Legislature(1997 - 1998)

04/28/1998 06:20 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
             HOUSE FINANCE COMMITTEE                                           
    April 28, 1998                                                             
                          6:20 P.M.                                            
                                                                               
TAPE HFC 98 - 132, Side 1.                                                     
TAPE HFC 98 - 132, Side 2.                                                     
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Therriault called the House Finance Committee                         
meeting to order at 6:20 P.M.                                                  
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Hanley   Representative Kelly                                         
Co-Chair Therriault   Representative Kohring                                   
Representative J. Davies  Representative Martin                                
Representative G. Davis  Representative Moses                                  
Representative Foster  Representative Mulder                                   
Representative Grussendorf                                                     
                                                                               
ALSO PRESENT                                                                   
                                                                               
Speaker Gail Phillips; Representative Ivan Ivan;                               
Representative Alan Austerman; Representative Jerry                            
Sanders; Portia Parker, Staff, Senator Mike Miller; Wendy                      
Redman, Vice President, University of Alaska; Carol                            
Carroll, Director, Division of Administrative Services,                        
Department of Natural Resources; Dwayne Wise, (Testified                       
via Teleconference), Rural Loans Program Manager, Alaska                       
Housing Finance Corporation, Department of Revenue,                            
Anchorage; John Bitney, (Testified via Teleconference),                        
Alaska Housing Finance Corporation, Department of Revenue,                     
Anchorage.                                                                     
                                                                               
SUMMARY                                                                        
                                                                               
SJR 35 Proposing an amendment to the Constitution of the                       
State of Alaska relating to participation in an                                
abortion.                                                                      
                                                                               
 HCS CSSJR 35 (FIN) was reported out of Committee                              
with a "do pass" recommendation and with a fiscal                              
note by the Office of the Governor dated 2/17/98.                              
                                                                               
HB 230 An Act relating to housing assistance provided by                       
the Alaska Housing Finance Corporation and to its                              
rural housing programs, to the corporation's                                   
supplemental housing development grants to                                     
regional housing authorities, and to housing                                   
programs of regional housing authorities;                                      
permitting regional housing authorities to make,                               
originate, and service loans for the purchase and                              
development of residential housing; and amending                               
definitions relating to various housing programs;                              
and providing for an effective date.                                           
                                                                               
 CS HB 230 (FIN) was reported out of Committee                                 
with "individual recommendations" and with a zero                              
fiscal note by the Department of Revenue.                                      
                                                                               
HB 488 An Act relating to the Alaska Royalty Oil and Gas                       
Development Advisory Board.                                                    
                                                                               
HB 488 was reported out of Committee with a "do                                
pass" recommendation and with a fiscal note by                                 
the Department of Natural Resources.                                           
SENATE JOINT RESOLUTION NO. 35                                                 
                                                                               
Proposing an amendment to the Constitution of the                              
State of Alaska relating to participation in an                                
abortion.                                                                      
                                                                               
Representative Martin MOVED to report SJR 35 out of                            
Committee with individual recommendations and with the                         
accompanying fiscal note.  Representative J. Davies                            
OBJECTED.                                                                      
                                                                               
Representative J. Davies explained that SJR 35 resulted                        
from an over reaction to a situation that that happened at                     
Valley Hospital in which people misread the significance of                    
the case.  He advised that an amendment to the constitution                    
is not required to accomplish the concerns of these people.                    
He noted that situations in which people are required to                       
perform an abortions against their will, do not exist, nor                     
is there any circumstance where private or religious                           
hospitals will be required to perform abortions if they do                     
not choose too.  A requirement specifying that a public                        
facility does not have to offer abortion services would be                     
unconstitutional.                                                              
                                                                               
Representative J. Davies stressed that the way the                             
resolution was worded would invite many lawsuits.  He                          
reiterated that the legislation is a reaction to a fear                        
that something might happen; there is noting in the record                     
that supports that fear.                                                       
                                                                               
Representative Kelly MOVED an amendment to the resolution,                     
inserting "elective" before "abortion" on Page 1, Line 9.                      
That change would address concerns by the Department of                        
Law.                                                                           
                                                                               
