Legislature(2019 - 2020)ADAMS ROOM 519

04/01/2019 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 106 SCHOOL BOND DEBT REIMBURSEMENT TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 87 LIQUEFIED NATURAL GAS STORAGE TAX CREDIT TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 106                                                                                                            
                                                                                                                                
     "An Act relating to school bond debt reimbursement."                                                                       
                                                                                                                                
1:57:18 PM                                                                                                                    
                                                                                                                                
LYNN  GATTIS, STAFF,  REPRESENTATIVE TAMMIE  WILSON, relayed                                                                    
that the bill  would simply extend the  termination date for                                                                    
the  school  bond  debt reimbursement  program  with  an  an                                                                    
effective  date of  July  1,  2025. The  bill  was a  5-year                                                                    
extension request.                                                                                                              
                                                                                                                                
1:58:27 PM                                                                                                                    
                                                                                                                                
HEIDI TESHNER, ADMINISTRATIVE  SERVICES DIRECTOR, DEPARTMENT                                                                    
OF  EDUCATION AND  EARLY DEVELOPMENT,  OFFICE OF  MANAGEMENT                                                                    
AND BUDGET, reviewed  the zero fiscal note.  She referred to                                                                    
the OMB  component number 153.  She explained that  the note                                                                    
was  zero because  the bill  was simply  extending the  debt                                                                    
moratorium. The current costs of  the program would continue                                                                    
and there  would be  no additional costs  because of  no new                                                                    
debts coming online until 2026.                                                                                                 
                                                                                                                                
Co-Chair Wilson asked if the  bill would affect the debt the                                                                    
state currently had.                                                                                                            
                                                                                                                                
Ms. Teshner replied that the  bill would extend the payments                                                                    
of  the  debt the  state  currently  had.  For FY  20,  $100                                                                    
million  would be  paid out.  Going forward,  each year  the                                                                    
amount  would decrease  depending on  when current  projects                                                                    
and associated bonds in the system were closed out.                                                                             
                                                                                                                                
Representative Josephson  asked if the  Regional Educational                                                                    
Attendance  Area (REAA)  programs would  be impacted  with a                                                                    
reduction in  the outlay  for programs they  had in  the que                                                                    
based on priority.                                                                                                              
                                                                                                                                
Ms.  Teshner  replied  that currently  the  REAA  and  Small                                                                    
Municipal School District Fund  calculation was based on the                                                                    
annual   debt  service   for  the   program.  Representative                                                                    
Josephson was  correct that the  amount would  decrease over                                                                    
the following 5 years, as it  had over the previous 5 years,                                                                    
if the moratorium  were to be continued.  The district REAAs                                                                    
could  still apply  for the  school  construction and  major                                                                    
maintenance  CIP list  every year.  They would  be competing                                                                    
with other projects and would  be funded through the non-REA                                                                    
fund.                                                                                                                           
                                                                                                                                
Representative  Josephson commented  that there  was another                                                                    
avenue for REAAs to receive  state revenue that would not be                                                                    
impacted by the legislation.                                                                                                    
                                                                                                                                
Ms.  Teshner clarified  that REAAs  would still  be able  to                                                                    
apply  for the  major  maintenance  and school  construction                                                                    
funds. Currently  they could be  funded, depending  on their                                                                    
ranking, through  the REAA fund.  If they were to  rank high                                                                    
enough  and  the  appropriations for  major  maintenance  or                                                                    
school construction  projects, they  could receive  a direct                                                                    
appropriation  outside of  the REAA  fund. Funding  would be                                                                    
contingent on  the amount  of appropriations  the Department                                                                    
of Education and Early Development (DEED) received.                                                                             
                                                                                                                                
Vice-Chair  Ortiz  asked  about  the  potential  impacts  of                                                                    
extending the sunset. He was  particularly curious about the                                                                    
impacts to borough areas and non-REAA areas.                                                                                    
                                                                                                                                
