Legislature(2001 - 2002)

04/30/2002 03:08 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
GENERAL OBLIGATION BONDS                                                                                                      
Co-Chair Mulder  noted that there  were $1.4 billion  dollars                                                                   
in  general  obligation  (GO) bond  requests.  The  attorneys                                                                   
indicated  that they  could not  be included  in one  ominous                                                                   
bond bill. The intent was to use  as few vehicles as possible                                                                   
and  identify  consistent themes.  He  observed  that HB  524                                                                   
contains   GO   bonds   for  new   schools   and   university                                                                   
construction. House  Bill 525 contains GO bonds  for deferred                                                                   
maintenance  of public  facilities.  Bond debt  reimbursement                                                                   
was  used for  projects  that  did not  fit  into  a GO  bond                                                                   
package,  because they  were previously  leveraged [HB  528].                                                                   
Representative Lancaster's energy  bill [HB 175] was utilized                                                                   
for the  final component.  House  Bill 524  and HB 525  would                                                                   
appear on the November general election ballot.                                                                                 
Co-Chair Mulder observed that  projects were prioritized. The                                                                   
priority lists were strictly used  with one exception. In new                                                                   
school  construction, out  of  the first  six schools:  three                                                                   
were in  [Representative Kaspner's]  district and  three were                                                                   
in Representative  Foster's district. The  proposed committee                                                                   
substitute took  the first  two [in Representative  Kaspner's                                                                   
district] and the first two from Representative Foster's.                                                                       
HOUSE BILL NO. 175                                                                                                            
     "An   Act  making   an  appropriation   to  the   Alaska                                                                   
     Industrial  Development and  Export Authority  for power                                                                   
     projects; and providing for an effective date."                                                                            
Representative Lancaster MOVED to ADOPT Amendment 1:                                                                            
     Page 1, line 6, through page 3, line 28:                                                                                   
     Delete all material and insert:                                                                                            
     Section 1.  ALASKA ENERGY AUTHORITY. (a)  me unobligated                                                                 
     and  unencumbered balance  of the  Railbelt energy  fund                                                                   
     (AS  37.05.520) on  the effective  date of  this Act  is                                                                   
     appropriated   to  the  Alaska   Energy  Authority   for                                                                   
     investment  by  the  authority to  secure  repayment  of                                                                   
     bonds  issued by the  authority under  AS 44.83  for the                                                                   
     following power and intertie projects:                                                                                     
          (1) the sum of $20,300,000 is allocated to                                                                            
          upgrade and extend the Anchorage-Fairbanks power                                                                      
          transmission intertie to the Teeland substation;                                                                      
          (2) to make grants to the recipients named, for                                                                       
          the purposes described, and in the amounts set out                                                                    
          Homer Electric Association replacement power                                                                          
          supply for Seldovia $2,000,000                                                                                        
          Anchorage Municipal Light and Power Ekiutna                                                                           
          project transmission line upgrade 19,300,000                                                                          
           Golden Valley Electric Association line extension                                                                    
         Matanuska Electric Association line extension 500,000                                                                  
     (b) It is  the intent of the legislature  that, once the                                                                   
     bonds  described  in  (a)  of  this  section  have  been                                                                   
     repaid,  the Alaska  Industrial  Development and  Export                                                                   
     Authority will bring to the    legislature a prioritized                                                                   
     list  of energy  projects that  can be  funded from  the                                                                   
     revenue  stream from  the funds  appropriated in  (a) of                                                                   
     this section.                                                                                                              
     *  Sec. 2.  LAPSE  OF APPROPRIATION.  The  appropriation                                                                   
     made by  sec. 1(a) of this  Act is to capitalize  a fund                                                                   
     and does not lapse.                                                                                                        
     * Sec.  3. This  Act takes  effect immediately  under AS                                                                 
He  explained  that the  amendment  makes minor  changes.  He                                                                   
observed  that  the amendment  would  also allow  the  Alaska                                                                   
Industrial  Development  and   Export  Authority  (AIDEA)  to                                                                   
compile  a priority  list  for  future consideration  by  the                                                                   
legislature.  The  legislation  would still  be  $43  million                                                                   
dollars.  The legislation  utilizes the  revenue stream  from                                                                   
the securitization of the Rail  Belt Energy Fund, which would                                                                   
no longer exist if the legislation were adopted.                                                                                
Representative John  Davies pointed out that  the legislation                                                                   
contains  a smorgasbord  of  projects in  terms  of size  and                                                                   
duration of the  debt repayment. He questioned  if the intent                                                                   
was  to wait  until the  last  project is  repaid before  the                                                                   
revenue  stream  could  be  utilized   again.  Representative                                                                   
Lancaster  responded  that  it  would  be a  function  and  a                                                                   
request of AIDEA.                                                                                                               
Representative  John Davies  MOVED to  ADOPT an amendment  on                                                                   
page 2, line 2: insert "the."                                                                                                   
Co-Chair Mulder  explained that $73 million dollars  would be                                                                   
securitized; $43 million dollars  would come off of the bonds                                                                   
sales to  pay for the projects.  The interest off of  the $73                                                                   
million dollars  pays for  the bonds.  The revenue  stream is                                                                   
driven from the interest on the bonds not the projects.                                                                         
Representative  John   Davies  questioned  if   some  of  the                                                                   
projects  would be  paid off  quicker  than others.  Co-Chair                                                                   
Mulder  stated  that  they  would  not.  Representative  John                                                                   
Davies  stressed that  the intent  is not to  wait until  the                                                                   
last project is paid before there are new projects.                                                                             
Representative  Lancaster  explained  that funds  would  flow                                                                   
immediately.  The revenue  stream,  through  AIDEA, from  the                                                                   
intertie fund would pay the bonds  back. He observed that $43                                                                   
million dollars would already be spent.                                                                                         
Representative  Croft acknowledged that  AIDEA will  make the                                                                   
decision, but  expressed concern  with the deletion  of "with                                                                   
the assistance of AREAC and the Denali Commission."                                                                             
Co-Chair Mulder observed that  the concern was that the focus                                                                   
of the Denali Commission has been  on economic development in                                                                   
rural Alaska. He  pointed out that the Rail  Belt Energy Fund                                                                   
centers on  the rail belt  energy grid.  He felt that  it was                                                                   
not  a  compatible  relationship.   Representative  Lancaster                                                                   
agreed.  Most  projects  are  discussed  through  the  Alaska                                                                   
Industrial Development  and Export Authority (AIDEA).  It was                                                                   
felt that  it would  be better to  collect the bonds  through                                                                   
Representative  Hudson   questioned  what  would   happen  to                                                                   
communities like Cordova. Representative  Lancaster explained                                                                   
that  Cordova is  included in  the  debt reimbursement  bond,                                                                   
which would not require a vote.                                                                                                 
Representative  Lancaster MOVED to  ADOPT Amendment  1. There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
HB  175  was   heard  and  HELD  in  Committee   for  further                                                                   

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