Legislature(1993 - 1994)
03/12/1994 10:05 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE BILL NO. 330 An Act relating to water quality enhancement, water supply, wastewater, and solid waste grants; the Alaska clean water fund; the establishment of the Alaska clean water account, the Alaska drinking water fund, and the Alaska drinking water account; and providing for an effective date. Co-chair Pearce directed that SB 330 be brought on for discussion and referenced the zero fiscal note from the Dept. of Environmental Conservation, a sponsor statement from Senator Halford, a sectional analysis, and letters of support from the City of Hoonah and the Dept. of Environmental Conservation. She further observed that the bill was introduced at the request of the department. KEITH KELTON, Director, Division of Facility Construction and Operation, Dept. of Environmental Conservation, came before committee. End: SFC-94, #28, Side 2 Begin: SFC-94, #30, Side 1 He explained that the bill amends two statutes: one relates to grants and the other to loans. Changes to matching grants are included in the first five sections of the bill. The program currently provides assistance for construction of water and sewage treatment plants and solid waste facilities for incorporated communities. First class and larger communities have typically availed themselves of the program. Proposed amendments would: 1. Make it easier for smaller incorporated communities to receive assistance. 2. Clean up archaic provisions in statutes enacted in 1972 and amended many times hence. As originally drafted, the matching grants program was intended to match a federal grant program from EPA. That program is no longer available. The federal program provided 75% funding. Statutes required that the balance be spilt 50/50 between state and local governments. Since the federal program no longer exists, there is no reason for the statutory provisions. The department has found, over the past several years, that the 50/50 requirement led communities to seek total state funding rather than applying for federal dollars. The proposed statutory change eliminates the federal clause and allows communities to match as much state money with as much federal money as they can acquire. There would thus be no disincentive to obtain federal dollars. Mr. Kelton explained that smaller communities with populations of 1,000 to 5,000 have not availed themselves of the program, although many have "real sanitation needs." For communities below 1,000, the village safe water program provides funding, and communities with populations greater than 5,000 generally do not have problems with the local match. Communities that fall within those ranges have been unable to finance facilities. The department is thus proposing a change in funding relationships to more closely parallel the Governor's matching grants program. Instead of 50% state participation, the level would be 85% for communities of 1,000 and 30% state participation for communities between 1,000 and 5,000. For communities over 5,000, the status quo is maintained. Changes to loan statutes, involve an addition to the current program. Present statutes allow the department to take advantage of an EPA loan program which is 85% capitalized by the federal government. These loans are for wastewater facilities only, and a fund of approximately $60 million is available for capitalization. Three bills, now pending in Congress, would establish a parallel program for drinking water. Through changes in the proposed bill, the department is attempting to "get ahead of the federal program authorization . . . ." The bill seeks to establish a state loan program so that when the federal authorization is available, the department will be able to utilize federal moneys. Mr. Kelton described the importance of drinking water loans in relation to federal requirements for surface water treatment. Federal law requires all surface water sources to receive filtration. Due to that law, a number of "very expensive treatment systems" are required. Localities (Unalaska, Kodiak, and Cordova were cited as examples) where seafood processors use surface water will incur a "tremendous cost." The proposed loan program will provide communities low interest loans, at 2/3 of the municipal bond index (about 4%), capitalized 80% by the federal government. Senator Rieger directed attention to existing law set forth at page 3, line 16, of the bill and referenced language allowing use of the clean water fund for "guaranteeing a public agency debt obligation." He then voiced need to substitute other wording for "guaranteeing" to more clearly indicate that clean water assets may be used as security for debt obligation. The Senator voiced concern that existing language might infer an obligation of the state. Mr. Kelton advised that while the language has been in effect since 1987 and no problems have arisen, he would have no objection to a change. Senator Rieger then MOVED for adoption of the following amendment: Page 3, Line 16: delete "guaranteeing or" insert "collateral or for" Co-chair Pearce called for a show of hands. The motion CARRIED unanimously, and the amendment was ADOPTED. Senator Sharp asked how the proposed new drinking water fund would interplay with the existing clean water program. Mr. Kelton explained that there is no correlation between the first five sections of the bill (relating to grants) and the new loan program in remaining bill provisions. There is no interplay between the two; one does not provide a match for the other. Co-chair Pearce called for additional testimony or discussion. None was forthcoming. Senator Kerttula MOVED that CSSB 330 (Fin) pass from committee with individual recommendations. No objection having been raised, CSSB 330 (Fin) was REPORTED OUT of committee with a zero fiscal note from the Dept. of Environmental Conservation. All members signed the committee report with a "do pass" recommendation with the exception of Senator Kelly who was absent from the meeting.