Co-Chair  Wilson  answered  that the  Fairbanks  North  Star                                                                    
Borough  had gone  out for  bonds. Currently,  the community                                                                    
had paid 100 percent for the  bonds. It was the same for all                                                                    
municipalities in the previous 5 years.                                                                                         
                                                                                                                                
Vice-Chair Ortiz  wondered if any  assessment had  been done                                                                    
on  whether other  boroughs would  be crippled  in advancing                                                                    
other projects with an extension of the sunset.                                                                                 
                                                                                                                                
Co-Chair  Wilson commented  that there  were several  people                                                                    
waiting in  the que  to testify.  She thought  his questions                                                                    
would be answered.                                                                                                              
                                                                                                                                
Co-Chair  Foster  commented   that  regarding  the  ordering                                                                    
question for the  REAAs, the first school on  the new school                                                                    
construction  list  was  for $37  million,  and  the  second                                                                    
school was  for $10 million.  If the state fully  funded the                                                                    
debt reimbursement, the REAAs  would receive $39 million. He                                                                    
asked if the  second school with a cost of  only $10 million                                                                    
would  move  into  first  place  if  only  $20  million  was                                                                    
available. He  was trying  to determine  the order  in which                                                                    
the funding was appropriated.                                                                                                   
                                                                                                                                
Ms.  Teshner answered  that if  the initial  project on  the                                                                    
list was  $20 million  and only  $10 million  was available,                                                                    
the  division might  only  fund the  design  portion of  the                                                                    
project  saving the  remainder for  the following  year. She                                                                    
thought Tim  Merrick could provide further  detail about how                                                                    
the division had applied it in  the past. She noted that the                                                                    
division would  attempt to  keep the REAA  Fund to  fund the                                                                    
REAAs and not to comingle funds.                                                                                                
                                                                                                                                
2:05:07 PM                                                                                                                    
                                                                                                                                
TIM MEARIG, FACILITIES MANAGER,  DEPARTMENT OF EDUCATION AND                                                                    
EARLY  DEVELOPMENT,  explained  there  was  a  provision  in                                                                    
regulation that allowed the department  to fund a phase of a                                                                    
project  (if  it   could  be  phased)  if   there  were  not                                                                    
sufficient  funds for  the  entire  project. Otherwise,  the                                                                    
department was permitted to fund further down the list.                                                                         
                                                                                                                                
Co-Chair  Foster clarified  that a  school project  could be                                                                    
phased or  skipped. He asked  at what point the  state would                                                                    
move to the major maintenance list.                                                                                             
                                                                                                                                
Mr. Mearig  replied that the  language in statute  for using                                                                    
the  funding on  the  major maintenance  list required  that                                                                    
priority would be given to  school construction projects. He                                                                    
surmised there  was not a  simple answer without  looking at                                                                    
the  detail  of the  scenario.  The  division would  develop                                                                    
scenarios in conjunction with the  districts being served at                                                                    
the  priority points  on the  list and  at the  department's                                                                    
leadership.                                                                                                                     
                                                                                                                                
Representative Josephson mentioned he  had taught in an REAA                                                                    
for  3  years. Shortly  after  he  left, the  George  Morgan                                                                    
Senior High School burned to  the ground and was rebuilt. In                                                                    
such a circumstance,  he asked what priority  would be given                                                                    
to the  community. He  wondered how  the situation  would be                                                                    
handled.                                                                                                                        
                                                                                                                                
Mr. Mearig responded that the  priority list was established                                                                    
through a regular statutory process  annually. If there were                                                                    
emergencies  that  arose, such  as  the  earthquake for  the                                                                    
previous year,  they would likely  be reflected on  the list                                                                    
if the districts  chose to submit a project  for funding. He                                                                    
continued that  a school that was  completely unhoused would                                                                    
receive a  significant amount of  points in the  matrix. The                                                                    
project would likely rise to the top of the priority list.                                                                      
                                                                                                                                
