Legislature(1993 - 1994)
04/20/1993 08:40 AM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
APRIL 20, 1993
8:40 A.M.
TAPE HFC 93 - 110, Side 2, #000 - end.
TAPE HFC 93 - 111, Side 1, #000 - end.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 8:40 A.M.
PRESENT
Co-Chair Larson Representative Brown
Co-Chair MacLean Representative Foster
Vice-Chair Hanley Representative Grussendorf
Representative Hoffman Representative Martin
Representative Navarre Representative Parnell
Representative Therriault
ALSO PRESENT
Representative Carl Moses; Kelley Sharp, Loan Manager,
Collection Branch, Division of Investment, Department of
Commerce and Economic Development; Duane Guiley, Director,
Administrative Services, School Finance, Department of
Education.
SUMMARY INFORMATION
HB 252 An Act amending the Commercial Fishing Loan Act to
authorize refinancing of existing loans made under
that Act.
HB 252 was reported out of Committee with "no
recommendation" and a new fiscal note by the
Department of Commerce and Economic Development.
HB 82 An Act relating to school construction grants and
major maintenance grants to school districts;
providing for school district participation in the
cost of school construction and major maintenance;
creating a major maintenance grant fund; and
providing for an effective date.
CS HB 82 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes by
the Department of Education dated 1/22/93,
the Department of Revenue dated 1/22/93 and
the Department of Transportation and Public
1
Facilities dated 1/22/93.
HOUSE BILL 252
"An Act amending the Commercial Fishing Loan Act to
authorize refinancing of existing loans made under that
Act."
REPRESENTATIVE CARL MOSES noted that HB 252 was introduced
to give the Department of Commerce and Economic Development
(DCED) the authority to refinance existing commercial
fishing loans. Most of the 1,200 commercial fishermen who
now have state loans are paying 10.5% in interest rates.
Regulations provide for new fixed rate loans at 2% above the
bank prime rate. Since the current bank prime rate is 6%,
current commercial fishing loans are now at 8% rates.
However, the Department of Commerce and Economic Development
has no mechanism to allow for current loans to be refinanced
to take advantage of the lower interest rates that are
currently available.
Commercial fishermen have been faced with low prices and
unpredictable fish returns. Following the disastrous 1991
salmon season, the Department approved loan extensions for
nearly half of the existing loans. More than 3000 fishermen
have reported filing back taxes in this year to the IRS.
The commercial fishing industry is obviously in bad shape.
Allowing fishermen to refinance their loans to reduce their
monthly payments is one way that the Legislature can help
the industry out.
Co-Chair Larson asked if four full time positions would be
necessary in order to provide the services. Representative
Moses acknowledged this figure was based on the possibility
that every loan would be refinanced.
Representative Parnell noted that the intent would be to
implement new fixed rate loans at 2% above the bank prime
rate; the interest would not be floating but rather fixed.
Co-Chair MacLean questioned hiring additional loan officers.
Representative Moses stated there would be an extra work
load in refinancing the loans. He stated that the
specifications to qualify would require a two year residency
and to hold a fishing permit.
KELLEY SHARP, LOAN MANAGER, COLLECTION BRANCH, DIVISION OF
INVESTMENTS, DEPARTMENT OF COMMERCE AND ECONOMIC
DEVELOPMENT, stated that the average loan size is
approximately $50 thousand dollars. The Department
anticipates that if the legislation is passed, they would be
annotated with requests. There currently are over 1200
2
loans on the books. He added, the cost to the borrower
would be approximately one half percent of the outstanding
balance.
Representative Hanley questioned how long it would take the
proposed four positions to execute the legislation. Mr.
Sharp stated the process would be completed within one year.
Representative Hanley and Mr. Sharp discussed regulation
changes necessary with the proposed legislation. Mr. Sharp
pointed out that the current delinquency rate is 11%.
Representative Grussendorf noted his support of the
legislation. He pointed out that many fishermen do not
qualify for loans from other places and advised the
Legislature would be a good investment.
Representative Therriault inquired as to the size of the
"pot". Mr. Sharp replied, the balance of the fund is $65
million dollars. Approximately, $6.8 million dollars is
generated annually from interest. Representative
Grussendorf asked if the 11% delinquency included those who
had petitioned to have their payment delayed. Mr. Sharp
noted they did. The seed money for the Commercial Fishing
Development Loan Fund originated from a $60 million dollars
general fund appropriation. However, $40 million dollars
has been reappropriated back to the general fund.
