Legislature(2007 - 2008)BELTZ 211
01/24/2008 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB223 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 223 | TELECONFERENCED | |
| + | HB 101 | TELECONFERENCED | |
SB 223-G.O. BONDS FOR CRIME LAB
CHAIR MCGUIRE announced the consideration of SB 223.
9:06:07 AM
JOHN GLASS, Deputy Commissioner, Department of Public Safety,
Anchorage, said Alaska's current crime lab was built in 1986 for
6 scientists and support staff. Currently there are 41 workers.
The lab is compressed and woefully lacking in room for
scientists and for storage. In 2006, the legislature provided
$4.9 million to study a new location, and a 15.3-acre plot was
found on Tudor Road in Anchorage. Contract negotiations for that
acreage are ongoing. The bill calls for an 83,000-square-foot
building. Only 50,000 square feet is needed today, but Mr. Glass
wants a building that can last 40 years and is able to house
whatever future science the state needs.
MR. GLASS said the lab is designed to allow future expansion.
The current crime lab cannot be expanded and is inadequate for
modern forensic tests. The lab services all municipalities in
Alaska and the state troopers. He showed photos of it.
9:11:44 AM
MR. GLASS said the lab's freezers came from a surplus sale. The
lab receives about 1,000 DNA samples per month. There is a
garage for processing large items like vehicles, but it is full
of other things. There are five DNA analysts. He pointed out
that contamination is a key issue.
9:14:31 AM
SENATOR BUNDE said a colleague told him that it would be more
economical to expand the current lab.
MR. GLASS said the present foot print of the lab does not allow
for expansion. The ventilation system is inadequate for the
tests the lab is doing. The building is hot, and noxious fumes
are a hazard. It is a secure facility so the windows cannot be
opened. He showed a map and design of the new location.
9:16:57 AM
SENATOR FRENCH asked where the new lab will be built and what
the plan is for the old building.
MR. GLASS said the new lab will be near the Anchorage Police
Department and across from the Alaska Native Hospital. The
department would like to turn the old lab into office space. The
Tudor Road headquarters needs space. He wants to put the ABC
board, sexual offender registration, "I.T. people," and one
investigative group in the old lab. There will be an increase in
foot traffic because of the new sexual offender law. It is a
secure building, so it will be suitable for that.
9:18:54 AM
SENATOR FRENCH said the current needs are for 50,000 square
feet, and the building will be 83,000 square feet. He expressed
concern that $100 million is a lot of money, even though he
wants the state to have every resource it needs to fight crime.
His high school needs help; other entities need money. He asked
what the plan is for the extra space.
MR. GLASS said he doesn't know what will be done with that
space. He wants to have room for expansion. It is a lot of
money, but he wants something to last 40 years and to be
prepared for new science. "I would rather build for the future
than be in the situation we are today."
9:21:29 AM
JAMES M. (MATT) TANAKA, Crime Lab Project Manager, Alaska
Department of Transportation and Public Facilities, Anchorage,
said a nationally-recognized expert reviewed the forensic needs
of the state. The 83,000 square feet will accommodate those
needs through 2020. It will take four years to finish the
project. Designing for the current need will be inadequate by
the time the building is ready. He is basing the $100 million on
other new labs, including Alaska's health lab and virology lab.
9:23:48 AM
SENATOR FRENCH said Mr. Tanaka is his ski buddy. He surmised
that the building would be designed to be able to add a layer.
He asked how many floors can be added if needed.
MR. TANAKA said over two stories is not allowed on the south
side of Tudor Road. At the new site, the building can be
expanded laterally. It will be oriented to do that. It is sized
for 2020 and can be enlarged later. The new building cannot go
above two stories.
9:26:23 AM
SENATOR BUNDE said he has similar concerns, and he questioned
the success of bonds in Anchorage. He asked if construction can
be done in stages or if it is an all-or-nothing proposition.
MR. TANAKA said it is possible, but in this case it would not be
economic. It will cost much more to split the project into two
phases because it needs to be laid out programmatically. To add
on would be inefficient. It would be like adding a bedroom to
the other side of your garage. It is sized for the year 2020.
SENATOR BUNDE surmised the 50,000-foot lab would be adequate for
the near future, and 80,000 square feet would be needed in 2020.