2:08:12 PM                                                                                                                    
                                                                                                                                
Co-Chair Wilson OPENED Public Testimony.                                                                                        
                                                                                                                                
2:08:23 PM                                                                                                                    
                                                                                                                                
JIM  ANDERSON,  CHIEF   FINANCE  OFFICER,  ANCHORAGE  SCHOOL                                                                    
DISTRICT (via  teleconference), was in support  of continued                                                                    
school bond  debt reimbursement for districts  to the state.                                                                    
In  the past,  municipalities  and  borough incurred  school                                                                    
bond  debt  in  accordance   with  the  state's  contractual                                                                    
agreement in place at the  time the bonds were approved. The                                                                    
agreements   allowed  the   state   to  maintain   education                                                                    
facilities   across   the   cities,  boroughs,   and   local                                                                    
communities.  He spoke  of the  struggles  of recession.  He                                                                    
urged  the  committee  to   continue  supporting  bond  debt                                                                    
reimbursement.                                                                                                                  
                                                                                                                                
2:10:26 PM                                                                                                                    
                                                                                                                                
BRYCE WARD,  MAYOR, FAIRBANKS NORTH STAR  BOROUGH, FAIRBANKS                                                                    
(via  teleconference),  spoke  in  support of  HB  106.  The                                                                    
ramification   of  not   funding   the   school  bond   debt                                                                    
reimbursement  to the  Fairbanks  North  Star Borough  would                                                                    
equal about $9 million, roughly  a 1.1 mill increase for the                                                                    
local tax  base. He was  speaking in favor of  the extension                                                                    
of the program to pay for  current debt that was approved by                                                                    
the  borough's voting  base with  the  assumption the  state                                                                    
would be contributing as part  of the requirement for school                                                                    
construction.  The borough  currently operated  under a  tax                                                                    
cap.  However, debt  was exempt  from the  cap and  the bill                                                                    
would result  in an  increase to the  tax base.  The borough                                                                    
was proposing  a tax increase  in its budget in  the current                                                                    
year.                                                                                                                           
                                                                                                                                
Mr.  Ward continued  that the  ability for  the state  to be                                                                    
able  to partner  with communities  at the  local level  was                                                                    
significant. The 30  percent match that the  local level was                                                                    
paying  contributed to  the state's  ability to  continue to                                                                    
provide school  services. He reiterated his  support for the                                                                    
bill.                                                                                                                           
                                                                                                                                
2:12:10 PM                                                                                                                    
                                                                                                                                
CHEYENNE    HEINDEL,    MAT-SU    BOROUGH,    PALMER    (via                                                                    
teleconference), spoke  in support of HB  106. She explained                                                                    
that without the passage of  the bill the borough would have                                                                    
to impose  an additional  2 mills on  its tax  payers. Also,                                                                    
she mentioned  that the  borough was  in need  of additional                                                                    
school   facilities.   She   thanked   members   for   their                                                                    
consideration.                                                                                                                  
                                                                                                                                
2:12:51 PM                                                                                                                    
                                                                                                                                
LUCY  NELSON,   NORTHWEST  ARCTIC  BOROUGH,   KOTZEBUE  (via                                                                    
teleconference),  spoke  in  opposition  of  the  bill.  She                                                                    
relayed that  for FY  20 the  Northwest Arctic  Borough bond                                                                    
debt  balance   was  $40.9  million,   none  of   which  was                                                                    
reimbursable by  the State of  Alaska if the FY  20 proposed                                                                    
governor's  budget  was  approved  due  to  the  moratorium.                                                                    
Adding  years would  devastate the  borough's finances.  The                                                                    
borough   would  be   required  to   supplant  the   funding                                                                    
previously  committed to  be paid  by  the state.  Essential                                                                    
borough  services  that  protected  the  life,  health,  and                                                                    
safety  of  its  residents  would  have  to  be  reduced  or                                                                    
eliminated. The State of Alaska  was responsible for funding                                                                    
schools  having  made  a prior  commitment  to  reimburse  a                                                                    
portion of  school bond debt.  Local governments  had relied                                                                    
on the state's  commitment in good faith. Any  change in the                                                                    
state's commitment  on school bond debt  reimbursement posed                                                                    
a significant financial burden on local communities.                                                                            
                                                                                                                                
