Legislature(1995 - 1996)

03/15/1995 09:07 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
       SENATE BILL NO. 92                                                      
       "An Act requiring  that, in  addition to its  operating                 
  budget,   all  activities  of  the  Alaska  Housing  Finance                 
  Corporation are     subject to the Executive Budget Act."                    
  Co-chair  Halford  announced  that  by  the request  of  the                 
  Legislative Budget and Audit Committee, SB 92 is submitted.                  
  Senator  Phillips  explained  that  Senators  Sharp,  Frank,                 
  Rieger and himself served on the LB&A Committee and that the                 
  Alaska Housing Finance  Corp. and Alaska Railroad  were left                 
  out  of  their  bill  last  year.    This  bill  adds  AHFC.                 
  Discussion  was  had on  the  Alaska  Railroad, and  it  was                 
  decided to create a new bill.                                                
  Co-chair Halford  asked Dan Fauske,  CEO/Executive Director,                 
  Alaska  Housing  Finance  Corp to  join  the  committee. Mr.                 
  Fauske testified to the committee (testimony attached).                      
  Co-chair  Frank   thanked  Mr.  Fauske  for   his  comments.                 
  Historically, the programs were not included in the original                 
  legislation.  The  legislature has had confidence  in AHFC's                 
  ability to  handle political  and arbitrary  decisions.   He                 
  stressed  that  he  meant  not  just  Mr.  Fauske,  but  the                 
  institution which includes the bond counsel and professional                 
  contractors, and  staff.   Senator Frank  does not view  the                 
  inclusion  of  AHFC  in  the  budget  act  as  being  overly                 
  burdensome,  it   is  hoped   that  it   will  improve   the                 
  relationship between  the agency  and the  legislature.   He                 
  added, in  addition to the  items Mr. Fauske  mentioned, the                 
  relationship  between  AHFC  and  the  legislature has  been                 
  strained over the years.  He added that there has not been a                 
  vehicle for  discussion.  The  legislature spends  a lot  of                 
  time   communicating  with   other  state   agencies.     An                 
  understanding  is developed  through the  budget  process of                 
  their  programs. Over time,  communication is  improved. Co-                 
  chair Frank  emphasized that  the agency  may view  it as  a                 
  threat,  but, it  is an opportunity  to improve  the working                 
  relationship between the  agency and  the legislature.   The                 
  legislature  will  not want  to  take  action that  will  be                 
  contrary  to  the purposes  of  the statutes,  programs, and                 
  purposes  of AHFC.  The legislature  does want to understand                 
  what goes on  and wants to  have an improved opportunity  to                 
  work with  the agency  to make  sure that  the purposes  are                 
  carried out.  He  stressed that it is not  the legislature's                 
  purpose  to  cut any  agency  out.   He  noted  that  if the                 
  legislature does not receive cooperation,  then the view may                 
  be that decisions are more rash.  Co-chair Frank stated that                 
  he  supports  bringing  this  legislation  into  the  budget                 
  process and improve the relationship  between the agency and                 
  the  legislature.  Otherwise, he said,  there would be many,                 
  he included,  who would  not be interested  in supporting  a                 
  capital or operating budget for this agency.                                 
  Senator Rieger questioned Mr. Fauske's  testimony.  He asked                 
  if he opposed  the inclusion into  the executive budget  act                 
  suggesting that it would hinder AHFC's operation. Mr. Fauske                 
  responded that he  is not beyond being  scrutinized, but his                 
  review in the short time he has been there is that currently                 
  there was $790,000,000. in loans and activity which occurred                 
  through that  agency.   Currently, the amount  this year  is                 
  $385,000,000.   He stated his  confusion, wanting to know if                 
  it is capped.   He asked, does the agency stop at some point                 
  denying  itself  access to  the  market for  refinancing and                 
  lowering  people's  mortgages.     This  has  been   a  very                 
  successful program.  He  asked, how does the agency  improve                 
  on past performance? He stressed  he welcomed the review and                 
  indicated that next to  the permanent fund this  is Alaska's                 
  most  important  asset.    He  noted  that he  wants  to  be                 
  perceived in some  capacity of success, mainly  being opened                 
  to  the  process  which  takes   place  allowing  people  to                 
  participate.   Again, his concern  is, how does  this become                 
  structured so  that  there isn't  a stoppage  at a  critical                 
  point in the market?                                                         
  Co-chair Frank indicated  that it was not  the legislature's                 
  intent  to  stifle the  agency.   He  suggested it  could be                 
  handled with general authority which is not dollar specific,                 
  or through the LB&A process, requesting additional increases                 
  from the  established dollar  maximum.   The legislature  is                 
  interested  in finding  a way  to make  it  work and  not to                 
  thwart the programs of AHFC.   This legislation is not meant                 
  to be negative, it is meant to be supportive.                                
