Legislature(2017 - 2018)SENATE FINANCE 532

04/11/2017 09:00 AM FINANCE

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Audio Topic
08:58:00 AM Start
08:59:09 AM SB107
09:01:53 AM SB23
09:02:39 AM Public Testimony
09:26:09 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 23 APPROP: CAPITAL BUDGET TELECONFERENCED
Heard & Held
-- Public Testimony Only --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
= SB 107 ALASKA CAPITAL INCOME FUND
Moved SB 107 Out of Committee
SENATE BILL NO. 23                                                                                                            
                                                                                                                                
     "An  Act   making  appropriations,   including  capital                                                                    
     appropriations,       supplemental      appropriations,                                                                    
     reappropriations,  and   other  appropriations;  making                                                                    
     appropriations to  capitalize funds; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
9:01:53 AM                                                                                                                    
                                                                                                                                
^PUBLIC TESTIMONY                                                                                                             
                                                                                                                                
9:02:39 AM                                                                                                                    
                                                                                                                                
GREG  MEISSNER,  HARBORMASTER, WRANGELL  HARBOR  DEPARTMENT,                                                                    
WRANGELL  (via  teleconference),  spoke in  support  of  the                                                                    
Municipal   Harbor  Fund.   He  announced   that  Wrangell's                                                                    
Shoemaker Bay  Harbor replacement project was  ranked number                                                                    
one  by   the  Department   of  Transportation   and  Public                                                                    
Facilities (DOT/PF).  He stated that  the $5 million  in the                                                                    
proposed budget  would cover the request,  and guarantee the                                                                    
completion  of the  project. He  stated  that Shoemaker  Bay                                                                    
represented approximately  35 percent of  Wrangell's moorage                                                                    
capacity.  The  existing float  system  was  unsafe, out  of                                                                    
code, and partially condemned. He  stressed that a new float                                                                    
system would  allow Wrangell to provide  safe and up-to-code                                                                    
moorage;  and  the new  float  walls  would allow  for  some                                                                    
growth.  He stated  that  the governor's  plan  to create  a                                                                    
sustainable  Alaska was  dependent  on communities  becoming                                                                    
sustainable  themselves.   He  stressed  that   the  coastal                                                                    
communities  needed safe  and useful  marine infrastructure.                                                                    
He remarked that  Wrangell would commit half  of the state's                                                                    
contribution. He  shared that the  intention of  turning the                                                                    
facilities over to municipality was to ensure state funds.                                                                      
                                                                                                                                
9:05:20 AM                                                                                                                    
                                                                                                                                
CLAY HAMMER, CHAIR, WRANGELL  PORT COMMISSION, WRANGELL (via                                                                    
teleconference), spoke  in support  of the  Municipal Harbor                                                                    
Matching  Grant Fund.  He stressed  that  Wrangell had  been                                                                    
proactive  in   responsibly  maintaining  its   port  harbor                                                                    
facility  since  assuming  ownership   from  the  state.  He                                                                    
remarked  that  the  infrastructure represented  a  key  and                                                                    
vital  component  of  Wrangell's survival.  He  shared  that                                                                    
Wrangell  had recently  increased  its moorage  rates by  30                                                                    
percent  to   ensure  adequate  reserves  to   forward  fund                                                                    
maintenance  and  future  replacement, which  represented  a                                                                    
commitment  to maintaining  the facilities.  He shared  that                                                                    
Wrangell had  worked to secure  funding for  the replacement                                                                    
of the  harbor. He announced  that the Shoemaker  Bay Harbor                                                                    
had  outlived its  useful life  to the  point of  becoming a                                                                    
liability. He  stated that it was  Wrangell's second largest                                                                    
mooring facility and  played an important role  in the local                                                                    
commercial, charter, and sport boat fleet.                                                                                      
                                                                                                                                
9:06:53 AM                                                                                                                    
                                                                                                                                
CAROL  RUSHMORE,  ACTING   BOROUGH  MANAGER,  WRANGELL  (via                                                                    
teleconference), spoke  in support  of the  Municipal Harbor                                                                    
Matching Grant  Fund. She stressed that  the marine industry                                                                    
in  Wrangell was  the largest  private sector  employment in                                                                    
the  community.  The  success of  its  economy  was  greatly                                                                    
affected  by the  marine infrastructure.  The grant  program                                                                    
was a  critical economic investment to  benefit the economic                                                                    
opportunities statewide.  She stressed that the  program was                                                                    
a  50/50  match,  so  the $5  million  would  leverage  $6.2                                                                    
million or  more of  local funds. She  remarked that  it was                                                                    
also a competitive grant program,  so all programs must meet                                                                    
strenuous  review  and  criteria.   She  stressed  that  the                                                                    
project was on the top of the program's list.                                                                                   
                                                                                                                                