Ms.  Nelson  continued  that   the  borough  understood  the                                                                    
state's fiscal shortfall  and the need to  balance the state                                                                    
budget by placing the moratorium  on bond debt. However, the                                                                    
Northwest  Arctic Borough  was currently  operating under  a                                                                    
PILT [Payments in lieu of  taxes] agreement. At the time the                                                                    
borough  negotiated   the  PILT   agreement  there   was  no                                                                    
discussion  on the  elimination of  bond debt  reimbursement                                                                    
payments from  the state. She  clarified that  any reduction                                                                    
to the bond  debt payment would devastate  the borough which                                                                    
was already suffering from high  crime and the lack of basic                                                                    
infrastructure.                                                                                                                 
                                                                                                                                
Mr. Nelson  reported that,  unlike other  rural communities,                                                                    
the Northwest  Arctic School District  was not an  REAA. The                                                                    
borough  contributed over  $2 million  per year  towards the                                                                    
bond  repayments.  Although  the payments  were  large,  the                                                                    
borough  was   committed  to  education  and   its  schools.                                                                    
Eliminating the  state reimbursement would cost  the borough                                                                    
$4 million in  FY 20. She asked legislators  to consider the                                                                    
bill carefully as  it moved forward. The borough  had no new                                                                    
revenue source  to make up  the huge reduction.  The borough                                                                    
had $14.3  million of bond  debt reimburse  payments pledged                                                                    
by  the  state for  its  school  construction projects.  The                                                                    
amount did not  include the Kivalina school  bond debt which                                                                    
was  $12.7  million. She  asked  the  committee to  pay  the                                                                    
authorized  bond  debt  reimbursement for  the  agreed  upon                                                                    
timeline.  The borough  had no  other  choices available  to                                                                    
absorb such a huge reduction.                                                                                                   
                                                                                                                                
Co-Chair Wilson  asked whether she understood  that the bill                                                                    
had nothing to do with  bond reimbursement for the borough's                                                                    
current bonds taken out prior to 2015.                                                                                          
                                                                                                                                
Ms. Nelson responded in the affirmative.                                                                                        
                                                                                                                                
Representative Josephson  thought there was a  good argument                                                                    
that the  world continued to  advance and that  the district                                                                    
had increasing needs since 2015.  His understanding was that                                                                    
when the moratorium began the  world was on notice that they                                                                    
would be subject to taking care  of their own bonds in full.                                                                    
He asked if Ms. Nelson shared the same understanding.                                                                           
                                                                                                                                
Ms.  Nelson asked  Representative Josephson  to restate  his                                                                    
question.                                                                                                                       
                                                                                                                                
Representative Josephson thought there  might be two sets of                                                                    
arguments.   First,   prior   to   2015   and   subject   to                                                                    
appropriation there  was an expectation that  if things went                                                                    
well,  the  state  would help.  However,  after  2015  there                                                                    
should  not  have been  any  expectation  of help  from  the                                                                    
state. He asked if he was correct.                                                                                              
                                                                                                                                
Ms. Nelson offered that the  borough felt that the state was                                                                    
responsible for funding schools.                                                                                                
                                                                                                                                