9:29:01 AM
MR. TANAKA said by the time it is complete in 2012, 50,000
square feet will nearly be inadequate. It would be fully
consumed over the remaining 12 years of its life.
SENATOR BUNDE suggested he refer to the footprint that the lab
will need when it moves in, not what is needed today, in order
to not give the impression that the building is excessive.
9:30:07 AM
SENATOR GREEN said she assumes the building includes all
equipment, which would be more expensive than building an
office. Much of the $100 million will go into the equipment.
MR. TANAKA said that is true. This is the third lab that he has
managed. Labs are inherently expensive, especially a public
safety lab, which is mechanically and architecturally complex.
9:32:13 AM
CHAIR MCGUIRE said the retired troopers put on a very popular
DNA information session for the public. She asked if the lab
will have teaching space for the staff and the public. Educating
the community on how law enforcement solves crime is good.
MR. TANAKA said there is a lab classroom. As the building is
expanded, there are opportunities to accommodate.
MR. GLASS said there is a classroom in the present lab for
teaching law enforcement officers about toxicology and breath
samples, for example. There is one in the new plan, too.
9:34:32 AM
CHAIR MCGUIRE asked for maps and plans for the committee.
SENATOR FRENCH wants to know why bonding is proposed instead of
using general funds.
CHAIR MCGUIRE said the committee supports the crime lab and has
gotten more technicians for it. She is "hoping to get that DNA
backlog as a result of the DNA expansion that Senator Bunde and
others have worked on." She hopes the voters support the lab.
9:36:31 AM
SENATOR BUNDE said he doesn't have a lot of confidence that the
voters will pass this, and he asked about a backup plan if the
bonds do not pass.
MR. GLASS said he doesn't have a backup, but a delay will add
about $10 million per year. The public needs to be convinced
that the lab is needed for the benefit of the citizens.
SENATOR BUNDE said he wants an adequate crime lab. He encouraged
him to think about doing it in stages. "If that doesn't work --
and I know that it will cost more in the future - we probably
should then have some thoughts about stepping up and doing it
out of [general funds]."
9:38:31 AM
CHAIR MCGUIRE said that would be good to think about. Something
bad might happen, "because I've been over to the crime lab and
it's just overwhelming … the lack of space that you have and the
kinds of things you're trying to do." The time is now. Voters
can be conservative. Schools in need were voted down, she said.
MR. GLASS said the lab director is educating the public. Things
like the "CSI" camps for children help sell the lab.
9:40:11 AM
BRIAN ANDREWS, Deputy Commissioner, Department of Revenue (DOR),
said it is the lowest interest environment in 20 years. A
general obligation bond would have an interest structure of 4.5
to 5.2 percent -- very low. The rates may even decline. A bond
will be cheap, but there are no costs associated with taking the
money from the general fund. However, the state has about $8.6
billion in liability from the pension fund with a cost of 8.25
percent, "so you might take that $100 million and … pay down
that higher expense." Although it is an allusive figure, the
state debt probably won't affect the state credit rating.
9:42:40 AM
SENATOR BUNDE said he wants a crime lab, but many people in his
district won't go into debt if they have the cash. The long-
range interest rate may decline in a recession, but investment
income may also go down, so it may balance each other. He asked
what it would take to get a net zero in long-term investment -
"how much money would we have to have invested at what rate so
that the bonding is a wise thing to do that actually doesn't
cost the state money," and might even earn some.
MR. ANDREWS said that is difficult to say. But, for example,
with $100 million invested, "historically, on average, we've
made about 9.25/9.5 percent off the retirement system."
Retirement systems are invested conservatively. "Depending on
the risk profile of the portfolio that we would look to … to
arbitrate out the cost of the debt, maybe $75 million" over the
same 30-year period. It depends on earnings results, which is
difficult to speak to.
SENATOR BUNDE suggested that if the state was just beginning the
project last week, "we would probably be discouraged."
MR. ANDREWS said, "That's absolutely correct."
9:45:32 AM
SENATOR FRENCH asked about the level of indebtedness now.
DEVON MITCHELL, Debt Manager, Department of Revenue, said the
state has about [$350] million in bonds now. The state hasn't
used general obligation bonds much; the last issuance prior to
2003 was 1983.