Representative Martin WITHDREW his motion to MOVE the bill                     
from Committee.  There being NO OBJECTION, it was                              
withdrawn.                                                                     
                                                                               
Representative Kelly MOVED the amendment.                                      
                                                                               
PORTIA PORTER, STAFF, SENATOR MIKE MILLER, noted that the                      
sponsor of the bill does not believe the amendment is                          
necessary but he would not oppose it.  There being NO                          
OBJECTION to the amendment, it was added.                                      
                                                                               
Representative Kohring voiced support of the SJR 35,                           
although, felt that the amendment weakened it.  He noted                       
that the legislation was good but should go further by                         
banning abortions completely in the constitution.                              
                                                                               
Representative Martin MOVED to report HCS CS SJR 35 (FIN)                      
out of Committee with individual recommendations and with                      
the accompanying fiscal note.  Representative J. Davies                        
OBJECTED.                                                                      
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Mulder, G. Davis, Foster, Kelly, Kohring,                            
Martin, Therriault, Hanley                                                     
OPPOSED:  Moses, J. Davies, Grussendorf                                        
                                                                               
The MOTION PASSED (8-3).                                                       
                                                                               
HCS CSSJR 35 (FIN) was reported out of Committee with a "do                    
pass" recommendation and with a fiscal note by the Office                      
of the Governor dated 2/17/98.                                                 
HOUSE BILL NO. 230                                                             
                                                                               
"An Act relating to housing assistance provided by the                         
Alaska Housing Finance Corporation and to its rural                            
housing programs, to the corporation's supplemental                            
housing development grants to regional housing                                 
authorities, and to housing programs of regional                               
housing authorities; permitting regional housing                               
authorities to make, originate, and service loans for                          
the purchase and development of residential housing;                           
and amending definitions relating to various housing                           
programs; and providing for an effective date."                                
                                                                               
Co-Chair Therriault MOVED that the work draft #0-LS0871\E,                     
Cook, 3/30/98, be the version before the Committee.  There                     
being NO OBJECTION, it was adopted.                                            
                                                                               
REPRESENTATIVE IVAN IVAN stated that HB 230 would modify                       
the rural loan programs in the Alaska Housing Finance                          
Corporation (AHFC), with regional housing authorities                          
improving the delivery of housing services.  The                               
legislation recognizes that Alaska's rural areas experience                    
unique circumstances which must be taken into account to                       
ensure that housing programs are administered practically                      
and fairly for all Alaskans.  The legislation recognizes                       
and relies on the role that regional housing authorities                       
play in the implementation of housing programs.                                
Representative Ivan explained that enactment of the bill                       
would greatly improve the quality of life for numerous                         
Alaskans living in small communities throughout the State.                     
                                                                               
JOHN BITNEY, (TESTIFIED VIA TELECONFERENCE), ALASKA HOUSING                    
FINANCE CORPORATION (AHFC), DEPARTMENT OF REVENUE,                             
ANCHORAGE, stated that AHFC supports the changes in CS HB
230 (FIN). He acknowledged that this is a time-sensitive                       
issue given the late date and that AHFC would like to keep                     
the "status quo" in regards to the number of communities                       
involved in the program.  This would guarantee that Bethel                     
and Haines would qualify to take advantage of the rural                        
mortgage program.  That program was established by statute,                    
charging a 1% below bond rate interest.                                        
                                                                               
Co-Chair Therriault inquired the benefits of the program.                      
                                                                               
DWAYNE WISE, (TESTIFIED VIA TELECONFERENCE), RURAL LOAN                        
PROGRAM MANAGER, ALASKA HOUSING FINANCE CORPORATION,                           
DEPARTMENT OF REVENUE, ANCHORAGE, noted that the benefits                      
would be much more flexible than the underwriting and                          
property criteria, because throughout rural Alaska, many of                    
the properties are unable to meet the typical standards                        
required for more transitional type underwriting.                              
                                                                               