2:17:31 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:18:00 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Wilson reiterated that  the bond debt reimbursement                                                                    
in the  operating budget that  was under discussion  was not                                                                    
part of  the bill. They were  bonds taken out prior  to 2015                                                                    
and  had a  70  percent state  contribution  and 30  percent                                                                    
local contribution or a 60  percent state contribution and a                                                                    
40  percent  local  contribution.  All  of  the  bonds  were                                                                    
contingent  on  an  appropriation by  the  legislature.  The                                                                    
bonds  prior to  2013  were not  a part  of  the bill  under                                                                    
consideration. There had been confusion in the testimony.                                                                       
                                                                                                                                
Co-Chair Wilson clarified  the purpose of the  bill. For the                                                                    
previous 5 years  no municipality had been able  to take out                                                                    
a  bond with  the understanding  that the  state would  pay.                                                                    
They  could put  out  bonds, but  communities  would be  100                                                                    
percent  responsible.   The  bill  would  extend   the  same                                                                    
moratorium for  5 years from FY  20 to FY 25.  It would have                                                                    
no  effect on  the  appropriation that  might  or might  not                                                                    
happen   with  the   current  debt   from  Alaska's   school                                                                    
districts.                                                                                                                      
                                                                                                                                
2:19:15 PM                                                                                                                    
                                                                                                                                
DR.  ANNMARIE  O'BRIEN,   SUPERINTENDENT,  NORTHWEST  ARCTIC                                                                    
SCHOOL  DISTRICT, KOTZEBUE  (via teleconference),  called in                                                                    
opposition  to the  bill. She  reported  that the  Northwest                                                                    
Arctic  Borough was  under a  PILT  agreement negotiated  in                                                                    
good faith with the Red  Dog Mine with an understanding that                                                                    
the moratorium would end in 2020.  It would come in time for                                                                    
the borough to  support the Kivalina School and  to bond for                                                                    
the  borough match  for the  school. She  stressed that  the                                                                    
borough  had no  other place  to  turn to  raise funds.  The                                                                    
borough  felt very  strongly  about putting  an  end to  the                                                                    
moratorium.  She  added  that   the  committee  should  make                                                                    
considerations  for boroughs  receiving funding  under PILT.                                                                    
The Kivalina  School was part  of the Moore  Settlement. The                                                                    
borough  had begun  the  process of  working  on the  school                                                                    
access.  The  development of  the  road  to the  school  was                                                                    
currently in  process. The opening  of the school  was long-                                                                    
overdue and had  an expected opening date  of 2021. However,                                                                    
it was necessary to have  the school bond debt reimbursement                                                                    
in  place  to  move  forward with  the  project.  She  urged                                                                    
members to reject the extension of the moratorium.                                                                              
                                                                                                                                
2:21:38 PM                                                                                                                    
                                                                                                                                
NILS  ANDREASSEN,   EXECUTIVE  DIRECTOR,   ALASKA  MUNICIPAL                                                                    
LEAGUE, thanked  the chair for clarification  on the purpose                                                                    
of the bill. He spoke of  the importance of school bond debt                                                                    
reimbursement  to local  governments  around  the state.  In                                                                    
order for the Alaska Municipal  League (AML) to approach the                                                                    
bill  effectively   it  was   still  working   to  determine                                                                    
municipal  impacts.  He  thought   agreement  needed  to  be                                                                    
reached as  to whether the  state had an obligation  to fund                                                                    
the  construction and/or  maintenance of  school facilities.                                                                    
If the  answer was yes,  then the next question  that needed                                                                    
to  be answered  was to  what extent.  The Alaska  Municipal                                                                    
League believed that the constitution  was clear that it was                                                                    
the  state's  responsibility  to establish  and  maintain  a                                                                    
system of public schools, which  AML thought extended to the                                                                    
construction of  schools. Once his questions  were answered,                                                                    
better certainty for school  districts and local governments                                                                    
could be provided.                                                                                                              
                                                                                                                                
