Legislature(2001 - 2002)
04/25/2002 02:14 PM House FIN
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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 25, 2002
2:14 PM
TAPE HFC 02 - 94, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:14 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Carl Moses
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Senator Ben Stevens; Representative Pete Kott, Sponsor;
Catherine Reardon, Director, Division of Occupational
Licensing, Department of Community and Economic Development;
Dean Guaneli, Chief Assistant Attorney General, Department
of Law; John Bitney, Legislative Liaison, Alaska Housing
Finance Corporation, Department of Revenue; Greg Winegar,
Director, Division of Investments, Department of Community
and Economic Development; Jon Carter, Director, Douglas
Island Pink and Chums, Juneau; Carl Rosier, Alaska Outdoor
Council, Juneau.
PRESENT VIA TELECONFERENCE
Joe Geldhoff, Mechanical Contractors of Alaska, Juneau; Dave
Cobb, Business Manager, Valdez Fisheries Development
Association, Valdez,
SUMMARY
HB 287 "An Act relating to the exemption of commercial
fishing entry permits from claims of creditors, to
loans to satisfy past due federal tax obligations
of commercial fishing entry permit holders, and to
loan origination charges for loans made by the
commercial fishing loan program to refinance a
debt obligation; and providing for an effective
date."
CSHB 287 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with two previously
published fiscal notes: DFG #1 and CED #2.
HB 318 "An Act relating to a health insurance uniform
prescription drug information card; and providing
for an effective date."
CSHB 318 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with two previously
published fiscal notes: ADM #1 and CED #2.
HB 399 "An Act relating to the Uniform Mechanical Code
and other safety codes; annulling certain
regulations adopted by the Department of Community
and Economic Development relating to the
mechanical code that applies to certain
construction contractors and mechanical
administrators; and providing for an effective
date."
CSHB 399 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with one previously
published fiscal note (REV #1); and two zero
fiscal notes: CED and LAW.
HB 519 "An Act authorizing priority treatment under the
Right-of-Way Leasing Act for an Alaska North Slope
natural gas project; expanding the scope for the
kinds of gas development projects that may become
qualified projects under the Alaska Stranded Gas
Development Act; extending the deadline for
submitting applications under the Alaska Stranded
Gas Development Act; exempting an Alaska North
Slope natural gas project from state property tax
and all municipal taxes during construction; and
providing for an effective date."
HB 519 was heard and HELD in Committee for further
consideration.
CSSB 266(RES)
"An Act authorizing the commissioner of community
and economic development to refinance and extend
the term of a fishery enhancement loan."
CSSB 266 (RES) was REPORTED out of Committee with
a "do pass" recommendation and with a previously
published fiscal note: CED #1.
HOUSE BILL NO. 399
"An Act relating to the Uniform Mechanical Code and
other safety codes; annulling certain regulations
adopted by the Department of Community and Economic
Development relating to the mechanical code that
applies to certain construction contractors and
mechanical administrators; and providing for an
effective date."
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL
LICENSING, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT
provided testimony on HB 399. She noted that the legislation
would nullify regulations adopted by the Division regarding
the definition of uniform mechanical code and mechanical
administrator and affect the mechanical contractor statutes.
She added that the House Labor and Commerce version also
provides some clarification regarding administration of the
program after repeal of the regulations. She stated that the
Division could work with CS HB 399 (L&C). The Division has
submitted a zero fiscal note with the proposed committee
substitute. Applicants would be given the choice of taking
their examinations on either the Uniform Mechanical Code of
1997 or the International Mechanical Code of 2000. After
December 31, 2003 the Division would test on the current
version of the mechanical code that has been adopted in the
state. She felt that health and safety would be protected
under either test.
DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, DEPARTMENT
OF LAW, stated that the department would support the House
Labor and Commerce version of the legislation. The
department supports clarification of the law, which the
legislation would provide.
JOE GELDHOFF, MECHANICAL CONTRACTORS OF ALASKA, JUNEAU,
testified via teleconference. He spoke in support of the
proposed committee substitute. He maintained that the Labor
and Commerce version does not clarify a number of issues; it
leaves the Alaska Housing Finance Corporation (AHFC)
hanging, does not meet concerns expressed by the
Municipality of Anchorage, and does not address the
legislative law making powers under the Constitution. He
asserted that the regulations are being used to adopt a new
code and should be annulled.
