Legislature(1999 - 2000)

03/09/1999 01:45 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
                                                                                                                                
HOUSE FINANCE COMMITTEE                                                                                                         
March 9, 1999                                                                                                                   
1:45 P.M.                                                                                                                       
                                                                                                                                
TAPE HFC 99 - 42, Side 1.                                                                                                       
TAPE HFC 99 - 42, Side 2.                                                                                                       
TAPE HFC 99 - 43, Side 1.                                                                                                       
TAPE HFC 99 - 43, Side 2.                                                                                                       
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 1:45 P.M.                                                                                                   
                                                                                                                                
PRESENT                                                                                                                         
                                                                                                                                
Co-Chair Therriault   Representative Foster                                                                                     
Co-Chair Mulder    Representative Grussendorf                                                                                   
Vice Chair Bunde   Representative Kohring                                                                                       
Representative Austerman  Representative Moses                                                                                  
Representative J. Davies  Representative Williams                                                                               
Representative G. Davis                                                                                                         
                                                                                                                                
ALSO PRESENT                                                                                                                    
                                                                                                                                
Representative Carl Morgan; Representative Norman Rokeberg;                                                                     
Kay Murphy, Mortgage Operations Director, Alaska Housing                                                                        
Finance Corporation, Department of Revenue; John Bitney,                                                                        
Legislative Liaison, Alaska Housing Finance Corporation,                                                                        
Department of Revenue; Wendy Redman, Vice President,                                                                            
University of Alaska, Fairbanks; Dan Spencer, Chief                                                                             
Financial Analyst, Office of Management and Budget; Ginger                                                                      
Blaisdell, Fiscal Analyst, Legislative Finance Division;                                                                        
Tracy Cramer, Director of Administration for Exxon Valdez                                                                       
Oil Spill (EVOS) Trustee Council, Department of Fish and                                                                        
Game.                                                                                                                           
                                                                                                                                
SUMMARY                                                                                                                         
                                                                                                                                
HB 13 An Act relating to the characterization of, use                                                                           
of, segregation of, deposit of, interest on, and                                                                                
disbursement of escrow money; relating to the                                                                                   
recording, filing, and delivery of escrow                                                                                       
documents; relating to civil penalties for                                                                                      
violations of certain escrow provisions by escrow                                                                               
settlement agents; relating to the supervision by                                                                               
the Department of Commerce and Economic                                                                                         
Development of escrow settlement agents;                                                                                        
authorizing the adoption of regulations to                                                                                      
implement certain escrow provisions; and providing                                                                              
for an effective date.                                                                                                          
                                                                                                                                
 CS HB 13 (FIN) was reported out of Committee with                                                                              
a "do pass" recommendation and with a zero fiscal                                                                               
note by the House Finance Committee.                                                                                            
                                                                                                                                
HB 93 An Act relating to the Alaska Housing Finance                                                                             
Corporation's rural assistance loan program and to                                                                              
the definition of 'housing' for purposes of the                                                                                 
corporation's housing assistance loan program; and                                                                              
providing for an effective date.                                                                                                
                                                                                                                                
HB 93 was reported out of Committee with "do pass"                                                                              
recommendation and with a zero fiscal note by the                                                                               
Department of Revenue.                                                                                                          
                                                                                                                                
HB 100 An Act making and amending capital, supplemental,                                                                        
and other appropriations, and appropriations to                                                                                 
capitalize funds; ratifying certain expenditures;                                                                               
and providing for an effective date.                                                                                            
                                                                                                                                
CS HB 100 (FIN) was reported out of Committee with                                                                              
"no recommendation".                                                                                                            
                                                                                                                                
HJR 13 Relating to using oil spill settlement funds to                                                                          
create an endowment for the sciences at the                                                                                     
University of Alaska.                                                                                                           
                                                                                                                                
CS HJR 13 (FIN) was reported out of Committee with                                                                              
a "do pass" recommendation and with a zero fiscal                                                                               
note by the House Hess Committee dated 3/8/99.                                                                                  
HOUSE BILL NO. 93                                                                                                               
                                                                                                                                
"An Act relating to the Alaska Housing Finance                                                                                  
Corporation's rural assistance loan program and to the                                                                          
definition of 'housing' for purposes of the                                                                                     
corporation's housing assistance loan program; and                                                                              
providing for an effective date."                                                                                               
                                                                                                                                
REPRESENTATIVE CARL MORGAN explained that the proposed                                                                          
legislation would modify AHFC's Rural Mortgage program to                                                                       
allow two changes:                                                                                                              
                                                                                                                                
? The Rural Mortgage program would allow for                                                                                    
refinancing of home loans in the same manner any                                                                                
conventional mortgage allows.  While many people                                                                                
around the nation have taken advantage of low                                                                                   
interest rates to refinance their home mortgages,                                                                               
state law simply does not provide the option under                                                                              
the rural lending program.                                                                                                      
? The current definition in state law limits the                                                                                
term "housing" to either single family or owner                                                                                 
occupied duplexes.  The proposed legislation would                                                                              
bring the term into compliance with current                                                                                     
industry standards for lending by allowing owner-                                                                               
occupied housing up to four units.  The Rural                                                                                   
Mortgage program would be allowed to finance up to                                                                              
a four-plex.                                                                                                                    
                                                                                                                                