Mr. Andreassen continued that AML's  fear was that extending                                                                    
the moratorium  would result in minimal  investment in major                                                                    
construction   and  maintenance   as  districts   waited  an                                                                    
additional  5 years  before being  able  to address  current                                                                    
concerns.  The league  was aware  that deferred  maintenance                                                                    
was  currently  a  challenge and  extending  the  moratorium                                                                    
might compound  the challenge. It  was not to say  that some                                                                    
municipalities  might  make  different  decisions.  Clearly,                                                                    
Fairbanks and others had worked  to address current concerns                                                                    
as  best  as  they  could.  It  did  not  mean  that  school                                                                    
districts  would not  work with  local  governments to  make                                                                    
necessary investments. However, the  questions about who was                                                                    
responsible and to what extend needed to be answered.                                                                           
                                                                                                                                
Mr. Andreassen  continued that  it would  fall to  local tax                                                                    
payers  to  determine whether  tax  increases  at the  local                                                                    
level could  and should  be borne  or sustained  and whether                                                                    
they  could occur  presently or  whether  local tax  dollars                                                                    
would be  better leveraged against  state investment  in the                                                                    
future.  He asserted  that  it was  clearly  in the  state's                                                                    
interest to put some  stronger guidelines around the program                                                                    
including  better control  over  its debt  structure and  to                                                                    
ensure   that  the   funding  of   school  construction   or                                                                    
maintenance  was  consistent  with available  revenues.  The                                                                    
Alaska  Municipal  League  would  look  forward  to  such  a                                                                    
conversation. He  offered that where there  might be changes                                                                    
to  the program,  AML would  like to  be involved  and would                                                                    
like to see  all parties at the table.  He suggested working                                                                    
next on  an assessment  of needs that  had been  delayed for                                                                    
the previous  5 years,  where there  had been  progress, and                                                                    
what  the potential  impact of  5 more  years might  mean to                                                                    
communities, school districts, and students.                                                                                    
                                                                                                                                
2:25:06 PM                                                                                                                    
                                                                                                                                
Representative  Knopp noted  Mr. Andreassen's  comment about                                                                    
the state aligning its debt with  the ability to pay for it.                                                                    
He  thought it  was  exactly  what the  state  was doing  by                                                                    
extending  the  moratorium.  He   asked  Mr.  Andreassen  to                                                                    
comment.                                                                                                                        
                                                                                                                                
Mr. Andreassen responded that he  thought 5 years was a long                                                                    
period without  knowing what the  current needs  looked like                                                                    
at  the local  level in  terms of  school districts  needing                                                                    
construction  funding  or  major maintenance  conducted.  He                                                                    
suggested that it was not  possible to match need to current                                                                    
revenue without  knowing what the needs  were. Additionally,                                                                    
he thought  it would be  wise to consider caps  or different                                                                    
matching amounts  to shape the  requests which  would better                                                                    
enable  the  state  to structure  the  program  relative  to                                                                    
current revenues.                                                                                                               
                                                                                                                                
Representative Knopp  asked whether  he thought it  had been                                                                    
made clear  to voters that  the bond reimbursement  would be                                                                    
subject to appropriations.                                                                                                      
                                                                                                                                
Mr. Andreassen replied that for  prior committed school bond                                                                    
debt reimbursement  it varied by  community in terms  of the                                                                    
public's  understanding. He  believed  the  public made  the                                                                    
commitments  based  on  a  17-year   history  of  the  state                                                                    
reimbursing school bond debt.                                                                                                   
                                                                                                                                
Co-Chair Wilson asked Mr. Andreassen's  if he thought it was                                                                    
fairer  for  the  legislature to  allow  districts  to  bond                                                                    
without looking at their ability to pay.                                                                                        
                                                                                                                                
