Legislature(1995 - 1996)
03/15/1995 09:07 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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. ADJOURNMENT The meeting was adjourned at approximately 10:50 a.m.