Legislature(2013 - 2014)SENATE FINANCE 532
03/27/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 || HB267 | |
| SB195 | |
| SB140 | |
| SB166 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 140 | TELECONFERENCED | |
| + | SB 166 | TELECONFERENCED | |
| + | HB 199 | TELECONFERENCED | |
| += | HB 266 | TELECONFERENCED | |
| += | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 195 | ||
SENATE FINANCE COMMITTEE
March 27, 2014
9:17 a.m.
9:17:51 AM
CALL TO ORDER
Co-Chair Kelly called the Senate Finance Committee meeting
to order at 9:17 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
James Armstrong, Staff, Senator Pete Kelly; Diane Barrans,
Executive Director, Alaska Commission on Postsecondary
Education, Department of Education and Early Development,
and Executive Officer, Alaska Student Loan Corporation,
Department of Education and Early Development; Senator
Lesil McGuire; Jesse Logan, Staff, Senator Lesil McGuire;
Paul Fuhs, Former Board Chairman, AIDEA, Board Chairman,
Marine of Alaska, Juneau; Sarah Lukin, Chief Operating
Officer, PT Public Policy LLC, Juneau; Ron Long, City of
Seward, Juneau; Senator Cathy Geisel; Jane Conway, Staff,
Senator Cathy Geisel;
PRESENT VIA TELECONFERENCE
Mark Davis, Deputy Director, Alaska Industrial Export
Authority (AIDEA), Anchorage; Nancy Sanders, Executive
Administrator, Alaska Board of Nursing; Sara Chambers,
Administrative Operations Manager, Division of
Corporations, Businesses, and Professional Licensing,
Department of Commerce, Community and Economic Development;
Beth Farnstrom, Chair, Alaska State Board of Nursing,
Anchorage; Patricia Senner, Professional Practice Director,
Alaska Nurses Association, Anchorage; Jana Shockman,
President, Alaska Nurses Association, Anchorage;
SUMMARY
SB 104 APPROPRIATIONS FROM THE DIVIDEND FUND
SB 104 was SCHEDULED but not HEARD.
SB 140 AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND
SB 140 was HEARD and HELD in committee for
further consideration.
SB 166 BOARD OF NURSING; NURSES
CSSB 166(FIN) was REPORTED out of committee with
a "do pass" recommendation and with a previously
published zero fiscal: FN2(CED).
SB 195 POSTSECONDARY EDUCATION LOANS/GRANTS
CSSB 195(FIN) was REPORTED out of committee with
a "do pass" recommendation and with a new fiscal
impact note from the Department of Education and
Early Development.
HB 199 VPSO FIREARMS
HB 199 was HEARD and HELD in committee for
further consideration.
CSHB 266(FIN)
APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 266(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 267(FIN)
APPROP: MENTAL HEALTH BUDGET
CSHB 267(FIN) was HEARD and HELD in committee for
further consideration.
CS FOR HOUSE BILL NO. 266(FIN)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, and making
reappropriations; and providing for an effective
date."
CS FOR HOUSE BILL NO. 267(FIN)
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
9:18:14 AM
Co-Chair Kelly discussed housekeeping.
9:18:34 AM
Co-Chair Meyer MOVED to ADOPT the proposed committee
substitute for HB 266, Work Draft 28-GH2671\E (Wallace
3/26/14) as a working document.
Co-Chair Kelly OBJECTED for the purpose of discussion.
Co-Chair Meyer MOVED to ADOPT the proposed committee
substitute for HB 267, WORK DRAFT 28-GH2673\R (Wallace
3/26/14) as a working document.
9:19:31 AM
Co-Chair Kelly OBJECTED for the purpose of discussion.