Representative Morgan asked members to note that the bill                                                                       
would not allow the program to make loans that are not                                                                          
allowed under conventional lending practices or industry                                                                        
standards.  The bill attempts to allow the loan program to                                                                      
make the same kind of loans allowed for any conventional                                                                        
urban loan program.                                                                                                             
                                                                                                                                
The Rural Mortgage loan program is a revolving fund.  Alaska                                                                    
Housing Finance Corporation (AHFC) has reported that default                                                                    
rates in the program are the same or less than the rate of                                                                      
defaults on conventional urban loans.  The legislation would                                                                    
attempt to make changes that would allow a lending program                                                                      
to make the same kind of loans considered standard practice                                                                     
under conventional lending.  Representative Morgan stressed                                                                     
that this is an issue of "fairness" for rural borrowers and                                                                     
would be good business for AHFC.                                                                                                
                                                                                                                                
JOHN BITNEY, LEGISLATIVE LIASON, ALASKA HOUSING FINANCE                                                                         
CORPORATION, DEPARTMENT OF REVENUE, ANCHORAGE, stated that                                                                      
Alaska Housing Finance Corporation (AHFC) supports the                                                                          
proposed legislation which will assist rural borrowers to                                                                       
take advantage of the better interest rates currently                                                                           
available.  The original statutes were not written to                                                                           
include the concept of "refinancing" or to address that the                                                                     
rates would decline to what they currently are.                                                                                 
                                                                                                                                
Co-Chair Therriault restated that current statute does not                                                                      
allow for refinancing; the language would be inclusive of up                                                                    
to a four-plex.  He asked if this would be a subsidized loan                                                                    
program.                                                                                                                        
                                                                                                                                
KAY MURPHY, MORTGAGE OPERATIONS DIRECTOR, ALASKA HOUSING                                                                        
FINANCE CORPORATION, DEPARTMENT OF REVENUE, explained that                                                                      
the program was funded from a revolving loan fund by                                                                            
corporate receipts of AHFC.  The interest rate is set by                                                                        
statute at 1% less than the Corporation's taxable loan                                                                          
program.                                                                                                                        
                                                                                                                                
Co-Chair Therriault questioned if additional staffing would                                                                     
be needed to implement the program.  Ms. Murphy responded                                                                       
that AHFC was not anticipating any additional staffing.  She                                                                    
added, because rural borrowers can not refinance their                                                                          
loans, AHFC has refinanced them under other programs within                                                                     
the Corporation.  A volume of loans has already been                                                                            
addressed.                                                                                                                      
                                                                                                                                
Representative Grussendorf asked if an owner would be                                                                           
required to live on the property.  Ms. Murphy replied that                                                                      
it would need to be owner occupied housing and having four                                                                      
or fewer units.  Mr. Bitney pointed out that there is a non-                                                                    
owner occupied program, which would not be addressed, in the                                                                    
proposed legislation.  Representative Foster commented that                                                                     
he had proposed an identical bill six years ago.  He voiced                                                                     
strong support for the legislation.                                                                                             
                                                                                                                                
Representative Bunde suggested that a subsidy needs to be                                                                       
fair and that to date, rural communities have not had the                                                                       
same opportunity to take advantage of loan programs                                                                             
available to the urban communities.                                                                                             
                                                                                                                                
Representative Kohring questioned the level of risk with                                                                        
loans offered to rural Alaska.  He suggested that risk                                                                          
factor be reflected in the default rate.  Ms. Murphy replied                                                                    
that the delinquency rate in the rural loan program was                                                                         
slightly less than the overall portfolio, which is a little                                                                     
over 3%, with a good payment history.                                                                                           
                                                                                                                                
Representative Kohring inquired if it would be a streamlined                                                                    
refinance.  Ms. Murphy explained that there is a streamline                                                                     
refinance program, which is a continual program without a                                                                       
cut off date.  With the passage of HB 93, AHFC would be able                                                                    
to offer streamline refinancing to rural loan borrowers                                                                         
within the rural loan program.                                                                                                  
                                                                                                                                
Representative Kohring questioned how many loans would be                                                                       
eligible for the program.  Ms. Murphy replied that in the                                                                       
rural loan program, there are over 500 loans which are over                                                                     
8% at this time.                                                                                                                
                                                                                                                                
Representative Kohring asked what definition of "rural" was                                                                     
used.  Ms. Murphy replied that if a community was not                                                                           
connected on a road system, it would consist of a population                                                                    
of 6500 or less; if it was connected on a road system, it                                                                       
would have a population of 1600 or less.                                                                                        
                                                                                                                                
Representative G. Davis questioned the definition of                                                                            
"community".  Ms. Murphy replied that for the higher                                                                            
populated areas around Anchorage and Fairbanks, a community                                                                     
would be within 50 miles of the Anchorage City center, which                                                                    
would be considered urban, and within 25 miles of Fairbanks                                                                     
City center would also be considered urban.  She noted this                                                                     
was an attempt by AHFC to define community.                                                                                     
                                                                                                                                