Representative Mulder offered for discussion Amendment #1,                     
relating to the University of Alaska (UA) student-housing                      
situation.                                                                     
                                                                               
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA                             
RELATIONS, FAIRBANKS, stated that Amendment #1 would                           
address projects which were not included in the Board of                       
Regents capital project requests this year.  There are four                    
housing projects, plus deferred maintenance on the housing.                    
She noted that the AHFC vehicle to help with the projects                      
has been useful, particularly in Anchorage.                                    
                                                                               
Representative Mulder noted a technical drafting error on                      
Page 2, Line 5, pointing out that there needs to be an                         
insertion of "a year" after "$350,000".  Ms. Redman stated                     
that the amendment was an attractive option for the                            
University with three components in the housing projects:                      
                                                                               
? Maintenance of the facilities;                                               
? Paying off the debt service; and                                             
? Programming.                                                                 
                                                                               
Dorm receipts can be used to pay for two of these concerns.                    
Maintenance of the projects is 100% funded through the life                    
of the projects, which allows with subsidized debt, to                         
contribute and pay for the facilities in a reasonable                          
amount of time.                                                                
                                                                               
In response to Co-Chair Hanley, Ms. Redman pointed out that                    
in terms of housing, it would be necessary to have a                           
subsidized bond to fully support the cost of a dorm unless                     
there was money in the operating budget to handle the                          
maintenance and programming on that facility.  Using this                      
particular mechanism allows the University a subsidy other                     
than that contained in the regular operating budget.                           
                                                                               
Co-Chair Hanley inquired the amount of deferred maintenance                    
remaining on student housing.  Ms. Redman replied that                         
approximately $14 million dollars remained.  Co-Chair                          
Hanley recommended repairing the buildings first, before                       
building new ones.  Ms. Redman pointed out that for four                       
years, the University had only placed deferred maintenance                     
projects in the Capital Budget Request (CBR).  She stressed                    
that there comes a time when both needs should be                              
addressed.  Student needs are important as is expanding the                    
enrollment.  She pointed out that there had been a                             
commitment by the Legislature for the past few years to                        
attempt to make headway on the deferred maintenance issue.                     
She advised that this is the top priority, although, at the                    
same time, the University also has other serious needs.                        
                                                                               
Co-Chair Hanley asked the percentage of housed students on                     
the Fairbanks campus.  Ms. Redman noted that the Fairbanks                     
campus is a residential campus with about 50% student body                     
beds.  The Anchorage campus is not a residential campus and                    
houses approximately 2% to 3% of their students.  The                          
University would like to bring Anchorage up to about the                       
10% level which is a typical number for a metropolitan                         
university.                                                                    
                                                                               
Representative Martin agreed that the University has                           
serious needs for capital improvement projects.  Co-Chair                      
Therriault questioned if the proposed amendment would                          
remove funding from other statewide capital projects.  He                      
asked if the AHFC money was being "counted on" to leverage                     
bonds.  Mr. Bitney replied that the proposed money would be                    
taken out of the $103 million dollar subsidy portion                           
provided by AHFC.                                                              
                                                                               
Co-Chair Hanley inquired the subsidy portion for current                       
dorms on the Anchorage campus.  Mr. Bitney advised that                        
amounted to $100 million dollars and would be taken from                       
the $103 million.                                                              
                                                                               
Co-Chair Therriault asked the multiplier used on the money                     
leveraging for the bonds.  Mr. Bitney replied that would                       
depend on the bonds terms and interest rates.                                  
Representative Mulder noted that it had brought forth                          
Amendment #1 so that the bill would not be returned to the                     
Committee for further discussion on that possibility.  He                      
proceeded to WITHDRAW Amendment #1.  There being NO                            
OBJECTION, it was withdrawn.                                                   
                                                                               
Representative J. Davies asked how much of the Governors                       
proposed $7 million dollar capital budget was to be used                       
for deferred maintenance.  Ms. Redman explained that none                      
of that money at this point would be used for housing                          
maintenance.  Those projects are lower on the priority list                    
for deferred maintenance and were not included in the first                    
$50 million dollars.                                                           
                                                                               
Co-Chair Therriault commented that he was supportive of the                    
University's dilemma, although, felt it was important to                       
see the total picture for the Capital Budget Reserve plan.                     
                                                                               
Representative Foster MOVED a change to the proposed                           
legislation on Page 1, Line 5, deleting "6,500" and                            
inserting "11,000".                                                            
                                                                               
REPRESENTATIVE ALAN AUSTERMAN replied that with this                           
amendment, the Kodiak out-skirts would then be eligible to                     
receive 1% reduction in the normal loan rate.  AHFC would                      
use 10,300 population base projection from which to work.                      
                                                                               
(Tape Change HFC 98- 132, Side 2).                                             
                                                                               
Mr. Bitney explained that increasing residency to 11,000                       
would bring in Ketchikan, Sitka and Kodiak.  A concern at                      
this time, by doubling the number, is that it would require                    
some fiscal changes.  AFHC is not prepared at this time to                     
release for the record that number because it will cause an                    
addition to the reserves.  The rural program is a self-                        
sustaining revolving fund and AHFC's concern at this time,                     
is to maintain the financial integrity of that program.                        
                                                                               
Co-Chair Hanley asked if those three communities currently                     
receive these loans.  Mr. Wise commented that within the                       
Sitka, Ketchikan or Kodiak city limits do not receive the                      
rural loan program.  Co-Chair Hanley pointed out that                          
adopting the amendment would make the program grow,                            
changing the intent.                                                           
                                                                               
Representative J. Davies asked how AHFC would administer                       
this program.  Mr. Bitney explained that the Rural                             
Revolving Loan Fund would need to be capitalized with                          
additional general funds.  He did not know what effect that                    
action would have on AHFC's ability to have the $103                           
million dollars available.                                                     
                                                                               
In response to Representative Grussendorf, Mr. Wise                            
explained that in 1982, a determination was made by the                        
Attorney General's office noting that outside Kodiak City                      
limits, because there was not city water or sewer, that                        
area did not meet the typical financing criteria.  A                           
determination was then made that they would be eligible for                    
the rural loan program.  He continued, the same criteria                       
has been applied to outside Kechikan City limits.                              
Representative Grussendorf inquired if Sitka was being                         
penalized because they were unified.  Mr. Wise stated that                     
it could appear that was true.                                                 
                                                                               
Mr. Bitney noted that the Rural Fund was not a subsidized                      
fund.  Representative J. Davies pointed out that there are                     
many places in the State which have the same situation                         
being an area surrounding a larger city.  Representative                       
Grussendorf commented that there appears to be a                               
distinction between the organization of boroughs.                              
                                                                               
Co-Chair Therriault OBJECTED to adoption of Amendment #2.                      
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  J. Davies, Grussendorf, Moses                                       
OPPOSED: Mulder, G. Davis, Foster, Kelly, Kohring,                             
Martin, Hanley, Therriault                                                     
                                                                               
The MOTION FAILED (3-8).                                                       
                                                                               
Representative Foster MOVED to report CS HB 230 (FIN) out                      
of Committee with individual recommendations and with the                      
accompanying fiscal note.                                                      
                                                                               
CS HB 230 (FIN) was reported out of Committee with                             
"individual recommendations" and with a zero fiscal note by                    
the Department of Revenue.                                                     
HOUSE BILL NO. 488                                                             
                                                                               
"An Act relating to the Alaska Royalty Oil and Gas                             
Development Advisory Board."                                                   
                                                                               
REPRESENTATIVE JERRY SANDERS stated that fuel prices have a                    
definite retardant effect on the economic development and                      
quality of living in Alaska.                                                   
                                                                               
Alaska refiners strongly influence regional prices through                     
company-owned retail outlets and distributors.  Refiners                       
are attempting to replace independent retail outlets and                       
distributors with company operated outlets to solidify                         
their control over prices.  Neither capacity nor                               
availability of supply is a determining factor in the cost                     
of fuel in Alaska.  Representative Sanders stated that                         
Alaskans would not bear the high prices if they had an                         
alternative.                                                                   
                                                                               