9:20:27 AM
AT EASE
9:21:56 AM
RECONVENED
9:22:05 AM
Mr. Armstrong stated that the 4 page narrative in members'
packets(copy on file) explained the 19 changes that had
been incorporated into the new committee substitute (CS)
for HB 266 and HB 267. He noted that the reports could be
found on the Legislative Finance website. He reviewed the
changes:
Commerce, Community and Economic Development:
Community and Regional Affairs
Community and Regional Affairs
Page 5
Lines 13-14
Increase $50,000 (UGF) -provides necessary UGF for
Kawarek Inc. to provide sufficient match for the
Federal Aviation Administration funding
Commerce, Community and Economic Development:
Corporations, Business and Professional Licensing
Page 6
Lines 4-7
Intent Language -provides direction to find
efficiencies and cost savings measures while also
limiting the burden of the licensing process on
license holders
Commerce, Community and Economic Development Economic
Development (Tourism Marketing):
Page 6
Line 10 & 19
Reduce $800,000 (UGF) -reduces program by 5%
Education and Early Development:
K-12 Support
Foundation Program
Page 10
Lines 11-20
Intent -provides policy guidance to school districts
utilizing K-12 support funding
Education and Early Development:
Teaching and Learning Support
Student and School Achievement
Page 10
Lines 31-32
Increase $750,000 (UGF) -provides Innovative Grant
funding
Environmental Conservation:
Water
Water Quality
Page 14
Lines 3-4
Increase $400,000 (UGF) -partially restores funding
associated with State Primacy for Dredge and Fill
Activities
Health & Social Services:
Public Health
Health Planning and Systems Development
Page 19
Lines 17-30
Increase $615,500 (UGF) -partially restores funding
for the SHARP Program Intent language added -provides
additional guidance to the program
Health & Social Services:
Senior Disability Services
Senior Community Based Grants
Page 20 of HB 266 and Page 5 of HB 267
Lines 15 & 20 of HB 266 and Lines 28 and 33 of HB 267
Increase $345,000 UGF -provides grant funding for the
senior independent living program ($200,000 GF/MH for
this program is included in HB 267)
Increase $200,000 for a one-time grant to the Mat-Su
Aging and Disability Resource Center
Public Safety:
Alaska State Troopers
Page 29
Lines 29-32
Intent -provides that funding may not be used to
assist federal employees in enforcing the Marine
Mammal Protection act of 1972 as it relates to sea
otters in Southeast Alaska.
University of Alaska:
Fairbanks Campus
Page 38
Lines 3 and 29
Increase $500,000 -provides funding to organize a
fossil fuel integration program
Commerce, Community and Economic Development:
Alaska Seafood Marketing Institute
Alaska Seafood Marketing Institute Page 60 Lines 11-13
Increase $388,600 (UGF) -restores Y2 of the
subcommittee's reduction
Department of Natural Resources New Language Section:
Page 63
Lines 4-8
Limits the replacement of federal funding with UGF for
declining federal grants for the Hot Shot firefighting
crews
University of Alaska:
New Language Section
Page 63
Lines 19-22
$12,500,000 -Contingent Appropriation -this language
only takes effect if the existing power plant at the
Fairbanks Campus utilizes diesel as its primary fuel
source for 60 consecutive days
Office of the Governor:
Statewide Fuel Trigger
Page 65
Lines 15-16
This amends the University of Alaska's allocation
formula from 10 percent of the total plus or minus
three percent to 15 percent of the total plus or minus
five percent. This change reflects recent allocation
disbursement within the fuel trigger formula.
Agency-Wide Technical Additions to the Numbers
Section:
In-State Natural Gas Pipeline Fund
Technical Legislative Finance fund code amendment
designed to meet accounting requirements for
separation of the Alaska Gasline Development
Corporation budget from money spent by other agencies
at the request of AGDC.
9:27:57 AM
Changes incorporated into
Senate CS for CS for House Bill 267 (FIN) 28-GH2673\R:
Health & Social Services:
Behavioral Health
Services to the Seriously Mentally III
Page 3 Line 27
Increase $75,000 UGF -replaces MHTAAR funding with UGF
Health & Social Services:
Behavioral Health
Suicide Prevention Council
Page 4
Line 21 Increase $60,000 -provides additional funds
for the suicide prevention program needs
Health & Social Services:
Senior Disability Services Senior Community Based
Grants Page 5
Lines 28 and 33
Increase $200,000 UGF -provides grant funding for the
Aging and Disability Resource Center
Revenue:
Alaska Mental Health Trust Authority
Mental Health Trust Operations
Page 7
Lines 15-16
Increase $500,000 -provides funding for a Fetal
Alcohol Spectrum Disorders Media Campaign
9:28:51 AM
AT EASE
9:33:12 AM
RECONVENED
9:33:26 AM
Co-Chair Meyer pointed out to the committee that the CS
reduced the tourism marketing money by $800,000, but noted
that the money for the Alaska Seafood Marketing Institute's
marketing program was increased on page 2 of the bill; he
assumed that this change put the two on equal footing.
Co-Chair Kelly replied that in the spirit of balance both
programs had been reduced the same amount. Mr. Armstrong
added that both programs had taken a 5 percent reduction
within the CS.
9:34:07 AM
Co-Chair Kelly WITHDDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 28-GH2671\E (Wallace 3/26/14)
and WORK DRAFT 28-GH2673\R (Wallace 3/26/14) were ADOPTED
as a working documents for HB 266 and HB 267.