Co-Chair Larson inquired if the Department would be able to
implement the legislation with two of the four positions
requested. Mr. Sharp stated that they could although it
would slow down the process.
Representative Hanley questioned the intent of the fund. He
stated that it would be important that Alaskans receive
permits. He noted his concern with the depletion of the
fund. It will now include the IFQ program and the proposed
legislation. Mr. Sharp stated that the prioritzation of the
requests would be considered closely throughout the year in
order to satisfy both interests.
Representative Hanley MOVED to report HB 252 out of
Committee with individual recommendations and the fiscal
note cut in half. Representative Grussendorf OBJECTED in
order to comment. He recommended that three persons be
hired for the initial period of time. Representative
Grussendorf REMOVED his OBJECTION. There being NO
OBJECTION, it was so ordered.
HB 252 was reported out of Committee with a "no
recommendation" and with a fiscal note by the House Finance
Committee.
3
HOUSE BILL 82
"An Act relating to school construction grants and
major maintenance grants to school districts; providing
for school district participation in the cost of school
construction and major maintenance; creating a major
maintenance grant fund; and providing for an effective
date."
DUANE GUILEY, DIRECTOR, SCHOOL FINANCE, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION, explained
the changes to the work draft #8-GH1047\K dated 4/18/93, CS
HB 82 (FIN).
Representative Brown asked if the funds included in the
Governor's proposed version included more than just schools.
Mr. Guiley stated that the purpose of the Major Maintenance
Grant Fund described on Page 2, Line 10 and the School
Construction Fund are funds which are to be used to receive
an annual appropriation which is distributed from the
priority list in order to fund grants for that current year.
The new fund described in the legislation on Page 7 is
basically a holding account within the general fund whereby
appropriations can be made to that fund and then
appropriated to the mentioned funds.
Representative Brown asked if the first two funds would be
limited to K - 12. Co-Chair MacLean stated they would.
Co-Chair Larson asked the significance of the word
"municipal" being added to Page 2, Line 22. Mr. Guiley
replied that the full value of the ATM chart would begin at
$1 dollar. REAA's would have a full value determination of
zero. They would no longer be included in subsection (b).
The full value of the ADM chart would refer only to
municipal and borough districts.
Co-Chair MacLean provided the Committee with a handout.
[Attachment #1]. Page 2 lists capital improvement program
budget requests and the percentage calculation for each
area. Representative Martin noted his concern that the raw
fish tax clarification should be considered in the
calculation. Co-Chair MacLean pointed out that the Bristol
Bay area was included in the 30% evaluation.
Mr. Guiley noted that Subsection #E would limit the State
funds which have been described as debt reimbursement or
school construction grants. Other types of State funds
could be used as match.
(Tape Change, HFC 93-111, Side 1).
4
Mr. Guiley pointed out to the Committee that the measure
used to determine the percentage paid incorporates the
determination of real and personal property. There is no
valuation of the REAA's. Representative Martin voiced his
concern that the wealthy REAA community areas are not paying
their share.
Representative Therriault stated that the HESS version of
the bill placed the local contribution up to 50% whereas the
proposed work draft recommends 30% high local match. Co-
Chair MacLean stated that the match could be increased.
Co-Chair Larson MOVED that the version before the Committee
be #8-GH1047\K dated 4/18/93. There being NO OBJECTION, it
was so ordered. Co-Chair Larson MOVED to increase the ADM
to 35% for all those communities over $600 ADM. There being
NO OBJECTION, it was so ordered.
Co-Chair MacLean MOVED Amendment #1 [Attachment #1].
Representative Martin questioned which federal receipts
would be in jeopardy by the proposed amendment. Mr. Guiley
stated that impact aid funds, funds received at local
taxation can only be considered once for determining state
aid. The Federal Impact Aid Program has specific
regulations and statutes which govern federal law in
relation to the State's ability to deduct State aid to
receive money. The guidelines are strict and will off set
over $40 million dollars of State aid with federal receipts.
Mr. Guiley advised that the Department, when drafting the
regulations, formed a task group to help develop the new
prioritization and construction standards as well as
discussing the program.
Representative Grussendorf noted his concern that Pelican is
listed at the 30% match criteria. He thought that it would
be very difficult for that community to be capable to
provide the required match without at least a three year
period. Representative Brown emphasized that some
communities will not be able to accumulate the match without
a few years preparation time.
Mr. Guiley advised that part of the process of appropriating
the money will involve applications from the school
district. The school district establishes the scoop of the
project and the total value. At that point, if the proposed
legislation passed, the amount forwarded would be reduced by
the required match. The full value of the project would be
reported to the Legislature as well as the appropriation
amount reduced by the match established.