Mr.  Andreassen replied  that  he would  be  better able  to                                                                    
evaluate  the  bill  if a  needs  assessment  was  available                                                                    
showing which districts  currently needed major construction                                                                    
or  maintenance.  He  would  then be  able  to  evaluate  it                                                                    
against the  local tax  base ability to  pay for  or provide                                                                    
match funding. He noted the  Northwest Arctic Borough's PILT                                                                    
agreement  which was  very  different  than other  boroughs.                                                                    
There were  different tax bases  and tax formats  that local                                                                    
governments applied  to their ability  to bond.  He believed                                                                    
that having  a more nuanced view  of what it looked  like at                                                                    
the   local   level   would  help   everyone   involved   in                                                                    
understanding what  a moratorium  might look like  for local                                                                    
residents.                                                                                                                      
                                                                                                                                
Co-Chair Wilson  thought the first question  should be about                                                                    
a municipality's ability to pay.                                                                                                
                                                                                                                                
Mr. Andreassen  responded in the affirmative.  He thought it                                                                    
went  back  to  the   earlier  confusion  about  whether  it                                                                    
extended and paid  the reimbursement or whether  it was only                                                                    
focused on the  moratorium. If it extended  the repayment of                                                                    
current  bond obligations,  AML would  support the  bill. It                                                                    
was  whether the  moratorium was  extended  and whether  the                                                                    
analysis was done.                                                                                                              
                                                                                                                                
Co-Chair Wilson reiterated  that the bill had  nothing to do                                                                    
with paying  what was currently  owed. She brought  the bill                                                                    
forward because  the state was having  difficulty being able                                                                    
to pay  what the  state presently owed.  She opined  that it                                                                    
would be  unfair to Alaskans  to issue more bonds  while the                                                                    
state  was currently  not paying  it. She  was proud  of her                                                                    
school district and community that stepped up to the plate.                                                                     
                                                                                                                                
Representative  Josephson was  likely to  support the  bill.                                                                    
However, he  was sad that there  had been a lack  of resolve                                                                    
since 2015 to  put together a comprehensive  fiscal plan. It                                                                    
was something  he had  fought for. He  noted voting  for new                                                                    
revenue.  He  thought  the  bill  was  warranted  given  the                                                                    
circumstance in context.                                                                                                        
                                                                                                                                
2:30:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Wilson CLOSED Public Testimony.                                                                                        
                                                                                                                                
Vice-Chair Ortiz agreed with  the previous speaker regarding                                                                    
supporting  the  bill.  He  wanted   to  be  clear  that  by                                                                    
extending the moratorium, the  legislature was not extending                                                                    
deferred maintenance  needs or deferred  construction needs.                                                                    
He did  not think  the extension would  help in  the state's                                                                    
ability  to provide  adequate education  and facilities  for                                                                    
Alaska's children.  He wanted to  hear more from  Mr. Mearig                                                                    
about  future deferred  maintenance and  school construction                                                                    
projects that might  not go forward if  the legislature were                                                                    
to extend the moratorium.                                                                                                       
                                                                                                                                
Co-Chair Wilson  asked Mr. Mearig  to respond  to Vice-Chair                                                                    
Ortiz's question.                                                                                                               
                                                                                                                                
Mr. Mearig asked for clarification.                                                                                             
                                                                                                                                
Vice-Chair Ortiz  asked Mr.  Mearig if he  was aware  of any                                                                    
deferred  maintenance  issues  or  new  school  construction                                                                    
plans that might  get put on hold if the  state was to adopt                                                                    
the moratorium.                                                                                                                 
                                                                                                                                
Mr.  Mearig  reported  that  the state  had  a  program  for                                                                    
identifying  and   collecting  school  capital   needs.  The                                                                    
program  was  an annual  opportunity  for  all districts  to                                                                    
submit their requirements to the  state. A list for possible                                                                    
FY 20  funding had  been compiled and  was available  to the                                                                    
public. Based on  the list, there were plenty  of needs from                                                                    
districts around  the state. There were  many districts that                                                                    
had  not participated  as  well as  they  could have.  There                                                                    
might be  other needs  not expressed on  the list.  The only                                                                    
district  he had  had active  conversations  with about  the                                                                    
reopening  of  debt  had  been  the  Mat-Su  Borough  School                                                                    
District. They spoke  about the timeline to  introduce a $20                                                                    
million to $25 million bond  package. His advise to them was                                                                    
to get  on the  list so  that the  division could  see their                                                                    
need.  If  there was  an  opportunity  for  the debt  to  be                                                                    
reopened, the division  would have a chance  to work through                                                                    
the eligibility review.                                                                                                         
                                                                                                                                
