Legislature(2001 - 2002)
05/04/2001 07:17 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 186 "An Act establishing a limit on the general obligation debt that may be authorized and issued by home rule and general law municipalities; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. [It was indicated on record that this was the third hearing; however it was scheduled but not actually heard at an earlier meeting.] Co-Chair Donley stated that the proposed committee substitute is intended to address concerns raised at the previous hearing. Co-Chair Donley moved to adopt CS SB 186, 22-LS0851\F, as a working draft. Without objection the committee substitute was ADOPTED. Co-Chair Donley detailed three changes in the committee substitute. The first change, he said, begins with Section 2 and provides for a "slow phasing in" of the ten-year cap restricting the North Slope Borough from issuing bonds imposed on the local share of oil and gas property tax. He explained this stipulation reduces the amount of bonding authority to one mil per year for ten years. Co-Chair Donley detailed the second change, which occurs in Section 15 (b) and allows additional debt to be incurred by a municipality that would otherwise be restrained under the provisions in the bill. He asserted this is an "extraordinarily generous" yearly allocation of debt since the statewide average is lower than the amount allowed in these provisions. Co-Chair Donley then told of the final change to allow existing bonds to be refinanced so long as the debt does not extend the length of the original loan. He explained this enables the borough to realize savings when lower interest rates are available. This language is contained in Section 16 of the committee substitute. Senator Ward inquired about the North Slope Borough's permanent fund and its relationship to the bonding limits. Co-Chair Donley suggested that the phasing down of the 20-mil oil and gas property tax availability would have a limiting effect upon issuance of new debt also. Co-Chair Kelly requested further explanation about the change to Section 15. Co-Chair Donley reminded of concerns expressed at the previous hearing from former Attorney General Avrum Gross that the bill had no provision for additional debt or flexibility for existing debt. Co-Chair Donley stated the committee substitute provides "a limited amount" of additional debt on an annual basis that would not exceed $1000 per capita. Co-Chair Kelly commented this would be "a tremendous amount". Co-Chair Donley agreed citing that the average community in Alaska has less then $3000 total debt per capita incurred over several years. He reiterated this is a "very generous allocation" for additional debt. He noted that there would be a "buy-down" of existing debt over a period of time. Senator Olson acquiesced this committee substitute "offers an approach to try to fix some of the difficulties that were so glaring." However, he stressed, "We're dealing with a very serious bill here," and asserted that this legislation is not the proper method to address such an important issue. He criticized the lack of public notice allowing for input, referring to the time between placement of the bill on the agenda, and the actual hearings within 24 hours of each other. He suggested that any legislation affecting the bonding authority for many other Alaskan communities, such as Anchorage, Fairbanks and the Mat-Su Borough, there would be an opportunity for "weeks and weeks" of public hearings on the issue. He emphasized there is no authority to provide for emergency situations such as the loss of a school building or health clinic to fire. He asserted the expedition of this bill demonstrated "extreme short-sidedness for us to try to pass legislation out of a distinguished committee such as this." Senator Olson requested 24 hours to review the legislation. Co-Chair Kelly responded that the committee substitute addresses the concerns raised by Senator Olson in that it allows the North Slope Borough to bond up to $1000 per capita per year, which would accommodate emergencies. Senator Olson calculated 8,000 residents in the Borough at $1000 per resident and stressed, "I've got to build two schools." Co-Chair Donley stated this provision allows bonding of $8 million per year, which he remarked is a "very very significant amount" Senator Olson repeated his request for additional time to review the legislation. Co-Chair Kelly stated he would accommodate the request and ordered the bill HELD in Committee. AT EASE 7:55 PM / 8:15 PM [Note: Audio recorder continued recording during this time, although receiving equipment was turned off, resulting in a section of tape with no sound. No portion of the meeting was omitted.]
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