5
Representative Hanley asked why the amendment included value
"per ADM less than $200,000". Co-Chair Larson explained
this would place the obligation upon DOE to determine the
ability to spend the money and the willingness to spend that
money. There being NO OBJECTION with Amendment 1, it so
ordered.
Co-Chair MacLean MOVED Amendment #2. [Attachment #2].
There being NO OBJECTION, it was so ordered.
Co-Chair MacLean MOVED a language change to Page 2, Lines
28-29, placing a period after "a regional educational
attendance area is two percent". A new sentence would then
begin "The participating share of any district may be
satisfied by money from federal, local, or other sources".
There being NO OBJECTION, it was so ordered.
Representative Brown referenced Page 2, Line 15 and MOVED
the additional language after the word "chapter" inserting
"or AS 37.16.011". This would cross reference another fund.
Mr. Guiley stated that the Department would not object to
the addition of the language. There being NO OBJECTION, was
so ordered.
Representative Brown MOVED a language change to Page 2, Line
16 adding an additional sentence to read "A district shall
have five years to provide the required participating
share". Representative Hanley suggested that it be
clarified that the time would be after the appropriation was
made.
Representative Martin recommended that the lapse period be
three years. Mr. Guiley pointed out that the legislation
does not set the timing of the match requirement. The
Department anticipates that funds would be released to the
school district and that district would have a window of
opportunity to arrive at the local match. He felt that
extending the lapse period to five years could be
problematic. Representative Brown MOVED to change the
"five" to "three years". There being NO OBJECTION to the
amendment containing the three year period, it was so
ordered.
Representative Therriault MOVED a language change to Page 8,
Line 6 deleting "capital projects" and inserting
"facilities". There being NO OBJECTION, it was so ordered.
Representative Brown MOVED a language change to Page 8, Line
5 deleting "capital projects" and inserting "facilities".
There being NO OBJECTION, it was so ordered.
6
Co-Chair Larson MOVED to report CS HB 82 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 82 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Department
of Education dated 1/22/93, the Department of Revenue dated
1/22/93 and the Department of Transportation and Public
Facilities dated 1/22/93.
ADJOURNMENT
The meeting adjourned at 10:05 A.M.
HOUSE FINANCE COMMITTEE
APRIL 20, 1993
8:40 A.M.
TAPE HFC 93 - 110, Side 2, #000 - end.
TAPE HFC 93 - 111, Side 1, #000 - end.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 8:40 A.M.
PRESENT
Co-Chair Larson Representative Brown
Co-Chair MacLean Representative Foster
Vice-Chair Hanley Representative Grussendorf
Representative Hoffman Representative Martin
Representative Navarre Representative Parnell
Representative Therriault
ALSO PRESENT
Representative Carl Moses; Kelley Sharp, Loan Manager,
Collection Branch, Division of Investment, Department of
Commerce and Economic Development; Duane Guiley, Director,
Administrative Services, School Finance, Department of
Education.
SUMMARY INFORMATION
HB 252 An Act amending the Commercial Fishing Loan Act to
authorize refinancing of existing loans made under
that Act.
HB 252 was reported out of Committee with "no
recommendation" and a new fiscal note by the
7
Department of Commerce and Economic Development.
HB 82 An Act relating to school construction grants and
major maintenance grants to school districts;
providing for school district participation in the
cost of school construction and major maintenance;
creating a major maintenance grant fund; and
providing for an effective date.
CS HB 82 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes by
the Department of Education dated 1/22/93,
the Department of Revenue dated 1/22/93 and
the Department of Transportation and Public
Facilities dated 1/22/93.
HOUSE BILL 252
"An Act amending the Commercial Fishing Loan Act to
authorize refinancing of existing loans made under that
Act."
REPRESENTATIVE CARL MOSES noted that HB 252 was introduced
to give the Department of Commerce and Economic Development
(DCED) the authority to refinance existing commercial
fishing loans. Most of the 1,200 commercial fishermen who
now have state loans are paying 10.5% in interest rates.
Regulations provide for new fixed rate loans at 2% above the
bank prime rate. Since the current bank prime rate is 6%,
current commercial fishing loans are now at 8% rates.
However, the Department of Commerce and Economic Development
has no mechanism to allow for current loans to be refinanced
to take advantage of the lower interest rates that are
currently available.
Commercial fishermen have been faced with low prices and
unpredictable fish returns. Following the disastrous 1991
salmon season, the Department approved loan extensions for
nearly half of the existing loans. More than 3000 fishermen
have reported filing back taxes in this year to the IRS.