Representative  LeBon asked  whether  the  department had  a                                                                    
chance  to weigh  in on  language presented  to voters  on a                                                                    
bond  issue  when  a  community  bonded  for  a  new  school                                                                    
building.                                                                                                                       
                                                                                                                                
Mr. Mearig responded that there  was no longer a requirement                                                                    
in statute  to pre-approve  voter language for  debt service                                                                    
for schools.                                                                                                                    
                                                                                                                                
Representative  LeBon  mentioned that  in  his  days on  the                                                                    
school  board,  members went  to  great  lengths to  educate                                                                    
voters. Although  the intention  was for  a 70/40  split, it                                                                    
was  not a  guarantee. The  board educated  voters that  the                                                                    
possibility existed  that the district  might not  receive a                                                                    
70  percent state  reimbursement. There  was a  risk in  any                                                                    
school bond  debt program  that the  community might  end up                                                                    
having to service the debt.                                                                                                     
                                                                                                                                
2:36:42 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Ortiz  directed  a  question  to  Representative                                                                    
LeBon.  He suggested  that if  the state  appeared to  be an                                                                    
unlikely participant in the bonding  program, the bond rates                                                                    
offered  to  communities  might  increase.  He  wondered  if                                                                    
communities would have to pay a higher rate for the bonds.                                                                      
                                                                                                                                
Representative  LeBon thought  there was  a chance  that the                                                                    
rate of  the bond  would be  slightly higher.  However, they                                                                    
were  general obligation  bonds which  the community  had to                                                                    
stand behind, as the bonds  carried the highest priority for                                                                    
repayment.                                                                                                                      
                                                                                                                                
Co-Chair Wilson  added that when  communities signed  on the                                                                    
bottom  line, it  was  for 100  percent  of the  obligation,                                                                    
whether or not the state contributed.                                                                                           
                                                                                                                                
Representative  Carpenter was  struck that  the state  had a                                                                    
$1.6 billion deficit and Alaska's  economy was in recession.                                                                    
He thought  it was obvious  the state could not  support its                                                                    
current  spending level.  The  extension  of the  moratorium                                                                    
would  require entities  to look  elsewhere  other than  the                                                                    
state which was  not a bad thing while  Alaska's economy was                                                                    
struggling and could not afford its current spending.                                                                           
                                                                                                                                
HB  106  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Wilson reviewed the agenda for the following day.                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB87 Sponsor Statement 3.25.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
HB87 Supporting Document-FEDC Letter of Support 3.25.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
HB87 Supporting Document-FNSB Letter of Support 3.25.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
HB87 Supporting Document-City of Fairbanks Resolution 4869 3.25.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
HB87 Supporting Document-GFCC Letter of Support 3.25.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
HB87 Supporting Document-IGU Letter of Support 3.25.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
H-FIN_HB87 Presentation_3.28.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 87
HB106 ver A Sponsor Statement 3.26 (1).pdf HFIN 4/1/2019 1:30:00 PM
SFIN 5/6/2019 9:00:00 AM
HB 106
HB106 ver A Back up info 3.26.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 106
HB106 Fiscal Note 3.31.19.pdf HFIN 4/1/2019 1:30:00 PM
HB 106
HB 106 Unalaska FIA School Debt Reimbursement 4-1-2019.pdf HFIN 4/1/2019 1:30:00 PM
HB 106