Representative John Davies clarified that the annulment
language is identical in the Labor and Commerce Committee
version and the proposed committee substitute, version O.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, observed that section 2
on page 2 amends the Alaska Housing Finance Corporation
(AHFC) statutes defining state building code. The
Corporation may not make or purchase a housing loan for
residential housing the construction of which begins after
June 30, 1992, unless the seller of the mortgage loan
complies with the state building code, which is defined in
the language being amended.
The current statutes provide that buildings funded by AHFC
must meet Uniform Building Code standards that were adopted
by the Department of Public Safety and mechanical standards
set out in the Uniform Mechanical Code that were adopted by
the Department of Public Safety. Last fall the Department of
Public Safety adopted the International Mechanical Code. The
legislation changes "Uniform Mechanical Code" to "mechanical
code". He pointed out that it would be cleaner to also
change "Uniform Building Code" to the more generic term
"building code" on line 10. He observed that statutes refer
to the standard adopted by the Department of Public Safety.
Therefore, the Alaska Housing Finance Corporation (AHFC) has
interpreted action by the Department of Public Safety to
mean that mortgages should confirm to the International
Mechanical Code. He stressed that confusion remains due to
the reference to the Uniform Mechanical Code in the statute.
Representative Lancaster questioned if "Uniform Plumbing
Code" should be changed to "plumbing code" on page 1. Mr.
Bitney noted that the reference on page 1 refers to
occupational licensing and is not an issue for AHFC.
Co-Chair Mulder MOVED to ADOPT Amendment 1: delete "uniform"
on page 2, line 10. There being NO OBJECTION, it was so
ordered.
Co-Chair Mulder MOVED to report CSHB 399 (FIN) out of
Committee with the accompanying zero fiscal note. There
being NO OBJECTION, it was so ordered.
CSHB 399 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with one previously published
fiscal note (REV #1); and two zero fiscal notes: CED and
LAW.
HOUSE BILL NO. 287
"An Act relating to the exemption of commercial fishing
entry permits from claims of creditors, to loans to
satisfy past due federal tax obligations of commercial
fishing entry permit holders, and to loan origination
charges for loans made by the commercial fishing loan
program to refinance a debt obligation; and providing
for an effective date."
Co-Chair Mulder MOVED to ADOPT proposed committee
substitute, work draft LS1106\S, dated 4/24/02. He explained
that the draft takes out sections of the legislation
pertaining to reconfiguration of the loan. Portions
requested by the Limited Entry Commission were retain and
the legislation meets with the Commission and sponsor's
concurrence.
Co-Chair Mulder MOVED to report CSHB 287 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 287 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with two previously published
fiscal notes: DFG #1 and CED #2.
#318
HOUSE BILL NO. 318
"An Act relating to a health insurance uniform
prescription drug information card; and providing for
an effective date."
Co-Chair Mulder MOVED to ADOPT proposed committee
substitute, work draft LS1061\X, dated 4/24/02. There being
NO OBJECTION, it was so ordered. He explained that the
committee substitute extends the effective date to July 1,
2004. He acknowledged that the amendment is a compromise and
noted that the sponsor concurs. The effective date would
allow a transition period.
Co-Chair Mulder MOVED to report CSHB 318 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 318 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with two previously published
fiscal notes: ADM #1 and CED #2.
#519
HOUSE BILL NO. 519
"An Act authorizing priority treatment under the Right-
of-Way Leasing Act for an Alaska North Slope natural
gas project; expanding the scope for the kinds of gas
development projects that may become qualified projects
under the Alaska Stranded Gas Development Act;
extending the deadline for submitting applications
under the Alaska Stranded Gas Development Act;
exempting an Alaska North Slope natural gas project
from state property tax and all municipal taxes during
construction; and providing for an effective date."
Co-Chair Mulder MOVED to ADOPT proposed committee substitute
22-LS1651\W, dated 4/25/02. There being NO OBJECTION, it was
so ordered.
REPRESENTATIVE PETE KOTT, SPONSOR, discussed the committee
substitute. He noted explained that the railroad bill was
included in the legislation: sections 2, 4, 5, 6, and 14. He
discussed other changes to the legislation. An end date, of
December 31, 2015, for application of the tax break was
added on page 7 lines 1 - 24. Language on page 9, line 10 -
13 clarifies that the exemption must be applied for and the
negotiation process must be agreed to.
HB 519 was heard and HELD in Committee for further
consideration.
CS FOR SENATE BILL NO. 266(RES)
"An Act authorizing the commissioner of community and
economic development to refinance and extend the term
of a fishery enhancement loan."