SENATOR BUNDE said the crime lab is important. The bond will
work for the public if the legislature puts "enough money away
and leaves it there." He said the guarantee can't be made
constitutionally, but "we can agree to do this; it will … put
this money away for 30 years." A future legislature can use the
money and the state is on the hook for all the debt service.
SENATOR BUNDE proposed Amendment 1, labeled 25-GS2043\A.1, Cook,
as follows:
Page 3, line 21:
Delete all material and insert:
"*Sec. 8. This Act takes effect on the effective date
of an Act enacted by the Twenty-Fifth Alaska State
Legislature that appropriates at least $100,000,000 to
the budget reserve fund (art. IX, sec. 17,
Constitution of the State of Alaska)."
SENATOR BUNDE said it would let the public know that there is
money put away, at least initially. The public would know "we
were serious about this, that we aren't going to bond and then
say, 'Oh King's X,' we're going to spend all that money anyway."
9:48:01 AM
MR. MITCHELL said he hasn't seen the amendment but cautioned
that there are internal codes that prohibit "transferred
proceeds, where you take money and invest it in a taxable type
of vehicle while it is pledged to the repayment of the bonds."
It's OK to make a deposit into the CBRF [Constitutional Budget
Reserve Fund], for example, and available for investment and
other purposes such as paying for some or all of the debt
service. One has to be careful, he said.
SENATOR BUNDE said the amendment calls for a deposit into the
CBRF that is available for appropriation, but with strong intent
language that the legislature is serious about making this
investment pay. It makes bonding a logical way to go.
CHAIR MCGUIRE asked for an opinion on the amendment.
9:49:32 AM
MR. MITCHELL suggested advice from the state's bond counsel.
SENATOR FRENCH said he would want legal advice. "We're all
committed to saving a bunch of money this session." Much more
than that will likely be deposited in the CBRF. He agrees that
money should be put away, but it will be done more globally.
9:50:20 AM
SENATOR BUNDE said he can hold back on his amendment.
CHAIR MCGUIRE said she wanted to move SB 223 to the finance
committee, but she'll hold it so DOR can look at the amendment.
SENATOR BUNDE said he hopes the state will be saving on a more
global basis, but if this mechanism was attached to the bill and
it goes out to the public, it will strengthen its passage.
CHAIR MCGUIRE said there is general trepidation about finances
throughout Alaska -- and the nation. But there is a surplus in
the budget because of high oil prices. There is confusion and
nervousness by voters about the future and committing the
state's resources with a bond, instead of using the surplus
money. People will be able to understand what Senator Bunde is
suggesting. She asked what the interest rate is on the $350
million of current general obligation bond debt.
9:52:44 AM
MR. MITCHELL said it is 2003 debt, so there were two series of
bonds, one for transportation, "which was Garvey-eligible, so we
can use federal highway funds to pay a portion of the debt
service." There was also accelerated transportation for state
projects at $102 million. There were educational projects, and
those interest rates had a substantial premium that was used to
pay debt service, "so they have a coupon that is a little bit
higher - it might be around 5 percent," but the actual interest
the state is paying is less because it received about $30
million over the par amount of the bonds when they were sold.
9:53:42 AM
SENATOR GREEN asked about the start time for the lab with the
two funding mechanisms. "What is the lag time with G.O. bonds?"
MR. MITCHELL said the biggest obstacle is the election in
November, and then it takes time to put the legal and financial
documents together. The money wouldn't be available until 2009,
at the earliest, but some work can move ahead after a yes vote.
SENATOR GREEN said that it could take over a year, and by using
the general fund, it would have an immediate effective date.
MR. MITCHELL said that can be addressed if general funds are
used for design and planning. It makes a lot of sense with bonds
because there are windows to spend tax-exempt bond proceeds
within - typically three years. The design process is lengthy to
ensure the right thing is built. He said he has dealt with
trying to compress those schedules and get the money spent in
that three-year window. It makes sense to have an investment and
then borrow money to fulfill the obligations.
9:55:52 AM
SENATOR FRENCH asked what amount of money is needed to get the
project started in the summer of 2009, and how that would be
split out from the bond money, "with the contingency that you
don't spend the money that we appropriate for 2009 if the bond
fails." Then the legislature can make a decision on how much
faith it has in the voters in the election that follows.
SENATOR BUNDE said a delay will cost $10 million.
CHAIR MCGUIRE said the amendment has not been formally offered,
and SB 223 will be set aside.
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