Legislature(2005 - 2006)SENATE FINANCE 532
05/06/2005 09:00 AM Senate FINANCE
Audio | Topic |
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Start | |
SB73 | |
SB157 | |
HB54 | |
HB286 | |
HB98 | |
HB218 | |
SB157 | |
HB147 | |
HB218 | |
SB46 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | SB 73 | TELECONFERENCED | |
+ | SB 74 | TELECONFERENCED | |
+ | HB 98 | TELECONFERENCED | |
+ | HB 147 | TELECONFERENCED | |
+ | HB 54 | TELECONFERENCED | |
+ | HB 286 | TELECONFERENCED | |
+ | HB 218 | TELECONFERENCED | |
+= | HB 275 | TELECONFERENCED | |
= | SB 46 | ||
CS FOR SENATE BILL NO. 73(HES) "An Act relating to a lease-purchase agreement for the construction, equipping, and financing of a state virology laboratory in Fairbanks to be operated by the Department of Health and Social Services; relating to the issuance of certificates of participation for the laboratory; relating to the use of certain investment income for certain construction and equipment costs for the laboratory; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Green noted that this legislation, which was proposed by Governor Frank Murkowski, would further action on the virology laboratory and its related certificates of participation. She asked that an explanation of the term Certificates of Participation (COP) be provided. RICHARD MANDSAGER, M.D., Director, Division of Public Health, Department of Health and Social Services, referred the Committee to a handout titled "Public Health Protecting and Promoting the Health of All Alaskans CSSB 73(HES): Construction of a State Public Health Virology Laboratory in Fairbanks" [copy on file] and explained that the term virology is defined as the study of viruses. This proposal would be to construct a virology laboratory in Fairbanks in which to identify common things such as influenza and measles. In addition, research regarding uncommon viruses such as rabies and hepatitis would also be conducted. The importance of having such an "up-to-date" laboratory would be to allow the State to prepare for new viruses that have been appearing elsewhere in the world such as the Avian Flu, which is also referred to as the bird flu. This virus, which is occurring in Southeast Asia, is being transmitted from birds to humans and currently has a 70-percent mortality rate. The worldwide public health field is concerned that this virus might mutate and "become transmissionable human to human. This is a very bad disease." The State must possess an advanced identification ability that could be linked to an isolation and quarantine process. It would be important to be able to identify whether a person arriving via airplane from Southeast Asia who is sick has the common flu or something worse. Dr. Mandsager noted that the aforementioned handout also contains pictures of the current Fairbanks virology laboratory. The people who work there are handling "very bad viruses" as well as dealing with such things as the release of "man-made things". The laboratory facility must meet a basic laboratory three (BSL3) level. 9:59:17 AM Dr. Mandsager noted that there are 25 BSL3 labs, two BSL4 labs, and one BSL 4+ lab currently operating in the United States. Although the existing laboratory in Fairbanks operates at a level of a BSL 3, it does not meet the applicable standards. This legislation would allow the State to meet those standards and be positioned for the needs of the future. Dr. Mandsager voiced that, while Fairbanks would be the preferred location, as it would allow the laboratory to work in partnership with the University and further their research missions, other locations in the State would be acceptable. Having the facility in Fairbanks would also provide a redundancy of services were a disaster to strike the Anchorage area which hosts the State's bacteriology and chemical-toxics laboratory. JANET CLARKE, Assistant Commissioner, Division of Finance and Management Services, Department of Health and Social Services, deferred to Deven Mitchell of the Department of Revenue to explain the Certificates of Participation (COP). Co-Chair Green noted that the majority of the Committee Members were familiar with this legislation due to media reports, other reports, or participation in other committee hearings on the bill. Co-Chair Green asked Mr. Mitchell to explain how the facility would be financed. DEVEN MITCHELL, Debt Manager, Department of Revenue, explained that the proposed financing structure would entail there being COP, "which would be facilitated by a lease that would be entered into between the Department of Administration and a trustee bank that would be given a title position". This "would facilitate the flow of money from the State of Alaska to the bond purchasers." In addition, this action would provide the mechanism allowing for participation in the lease, hence the name Certificates of Participation. 10:01:27 AM Mr. Mitchell stated that the projected $24,200,000 expense would include the cost of issuing the certificates. Debt service, at an interest rate of 4.9 percent, would amount to an annual expense of $2,400,000 for 15 years. Mr. Mitchell noted that the 4.9 percent interest rate factored into the financing calculation is above the current 4.2 percent interest rate that would be available were the certificates issued today. The sale of the certificates would be conducted in the fall of 2005. Construction would occur in the year 2006. Mr. Mitchell addressed the Committee's "general" concern about how such financial commitments might affect the State's AA credit rating. Numerous discussions have occurred with rating analysts about various funding options available to the State. Limiting the number of general fund obligations undertaken by the State has been considered in order to maintain that credit rating, prior to the adoption of a long-term fiscal plan by the State. While the State currently has "a positive budget position", no fiscal plan exists for the next four or five year time period. The $24,200,000 obligation level has received positive feedback in that it "would fall under the radar or within the buffer zone ? where we would be issuing an obligation that wouldn't raise the eyebrows of the rating analysts that track this State to the point that they would be considering taking any credit action against the State." In conclusion, this project would not impact the credit rating of the State. Co-Chair Wilken asked whether the "change of location" option that would permit the laboratory to be constructed outside of the University of Alaska Fairbanks campus is included in the Version 24-GS1117\F Committee Substitute. Co-Chair Green affirmed that that option is included in the committee substitute. She apologized for not previously mentioning that component. Co-Chair Wilken moved to adopt Committee Substitute, Version 24- GS1117\F as the working document. There being no objection, Version "F" was ADOPTED as the working document. Co-Chair Green commented that this bill would work in partnership with a budget item included in the FY 06 capital budget bill. 10:05:25 AM Co-Chair Wilken moved to report the bill from committee with individual recommendations and accompanying fiscal notes. There being no objection, CS SB 73(FIN) was REPORTED from Committee with $10,000 fiscal note #1 dated January 19, 2005 from the Department of Revenue; an FY 2010 fiscal need as reflected in fiscal note #2 dated January 20, 2005 from the Division of Public Health, Department of Health and Social Services; and a new zero fiscal note dated May 6, 2005 from Administrative Support Services, Department of Health and Social Services. AT EASE 10:05:41 AM / 10:06:17 AM
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