  Mr. Fauske stated that he needed to receive clarity from the                 
  committee on  a potential problem.   In  the past,  programs                 
  have gone into various districts without the representatives                 
  even aware it was coming in.   He indicated he was stating a                 
  criticism of the agency, that it has not been forthcoming in                 
  dealing with Representatives or Senators of certain areas.                   
  Co-chair Frank responded that there was no truth to that and                 
  it  has  a lot  to  do  with activities  outside  the budget                 
  process.  In  the budget process  the legislators are  tuned                 
  into what state  government is  doing.  If  a legislator  is                 
  sitting  on  the  Finance  Committee,  there is  a  definite                 
  understanding  of  everything.    If  a  legislator  is  not                 
  presiding  on  the  Finance Committee,  then  there  will be                 
  requests from  the constituency for information,  which does                 
  heighten the awareness for those programs.                                   
  Senator Phillips asked if Mr. Fauske  was speaking to the 5%                 
  money? If  it was  passed by  AHFC, and  implemented to  the                 
  public, are you saying that legislators did not  receive the                 
  information  before, or know about the program before it hit                 
  the streets?                                                                 
  Mr. Fauske responded  that he  was not speaking  of the  5%,                 
  which  could   be  another  example.  Specifically,  he  was                 
  speaking to major  HUD funded  projects for senior  centers,                 
  and others that have come into various regions.                              
  Senator Phillips and the committee spoke to the 5% funds.                    
  Senator Rieger stated  that making the agency subject to the                 
  executive   budget   act,   may   not   totally    eliminate                 
  misunderstandings.    AHFC   statutes  have  provisions  for                 
  establishing programs by regulation.                                         
  Mr. Fauske assured  the committee that  it is his intent  to                 
  open up the  communication.   That is  not to  say that  all                 
  problems are solved, but the agency  is striving hard not to                 
  repeat past mistakes.                                                        
  Senator Rieger asked if Mr.  Fauske would oppose legislation                 
  resplitting the AHFC from ASHA?   Mr. Fauske responded that                  
   historically,  and  as  an individual  who  worked  for the                 
  institution on the North Slope, efforts to develop a housing                 
  program  did  not  materialize.     Dealing  with  ASHA  was                 
  impossible.  Regulations were  a problem.  There  were three                 
  and  four  generations living  in  one house.   Conventional                 
  banking  loans were not  available.  In  essence nothing was                 
  working.  It  took 4 years  to finally turn  it around.   He                 
  stressed that if it means going back to that, he opposes it.                 
  He stated there are a great many people in this state who do                 
  not  have the  same access  as some  of the  urban  areas or                 
  technically advanced rural areas, and literally are shut off                 
  from the entire  process. ASHA, in those  days, went through                 
  appropriations  from  the  state, the  regulations  were  so                 
  heavy, the agency could never get around anything.  ASHA was                 
  in poor  standing with HUD at the time,  and that was one of                 
  the   reasons   why  it   was   important  to   create  this                 
  comprehensive unit  that functioned  better.   He felt  that                 
  this  has  been  accomplished  when he  talks  to  staff and                 
  outside agencies.  He stated that he would  oppose it unless                 
  there were  assurances that  it would  not  result in  those                 
  circumstances again.                                                         
  Discussion was had regarding communication and travel during                 
  the out of session months.                                                   
  Co-chair Frank MOVED  for passage of  SB 92 with  individual                 
  recommendations.  No objection having been raised, SB 92 was                 
  REPORTED OUT of committee  with a zero fiscal note  from the                 
  Department of Revenue.   Co-chairs Halford and  Frank, along                 
  with Senators Rieger, Phillips, Donley  and Sharp signed the                 
  committee report with  a "do pass" recommendation.   Senator                 
  Zharoff signed "no recommendation".                                          
  Co-chair  Halford  announced that  SB  6 would  be revisited                 
  Friday, March 17th.                                                          
  The meeting was adjourned at approximately 10:50 a.m.                        

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