9:08:39 AM                                                                                                                    
                                                                                                                                
JODI  MITCHELL, CEO,  INSIDE  PASSAGE ELECTRIC  COOPERATIVE,                                                                    
JUNEAU  (via teleconference),  spoke in  support of  funding                                                                    
for the  project in  Kake. She felt  that the  $1.45 million                                                                    
from  another project  should be  reappropriated to  build a                                                                    
project that  would help the community  with decreased power                                                                    
costs. She remarked  that the project would  work along with                                                                    
the  Kake  Hatchery. She  stressed  that  the project  would                                                                    
increase rates currently.                                                                                                       
                                                                                                                                
9:10:20 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon queried the  project's name. Ms. Mitchell                                                                    
replied that  the funds  were in  the Renewable  Energy Fund                                                                    
for  the  Intertie Project.  She  stated  that the  Intertie                                                                    
Project was not moving forward,  so it would be appropriated                                                                    
from one  grant to another.  She explained that it  would be                                                                    
used for the Kake Hydro Project.                                                                                                
                                                                                                                                
9:11:04 AM                                                                                                                    
                                                                                                                                
PETER  MJOS, SELF,  ANCHORAGE (via  teleconference), opposed                                                                    
the money  for the  King Cove  to Cold  Bay road.  He stated                                                                    
that he  had been involved  in many medivacs from  King Cove                                                                    
to  Cold Bay,  by sea  and air,  and each  medivac had  been                                                                    
successful.  He remarked  that the  original  intent of  the                                                                    
road in 1994  was to create positive  economic impacts, with                                                                    
no  mention of  health or  safety. He  felt that  the road's                                                                    
declaration  to save  lives,  but posed  a  great danger  of                                                                    
threat to  life itself.  He felt  that the  proposed 27-mile                                                                    
road would  not be  passable, because  the area  was already                                                                    
extremely dangerous.                                                                                                            
                                                                                                                                
9:13:20 AM                                                                                                                    
                                                                                                                                
DAVID  KRAUSE, SELF/THE  WILDERNESS SOCIETY,  ANCHORAGE (via                                                                    
teleconference), opposed to  the $10 million reappropriation                                                                    
for  the Izembek  Road  Project in  the  FY 17  Supplemental                                                                    
Budget. He  stressed that the  Izembek Road  controversy was                                                                    
addressed in  the Clinton  administration, when  the federal                                                                    
government  provided   substantial  funds  to   King  Cove's                                                                    
medical needs. The  funds were intended to  end the dispute.                                                                    
He remarked  that the federal government  had allocated over                                                                    
$37 million  to upgrade  access to  quality medical  care to                                                                    
the community in lieu of building the proposed road.                                                                            
                                                                                                                                
Co-Chair  MacKinnon queried  Mr.  Krause's affiliation.  Mr.                                                                    
Krause replied  that he  represented the  Wilderness Society                                                                    
and himself.                                                                                                                    
                                                                                                                                
9:15:54 AM                                                                                                                    
                                                                                                                                
WILLIAM  HARRINGTON, SELF,  ANCHORAGE (via  teleconference),                                                                    
wondered if  the topic  for the day's  meeting was  only the                                                                    
King Cove Road.                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon  replied that there was  an allocation in                                                                    
the budget  to take $10  million of reappropriated  money to                                                                    
spend on development of the Izembek Road.                                                                                       
                                                                                                                                
Mr. Harrington wondered  if he could speak to  the budget as                                                                    
a whole. Co-Chair MacKinnon replied in the affirmative.                                                                         
                                                                                                                                
Mr.  Harrington   encouraged  the   committee  to   ask  the                                                                    
testifiers whether they are  government employees or private                                                                    
sector employees.  He felt that  the question  was important                                                                    
to gauge  the real  sentiment of the  support of  the income                                                                    
tax. He  felt that the lack  of the natural gas  pipeline to                                                                    
support Fairbanks was terrible. He  felt that it was a shame                                                                    
that Alaskans  paid the nation's  highest gas prices  at the                                                                    
pump. He stressed that it  was important to protect the real                                                                    
estate  values  by  continuing to  keep  employment  in  the                                                                    
state. He shared  that he experienced two  real estate "fall                                                                    
out" recessions.                                                                                                                
                                                                                                                                
