Legislature(1995 - 1996)

03/13/1996 01:45 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         MARCH 13, 1996                                        
                            1:45 P.M.                                          
                                                                               
  TAPE HFC 96 - 74, Side 1, #000 - end.                                        
  TAPE HFC 96 - 74, Side 2, #000 - end.                                        
  TAPE HFC 96 - 75, Side 1, #000 - #620.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark Hanley  called  the  House Finance  Committee                 
  meeting to order at 1:45 P.M.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative Jeannette James; Don Nessi, Deputy  Assistant                 
  Secretary for Native  American Programs, U.S.  Department of                 
  Housing and Urban Development (HUD),  Washington D.C.; Bryce                 
  Edgmon,  Aid, Representative  Richard  Foster; John  Bitney,                 
  Legislative  Liaison,  Alaska  Housing  Finance  Corporation                 
  (AHFC),  Department  of  Revenue,  Anchorage; Jacqueline  C.                 
  Johnson, Executive Director, Tlingit-Haida  Regional Housing                 
  Authority,  Juneau; Dan  Fauske, Executive  Director, Alaska                 
  Housing Finance Corporation  (AHFC), Department of  Revenue,                 
  Anchorage; Kay Murphy, Director, Mortgage Operations, Alaska                 
  Housing Finance  Corporation (AHFC), Department  of Revenue,                 
  Anchorage;  Mr.  Dillion,  (Testified  via  teleconference),                 
  Anchorage; Sam  S.  Kito  III,  Legislative  Liaison/Special                 
  Assistant,  Office   of  the  Commissioner,   Department  of                 
  Transportation  and  Public  Facilities;   Bob  Bartholomew,                 
  Deputy  Director, Income & Excise Audit Division, Department                 
  of  Revenue;  Arthur  Snowden II,  Administrative  Director,                 
  Alaska Court System; Elmer  Lindstrom, Special Assistant  to                 
  the Commissioner, Office of the Commissioner,  Department of                 
  Health and Social Services.                                                  
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 192    An Act relating to housing  programs of the Alaska                 
            Housing  Finance  Corporation,  the  corporation's                 
            supplemental   housing   development   grants   to                 
            regional  housing  authorities,  and   to  housing                 
                                                                               
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            programs  of  regional  housing  authorities,  and                 
            permitting regional housing  authorities to  make,                 
            originate, and service loans  for the purchase and                 
            development of residential housing.                                
                                                                               
            CS HB 192 (FIN) was reported out of Committee with                 
            "no recommendations" and  with a zero fiscal  note                 
            by the Alaska Housing Finance Corporation (AHFC).                  
                                                                               
  HB 284    An Act  relating to the Alaska  Commercial Fishing                 
            and Agriculture Bank.                                              
                                                                               
            CS HB 284 (FIN) was reported out of Committee with                 
            a "do pass"  recommendation and with fiscal  notes                 
            by  the  Commercial   Fisheries  (Limited)   Entry                 
            Commission and  the  Department of  Revenue and  a                 
            House Finance Letter of Intent.                                    
                                                                               
  HB 520    An  Act  relating  to   death  investigations  and                 
            inquests,  coroners,  public  administrators,  and                 
            medical  examiners,  including  the state  medical                 
            examiner; relating to the jurisdiction of district                 
            court judges  and  magistrates  in  certain  cases                 
            involving death.                                                   
                                                                               
            CS HB 520 (FIN) was reported out of Committee with                 
            a "do pass"  recommendation and with  fiscal notes                 
            by  the  Alaska Court  System  and  the Department                 
            Health and Social Services and  a zero fiscal note                 
            by the Department of Public Safety.                                
                                                                               
  HJR 49    Proposing amendments  to the  Constitution of  the                 
            State of Alaska creating a highway fund.                           
                                                                               
            HJR  49  was   HELD  in   Committee  for   further                 
            consideration.                                                     
  HOUSE BILL 284                                                               
                                                                               
       "An Act relating  to the Alaska Commercial  Fishing and                 
       Agriculture Bank."                                                      
                                                                               
  Co-Chair  Hanley asked  if  it  was  Representative  Brown's                 
  intent to move  Amendment #2  which had been  held from  the                 
  previous meeting.   Representative Brown noted that  she did                 
  not want to move  the amendment but planned to  instead move                 
  the Letter of Intent.                                                        
                                                                               
  Representative  Mulder  suggested amending  language  in the                 
  bill  on Page  11, Section  #20, deleting all  material from                 
  Lines 15 -  23.  Representative Mulder  MOVED the amendment.                 
  There being NO OBJECTION, it was adopted.                                    
                                                                               
                                2                                              
                                                                               
                                                                               
  Representative Brown  spoke to  the Letter  of Intent  which                 
  would request  that Commercial Fishing and  Agriculture Bank                 
  (CFAB) identify appropriate  measures for financing  options                 
  and then report those findings back to the Legislature.                      
                                                                               
  Representative Mulder MOVED to report CS HB 284 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  Representative Brown MOVED  to adopt  the Letter of  Intent.                 
  There being NO OBJECTION, it was adopted.                                    
                                                                               
  CS  HB 284  (FIN) was reported  out of Committee  with a "do                 
  pass" recommendation and with fiscal notes by the Commercial                 
  Fisheries (Limited)  Entry Commission and the  Department of                 
  Revenue.                                                                     
  HOUSE BILL 192                                                               
                                                                               
       "An  Act  relating to  housing  programs of  the Alaska                 
       Housing   Finance   Corporation,    the   corporation's                 
       supplemental  housing  development  grants to  regional                 
       housing  authorities,  and   to  housing  programs   of                 
       regional housing authorities,  and permitting  regional                 
       housing  authorities to  make,  originate, and  service                 
       loans for the  purchase and development of  residential                 
       housing."                                                               
                                                                               
  Co-Chair  Foster  MOVED  to adopt  work  draft  #9-LS0463\U,                 
  Chenoweth,  3/08/96, as  the  version before  the Committee.                 
  Representative Brown OBJECTED for purposes of discussing the                 
  changes.                                                                     
                                                                               
  BRYCE  EDGMON, AID,  REPRESENTATIVE  RICHARD FOSTER,  stated                 
  that the legislation before the Committee addresses existing                 
  programs within  Alaska Housing  Finance Corporation  (AHFC)                 
  and  would  also  provide  for  individual  regional housing                 
  authorities to investigate rural areas of the State in order                 
  to provide additional financing tools to make home mortgages                 
  more  available.    He  provided  Committee members  with  a                 
  sectional  analysis  of the  proposed  committee substitute.                 
  [Copy on file].   Mr.  Edgmon presented an  overview of  the                 
  sectional analysis.                                                          
                                                                               
  Representative  Brown  questioned  the relationship  between                 
  regional  housing  authorities and  AHFC.   She  asked which                 
  agency would determine who would receive the loans.                          
                                                                               
  JOHN  BITNEY, LEGISLATIVE  LIAISON,  ALASKA HOUSING  FINANCE                 
  CORPORATION  (AHFC),  ANCHORAGE,  responded,   the  regional                 
                                                                               
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  housing  authorities are restricted to  who they can grant a                 
  loan to.  Currently, statute allows loans made only to those                 
  areas  defined   as  "rural"  communities.     The  proposed                 
  legislation would expand the authority to make loans outside                 
  of rural communities.                                                        
                                                                               
  The  types  of  loans made  would  continue  to  be tied  to                 
  interest rates.   Mr. Bitney concluded that  statutes define                 
  regional  housing  authority   boundaries  as  identical  to                 
  regional corporation boundaries.                                             
                                                                               
  JACQUELINE  C.  JOHNSON,  EXECUTIVE DIRECTOR,  TLINGIT-HAIDA                 
  REGIONAL   HOUSING   AUTHORITY,  JUNEAU,   in   response  to                 
  Representative Martin's  concern, replied that  matching the                 
  supplemental grant program to the AHFC loan program does not                 
  exist at present.   Instead, the supplemental  housing grant                 
  funds match  the U.S.  Housing and  Urban Development  (HUD)                 
  appropriated dollars.   She  stressed that this  would be  a                 
  separate  issue  from mortgage  lending.   She  pointed out,                 
  also, that the  dollars primarily used for  regional housing                 
  authority had been allocated to  low income rentals.   "Real                 
  loan" programs began years ago as a result of not many loans                 
  being generated to the rural communities.                                    
                                                                               
  Ms. Johnson continued,  a problem arose because  the statute                 
  does not allow  regional housing authorities to  provide the                 
  loan  service.    The  proposed  legislation  requests  that                 
  change.  Representative  Martin asked how  small of an  area                 
  could qualify.   Ms. Johnson advised that  because the State                 
  had concerns with the rural  sized communities, they created                 
  fourteen regional housing authorities.  Each one is required                 
  to  come back  for  Legislative approval,  thus  prohibiting                 
  small villages from creating their own housing authority.                    
                                                                               
  Representative Martin  asked if  there was  anything in  the                 
  legislation that  could treat  urban areas differently  from                 
  rural  areas.    Mr. Bitney  explained  that  the authorized                 
  projects listed on Page  3, would tie areas to  the projects                 
  being constructed by  the regional  housing authority.   The                 
  legislation would not  authorize AHFC to go  "outside" those                 
  projects.                                                                    
                                                                               
  He noted that  the statute allows AHFC to authorize up to an                 
  eight-plex unit without  any type  of determination.   There                 
  must  be a feasibility  study and an  evaluation provided by                 
  AHFC.  The statute  allows AHFC to go beyond  an eight-plex,                 
  although  a special  determination must  first be  provided.                 
  The interest rate on the program would remain the same as it                 
  currently  is.    The legislation  would  only  "modify" the                 
  existing program.   Mr. Bitney indicated that  no preference                 
  would be created.                                                            
                                                                               
                                                                               
                                4                                              
                                                                               
                                                                               
  Representative Martin  inquired if  more than one  authority                 
  could exist in an urban area  to encourage competition.  Mr.                 
  Bitney suggested that beyond a regional housing authority, a                 
  party could rely  on banks.   Mrs. Johnson  added that  each                 
  housing authority does have public housing offered, and that                 
  development  corporations  do  exist  that  deal  with  only                 
  housing services.  She concluded,  in urban areas, different                 
  needs exist as do different funding source mechanisms.                       
                                                                               
  Representative Brown asked for further information regarding                 
  the "unfavorable"  report on the  Interior Regional  Housing                 
  Authority.                                                                   
                                                                               
  DAN  FAUSKE, EXECUTIVE  DIRECTOR,  ALASKA HOUSING  AUTHORITY                 
  (AHFC),  ANCHORAGE, stated,  last spring  when  the incident                 
  occurred, AHFC  immediately froze  that account  and sent  a                 
  team to work  with the new management.  At that time, a duel                 
  signatory  was  put   into  effect.    No  new   funds  were                 
  transferred until  the money  concern was  sorted out.   The                 
  issue has been resolved at this time.                                        
                                                                               
  Representative  Brown  WITHDREW  the OBJECTION  to  move the                 
  committee substitute.  There being NO further OBJECTION, the                 
  work  draft, #9-LS0463\U,  Chenoweth, 3/08/96,  was adopted.                 
  Mr.  Bitney  stated that  with  the version  adopted  by the                 
  Committee, the fiscal impact would be reduced to zero.                       
                                                                               
  Representative Kohring MOVED  to adopt Amendment #1.   [Copy                 
  on file].   The amendment would lower  the qualification age                 
  from   60   years   to   55   years  for   senior   housing.                 
  Representative  Martin  OBJECTED  for  discussion  purposes.                 
  Representative Kohring  explained that  the amendment  would                 
  allow people under the age of 60 years to be eligible  to be                 
  considered for senior  housing loans.   He  felt that  there                 
  existed a  housing demand among  those persons who  have not                 
  yet reached the  age of 60, assuming that  they have met the                 
  other criteria.                                                              
                                                                               
  Representative Martin stated that AHFC currently has a large                 
  demand for senior housing.  If the age limit is lowered, the                 
  problem  will   become  maximized.     Representative  Brown                 
  questioned the fiscal impact of the amendment.                               
                                                                               
  KAY MURPHY,  DIRECTOR, MORTGAGE  OPERATIONS, ALASKA  HOUSING                 
  FINANCE  CORPORATION  (AHFC),  ANCHORAGE,  stated  that  the                 
  senior  housing  loan  program  was  not  used  very  often.                 
  Borrowers seem  to fit  into the  "special needs"  category.                 
  She did not feel  that there would be a  tremendous increase                 
  in   activity    through   passage    of   the    amendment.                 
  Representative  Martin  asked  how  many  seniors  currently                 
  receive aid.  Ms. Murphy  replied that the senior population                 
  is the fastest growing  population in Alaska.   Lowering the                 
                                                                               
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  age to 55 years would encompass a  larger group of people.                   
                                                                               
                                                                               
  Ms. Johnson pointed  out that  currently, there are  subsidy                 
  programs within the federal government using the 55 year old                 
  category.    Through  adoption of  the  amendment,  a senior                 
  person would be able to tap into both  the federal and state                 
  level funding.                                                               
                                                                               
  (Tape Change, HFC 96-74, Side 2).                                            
                                                                               
  Co-Chair  Hanley expressed  concern  that  lowering the  age                 
  would place an increasing demand  on programs that currently                 
  exist.   Ms. Murphy  noted that  on the  federal level,  the                 
  possibility  exists of  decreasing  the  age  even  further.                 
  Allowances are made in the  guidelines for partnerships when                 
  only one member of the couple  is 60 years of age or  older.                 
  The other partner can  stay at the residence as  an eligible                 
  resident.  The guidelines are established as a loan program,                 
  and are available to seniors, 60 years of age or older.                      
                                                                               
  A roll call was taken on the MOTION to adopt the amendment.                  
                                                                               
       IN FAVOR:      Therriault,   Brown,   Kelly,   Kohring,                 
                      Mulder, Foster.                                          
       OPPOSED:       Martin, Hanley.                                          
                                                                               
  Representatives Parnell,  Grussendorf and  Navarre were  not                 
  present for the vote.                                                        
                                                                               
  The MOTION PASSED (6-2).                                                     
                                                                               
  Co-Chair  Foster  MOVED to  report CS  HB  192 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There being NO OBJECTION,  it was                 
  so ordered.                                                                  
                                                                               
  Representative Brown  asked AHFC authorities if  there would                 
  be fiscal  impact  through adoption  of Amendment  #1.   Mr.                 
  Fauske replied,  the result  would be  adjusted through  the                 
  loan  process.   AHFC provides  estimates each year  for the                 
  anticipated loan costs.  The legislation could increase that                 
  estimate, although he assumed it would be small.  If the cap                 
  was exceeded, AHFC would request supplemental funding.                       
                                                                               
  CS  HB  192   was  reported  out   of  Committee  with   "no                 
  recommendations" and with  a zero fiscal note  by the Alaska                 
  Housing Finance Corporation (AHFC).                                          
  HOUSE BILL 520                                                               
                                                                               
       "An Act relating to  death investigations and inquests,                 
                                                                               
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       coroners, public administrators, and medical examiners,                 
       including  the state medical  examiner; relating to the                 
       jurisdiction of  district court judges  and magistrates                 
       in certain cases involving death."                                      
                                                                               
  ARTHUR  SNOWDEN II,  ADMINISTRATIVE  DIRECTOR, ALASKA  COURT                 
  SYSTEM, spoke to HB  520 which would create a  unified death                 
  investigation  system  under  the  authority  of  the  State                 
  Medical Examiner within the Department  of Health and Social                 
  Services (DHSS).   The bill has a  net zero cost  with funds                 
  transferred from the  Alaska Court System to  the Department                 
  of Health and Social Services (DHSS) reflecting the transfer                 
  of death investigation responsibilities.                                     
                                                                               
  Co-Chair  Foster MOVED  to  adopt  work  draft  #9-LS1678\C,                 
  Lauterbach,  3/12/96, as the  version before  the Committee.                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Mr.  Snowden  provided  background history  on  the  coroner                 
  system used in  Alaska.  He  emphasized that the old  system                 
  did  not  work  well.    Magistrates  have no  knowledge  of                 
  forensic pathology.  If a magistrate declared the purpose of                 
  death,  and  then left  town, a  case  could not  be brought                 
  forth, without being subject to  challenge.  That system was                 
  used because there  was no  other alternative.   Using  that                 
  system, costs have always been significant.                                  
                                                                               
  Mr.  Snowden established  that a  number of  years  ago, the                 
  State Legislature provided  funding for a State  Medical Lab                 
  in Anchorage.  The proposed legislation would  provide for a                 
  professional medical examiner to better support the criminal                 
  justice system, by investigating deaths of concern to public                 
  health officers.   The  version before  the Committee  would                 
  leave  the  public  administrator  functions  in  the  Court                 
  System.   All other services  would be moved  to DHSS.   Mr.                 
  Snowden spoke to Amendment #1.  [Copy on file].  He  pointed                 
  out that Amendment #1 would address technical changes.                       
                                                                               
  Representative Grussendorf MOVED to adopt Amendment #1.                      
                                                                               
  ELMER LINDSTROM,  SPECIAL  ASSISTANT  TO  THE  COMMISSIONER,                 
  OFFICE OF THE COMMISSIONER, DEPARTMENT  OF HEALTH AND SOCIAL                 
  SERVICES,  stated   that  Amendment  #1  had  resulted  from                 
  suggestions made by Terry Lauterbach,  legal drafter.  There                 
  being NO OBJECTION, Amendment #1 was adopted.                                
                                                                               
  Mr.  Lindstrom  stated  that   DHSS  supports  the  proposed                 
  legislation.   The  role of  the medical  examiner has  been                 
  successfully  seated  in  that  Department.    Historically,                 
  supplemental  requests   have  been  made  to  address  that                 
  concern.  He pointed out that this is the first year  that a                 
  need  does  not  exist  for  a  supplemental  request  or  a                 
                                                                               
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  reallocation  within  the Division  of  Public Health.   The                 
  legislation will provide  further tools to curtail  costs in                 
  that area.                                                                   
                                                                               
  Mr. Lindstrom added that a new fiscal note would reflect the                 
  action  taken through the House Finance Committee substitute                 
  corresponding to the Court  System fiscal note.   The fiscal                 
  note reflects the public administrator position remaining in                 
  the Court System.                                                            
                                                                               
  Representative Brown inquired if the State examiner would be                 
  required  to fill out  a Certificate of  Death for everyone.                 
  Mr.  Lindstrom responded that the proposed legislation would                 
  not  provide a  change to  that  process.   If the  death is                 
  referred  to  the  State  medical  examiner,  it  would  not                 
  necessarily be the medical examiner who  fills out the death                 
  certificate,  but would be filed under  that authority.  Mr.                 
  Lindstrom understood that  every death  in the State  should                 
  have a death  certificate.  Representative Brown  noted that                 
  HB  371 had been provided  a DHSS fiscal  note for the costs                 
  associated with changing a death certificate.                                
                                                                               
  Co-Chair  Foster  MOVED to  report CS  HB  520 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CS HB  520 (FIN) was  reported out  of Committee with  a "do                 
  pass" recommendation  and with  fiscal notes  by the  Alaska                 
  Court  System  and  the  Department  of  Health  and  Social                 
  Services and a zero fiscal note  by the Department of Public                 
  Safety.                                                                      
  HOUSE JOINT RESOLUTION 49                                                    
                                                                               
       Proposing amendments to the  Constitution of the  State                 
       of Alaska creating a highway fund.                                      
                                                                               
  REPRESENTATIVE  JEANNETTE  JAMES  noted  that  HJR  49 would                 
  propose amendments to the Alaska State Constitution creating                 
  a dedicated transportation  fund.   The amendments would  be                 
  placed  before the  voters  of Alaska  at  the next  general                 
  election.                                                                    
                                                                               
  The  bill  would not  address an  amount  of motor  fuel tax                 
  increase,  but   merely  would  provide   a  mechanism   for                 
  allocating the proceeds from collection of fuel taxes.                       
                                                                               
  She  added  that the  resolution  has received  wide support                 
  relative to the  current level of  fuel taxes.  She  thought                 
  that Alaska's  citizens would  be more  willing to  accept a                 
  necessary increase in  their motor fuel  taxes if they  knew                 
                                                                               
                                8                                              
                                                                               
                                                                               
  the money would be utilized to address the need for improved                 
  maintenance of the roads and highways.                                       
                                                                               
  SAM  S.  KITO  III,  LEGISLATIVE LIAISON/SPECIAL  ASSISTANT,                 
  OFFICE OF THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND                 
  PUBLIC FACILITIES (DOTPF),  testified in support of  HJR 49.                 
  He pointed out that the resolution  contains the marine fuel                 
  tax component.  The Department would utilize that revenue to                 
  transfer facilities to local governments.                                    
                                                                               
  Mr.  Kito pointed  out  the Department's  recommendations to                 
  permit  highway expenditures  to include  construction.   He                 
  suggested  changing  the  vote from  3/5  to  3/4 consenting                 
  votes.                                                                       
                                                                               
  BOB BARTHOLOMEW,  DEPUTY  DIRECTOR, INCOME  &  EXCISE  AUDIT                 
  DIVISION,  DEPARTMENT OF  REVENUE, advised  that the  fiscal                 
  note  provided by the Department of Revenue would change the                 
  effective date to July 1, 1998.  At that point, proceeds for                 
  motor fuel tax would be deposited into a dedicated fund.  He                 
  added, the fiscal note only indicates the  impact of gasohol                 
  in the Anchorage area.  In FY95, gasohol was required use by                 
  the  Environmental Protection Agency  (EPA) in Anchorage for                 
  duration of a two month period.  During that two months, the                 
  State lost $2.4  million dollars in revenue,  resulting from                 
  the motor fuel tax exemption.  The stipulation  in Anchorage                 
  was increased from two to four  months required use, as well                 
  as two to four million gallons  being sold each month during                 
  the transition.  The estimates  include FY96 lost revenue in                 
  the amount of $6 million dollars.                                            
                                                                               
  Representative Mulder asked  if there was any  Alaskan grain                 
  used  in production  of  gasohol.   If  not, he  recommended                 
  revising  that  statute.     Representative  James   agreed,                 
  indicating  that there is a bill  in another committee which                 
  addresses that tax.   There  could be some  gasohol made  in                 
  Alaska, although most of it comes from outside.                              
                                                                               
  Mr.  Bartholomew  pointed  out  that  DOR's  dedicated  fund                 
  revenue dollars, includes a tax applied to off highway fuel.                 
  On  off  highway fuel,  an  eight  cents per  gallon  tax is                 
  charged, and then a six cent per gallon refund is made.  The                 
  resulting net  tax amounts  to two  cents per  gallon.   The                 
  Department collects $3.2 million dollars  per year from that                 
  tax.  That revenue is not reflected in the fiscal note.                      
                                                                               
  MR.  DILLION,  (TESTIFIED  VIA  TELECONFERENCE),  ANCHORAGE,                 
  testified in support  of HJR 49.   He requested that  intent                 
  language be added in order to tightly control the  dedicated                 
  fund,  stressing  that   the  fund  be  used   strictly  for                 
  maintenance  purposes.    He  recommended  that  a  tool  be                 
  implemented to focus behavior in  spending fuel tax revenue.                 
                                                                               
                                9                                              
                                                                               
                                                                               
  He stressed  that he  would be  against using  the fund  for                 
  construction.  It  must be a  maintenance fund, and be  used                 
  for highways only.  Mr. Dillion noted that his company would                 
  not support the marine portion of the legislation.                           
                                                                               
  In  response to  Representative  Therriault's question,  Mr.                 
  Bartholomew  noted  that   a  separate   account  would   be                 
  maintained for the marine  fuel.  Mr. Kito added,  DOTPF has                 
  established that there  is not enough revenue even  with the                 
  proposed tax increases  to expand beyond maintenance  of the                 
  highway system.                                                              
                                                                               
  Co-Chair Hanley  advised that  there is  not enough  revenue                 
  available without a  tax increase to  cover the needs.   The                 
  public wants to  see current  roads being maintained  rather                 
  than  new  roads being  built  with those  funds.   Co-Chair                 
  Hanley voiced his  concern adding "construction" to  the use                 
  of the fund.                                                                 
                                                                               
  Representative  James noted  that  Commissioner Perkins  had                 
  indicated in a  previous committee discussion, that  federal                 
  funds  to  Alaska would  be  reduced, which  would  create a                 
  reduction to the federal tax requirement.  That action would                 
  provide  a  need for  the State  to  tax, thus  placing more                 
  revenue into that account.                                                   
                                                                               
  Mr. Kito noted  that a general accounting office  report had                 
  been released in January, 1996, which indicates how the U.S.                 
  Congress  plans  on  putting   together  the  next   funding                 
  authorization for the Federal Highway  Trust Fund.  In  four                 
  of  the  seven scenarios,  Alaska  went from  receiving $230                 
  million dollars to being allocated approximately $40 million                 
  dollars.                                                                     
                                                                               
  Mr.  Dillion  questioned  how  the  ferry  system  would  be                 
  integrated as  part of  the highway system.   He  understood                 
  that ferries do not pay a fuel tax.  Mr. Kito responded that                 
  some activities on the ferry  system would be permissible as                 
  an expenditure.  The primary focus would be pavement, repair                 
  and  maintenance from  the dedicated  fund.   Representative                 
  James agreed that within the legislation, the marine highway                 
  would be  an allowable  use of  fund monies  for maintenance                 
  only.                                                                        
                                                                               
  (Tape Change, HFC 96-75, Side 1).                                            
                                                                               
  Representative  Brown asked  how  much  the State  currently                 
  spends  on highway maintenance.   Mr. Kito  replied the best                 
  estimate  of the  direct  and  indirect  FY95 costs  is  $75                 
  million dollars.   The indirect expenses would  include some                 
  administrative costs which helps to keep  equipment working.                 
  The Department does not have a  clearly defined break-out of                 
                                                                               
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  those costs.   Representative Brown asked the  current costs                 
  of construction and  improvement of harbor facilities.   Mr.                 
  Kito replied that FY97 budget  requests a $1 million  dollar                 
  appropriation for the  harbor fund.   He added, those  costs                 
  have averaged approximately  37% of the amount  collected in                 
  fuel tax.   The  balance would  be placed  into the  general                 
  fund.                                                                        
                                                                               
  Representative  Brown  pointed  out  that  passage   of  the                 
  legislation  would provide  that  revenue  available to  the                 
  general fund  be decreased  and the  amount spent  on harbor                 
  construction be increased by $7.6 million dollars.  Co-Chair                 
  Hanley  suggested that  costs could be  added to  the amount                 
  currently spent.  He voiced concern with that portion of the                 
  bill, pointing out that  it could increase by six  times the                 
  expenditures  for  ports  and  harbors.     Co-Chair  Hanley                 
  recommended separating the issues.                                           
                                                                               
  Representative  Brown  asked how  much  the State  spends on                 
  maintaining local government  roads.  Mr. Kito  replied that                 
  revenue for local government road maintenance passes through                 
  the Department of Community and Regional Affairs (DCRA) in a                 
  revenue sharing request, for a road program component in the                 
  amount of $4.4 million dollars.   Representative Brown asked                 
  if  local  governments  would be  entitled  to  some of  the                 
  maintenance money.   Mr. Kito  commented that provision  had                 
  been included  in order  to prevent incentive  to take  over                 
  roads.  Without increasing the tax  rate, there would not be                 
  enough revenue  for the  State to  initiate the  transfer or                 
  sharing program.  Mr. Kito  noted that the "airport  system"                 
  would not  be considered a "highway" within  the language of                 
  the legislation.                                                             
  Mr. Kito  spoke to  upgrading facilities  which belong  to a                 
  municipality.   The Department currently is negotiating with                 
  the  municipalities  to  determine  the level  of  community                 
  acceptance.     He  added,   the  Department  is   currently                 
  investigating  a   "tax  sharing"   mechanism,  whereby,   a                 
  community that  does accept  ownership of  a facility  would                 
  also receive a portion of the tax revenue collected.                         
                                                                               
  Discussion  followed  among   Committee  members   regarding                 
  inclusion  of  the   marine  highway   to  the   resolution.                 
  Representative  Brown  inquired   if  the  State   currently                 
  collects  shared taxes on behalf of  local governments.  Mr.                 
  Bartholomew  replied  that the  State  does not  collect any                 
  shared highway or marine  fuel taxes.  A minimum  amount has                 
  been collected for aviation air revenue.                                     
                                                                               
  Representative Brown argued  that if the Constitution  is to                 
  be  amended,   the  new  language  should  be  clear.    She                 
  recommended  deletion  of  Section  (b).    Co-Chair  Hanley                 
  replied that there should exist  some statutory mechanism to                 
                                                                               
                               11                                              
                                                                               
                                                                               
  address   when    the   State   collects   taxes   for   the                 
  municipalities.     He   questioned  who   would   pay   the                 
  administrative costs.                                                        
                                                                               
  Co-Chair Hanley  interjected that he  was not in  support of                 
  including  the marine  fuel  tax, suggesting  that  it be  a                 
  separate issue.  Discussion followed among Committee members                 
  regarding the marine fuel tax.   Representative Brown voiced                 
  opposition   to   creating    a   dedicated   fund   source.                 
  Representative Navarre  commented that the State  spends far                 
  more than collected  on highway  maintenance.  He  suggested                 
  that  the amount  assessed should  be increased,  otherwise,                 
  there would be no reason to pass a constitutional amendment.                 
  Representative  Navarre  suggested  the   harbor  facilities                 
  provision be removed.  He  added, if a dedicated fund  is to                 
  be  established,  a  3/5ths vote  would  not  provide enough                 
  protection  for  a dedicated  fund,  and recommended  that a                 
  3/4th or 4/5th  majority vote be required.   Co-Chair Hanley                 
  agreed.  Representative  Grussendorf elaborated his  support                 
  to include harbor maintenance.                                               
                                                                               
  HJR 49 was HELD in Committee for further consideration.                      
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:45 P.M.                                           
                                                                               
                                                                               
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