of committee with individual recommendations and the accompanying fiscal notes. Representative Carpenter OBJECTED. He understood that adding tools to the toolbox is a good thing and that the bond bank staff would make good decisions on how to finance things. However, the bill was asking the committee to accept an increased risk to the state. Under the current circumstances, where the future was unknown, he did not believe it would be prudent to increase the state's risk. He highlighted that no one knew how long the current financial crisis would last. He reasoned that if the discussion had taken place ten years earlier when the state was flush with oil money it may have been a wiser decision. He did not support increasing risk to the state under the current circumstances. Representative LeBon understood and appreciated the concerns expressed by Representative Carpenter. He saw two immediate benefits of the bill including the opportunity to potentially refinance university debt at a significantly lower rate. He pointed out that the debt already existed. He elaborated that it would be up to the university to seek out the opportunity on a case-by-case basis. He informed the committee that the university held nearly $300 million in debt. He explained that the bill provided an important potential savings on existing debt. He addressed the regional health organization component and highlighted it was in the state constitution "that we take care of ourselves." Representative LeBon believed they should take full advantage if the regional health organization concept could be used to deliver primary healthcare services in rural Alaska at a cost savings while providing for improved services. The bill would allow the organizations to access the bond bank for 100 percent of the project instead of seeking out a partner that could ask for a higher interest rate on debt. He explained that when forcing an organization to split the financing among several entities, there was not always parity in the debt pricing. He expounded that the bond bank may be cheaper than another financial institution. He did not want to hamper organizations. He noted that an organization may find a partner that matched the rate, which was great. He concluded that the bill provided an option. 9:37:46 AM Co-Chair Johnston shared that she may have been less interested in the bill ten years earlier. She was interested in the bill under the existing circumstances and wanted to see it move forward from committee. She believed all of the tools were needed in the coming year. She would prefer to have the tools with a fiscally responsible organization that would assess risk and take advantage of any forthcoming financing and any stimulus package. She noted that currently "our" federal rate was cut to zero. She considered that she may have been a "no" vote ten years earlier, but she supported the legislation at present. 9:38:48 AM A roll call vote was taken on the motion to report the bill from committee. IN FAVOR: Josephson, LeBon, Merrick, Ortiz, Johnston, Foster OPPOSED: Carpenter, Tilton Representative Sullivan-Leonard, Representative Wool, and Representative Knopp were absent from the vote. The MOTION PASSED (6/2). There being NO further OBJECTION, CSHB 268(FIN) was REPORTED out of committee with four "do pass" recommendations and four "no recommendation" recommendations and with one new indeterminate note from the University of Alaska and one new fiscal impact note from the Department of Revenue. 9:39:29 AM Co-Chair Johnston shared that everything [with the schedule] would be very fluid. She asked for patience and relayed that the agenda would be changed as needed. She felt it was incumbent upon the committee to continue to do its work. She reviewed the schedule for the following meeting.
Document Name | Date/Time | Subjects |
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Anita Halterman Resume_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |
Anita Halterman Board Application_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |
Rhonda Boyles Board Application_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |
Rhonda Boyles Resume_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |