Legislature(2005 - 2006)HOUSE FINANCE 519
03/24/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 | |
| SB172 | |
| HB190 | |
| HB377 | |
| HB278 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 190 | TELECONFERENCED | |
| += | HB 266 | TELECONFERENCED | |
| += | HB 377 | TELECONFERENCED | |
| += | SB 172 | TELECONFERENCED | |
| += | HB 278 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 24, 2006
1:46 P.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:46:49 PM.
MEMBERS PRESENT
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Richard Foster
Representative Mike Hawker
Representative Mike Kelly
Representative Beth Kerttula
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Mike Chenault, Co-Chair
Representative Jim Holm
Representative Reggie Joule
ALSO PRESENT
Representative Harry Crawford; Representative Jim Elkins;
Mike Pawlowski, Staff, Representative Kevin Meyer; Suzanne
Cunningham, Staff, Representative Meyer; Joe Balash, Staff,
Senator Gene Therriault; Annette Kreitzer, Chief of Staff,
Office of the Lt. Governor; Heather Beaty, Staff,
Representative Harry Crawford; Whitney Brewster, Director,
Division of Elections, Office of the Lt. Governor; John
MacKinnon, Deputy Director, Department of Transportation and
Public Facilities; Jennifer Baxter, Staff, Representative
Jim Elkins
PRESENT VIA TELECONFERENCE
Aves Thompson, Director, Commercial Vehicle Enforcement,
Department of Transportation & Public Facilities, Anchorage;
Duane Bannock, Director, Division of Motor Vehicles,
Department of Administration, Anchorage
SUMMARY
HB 190 An Act relating to the purchase of alcoholic
beverages and to requiring identification to buy
alcoholic beverages; requiring driver's licenses
and identification cards to be marked if a person
is restricted from consuming alcoholic beverages
as a result of a conviction or condition of
probation or parole.
CS HB 190 (FIN) was reported out of Committee with
a "no recommendation" and with zero note #2 by the
Department of Administration and indeterminate
note #3 by the Department of Administration.
HB 266 An Act relating to offenses and penalties for
violation of vehicle weight limitations;
prohibiting the use of a violation of a vehicle
weight limitation for certain personal automobile
insurance actions; amending Rule 43.6, Alaska
Rules of Administration; and providing for an
effective date.
CS HB 266 (FIN) was reported out of Committee with
a "no recommendation" and with zero note #4 by the
Department of Commerce, Community & Economic
Development, zero note #5 by the Department of
Transportation & Public Facilities and
indeterminate note #6 by the Department of Law.
HB 278 An Act relating to the Alaska Municipal Bond Bank
Authority; permitting the Alaska Municipal Bond
Bank Authority or a subsidiary of the authority to
assist state and municipal governmental employers
by issuing bonds and other commercial paper to
enable the governmental employers to prepay all or
a portion of the governmental employers' shares of
the unfunded accrued actuarial liabilities of
retirement systems and authorizing governmental
employers to contract with and to issue bonds,
notes, or commercial paper to the authority or its
subsidiary corporation for that purpose; and
providing for an effective date.
CS HB 278 (FIN) was reported out of Committee with
"individual" recommendations and with a new
indeterminate note by the House Finance Committee
for the Alaska Municipal Bond Bank.
HB 377 An Act relating to an exemption from certain
registration and practice requirements for persons
preparing drawings or specifications related to
the construction of certain buildings.
CS HB 377 (L&C) was reported out of Committee with
a "do pass" recommendation and with zero note #1
by the Department of Commerce, Community &
Economic Development.
SB 172 An Act relating to the presentation of initiatives
and referenda on the ballot.
HCS CS SB 172 (FIN) was reported out of Committee
with a "do pass" recommendation, with two new
fiscal notes by the Office of the Lt. Governor and
the House Finance Committee and with the
accompanying title change resolution.
1:47:34 PM
HOUSE BILL NO. 266
An Act relating to offenses and penalties for violation
of vehicle weight limitations; prohibiting the use of a
violation of a vehicle weight limitation for certain
personal automobile insurance actions; amending Rule
43.6, Alaska Rules of Administration; and providing for
an effective date.