Co-Chair Kelly noted that amendments to the CS would be
taken up the following day.
Mr. Armstrong stated that there would be an amendment that
dealt with the 4 contracts that had been settled, which was
not contained within the current CS.
9:35:14 AM
Mr. Armstrong expressed appreciation to Amanda Ryder and
David Teal for their help on the two budget bills.
9:35:54 AM
AT EASE
10:09:21 AM
RECONVENED
Co-Chair Kelly announced an amendment by Senators Hoffmann
Olson and Bishop. Co-Chair Kelly requested to be added as
sponsors to Amendment 1.
10:09:58 AM
Senator Hoffman MOVED to ADOPT Amendment 1:
OFFERED IN: The Senate Finance Committee
TO: HB 266 / HB 267
OFFERED BY: Senator Hoffman, Senator Bishop, Senator
Olson
DEPARTMENT: Fund Capitalization
APPROPRIATION: Fund Capitalization (no approps out)
ALLOCATION: Community Revenue Sharing Fund
AMEND LANGUAGE SECTION 25(b) AS FOLLOWS:
Sec. 25(b):
(b) An amount equal to 20 percent of the revenue
collected under AS 43.20.030(c), not to exceed
$53,000,000 [50,000,000], is appropriated from the
general fund to the community revenue sharing fund (AS
29.60.850).
EXPLANATION: This amendment adds $3 million UGF to the
Community Revenue Sharing Fund (from $50 million to
$53 million). This amendment is $3 million above the
Senate's budget and $7 million below the Governor's
request.
10:10:07 AM
Co-Chair Meyer OBJECTED for the purpose of discussion.
Senator Hoffman explained that the amendment increased the
revenue sharing by $3 million. The original request by the
governor had been for $60 million, the subcommittee had
recommended a funding level of $50 million; the amendment
would add $3 million and would result in a number that
would be $7 million below the governor's budget.
10:10:37 AM
Mr. Armstrong explained that the reduction in 2014 would
have no effect on FY15 revenue shares. He said that the $53
million would take effect in the next cycle; $57.6 million
would be distributed in FY16, $56.1 in FY17, $55.1 in FY18
and $54.4 in FY19.
10:11:29 AM
Co-Chair Kelly explained that the amendment considered
public testimony on the legislation regarding municipal
assistance and the concern for life, health, and safety
issues.
10:12:04 AM
Co-Chair Meyer WHITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 1 was ADOPTED.
CSHB 266(FIN) was HEARD and HELD in committee for further
consideration.
CSHB 267(FIN) was HEARD and HELD in committee for further
consideration.
10:12:21 AM
AT EASE
10:14:31 AM
RECONVENED
Co-Chair Kelly handed the gavel over to Co-Chair Meyer.
SENATE BILL NO. 195
"An Act relating to the membership and authority of
the Alaska Commission on Postsecondary Education;
relating to the Alaska Student Loan Corporation;
relating to teacher education loans; relating to
interest on and consolidation of postsecondary
education loans; relating to Alaska supplemental
education loans; relating to AlaskAdvantage grants;
relating to the Alaska family education loan program;
relating to postsecondary educational institutions;
and providing for an effective date."
10:15:42 AM
DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON
POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, AND EXECUTIVE OFFICER, ALASKA STUDENT LOAN
CORPORATION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
expressed appreciation for the legislation. She opined that
it had been two decades since a substantive review of loan
limits and the policies that guided the state's financial
aid administration.
10:16:21 AM
Senator Dunleavy queried that language in the bill that
stated that a person representing private higher education
had to be non-profit.
Ms. Barrans replied that the membership of the commission
was comprised of representative from both the for-profit
and non-profit sectors. She said that the language allowed
the governor the latitude to choose any of the institutions
in the sector, rather than being limited to a member of the
board of trustees.
10:17:31 AM
Senator Dunleavy wondered if there was a seat reserved for
for-profit educational entities.
Ms. Barrans replied in the affirmative.
10:17:38 AM
Senator Dunleavy inquired if there was a practice of
loaning more willingly for certain categories of
educational entities.
Ms. Barrans responded that that there was not an express
policy relative to the question. She said that loan limits
were divided between collegiate and vocational
institutions, without speaking to whether those
institutions were non-profit or for-profit. She explained
that rating agencies requested a break out of the portfolio
of lenders who financed their loans in the financial market
in order to determine, by educational sector, what portion
of the loans when to one or the other. If a portfolio
reflected a high proportion of proprietary lending, it
could result in higher overcollateralization requirements
because of the historical trend of higher default rates
associated with vocational schools, particularly in the
for-profit sector.