SENATOR BEN STEVENS, SPONSOR, explained that the legislation
authorizes the commissioner of the Department of Community
and Economic Development to refinance loans from the
Fisheries Enhancement Revolving Loan Fund. The Fund has been
in existence since 1974 and has about $112 million dollars
in loans. The legislation allows for refinancing of existing
loans but does not forgive interest or principle. The
director of the Division can allow the participants of the
loans to benefit from lower interest rates available in the
current markets. Loan terms can be extended at the
director's discretion. The director would report their
activities in relation to loan financing, refinancing or
extensions to the legislature.
Representative Hudson clarified that there are no scarcity
of funds for loans at the present time. Senator Stevens
noted that there is no shortage and that the balance of the
Fund would not jeopardized its ability to make new loans.
Representative Hudson spoke in support of the legislation.
Representative Harris questioned if there were a floor on
the legislation. Senator Stevens thought the floor was
6.25%.
GREG WINEGAR, DIRECTOR, DIVISION OF INVESTMENTS, DEPARTMENT
OF COMMUNITY AND ECONOMIC DEVELOPMENT, clarified that a
floor was not set. A ceiling was set that cannot exceed 9
and a half percent. The regulation ties into the prime rate
at prime plus one not to exceed 9.25 percent, adjusted on a
quarterly basis. He noted that the fund has done well and
they do not anticipate problems. The fund is revolving and
would not impact the general fund.
DAVE COBB, BUSINESS MANAGER, VALDEZ FISHERIES DEVELOPMENT
ASSOCIATION, VALDEZ, testified via teleconference. He noted
that loan refinancing is one of the tools needed for the
hatchery program to remain competitive in today's global
fisheries environment. Lower interest rates would allow
most hatcheries to reduce their annual loan payments and
costs of operations significantly.
Valdez Fisheries believes that while the legislation is very
important to the state hatchery program it is only one of
the many changes needed if the commercial fishing industry
in Alaska is to survive. The hatchery system created by the
legislature in 1974 has met or exceeds expectations. Harvest
of hatchery salmon exceeds one billion pounds, with a value
in excess of $340 million dollars over the last ten years.
The legislation would allow them to manage funds more
efficiently and effectively. He observed the level of global
competition. He asserted that the legislation makes good
business sense and would have no impact on General Fund
dollars.
JON CARTER, DIRECTOR, DOUGLAS ISLAND PINK AND CHUMS (DIPAC),
Juneau, testified in support of the legislation.
The private non-profit hatchery program was created by
the legislature to replace the hatchery program
operated by the state's Fish & Game FRED Division. The
FRED hatcheries operated through annual appropriations
to the State Department of Fish & Game. In effect, the
PNP hatchery program was created as a user pay entity
to reduce the draw on the state coffers. To get the
program started the State gifted some existing
hatcheries to Regional Corporations but primarily
created the "Fisheries Enhancement Revolving Loan
Fund". This fund, along with a tax on commercial
fishermen, was to provide construction and operational
funds as the enhancement programs developed.
Twenty-five plus years later, the PNP hatchery programs
are described, even by some of its detractors, as "some
of the best in North America." They have made dramatic
financial contributions to many areas of the State with
a total contribution of well over 1 Billion dollars.
The recent McDowell Report covering four of the State's
largest enhancement corporations certainly makes it
appear the program is an unqualified success.
That being said, we are still a business and are
responsible for budgets, payroll and of course debt
service. What we are asking for here is the ability to
refinance our debt at lower interest rates. This is
obviously going on in businesses all across the
country. Taking advantage of today's current low
interest environment just makes good business sense.
Simply put, refinancing will strengthen our financial
position, make us better able to pay our debt and more
able to continue doing our job of providing fish to the
commercial and sport fishers across the state. This
will mean principle and interest are paid into the fund
at a slower rate but loan demand on the fund has slowed
dramatically so the fund will remain financially sound.
CARL ROSIER, ALASKA OUTDOOR COUNCIL, JUNEAU, testified in
support of the legislation. He stressed that the hatchery
program in private hands has been a "real plus" for all user
groups and urged passage of the legislation.
In response to a question by Representative Hudson, Mr.
Rosier agreed that the program has been successful in
rebuilding and adding to natural stocks. He emphasized that
the marketing aspect was forgotten. The resources are in
good shape, but the right market needs to be found.
Representative Foster MOVED to report CSSB 266 (FIIN) out of
Committee with the accompanying fiscal note.
CSSB 266 (RES) was REPORTED out of Committee with a "do
pass" recommendation and with a previously published fiscal
note: CED #1.
ADJOURNMENT
The meeting was adjourned at 3:19 PM
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