Co-Chair Meyer overviewed briefly the history of the bill.
REPRESENTATIVE JIM ELKINS, SPONSOR, introduced his staff,
Jennifer Baxter. He commented on the bill's process and
said he supports the version before the Committee.
Representative Weyhrauch indicated his gratitude for the
introduction of the legislation.
1:50:34 PM
Co-Chair Meyer inquired if Department of Transportation &
Public Facilities supports the bill.
JOHN MACKINNON, DEPUTY DIRECTOR, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, stated that the
Department does support the bill. He stated they had worked
with the trucking industry and have reached an agreement
providing an increase to the fine structure, as well as
enforceability.
1:51:33 PM
Vice Chair Stoltze made comments regarding the availability
of scales in the Chugiak area.
AVES THOMPSON, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
COMMERCIAL VEHICLE ENFORCEMENT DIVISION, DEPARTMENT OF
TRANSPORTATION & PUBLIC FACILITIES, ANCHORAGE, replied there
are not scales at all area pits but there are at the larger
ones. The Department is working to develop a strategy to
address vehicles that are operating within the accepted
weight limits. Vice Chair Stoltze voiced concern with
better compliance.
Co-Chair Meyer noted the differences between the House
Transportation Committee (HTC) and the House Finance
Committee (HFC) version, pointing out that the HFC one
addresses the violation practice. He asked why that was
necessary since the Department has the authority to go after
multiple offenders. Mr. Thompson agreed, acknowledging he
supports the House Finance Committee version.
Representative Foster MOVED to REPORT CS HB 266 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 266 (FIN) was reported out of Committee with a "no
recommendation" and with zero note #4 by the Department of
Commerce, Community & Economic Development, zero note #5 by
the Department of Transportation & Public Facilities and
indeterminate note #6 by the Department of Law.
At EASE: 1:55:04 PM
RECONVENE: 1:57:33 PM
SENATE BILL NO. 172
An Act relating to the presentation of initiatives and
referenda on the ballot.
Vice Chair Stoltze MOVED to ADOPT work draft #24-LS0859\U,
Kurtz, 3/24/06, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
SUZANNE CUNNINGHAM, STAFF, REPRESENTATIVE KEVIN MEYER,
addressed the modifications made to the committee
substitute. There are two essential changes from the House
Judiciary Committee (HJC) version.
· In the HJC version, there was a requirement that the
summary be no more than 100 words for each section.
The House Finance Committee (HFC) substitute reduces
that to 50 words per session.
· The HFC version requires the Division of Elections to
prepare and publish a pamphlet for the primary election
if there is an initiative that will appear on the
ballot. There is already a requirement in State law
that the Division of Elections prepare a pamphlet for
the General Election ballot, except for, in that
description, the summary would be 50 words or less.
2:00:12 PM
Representative Hawker asked if the interpretation as
proposed was for the 100 words and was meant for each
section or the entire bill. Ms. Cunningham replied that
when preparing the summery, the Division of Elections, in
describing each section of the initiative, could use up to
50 words only. There is no aggregate limit.
ANNETTE KREITZER, CHIEF OF STAFF, OFFICE OF THE LT.
GOVERNOR, clarified that would be a technical correction.
It is the job of the Lt. Governor to make that description,
not the Division of Elections.
2:01:54 PM
Representative Hawker asked further clarification. Ms.
Kreitzer reiterated it was clear to their office, that it
would be 50 words or less per section.
2:04:07 PM
Co-Chair Meyer acknowledged concerns but realized there must
be a limit to keep encouraging citizens to vote. The bill
also requires an information pamphlet sent out before the
election.
Representative Hawker asked if that was what was truly
intended. Ms. Kreitzer stated that the Legislature must
make the policy call and then the Lt. Governor and the
Division of Elections will carry it out.
2:05:30 PM
JOE BALASH, STAFF, SENATOR GENE THERRIAULT, responded to
queries by Representative Hawker noting that the sponsor
supports the proposed approach.
Representative Kelly asked what other states are doing to
address such concerns. Mr. Balash offered to research that.
Representative Kelly indicated his concern with the fiscal
note.
Representative Kerttula MOVED to ADOPT Amendment #2. Vice
Chair Stoltze OBJECTED.
Representative Kerttula noted that she supported including
the information in the voter pamphlet as voters could
actually take time to read it. The intent of the amendment
is to keep the ballot the same as it currently looks at 100
words; she did not think voters would actually read a 50-
word ballot. The amendment is meant to leave the 25-word
title limit alone but limit the description to 100 words.
2:09:21 PM
Mr. Balash commented that the sponsor was satisfied with the
product of the Committee.
Representative Hawker worried how realistic the amendment
would be. He thought that the Lt. Governor needs to have
the expanded authority to decide what is contained in the
voter's pamphlet. He did not support the amendment.
Representative Kerttula explained that her concern is the
actual ballot. Placing too many words on the actual ballot
is not good and the amendment could save money.
Co-Chair Meyer hoped that including the information in the
pamphlet, the voter would then be able to make the most
educated voting decision. Representative Kerttula agreed
about the pamphlet but thought that the extra language on
the ballot will make it more expensive and confusing.
2:12:44 PM
A roll call vote was taken on the motion.
IN FAVOR: Kerttula, Moses, Weyhrauch
OPPOSED: Kelly, Stoltze, Foster, Hawker, Meyer
Representative Holm, Representative Joule and Co-Chair
Chenault were not present for the vote.
The MOTION FAILED (3-5).
2:14:28 PM
Representative Kelly reiterated concerns regarding how other
states are addressing the concern.
2:15:42 PM
WHITNEY BREWSTER, DIRECTOR, DIVISION OF ELECTIONS, OFFICE OF
THE LT. GOVERNOR, stated that the Municipality of Anchorage
has the full language on their ballot and had heard mixed
reactions to that.
Representative Kelly hoped that researched information could
be brought forward to the House Rules Committee. Co-Chair
Meyer noted that Mr. Balash would research it.
2:16:34 PM
Co-Chair Meyer pointed out that the Lt. Governor would be
receiving plenty of latitude with up to 50 words. He
pointed out the new fiscal note.
Ms. Cunningham advised that there had been discussions with
the Office of the Lt. Governor and the Division of Elections
regarding the changes made in the version before the
Committee, particularly the provision that requires them to
print a pamphlet. If there was a need for something on the
general election ballot, they prepared a cost estimate,
indicated by fiscal note dated 3/24/06, itemizing the
contractual costs. Through continuing discussions, the
Division has "real concerns" regarding the length of various
initiatives that may appear on the ballot. She recommended
both notes be moved with the bill:
· The one dated 2/10/06, Office of the Lt. Governor,
and
· The new one proposed by the House Finance Committee.
Ms. Cunningham believed the final costs could be rectified
during the Conference Committee action.
2:19:48 PM
Co-Chair Meyer knew that the Lt. Governor's office wanted to
avoid a supplemental request. Ms. Kreitzer acknowledged
that was correct. She appreciated the Committee working
with their Office to avoid such action.
2:20:23 PM
Representative Weyhrauch appreciated the testimony.
Representative Foster MOVED to REPORT HCS CS SB 172 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. There being NO OBJECTION, it
was so ordered.
2:21:24 PM
Ms. Cunningham pointed out that the substitute adopted by
the Committee, includes a reference to election pamphlets,
which must be incorporated into the title. Consequently,
there is an accompanying title change resolution.
Co-Chair Meyer stated that the bill would be passed from
Committee including the accompanying title change
resolution.
HCS CS SB 172 (FIN) was reported out of Committee with a "do
pass" recommendation, with two new fiscal notes by the
Office of the Lt. Governor and the House Finance Committee
and with the accompanying title change resolution.
2:23:02 PM
HOUSE BILL NO. 190
An Act relating to the purchase of alcoholic beverages
and to requiring identification to buy alcoholic
beverages; requiring driver's licenses and
identification cards to be marked if a person is
restricted from consuming alcoholic beverages as a
result of a conviction or condition of probation or
parole.
Vice Chair Stoltze MOVED to ADOPT work draft #24-LS0617\P,
Luckhaupt, 3/21/06, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
2:23:43 PM
REPRESENTATIVE HARRY CRAWFORD, SPONSOR, deferred comments to
his staff, Ms. Beaty.
HEATHER BEATY, STAFF, REPRESENTATIVE HARRY CRAWFORD,
highlighted the changes made from version "X" to version "P"
- before the Committee.
· Page 2, Lines 9 & 10, references were added to AS
28.35.030 and 28.35.032, which clarifies that the
intent of the bill, only persons convicted under
Alaska's drunken driving and refusal to submit to
breathalyzer, would receive a marked license or State
ID.
· Page 3, Line 3, adds that the description of the mark
on the license reflect, "not to enter or consume". The
idea was that could help the Division of Motor Vehicles
understand what is needed on the actual license. It
would also provide better understanding to the business
selling alcohol and what they should be looking for.
· Page 3, Lines 28 & 29, & Page 4, Lines 3 & 4,
incorporates Amendment #1 adopted by the Finance
Committee at the last hearing, and clarifies that the
license must reflect the mark and other information
that the bill might require.
2:26:28 PM
Co-Chair Meyer was encouraged by the support from the Brown
Jug, wholesaler.
Representative Kelly asked about the mark on the license and
the six-year time limit. Representative Crawford explained
that the person would have to surrender their license at the
time stopped by the police. The new license would have a
mark for a prescribed amount of time.
2:27:31 PM
Vice Chair Stoltze asked the intent of Section 1.
Representative Crawford replied that the responsibility
would be voluntary and it would only restrict the purpose
for buying alcohol; it would not restrict them from entering
a premise.
2:29:12 PM
Co-Chair Meyer MOVED to ADOPT Amendment #2, #24-LS0617\P.2,
Mischel, 3/23/06. Representative Hawker OBJECTED for
discussion purposes.
SUZANNE CUNNINGHAM, STAFF, REPRESENTATIVE KEVIN MEYER,
explained that Amendment #2 was drawn from concerns
regarding a restriction that a person might have in entering
an establishment that serves alcohol. The amendment would
delete "NEOC" on Page 3, Line 3 and would insert "ROC",
which is an abbreviation for "restriction on consumption".
Vice Chair Stoltze commented it would still allow the person
to go to a club but not be served.
Representative Hawker WITHDREW his OBJECTION. There being
NO further OBJECTION, Amendment #2 was adopted.
2:31:10 PM
Co-Chair Meyer MOVED to ADOPT Amendment #3, #24-LS0617\P.1,
Mischel, 3/24/06. Representative Hawker OBJECTED for
discussion purposes.
Ms. Cunningham explained Amendment #3, addresses
identification (I.D.) cards. She was concerned that if a
person was restricted from consumption, the card should
contain a mark during the person's probation or duration of
parole. The amendment only applies to driving under the
influence of alcohol or controlled substances and refusal to
submit to a Breathalyzer or chemical test. Drivers license
is usually the first thing taken at that time. To meet the
intent of the bill, the license should contain a restriction
on consumption during the period of probation and/or parole.
The amendment would help tighten up those concerns by
indicating the restriction.
Representative Crawford was okay with the amendment.
Representative Hawker WITHDREW his OBJECTION. There being
NO further OBJECTION, Amendment #3 was adopted.
2:33:45 PM
Co-Chair Meyer MOVED to ADOPT conceptual Amendment #4 to
Page 3, Line 31, deleting "Department of Corrections" and
inserting "Alaska Parole Board". Representative Hawker
OBJECTED for discussion purposes.
Ms. Cunningham explained that Amendment #4 provides
clarification submitted by the Department of Corrections.
Representative Crawford stated that he supports Amendment
#4.
Representative Hawker inquired if it would be appropriate to
indicate the Alaska Parole Board or the Department of
Corrections. Ms. Cunningham responded that the conceptual
amendment would remain with that intent depending on how the
duties were divided between the two.
Ms. Beaty advised that language came directly from the
Department of Corrections and the instructions were to
replace the language.
2:36:23 PM
Representative Hawker WITHDREW his OBJECTION. There being
NO further OBJECTION, conceptual Amendment #3 was adopted.
Co-Chair Meyer MOVED to ADOPT Amendment #5. Representative
Hawker OBJECTED for the purposes of discussion.
Ms. Cunningham explained that Amendment #5 would accomplish
the needed changes to address technical and drafting
concerns and would clarify the condition of parole for the
conviction of those crimes.
Representative Hawker WITHDREW his OBJECTION. There being
NO further OBJECTION, Amendment #5 was adopted.
2:37:52 PM
Co-Chair Meyer pointed out that the largest wholesaler in
the State of Alaska supports the bill. He applauded that
costs had been reduced.
Representative Kelly asked if there would be any liability
to a vendor if they had not checked the ID and then
something 'bad' occurred. Representative Crawford stated it
was not the intent of the legislation to place liability on
a vendor. The responsibility rests on the offender.
Representative Hawker applauded the amount of work done on
the bill, but maintained his reservations on the kind of
policy being proposed.
2:41:46 PM
Representative Crawford acknowledged that there had been
much deliberation on that concern and that the mark would
remain during the time the person was on orders from the
Court. He stated the merits keeping people with a drinking
problem during the specified time of their probation. He
stressed the number of people harmed and/or killed and the
amount of expense to the State.
Representative Hawker worried about protection issues and
thought the legislation would predominately be enforced on
young people; seniors are rarely carded. Representative
Crawford acknowledged that not every establishment would
check ID's.
2:46:20 PM
Representative Foster MOVED to REPORT CS HB 190 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
CS HB 190 (FIN) was reported out of Committee with a "no
recommendation" and with zero note #2 by the Department of
Administration and indeterminate note #3 by the Department
of Administration.
2:47:04 PM
HOUSE BILL NO. 377
An Act relating to an exemption from certain
registration and practice requirements for persons
preparing drawings or specifications related to the
construction of certain buildings.
MIKE PAWLOWSKI, STAFF, REPRESENTATIVE KEVIN MEYER, updated
the Committee on the work done to address safety issues
since the bill was last heard. He indicated that each side
was present for testimony.
2:49:02 PM
Co-Chair Meyer said there would be no public testimony as it
had been closed at the previous hearing. He mentioned
concerns regarding how it could work within statewide cities
& towns. Mr. Pawlowski acknowledged discussion regarding
that concern. Most places have building departments and
planning review divisions. There was concern that the staff
providing reviews might not be structural engineers. That
argument was countered that building codes prohibit third
stories being built in areas where earthquakes or high winds
exist and it is a mute point for the bill. He thought
reviews by structural engineers add expense. Mr. Pawlowski
advised that Alaska Statute, Page 2, Lines 13 & 14, itemizes
the exceptions.
2:51:18 PM
Mr. Pawlowski added that per request of Representative
Kelly, contact with various statewide building departments
was made and have remained neutral on the bill.
Representative Hawker noted he initially expressed
reservation out of deference to the Architects, Engineers,
and Land Surveyors (AELS) Board, but his position had
changed and now supports the bill.
2:53:27 PM
Vice Chair Stoltze pointed out the high cost of building
residential units statewide and how costs associated with
engineering increase that price tag. He emphasized the
escalation of building costs, stating he would support the
bill.
2:55:14 PM
Co-Chair Meyer understood that it would conform the Alaska
code to the International Building and Residential code.
Mr. Pawlowski stated that there might be some distinction in
the residential code.
Representative Kerttula voiced the serious concerns that are
not being acknowledged regarding load safety. She advised
that she would address those concerns on the House Floor.
2:56:18 PM
Representative Foster MOVED to REPORT CS HB 377 (L&C) out of
Committee with individual recommendations and with the
accompanying zero note.
CS HB 377 (L&C) was reported out of Committee with a "do
pass" recommendation and with zero note #1 by the Department
of Commerce, Community & Economic Development.
2:57:02 PM
HOUSE BILL NO. 278
An Act relating to the Alaska Municipal Bond Bank
Authority; permitting the Alaska Municipal Bond Bank
Authority or a subsidiary of the authority to assist
state and municipal governmental employers by issuing
bonds and other commercial paper to enable the
governmental employers to prepay all or a portion of
the governmental employers' shares of the unfunded
accrued actuarial liabilities of retirement systems and
authorizing governmental employers to contract with and
to issue bonds, notes, or commercial paper to the
authority or its subsidiary corporation for that
purpose; and providing for an effective date.
REPRESENTATIVE MIKE HAWKER, SPONSOR, explained that the bill
authorizes the Alaska Municipal Bond Authority to consider
issuing pension obligation bonds (POBs) at the request of
the State or a municipal governmental employer. POBs are a
proven and acceptable tool to manage pre-existing
liabilities for State and local pensions. Bond market
participants are receptive to POBs, including bond insurers,
rating agencies and investors.
HB 278 would expand the authority of the Alaska Municipal
Bond Authority to support the State or municipality that
wishes to include POBs in their strategy to reduce the cost
of meeting unfunded pension liabilities. The bill does not
authorize any debt instruments to be issued. The State or
municipality would need to take a separate specific action
to utilize the new ability of the Municipal Bond Bank
Authority.
Co-Chair Meyer MOVED to ADOPT Amendment #1. Representative
Weyhrauch OBJECTED.
Representative Hawker asked to AMEND Amendment #1: Delete
lines 28 - 31, Page 4. That section is not needed. There
being NO OBJECTION, it was deleted.
Representative Hawker explained that a title change might be
necessary. He observed that Amendment #1 pertains to the
Public Employees Retirement System (PERS) and Teachers
Retirement System (TRS) contributions in place prior to the
passage of legislation last year. The Department would have
the authority to make regulations to allow that the employer
could prepay a portion of the actuarial liability.
Representative Hawker continued, Page 1, Lines 19-22,
address the provision that indemnifies an employer that
makes a prepayment.
Section 2, highlights the State's statutory authority for
municipal debt authority. It answers questions brought up
in House State Affairs (HSTA) Committee and clarifies that 2
or more municipalities may come together to make that type
transaction.
3:04:08 PM
Representative Hawker pointed out that the Municipal Bond
Bank could pool those activities; the language is
permissive. He added that Item C was another provision
requested and would authorize municipalities to enter into
fund diversion agreements.
3:04:50 PM
Representative Hawker continued, Sections 3 - 5, recognizes
that the individual employer (TRS) contributions must be
prepaid all unfunded pension for unfunded service costs.
3:05:50 PM
Page 4 - Identical language relating to the PERS
transactions. Page 1, Line 10, provides a technical
correction. That section from Lines 13 - 26, is legislative
policy guiding the Alaska Municipal Bond Bank. That
language was rewritten, adding a provision addressing the
authority. The Bond Bank must operate as a self-sufficient
operation with no expectation of subsidization of State
funds.
3:07:56 PM
Representative Hawker pointed out that the University of
Alaska had been included.
3:08:11 PM
Representative Weyhrauch questioned what constraints would
be placed upon the University of Alaska.
Representative Hawker responded that would be "empty
authority" and subject to the internal accounting and
editing controls. The capital market would regulate any
such contemplated transaction along with the legislative
sidebars. He felt it would be difficult for the University
to secure such a transaction without sufficient legislative
support. He did not believe the State would be overexposed.
Representative Weyhrauch stressed the need to address the
State's unfunded liability. He observed the extent of the
State's current liability @ $6.9 billion dollars.
Representative Hawker pointed out that the legislation would
only provide an additional tool in that toolbox and that the
program would be optional for municipalities.
Representative Kelly pointed out a technical correction on
Page 4, Line 25, that the period after "notes" should be a
comma. Representative Hawker concurred.
3:13:01 PM
Representative Hawker advised that the Department of Revenue
does not support the transactions; however, he reminded
members that the Legislature is an independent body. He
pointed out statewide interest in the legislation.
Co-Chair Meyer spoke in support of the bill.
Representative Weyhrauch spoke in support of additional
appropriations to municipalities, but noted that it was
unlikely that they would receive further State funds.
Representative Hawker pointed out that the State will not be
liable; he reiterated the municipality's desire for the
transaction. Co-Chair Meyer countered that the State is
ultimately responsible if the bonds default. Representative
Hawker stated it would be a moral liability, but not a
direct liability of the State.
3:16:34 PM
In response to a question by Representative Weyhrauch,
Representative Hawker explained that "pooling provisions"
were added to assist the smaller entities, which are feeling
the largest impact. The intent is to minimize the cost
associated with the liability. Smaller communities would be
more likely to avail themselves of assistance from the
municipal bond bank.