10:20:45 AM
Vice-Chair Fairclough requested that Ms. Barrans discuss
the 15 credit per semester requirement in order to access
funds.
Ms. Barrans said that the reason the 15 credits per term
had been proposed, rather than 30 credits per year, was
because it was a student's enrollment level on each term
that determined the amount of loan that they could receive.
She stated that there was flexibility; if a student
enrolled and met the full-time requirement of 12 credits
for fall, but then increased their credits to 15 for
spring, they could qualify for the higher amount for the
spring term. She noted that if a student enrolled for full-
time of 12 credits, and did not complete the 12 credits in
the term, the student could make up the credits during the
academic year for the purpose of continuing eligibility for
the next year's loan. She stated that the department worked
to ensure that students were completing the number of
credits that their loan was awarded for without risking
over-awarding students, which could be a risk if the loan
were awarded at the beginning of the year for a higher
amount based on the student's best intentions.
10:22:53 AM
Co-Chair Meyer queried the default rate for Alaska student
loans.
Ms. Barrans replied that the most recent published rate was
slightly higher than 6 percent. She said that looking back
over the last 10 years, the rate had been as low as 3.8
percent, peaking in 2008 and 2009 at about 7.5 percent, but
gradually rising as the economy has recovered.
10:23:28 AM
Co-Chair Meyer understood that Alaska's default rate was
lower than the national average.
Ms. Barrans replied that the default rate for the federal
loan program was substantially higher than Alaska. She
noted that the federal loans had no credit underwriting
criteria; taxpayers underwrite the credit for federal
loans.
Co-Chair Meyer probed the difference between the two loans.
Ms. Barrans responded that if the barrower did not have a
credit score of at least 680, they would need a credit
worthy co-signer.
10:24:14 AM
Co-Chair Meyer discussed the new fiscal note. He understood
that with the purchase of new software with $460,000
capital dollars the state would see a savings of $82.8
thousand.
Ms. Barrans replied that the savings would be approximately
$30,000 per year due to reduced software maintenance. She
relayed that the current system was inadequate to support
the number of student receiving student loans.
10:25:40 AM
Co-Chair Meyer inquired if the expense was reflected in the
governor's FY15 capital budget.
Ms. Barrans replied that it was not.
10:25:51 AM
Vice-Chair Fairclough offered that the investment of
capital would save the state money in the long run and
provided a smoother streamlined process for the students
that were accessing student loans.
10:26:25 AM
Co-Chair Kelly MOVED to REPORT CSSB 195(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 195(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new fiscal impact note from
the Department of Education and Early Development.
10:26:49 AM
AT EASE
10:30:05 AM
RECONVENED
SENATE BILL NO. 140
"An Act creating the Arctic infrastructure development
program and fund in the Alaska Industrial Development
and Export Authority."
10:30:53 AM
SENATOR LESIL MCGUIRE, introduced SB 140 and related that
the bill was a result of work that had been done by the
Alaska Arctic Policy Commission. She relayed some
background on the make-up and duties of the commission. She
shared that over the course of one year the commission had
compiled a preliminary report, which could be found at
akarctic.com. The bill would develop and contrive a funding
and implementation mechanism for constructing and
maintaining Arctic infrastructure and economic development.
She asserted that the Alaskan Arctic was one of the least
developed areas of the state, yet one of the most open and
ready for opportunity. The intent of the legislation was to
develop the vision statements, policy statement and
strategic recommendations of the Alaska Arctic Policy
Commission. She contended that Arctic policy was part of a
global discussion and that the state was behind the other
seven Arctic Nations when it came to infrastructure
development. She relayed that Alaska has the longest
coastline in the United States; Alaska's Arctic coastline
extends from the Northeastern Canadian border, west across
the Arctic Ocean, and south covering western Alaska, then
1500 miles down to the Aleutian Chain. She stated that
within the entire coastline the only deep draft port was in
Dutch Harbor. She lamented that the lack of infrastructure
in Unalaska limited any support for new traffic coming from
the Northwest Passage. She added that telecommunications,
emergency and spill response, search and rescue, national
defense and other critical needs were all addressed within
the legislation.
Senator McGuire proclaimed that Alaska was blessed with
untold natural resource wealth in the Arctic that would
provide opportunity for future generations, but nothing
could be done without sufficient infrastructure. She shared
that there was an estimated $100 billion in private funding
that was waiting to be invested in the Arctic, which was
considered to be one of the last great economic global
opportunities.
