Legislature(2007 - 2008)SENATE FINANCE 532
04/07/2008 09:00 AM Senate FINANCE
Audio | Topic |
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Start | |
SB231 | |
HB319 | |
HB419 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+= | SB 231 | TELECONFERENCED | |
+ | HB 419 | TELECONFERENCED | |
+ | HB 319 | TELECONFERENCED | |
+ | TELECONFERENCED |
CS FOR HOUSE BILL NO. 419(FIN) "An Act relating to state lease-purchases of equipment and other personal property; and providing for an effective date." Senator Huggins MOVED to ADOPT SCS CSHB 419(FIN), labeled 25-LS1567\O, Cook, 4/3/08. Senator Dyson OBJECTED. He requested an explanation of the changes in the new CS. 9:43:48 AM TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, explained that the new CS is the bill that was originally introduced in House Finance. It does not allow any agency to do state lease purchases. Senator Dyson WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. Mr. Wright explained that there were concerns about the usage of the master lease line of credit. One of the items used for lease purchase was Governor Murkowski's jet. There have been 29 separate lease purchases. The legislature last year authorized $16 million for the master lease line of credit. This was problematic because there was no fund source for it. There were a number of items that avoided the appropriation process. Mr. Wright related that the other concern was that some payments were not showing up in the detail book. There was lack of information about the source of funding and who controlled the dollar amounts. The original intent of the bill was to stop the master lease line of credit. Co-Chair Stedman suggested that Mr. Wright provide more information. Mr. Wright reiterated that the bill does apply to all lease purchase agreements. One of the problems was that AS 36.30.085 was too broad and lacked a definition of what a lease purchase agreement was or how the departments were to use it. There were only four agencies that were entitled to use it. A 1987 Attorney General's opinion opened the door to departmental abuse due to the broadness of the statute. Mr. Wright reported that one of the goals of the bill is to have a reporting mechanism regarding lease purchases. Any agency that enters into a lease purchase contract over $100,000 must provide written notice within 10 days to the House and Senate presiding officers and the Finance Committee chairs. It also requires OMB to compile a list of every lease purchase item a department enters into. This information would be used when drafting the operating budget. 9:49:47 AM Senator Dyson termed the bill draconian. He asked which organizations would be included. Mr. Wright said the organizations could still lease equipment, but they cannot enter into a lease purchase agreement. Senator Dyson asked if the problems occur when the leases end up as purchases. Mr. Wright said that was correct. The biggest objection the House Finance Committee had was the lack of limitations with the use of the master lease line of credit. Senator Dyson summarized that the intent of the bill is to prevent departments from purchasing equipment through the subterfuge of a lease purchase and bypassing the budgeting process. Mr. Wright said that was correct. Co-Chair Stedman noted that there was language in the capital budget to deal with this issue. It was decided to follow the House's lead on this matter. 9:52:56 AM Senator Thomas asked for clarification of the departments' responsibility regarding leases. Mr. Wright said that under the CS there would be no lease purchase agreements. Mr. Wright clarified that one could not enter into a lease of personal property. It does not apply to real property. Co-Chair Stedman asked who controls the dollar amount available. Mr. Wright reiterated that there is no dollar amount listed under the master lease line of credit. Co- Chair Stedman inquired how the payments show up in the budgets that are presented. Mr. Wright said that was one of the questions that the House Finance Committee had. Some agencies do report in the detail books and some don't. Co- Chair Stedman thought that would create concern. Mr. Wright agreed. 9:55:04 AM Senator Dyson requested an example about how the building improvements were abused. Mr. Wright did not know if that had happened. He gave an example of a purchase for carpeting for the State Office Building. Senator Dyson noted that the agencies may be using the process to subvert the capital projects process. He gave an example. He agreed with the intent of the bill, but emphasized that the legislature must be responsible in providing needed equipment. 9:57:57 AM Co-Chair Stedman said when looking back at this year's capital budget, the Administration reduced departmental requests by $1 billion before the Committee received it. The Senate Finance Committee reduced the legislators' requests by about $1.1 billion. 9:58:14 AM JIM LYNCH, ASSOCIATE VICE PRESIDENT OF FINANCE, UNIVERSITY OF ALASKA, voiced concern about the lack of a floor when reporting to the Office of Management and Budget. He spoke in favor of the accountability aspect of the bill and against removing the ability to lease purchase. 10:01:53 AM REMOND HENDERSON, DEPUTY DIRECTOR, DIVISION OF GENERAL SERVICES, DEPARTMENT OF ADMINISTRATION, commented that if the CS prohibits the leasing of equipment or other personal property when necessary, the Department of Administration objects to the bill. He spoke in favor of the bill version which was amended in the House and contains reporting requirements. Co-Chair Stedman noted two zero fiscal notes. HB 419 was heard and HELD in Committee for further consideration.
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