9:18:46 AM                                                                                                                    
                                                                                                                                
MILES   BAKER,   ASSOCIATE    VICE   PRESIDENT,   GOVERNMENT                                                                    
RELATIONS,  UNIVERSITY  OF  ALASKA, spoke  to  the  deferred                                                                    
maintenance challenge  at the University of  Alaska (UA). He                                                                    
remarked  that   UA  was  the  largest   landlord  in  state                                                                    
government with  400 buildings over 7.7  million square feet                                                                    
with  a  $3  billion  asset value.  The  legislature  was  a                                                                    
generous  partner  in helping  build  the  campuses, and  he                                                                    
thanked the committee  for the past support.  He shared that                                                                    
UA  had received  $240 million  over the  last 10  years for                                                                    
deferred maintenance  and renewal  from the  legislature. He                                                                    
shared that over  that same time period  the legislature had                                                                    
appropriated $666  million for  new facilities  alone, which                                                                    
was an average $66 million  per year. He remarked that there                                                                    
were  wonderful  new  facilities including  new  engineering                                                                    
facilities at  the University of Alaska  Anchorage (UAA) and                                                                    
the  University  of Alaska  Fairbanks  (UAF);  a new  Health                                                                    
Sciences building; the Alaska  Airlines Center; dorms at the                                                                    
University  of Alaska  Southeast  (UAS); and  a  soon to  be                                                                    
commissioned new  power plant at  UAF. He remarked  that the                                                                    
challenge was the maintenance of  the facilities, because UA                                                                    
also  had some  of the  oldest  buildings in  the state.  He                                                                    
stated that the average age of the UA buildings was 33-                                                                         
years-old;  with a  weighted  average  of approximately  22-                                                                    
years-old.  He  stated  that  the   inventory  had  a  large                                                                    
deferred  maintenance backlog  at approximately  $1 billion.                                                                    
He stated that maintaining  the backlog required $60 million                                                                    
a year toward  deferred maintenance, based on  a 1.5 percent                                                                    
facility  adjusted   value,  which  was  the   minimum  best                                                                    
practice   industry  standard.   He  stated   that  UA   had                                                                    
historically   relied  on   the   legislature  for   capital                                                                    
appropriations  to  maintain  the   new  facilities  and  to                                                                    
address deferred  maintenance. He  remarked that UA  did not                                                                    
have  any capital  funds in  the current  budget. He  shared                                                                    
that UA  had put  $35 million  a year  from all  the funding                                                                    
sources toward  maintenance of  the facilities.  He remarked                                                                    
that,  in   2017,  the  Board   of  Regents   redirected  an                                                                    
additional $10 million  of general fund (GF) for  a total of                                                                    
$45  million  toward  maintenance   of  the  facilities.  He                                                                    
stressed   that,  as   the  operating   budget  of   UA  was                                                                    
continually reduced,  the campuses  were struggling  to keep                                                                    
up  with that  challenge.  He remarked  that, without  state                                                                    
support, the  backlog was  likely to grow,  and the  risk of                                                                    
costly emergency  maintenance would increase.  He understood                                                                    
that the committee was looking  for creative ways to address                                                                    
deferred maintenance  in all state agencies.  He appreciated                                                                    
the  introduction   of  SB  107,  which   would  make  funds                                                                    
available for preventative and deferred maintenance.                                                                            
                                                                                                                                
9:22:59 AM                                                                                                                    
                                                                                                                                
CHRIS REITAN,  SUPERINTENDENT, GALENA CITY  SCHOOL DISTRICT,                                                                    
GALENA  (via  teleconference),  spoke   in  support  of  the                                                                    
Department of  Education and Early Development  (DEED) Major                                                                    
Maintenance Grant  Fund. He stated that  there was currently                                                                    
no money allocated in the fund.  He shared that was no money                                                                    
allocated  in the  year  prior also.  He  stressed that  the                                                                    
grant fund was critical to  school districts to address some                                                                    
of  the major  maintenance projects  in the  communities and                                                                    
school districts.  He urged  the committee  to add  money to                                                                    
the grant fund, so the districts could continue to address                                                                      
their ongoing issues.                                                                                                           
                                                                                                                                
9:24:24 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:24:55 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
SB 23 was HEARD and HELD in committee for further                                                                               
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 23 Testimony Alaska Commission on Aging.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 Testimony Lavin.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 University of Alaska Testimony.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 Testimony DeBartolo.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 Great Land Trust Testimony.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 Uyak Natives Inc. Letter.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 Trans-Pac Support letter for Thorsheim Bay EVOS.pdf SFIN 4/11/2017 9:00:00 AM
SB 23
SB 23 Testimony City and Burough of Wrangell.pdf SFIN 4/11/2017 9:00:00 AM
SB 23