10:38:07 AM
Senator McGuire provided a further sponsor statement:
Globally, all eyes are on the Arctic. The World
Economic Forum has recently identified Arctic
Infrastructure development as one of the top Four (4)
challenges facing the regions. Alaska's future is in
the Arctic, and in order for Alaskans to capitalize on
the incredible opportunities and overcome the
significant challenges that this region presents, we
must begin to build infrastructure now.
Aside from a few areas in Norway and the Russian
Federation the Arctic as a whole remains vastly
underserved by transportation, ports, communication,
emergency response, defense and other critical
infrastructure. For further development to occur,
which Alaskans deserve, both public and private
interests must come together to boost the investment
in the Arctic.
For these reasons I have introduced Senate Bill 140,
Arctic Infrastructure Development Fund ("AIDF"). The
CS SB 140 (L&C) expands AIDEA's tool bag by extending
the same authority for loans, loan guarantees, bonds
and bond guarantees that it currently utilizes in the
energy sector via the SETS fund (AS 44.88.650- 690) in
order to develop Infrastructure in the Arctic. AIDEA
used SETS to facilitate the financing of the Interior
Energy Project. This tool helps to create the public-
private partnerships that are needed to encourage
large investment in capital intensive infrastructure.
CS SB 140 (L&C) extends AIDEA's existing power to
finance, or facilitate the financing of projects to
the realm of Arctic Infrastructure by granting the
Authority the ability to:
1. Insure project obligations and guarantee loans or
bonds for projects.
2. Defer principle payments and capitalize interest.
3. Offer financing terms of up to 40 years.
4. Enter into lease agreements, sales-lease-back
agreements, build-operate-transfer agreements and
other agreements to finance Arctic infrastructure
projects.
5. Finance certain aspects of Fisheries in the Arctic.
Many of these powers already provide flexible terms
that can reduce the ultimate cost of energy (via the
SETS program) to consumers, and if it can work in the
energy realm, it can work for infrastructure. However,
CSSB 140 (L&C) also requires legislative approval for
investments that are more than one-third of a
project's capital costs or if a loan guarantee exceeds
$20 Million. By subjecting certain investments to
legislative approval, CSSB 140 (L&C) maintains an
appropriate level of due diligence for projects.
By making financing available we can empower
communities and attract a global pool of investment
that is an alternative to the traditional grant model
that too often underfunds projects and leads to
delays. Relying on credit also ensures that sponsors
have some skin in the game and a stake in the
project's success. Most importantly, we expand the
arena of where Alaskan assets are working in order to
grow our own economy. Currently, many of Alaska's
savings accounts are invested in stocks and bonds that
drive economic activity outside of Alaska. CSSB
140(L&C) suggests instead that some of those savings
be invested here in Alaska through AIDEA, not as blank
checks for development, but as investments for our
future in Arctic Infrastructure.
For the purposes of this Act, I propose that this
program and fund focus infrastructure development in
the geographical definition of the Arctic as laid out
in Arctic Research and Policy Act (amended 1990). That
definition includes the area of the State of Alaska
north of the Arctic Circle, north and west of the
boundary formed by the Porcupine, Yukon, and Kuskokwim
Rivers, all contiguous seas, including the Arctic
Ocean, and the Beaufort, Bering, and Chukchi Seas, and
the Aleutian chain.
With AIDF I am proposing that the State expand AIDEA's
existing authority to finance, or facilitate the
financing of, Arctic Infrastructure.
10:43:01 AM
Senator McGuire asserted that it would be irresponsible to
ignore the obligation of the state to develop
infrastructure in the Arctic.
10:43:41 AM
Co-Chair Meyer requested that the sponsor list any
sideboards that had been written into the bill.
10:44:02 AM
JESSE LOGAN, STAFF, SENATOR LESIL MCGUIRE, offered a
sectional analysis (copy on file):
Section 1. AS 44.88.088(a) is amended
o This section establishes that the Alaska
Industrial Development and Export Authority
(AIDEA) shall adopt a policy for payment of a
dividend from the Arctic infrastructure
development fund (AS 44.88.810) to the state each
fiscal year.
o The dividend may not be less than 25% nor more
than 50% of the net income of the fund.
o This puts the AIDF in-line with AIDEA's
sustainable energy transmission and supply
development fund (SETS) (AS 44.88.660).
Section 2. AS 44.88.088(b)(2) is amended
o This section defines "net income" for the
purposes of this chapter.
o The definition now includes the AIDF.
Section 3. AS 44.88.088(b)(3) is amended