The commercial fishing industry is obviously in bad shape.
Allowing fishermen to refinance their loans to reduce their
monthly payments is one way that the Legislature can help
the industry out.
Co-Chair Larson asked if four full time positions would be
necessary in order to provide the services. Representative
Moses acknowledged this figure was based on the possibility
that every loan would be refinanced.
Representative Parnell noted that the intent would be to
implement new fixed rate loans at 2% above the bank prime
8
rate; the interest would not be floating but rather fixed.
Co-Chair MacLean questioned hiring additional loan officers.
Representative Moses stated there would be an extra work
load in refinancing the loans. He stated that the
specifications to qualify would require a two year residency
and to hold a fishing permit.
KELLEY SHARP, LOAN MANAGER, COLLECTION BRANCH, DIVISION OF
INVESTMENTS, DEPARTMENT OF COMMERCE AND ECONOMIC
DEVELOPMENT, stated that the average loan size is
approximately $50 thousand dollars. The Department
anticipates that if the legislation is passed, they would be
annotated with requests. There currently are over 1200
loans on the books. He added, the cost to the borrower
would be approximately one half percent of the outstanding
balance.
Representative Hanley questioned how long it would take the
proposed four positions to execute the legislation. Mr.
Sharp stated the process would be completed within one year.
Representative Hanley and Mr. Sharp discussed regulation
changes necessary with the proposed legislation. Mr. Sharp
pointed out that the current delinquency rate is 11%.
Representative Grussendorf noted his support of the
legislation. He pointed out that many fishermen do not
qualify for loans from other places and advised the
Legislature would be a good investment.
Representative Therriault inquired as to the size of the
"pot". Mr. Sharp replied, the balance of the fund is $65
million dollars. Approximately, $6.8 million dollars is
generated annually from interest. Representative
Grussendorf asked if the 11% delinquency included those who
had petitioned to have their payment delayed. Mr. Sharp
noted they did. The seed money for the Commercial Fishing
Development Loan Fund originated from a $60 million dollars
general fund appropriation. However, $40 million dollars
has been reappropriated back to the general fund.
Co-Chair Larson inquired if the Department would be able to
implement the legislation with two of the four positions
requested. Mr. Sharp stated that they could although it
would slow down the process.
Representative Hanley questioned the intent of the fund. He
stated that it would be important that Alaskans receive
permits. He noted his concern with the depletion of the
fund. It will now include the IFQ program and the proposed
legislation. Mr. Sharp stated that the prioritzation of the
requests would be considered closely throughout the year in
9
order to satisfy both interests.
Representative Hanley MOVED to report HB 252 out of
Committee with individual recommendations and the fiscal
note cut in half. Representative Grussendorf OBJECTED in
order to comment. He recommended that three persons be
hired for the initial period of time. Representative
Grussendorf REMOVED his OBJECTION. There being NO
OBJECTION, it was so ordered.
HB 252 was reported out of Committee with a "no
recommendation" and with a fiscal note by the House Finance
Committee.
HOUSE BILL 82
"An Act relating to school construction grants and
major maintenance grants to school districts; providing
for school district participation in the cost of school
construction and major maintenance; creating a major
maintenance grant fund; and providing for an effective
date."
DUANE GUILEY, DIRECTOR, SCHOOL FINANCE, DIVISION OF
ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION, explained
the changes to the work draft #8-GH1047\K dated 4/18/93, CS
HB 82 (FIN).
Representative Brown asked if the funds included in the
Governor's proposed version included more than just schools.
Mr. Guiley stated that the purpose of the Major Maintenance
Grant Fund described on Page 2, Line 10 and the School
Construction Fund are funds which are to be used to receive
an annual appropriation which is distributed from the
priority list in order to fund grants for that current year.
The new fund described in the legislation on Page 7 is
basically a holding account within the general fund whereby
appropriations can be made to that fund and then
appropriated to the mentioned funds.
Representative Brown asked if the first two funds would be
limited to K - 12. Co-Chair MacLean stated they would.
Co-Chair Larson asked the significance of the word
"municipal" being added to Page 2, Line 22. Mr. Guiley
replied that the full value of the ATM chart would begin at
$1 dollar. REAA's would have a full value determination of
zero. They would no longer be included in subsection (b).
The full value of the ADM chart would refer only to
municipal and borough districts.
Co-Chair MacLean provided the Committee with a handout.
