04/01/1993 03:00 PM House L&C

  HB 14 APPROP:  BIDCO FUND                                                    
                                                                               
  Number 236                                                                   
                                                                               
  REP. BETTYE DAVIS, PRIME SPONSOR of HB 14, stated that last                  
  year she sponsored legislation creating Business Development                 
  Industrial Corporations (BIDCOs) in Alaska.  She said BIDCOs                 
  provide financing, management, and technical assistance to                   
  small to medium sized business, with an emphasis on minority                 
  and rural businesses.  They address a gap for companies with                 
  financing needs that are deemed too risky for traditional                    
  bank lending, but do not provide the potential for high                      
  rates of return sought by traditional venture funds.                         
                                                                               
  REP. DAVIS stated that HB 14 appropriates $10 million from                   
  the earnings reserve of the Alaska Science and Technology                    
  endowment to initially fund the BIDCO fund.                                  
                                                                               
  REP. DAVIS noted that in an effort to encourage capital                      
  sources to invest and lend money to BIDCOs, the program will                 
  be licensed and regulated by the Department of Commerce.                     
  This system is designed to prevent fraud, conflict of                        
  interest and mismanagement, and to promote competent                         
  management, accurate record keeping and appropriate                          
  communication with shareholders.  In addition, the Alaska                    
  Science and Technology program will help assist BIDCOs in                    
  raising substantial private investment.                                      
                                                                               
  REP. DAVIS said BIDCOs are one of the best opportunities for                 
  growth and expansions for small, rural, and minority                         
  businesses in Alaska.                                                        
                                                                               
  Number 330                                                                   
                                                                               
  REP. MACKIE moved to bring the CS of HB 14 before the                        
  committee.                                                                   
                                                                               
  There being no objections, it was so ordered.                                
                                                                               
  Number 340                                                                   
                                                                               
  REP. MACKIE asked if the legislature had the authority to                    
  appropriate money in future years.                                           
                                                                               
  REP. DAVIS answered that she would rather see the program be                 
  funded by the end of this legislature, but it was the                        
  Science and Technology Foundation's suggestion to spread it                  
  out over three years.  Rep. Davis stated she did not know if                 
  the legislature had the authority to spread the funding out                  
  over a three year period.                                                    
                                                                               
  Number 368                                                                   
                                                                               
  JOHN SIBERT, EXECUTIVE DIRECTOR, ALASKA SCIENCE AND                          
  TECHNOLOGY FOUNDATION, testified in support of HB 14 and                     
  said he would like to see the funding of HB 14 carried out                   
  without crippling the grant program.                                         
                                                                               
  Number 419                                                                   
                                                                               
  CHAIRMAN HUDSON noted that the committee substitute allows                   
  for a different allocation schedule than the original bill                   
  and wondered if Mr. Sibert could comment.                                    
                                                                               
  Number 423                                                                   
                                                                               
  MR. SIBERT suggested that $3 million in FY 94, $3 million in                 
  FY 95, and $4 million in FY 96, per the fiscal note sent                     
  down on April 6, 1993, would be the best scenario for the                    
  foundation.                                                                  
                                                                               
  Number 485                                                                   
                                                                               
  REP. MACKIE suggested that the Finance Committee should look                 
  at the funding in accordance with the budgeting plan they                    
  have for the next two years.                                                 
                                                                               
  Number 490                                                                   
                                                                               
  CHAIRMAN HUDSON stated that HB 14 should be passed out of                    
  the Labor and Commerce Committee to Finance with the comment                 
  that the intent that a total appropriation of $10 million be                 
  appropriated over a three year period of time according to                   
  the revised fiscal note provided by the Alaska Science and                   
  Technology Foundation.                                                       
                                                                               
  Number 502                                                                   
                                                                               
  REP. PORTER moved for passage of HB 14 with the                              
  recommendation of the committee that it be redrafted to                      
  comply with the revised fiscal note and with the revised                     
  fiscal note.                                                                 
                                                                               
  No objections were heard; it was so ordered.