Legislature(1995 - 1996)

05/01/1995 01:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  SB 92     An  Act  requiring  that,   in  addition  to   its                 
            operating  budget, all  activities  of the  Alaska                 
            Housing  Finance Corporation  are  subject to  the                 
            Executive Budget Act.                                              
                                                                               
            HCS CS SB 92 (FIN)  was reported out of  Committee                 
            with "no recommendation"  and with  a zero  fiscal                 
            note by the Department of Revenue dated 3/1/95.                    
                                                                               
  SENATE BILL 92                                                               
                                                                               
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       "An Act requiring  that, in  addition to its  operating                 
       budget, all  activities of  the Alaska  Housing Finance                 
       Corporation are subject to the Executive Budget Act."                   
                                                                               
  Representative Martin MOVED to adopt work draft #9-LS0762\M,                 
  Chenoweth,  5/1/95,  as the  version  before  the Committee.                 
  There being NO OBJECTIONS, it was so ordered.                                
                                                                               
  JOHN BITNEY, STAFF,  REPRESENTATIVE TERRY MARTIN,  explained                 
  that the work draft addressed language as recommended by the                 
  Subcommittee.   The language  will spell  out the  new items                 
  provided in the Executive Budget Act for the Alaska  Housing                 
  Finance Corporation (AHFC).   That information was  included                 
  in the new subsection (D).   He added that an  amendment had                 
  been  prepared  to  address  the  exemptions  referenced  in                 
  Section (F).  [Attachment #1].                                               
                                                                               
  Representative   Martin   MOVED  to   adopt   Amendment  #1.                 
  Representative   Therriault   OBJECTED   for   purposes   of                 
  discussion.                                                                  
                                                                               
  DAN  FAUSKE,  CORPORATE  EXECUTIVE  OFFICER  (CEO),   ALASKA                 
  HOUSING   FINANCE   CORPORATION,   DEPARTMENT  OF   REVENUE,                 
  commented  that the  refinancing  concern would  be remedied                 
  through  the  amendment.    That  language would  allow  for                 
  service   of  the  mortgage  loans  and  foreclosures  while                 
  providing the flexibility  needed to  remain in the  market,                 
  capitalize on savings and allow the  corporations to be in a                 
  position to react quickly in the bond market.                                
                                                                               
  Representative Parnell questioned the scope of Section  2(A)                 
  contained within the  amendment.  Mr. Fauske  explained that                 
  within the budget two numbers would  be provided; one in the                 
  front end  (D) and the  other in (F).   Mr. Bitney responded                 
  that  the  5% loan  program  was  financed with  the  use of                 
  arbitrage earnings.    He referenced  the adopted  committee                 
  substitute, Line 10 (C), indicating the exempted portion.                    
                                                                               
  Representative  Brown  asked  how   the  proposed  committee                 
  substitute had  changed from the State Affairs version.  Mr.                 
  Bitney  replied  that  there had  not  been  any substantive                 
  changes.    He  continued,  under  the House  State  Affairs                 
  version,  the two loan programs were  exempt from the review                 
  procedures.  Current language  dictates that the Legislature                 
  would provide an aggregate appropriation number for the loan                 
  permits.  He added  that there are new exemptions  listed in                 
  Amendment #1.                                                                
                                                                               
  Representative Brown asked how the multi-family loan portion                 
  of  the bill would  be addressed.  Mr.  Bitney said that had                 
  been referenced  in Subsection  (E), Page  2, Line  3.   The                 
                                                                               
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  appropriation would be divided into  two parts; an aggregate                 
  appropriation for the  loan programs in which  a subsidy was                 
  not provided and also (E) would provide an appropriation for                 
  all  the  "other"  loan   programs  including  multi-family.                 
  Representative Martin  understood that language  would allow                 
  the bill to be more "open".                                                  
                                                                               
  Representative Brown questioned why portions of the bill had                 
  been deleted.  Mr.  Fauske pointed out that he  prefered the                 
  last bill, although  through the  course of negotiation,  it                 
  became apparent that the language addressing AHFC would need                 
  to become more "stringent".   He summarized that a  position                 
  had  been accomplished within the proposed legislation which                 
  would not bind the corporation upward and which would permit                 
  it to continue to function.                                                  
                                                                               