3:18:03 PM
Representative Kelly spoke in support of the legislation and
noted that the liability is nearly $7 billion dollars. He
felt the problem is worse than anticipated and that the
legislation could add an optional tool. He felt that there
were reasonable protections for the downside.
3:20:13 PM
Representative Kerttula questioned why the University of
Alaska had been included.
Representative Weyhrauch WITHDREW his OBJECTION to Amendment
#1 as amended. There being NO further OBJECTION, amended
Amendment #1 was adopted.
Representative Kerttula reiterated her question regarding
inclusion of the University. Representative Hawker
responded that it resulted from a request brought forward by
the University. They have a large outstanding pension
obligation and it would provide them the authority to use
the professional services available through the Alaska
Municipal Bond Bank.
3:22:12 PM
Representative Hawker reviewed the definition of
governmental employer and observed that the University would
fall under that definition.
3:23:21 PM
Representative Weyhrauch suggested that the Department of
Law be included in the definition.
3:23:48 PM
Representative Kelly inquired if school districts would be
included. Representative Hawker noted that the bill was
drafted to encompass school districts, but pointed out that
most have higher regulatory structures.
3:25:00 PM
Representative Kelly observed that the term intercept funds
were used and/or a fund diversion, questioning if that was
fair. Representative Hawker agreed and acknowledged that a
transaction would not occur if capital markets were not
favorable.
3:25:56 PM
Representative Weyhrauch advised that states using the
pension obligation bonds are currently in serious trouble.
He observed the high risk involved.
Representative Weyhrauch believed that the legislation could
provide a false sense of security. He acknowledged that it
could help address the problem, but emphasized the need for
prudence.
3:27:07 PM
Representative Hawker agreed that any financial transaction
has risks. He noted discussions in previous committees
about the misuse of such transactions and referred to backup
regarding ratings. Representative Hawker noted that most
failures occur when entities are not realistic or are too
aggressive. He maintained that the State of Alaska is
operating in an atmosphere of reality. The transactions
have exceeded 8 percent with a 2 - 3 percent arbitrage.
Compound interest works to the favor of the employer.
Representative Hawker emphasized that lessons learned in
other jurisdictions have been included into the proposal.
3:30:46 PM
Co-Chair Meyer pointed out the new indeterminate fiscal
note.
Representative Hawker agreed, explaining there is no way to
know if a transaction would be completed.
3:31:51 PM
Representative Kelly expressed frustration with the size of
the liability. He noted that there are Alaskans not
invested in solving the problem, and that employees must be
part of the solution.
3:33:27 PM
Representative Hawker observed that there are problems with
paying cash up front to cover the liability. The State
would forgo the ability to mitigate its obligation with
other funding sources. There are no simple solutions and
there is no silver bullet. The legislation is one tool in
the toolbox.
3:34:22 PM
Representative Weyhrauch spoke to the complexity of the
PERS/TRS system repayment and recommended deleting the
University of Alaska. Representative Hawker accepted the
change.
Representative Weyhrauch MOVED to delete "the University of
Alaska" on Page 5 of Amendment #1.
Representative Kelly did not object, however, pointed out
that the University has a significant problem, which also
must be solved. He recommended further deliberation on
inclusion of the University.
3:37:03 PM
Representative Hawker noted that the issue could be reviewed
in the Senate.
3:37:24 PM
Representative Weyhrauch stated that not withstanding
significant increases in K-12 payments that must be made to
the PERS/TRS system, the money should not be taken out of
the classrooms. He warned that including the University
would raise issues of "finances and politics". He urged
distinguishing the University from the school districts.
3:38:30 PM
There being NO OBJECTION, the University was deleted.
Representative Foster MOVED to REPORT CS HB 278 (FIN) out of
Committee with individual recommendations and with the
accompanying new indeterminate note.
CS HB 278 (FIN) was reported out of Committee with
"individual" recommendations and with a new indeterminate
note by the House Finance Committee for the Alaska Municipal
Bond Bank.
ADJOURNMENT
The meeting was adjourned at 3:39 P.M.
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