10
[Attachment #1]. Page 2 lists capital improvement program
budget requests and the percentage calculation for each
area. Representative Martin noted his concern that the raw
fish tax clarification should be considered in the
calculation. Co-Chair MacLean pointed out that the Bristol
Bay area was included in the 30% evaluation.
Mr. Guiley noted that Subsection #E would limit the State
funds which have been described as debt reimbursement or
school construction grants. Other types of State funds
could be used as match.
(Tape Change, HFC 93-111, Side 1).
Mr. Guiley pointed out to the Committee that the measure
used to determine the percentage paid incorporates the
determination of real and personal property. There is no
valuation of the REAA's. Representative Martin voiced his
concern that the wealthy REAA community areas are not paying
their share.
Representative Therriault stated that the HESS version of
the bill placed the local contribution up to 50% whereas the
proposed work draft recommends 30% high local match. Co-
Chair MacLean stated that the match could be increased.
Co-Chair Larson MOVED that the version before the Committee
be #8-GH1047\K dated 4/18/93. There being NO OBJECTION, it
was so ordered. Co-Chair Larson MOVED to increase the ADM
to 35% for all those communities over $600 ADM. There being
NO OBJECTION, it was so ordered.
Co-Chair MacLean MOVED Amendment #1 [Attachment #1].
Representative Martin questioned which federal receipts
would be in jeopardy by the proposed amendment. Mr. Guiley
stated that impact aid funds, funds received at local
taxation can only be considered once for determining state
aid. The Federal Impact Aid Program has specific
regulations and statutes which govern federal law in
relation to the State's ability to deduct State aid to
receive money. The guidelines are strict and will off set
over $40 million dollars of State aid with federal receipts.
Mr. Guiley advised that the Department, when drafting the
regulations, formed a task group to help develop the new
prioritization and construction standards as well as
discussing the program.
Representative Grussendorf noted his concern that Pelican is
listed at the 30% match criteria. He thought that it would
be very difficult for that community to be capable to
11
provide the required match without at least a three year
period. Representative Brown emphasized that some
communities will not be able to accumulate the match without
a few years preparation time.
Mr. Guiley advised that part of the process of appropriating
the money will involve applications from the school
district. The school district establishes the scoop of the
project and the total value. At that point, if the proposed
legislation passed, the amount forwarded would be reduced by
the required match. The full value of the project would be
reported to the Legislature as well as the appropriation
amount reduced by the match established.
Representative Hanley asked why the amendment included value
"per ADM less than $200,000". Co-Chair Larson explained
this would place the obligation upon DOE to determine the
ability to spend the money and the willingness to spend that
money. There being NO OBJECTION with Amendment 1, it so
ordered.
Co-Chair MacLean MOVED Amendment #2. [Attachment #2].
There being NO OBJECTION, it was so ordered.
Co-Chair MacLean MOVED a language change to Page 2, Lines
28-29, placing a period after "a regional educational
attendance area is two percent". A new sentence would then
begin "The participating share of any district may be
satisfied by money from federal, local, or other sources".
There being NO OBJECTION, it was so ordered.
Representative Brown referenced Page 2, Line 15 and MOVED
the additional language after the word "chapter" inserting
"or AS 37.16.011". This would cross reference another fund.
Mr. Guiley stated that the Department would not object to
the addition of the language. There being NO OBJECTION, was
so ordered.
Representative Brown MOVED a language change to Page 2, Line
16 adding an additional sentence to read "A district shall
have five years to provide the required participating
share". Representative Hanley suggested that it be
clarified that the time would be after the appropriation was
made.
Representative Martin recommended that the lapse period be
three years. Mr. Guiley pointed out that the legislation
does not set the timing of the match requirement. The
Department anticipates that funds would be released to the
school district and that district would have a window of
opportunity to arrive at the local match. He felt that
extending the lapse period to five years could be
12
problematic. Representative Brown MOVED to change the
"five" to "three years". There being NO OBJECTION to the
amendment containing the three year period, it was so
ordered.
Representative Therriault MOVED a language change to Page 8,
Line 6 deleting "capital projects" and inserting
"facilities". There being NO OBJECTION, it was so ordered.
Representative Brown MOVED a language change to Page 8, Line
5 deleting "capital projects" and inserting "facilities".
There being NO OBJECTION, it was so ordered.
Co-Chair Larson MOVED to report CS HB 82 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 82 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Department
of Education dated 1/22/93, the Department of Revenue dated
1/22/93 and the Department of Transportation and Public
Facilities dated 1/22/93.
ADJOURNMENT
The meeting adjourned at 10:05 A.M.
13
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