  Representative Brown  asked if opportunities would  be lost.                 
  Mr. Fauske felt that there would  continue to be enough lead                 
  time in order for the Legislative Budget and Audit Committee                 
  (LBA)  to  explain  the  case   when  the  amount  of  money                 
  stipulated in  the front  section might  not be  sufficient.                 
  The propsed legislation needs  additional work, although  it                 
  would be  "doable".  Mr. Fauske anticipated that this year's                 
  loan  activity  would  be  $350-$400  million dollars.    He                 
  understood  that  the  Legislature  would  appropriate  that                 
  amount each year for loan programs.                                          
                                                                               
  Representative Brown asked if AHFC's corporate dollars would                 
  be incorporated as well as the funds bonded for.  Mr. Fauske                 
  noted  that  was  correct.    He  added that  based  on  the                 
  companies appropriated estimates, that dollar amount will be                 
  in  the  front  end of  the  budget.    Representative Brown                 
  disagreed  with  that concept.    Mr. Fauske  understood the                 
  concern.      Representative  Martin   explained   that  the                 
  Legislature has  complete authority  over appropriations  as                 
  stipulated in Article 9.                                                     
                                                                               
  WILLIAM  HOWE,  DEPUTY   COMMISSIONER,  TREASURY   DIVISION,                 
  DEPARTMENT OF  REVENUE, responded to  Representative Brown's                 
  concern.  He noted that the intent of  the language would be                 
  that the  Legislature will review  all of the  loan programs                 
  that AHFC carries as part of  their oversight process.  With                 
  the  multi-family  housing  loan  and special-needs  housing                 
  projects   and  programs  will   be  reviewed   through  the                 
  Legislature.  Both  last year and this year,  those programs                 
  consume  approximately $50  million  dollars of  AHFC money,                 
  raised through new  bond issues.  The  Legislature will have                 
  the right to review those programs.  The amendment clarifies                 
  that once  the scope of the total  activities is determined,                 
  AHFC  can  operate  freely  within  those  boundaries.    He                 
  stressed  that  the  Legislature will  not  get  involved in                 
  funding individual projects.                                                 
                                                                               
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  Representative Brown  asked the distinction  between (a)1(D)                 
  and  2(A).   Mr.  Howe stated  that  2(A) would  provide the                 
  ability to float bonds and borrow money for bond issues.  He                 
  continued,  Section  1(D)  only deals  with  the  lending of                 
  money.    Representative Brown  voiced  confusion about  the                 
  source of the money; she thought  that they both represented                 
  the same funds.   Mr. Howe explained that Section  1(D), the                 
  lending  of money, the  authorization is only  related to an                 
  aggregate amount and provides the Legislature the ability to                 
  review  programs.   If  the programs  are  supported by  the                 
  Legislature,  then  the  aggregate   amount  for  all  those                 
  programs  will be given to AHFC  to function.  How they fund                 
  those  loans  will  be  a  function  of  corporate  receipts                 
  acquired from past loan payments,  interest earnings as well                 
  as floating bonds.                                                           
                                                                               
  TOM  WILLIAMS, STAFF,  SENATOR  STEVE FRANK,  commented that                 
  Senator Frank requested that the bill return to the original                 
  Senate   version   or  some   modified   version  of   that.                 
  Representative  Martin noted  that the  committee substitute                 
  would represent the "middle ground" on the legislation.                      
                                                                               
  Representative Therriault WITHDREW THE OBJECTION to adopting                 
  Amendment #1.   Representative  Brown pointed  out that  the                 
  amendment would  need a  semi colon  following the  language                 
  "obligation" in Section  (A).  Representative  Parnell noted                 
  that Section (B) would need an apostrophe in "corporations".                 
  There being NO further OBJECTIONS, Amendment #1 was adopted.                 
                                                                               
  Representative Martin MOVED to report HCS CS SB 92 (FIN) out                 
  of Committee  with individual recommendations  and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  HCS CS SB 92  (FIN) was reported  out of Committee with  "no                 
  recommendation"  and  with   a  zero  fiscal  note   by  the                 
  Department of Revenue dated 3/1/95.                                          

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