Representative Sanders advised that the Alaska Royalty Oil                     
and Gas Development Advisory Board would be charged to                         
protect the public under the Alaska Statutes from high fuel                    
prices.                                                                        
                                                                               
Representative Sanders continued, HB 488 would change the                      
Board's makeup by increasing the public membership.  The                       
objectives of the bill are:                                                    
                                                                               
? Replace the Commissioner of Revenue with the                                 
Commissioner of the Department of Community and                                
Regional Affairs (DCRA);                                                       
? Raise the number of voting members from five to                              
seven; and                                                                     
? Change the number of members with petroleum                                  
related backgrounds from three to one.                                         
Currently, all public members are required to                                  
have a petroleum-related background, which limits                              
the number of people who can serve on the board.                               
                                                                               
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE                            
SERVICES, DEPARTMENT OF NATURAL RESOURCES, noted that the                      
Department is neutral on the legislation.  There is a                          
concern with the replacement of the Commissioner of the                        
Department of Revenue by the Commissioner of the Department                    
of Community and Regional Affairs.  The Commissioner of                        
Revenue has a lot of knowledge on how these revenues impact                    
the State.  She noted that the Administration would prefer                     
that the Commissioner of Revenue be on the Board in                            
addition to the Commissioner of DCRA.                                          
                                                                               
Co-Chair Therriault recommended deleting language on Page                      
2, Line 5, "transportation, sale" which would address the                      
legislation's intent.  Representative Sanders stated that                      
change would be "okay".  Co-Chair Therriault MOVED that                        
language change as Amendment #1.                                               
                                                                               
Co-Chair Hanley suggested that the language stay as                            
currently written, in order to avoid a conflict.  He                           
pointed out that if the intent was not to include those                        
people with a vested interest in the fuel business on the                      
board, the language should remain as originally written.                       
Co-Chair Therriault WITHDREW Amendment #1.  There being NO                     
OBJECTION, it was withdrawn.                                                   
                                                                               
Representative G. Davis asked how the Board would protect                      
the people of the State from high oil prices.  Ms. Carroll                     
explained that when the Department is in the process of                        
negotiating with enterprises such as MAPCO, they take into                     
consideration the price, although, do not make any                             
determinations on the retail price of gas.  It is one of                       
the criteria used in selling royalty oil.  There are                           
multiple lists of criteria which the State considers, one                      
of which is price.  Representative Sanders added that oil                      
refiners must consider price or supplied benefits to the                       
citizens.  He concluded that HB 488 would create a new body                    
not directly involved in the industry to consider these                        
concerns.                                                                      
                                                                               
Representative G. Davis spoke in favor of keeping the                          
Commissioner of the Department of Revenue involved in the                      
process.  Representative Sanders reflected, from testimony                     
received from the Commissioner of Revenue, he has little to                    
do with the contract.  Representative Sanders noted that                       
his staff was responsible for all decisions.  He commented                     
that he was not against the Commissioner of Revenue being                      
on the Committee.  Co-Chair Therriault pointed out that the                    
Commissioner would most likely be involved in negotiations                     
on the actual sale.  He remarked that making this change                       
would not exclude the Commissioner of Revenue from being                       
involved in the drafting of proposed contracts.                                
                                                                               
Representative Kohring observed that there are                                 
inappropriate circumstances being placed on the consumer,                      
noting that there is a monopoly on the market with only two                    
refiners in the State.  He cautioned not to restrict the                       
industry in the State, but instead, to encourage a more                        
competitive environment.                                                       
                                                                               
Representative Foster MOVED to report HB 488 out of                            
Committee with individual recommendations and with the                         
accompanying fiscal note.  There being NO OBJECTION, it was                    
so ordered.                                                                    
                                                                               
HB 488 was reported out of Committee with a "do pass"                          
recommendation and with a fiscal note by the Department of                     
Natural Resources.                                                             
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 7:45 P.M.                                             
H.F.C. 10 4/28/98 eve                                                          

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