Representative Kohring MOVED to report HB 93 out of                                                                             
Committee with individual recommendations and with the                                                                          
accompanying zero fiscal note.  There being NO OBJECTION, it                                                                    
was so ordered.                                                                                                                 
                                                                                                                                
HB 93 was reported out of Committee with a "do pass"                                                                            
recommendation and with a zero fiscal note by the Department                                                                    
of Revenue dated 2/24/99.                                                                                                       
HOUSE BILL NO. 13                                                                                                               
                                                                                                                                
"An Act relating to the characterization of, use of,                                                                            
segregation of, deposit of, interest on, and                                                                                    
disbursement of escrow money; relating to the                                                                                   
recording, filing, and delivery of escrow documents;                                                                            
relating to civil penalties for violations of certain                                                                           
escrow provisions by escrow settlement agents; relating                                                                         
to the supervision by the Department of Commerce and                                                                            
Economic Development of escrow settlement agents;                                                                               
authorizing the adoption of regulations to implement                                                                            
certain escrow provisions; and providing for an                                                                                 
effective date."                                                                                                                
                                                                                                                                
REPRESENTATIVE NORMAN ROKEBERG explained that HB 13 was                                                                         
submitted at the request of the Alaska State Escrow                                                                             
Association and was reintroduced in an effort to assure                                                                         
consumers that their money would be safely received in a                                                                        
timely manner, and properly accounted for when delivered to                                                                     
a settlement agent for a residential real property                                                                              
transaction.  Currently, there are no Alaskan laws                                                                              
addressing that concern.                                                                                                        
                                                                                                                                
He continued, an increasing number of incidents have                                                                            
occurred demonstrating the need for Alaska to join the large                                                                    
number of states having "good funds" legislation.  In the                                                                       
age of growing electronic commerce, people are shopping the                                                                     
Internet for mortgages and there is an increase in                                                                              
competition from "outside" mortgage companies caused by low                                                                     
interest rates.  Problems have arisen from failure of these                                                                     
companies to properly fund transactions in a timely fashion                                                                     
or in some cases left with bankruptcy.  Representative                                                                          
Rokeberg summarized that when drafting the bill, he worked                                                                      
with various interest groups and financial institutions                                                                         
throughout Alaska.                                                                                                              
                                                                                                                                
Representative Rokeberg advised that the bill had been                                                                          
rewritten, resulting from an attached fiscal note in a                                                                          
previous Committee hearing.  The new version would eliminate                                                                    
the regulatory necessity of the Department of Commerce and                                                                      
Economic Development to oversee that particular chapter of                                                                      
law.                                                                                                                            
                                                                                                                                
Representative Foster MOVED to adopt work draft 1-LS026\M,                                                                      
Bannister, 2/19/99, as the version before the Committee.                                                                        
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Representative Rokeberg explained the changes to the work                                                                       
draft:                                                                                                                          
                                                                                                                                
? Amendment #1, addressed on Page 2, Line 5,                                                                                    
language after "transaction agreement" was                                                                                      
deleted.                                                                                                                        
? Amendment #2 was not addressed in the proposed                                                                                
bill since that particular section "Civil Penalty"                                                                              
was replaced by "Civil Action" on Page 3, Lines                                                                                 
22-27.  That section removes all departments from                                                                               
the legislation and makes the violation of the                                                                                  
"good funds act" a private right of action.                                                                                     
? Amendment #3 was withdrawn.                                                                                                   
? Amendment #4 was addressed on Page 6, Lines 28-29;                                                                            
however, the definition has also had the following                                                                              
language added after "dwelling units", as "any                                                                                  
number of apartments are in a horizontal property                                                                               
regime formed under AS 34.07 or any number of                                                                                   
unites if the unites are in a common interest                                                                                   
community created under AS 34.08".                                                                                              
? Amendment #5 deals with the "Civil Penalty"                                                                                   
section that has been changed to the "Civil                                                                                     
Action" section.                                                                                                                
? Amendment #6 was pending, however, all references                                                                             
to the Department of Commerce and Economic                                                                                      
Development, its supervisory authority,                                                                                         
investigative authority, and regulation making                                                                                  
authority are deleted from Version M.  Also,                                                                                    
deleted is reference to the referral to the                                                                                     
attorney general's office if voluntary compliance                                                                               
was not obtained.                                                                                                               
? Amendment #7 deals with the "Civil Penalty"                                                                                   
section that is no longer in the legislation.                                                                                   
? Amendment #8 is not needed as the removal through                                                                             
the Department of Commerce and Economic                                                                                         
Development since there are no provisions for an                                                                                
audit.                                                                                                                          
                                                                                                                                
Representative Bunde asked why the bill addresses only                                                                          
residential property and not commercial property.                                                                               
Representative Rokeberg explained that because of the large                                                                     
amounts of money involved in commercial transactions and the                                                                    
different funding mechanisms, those projects were excluded.                                                                     
The primary focus of the legislation is consumer protection                                                                     
issues related to residential properties.                                                                                       
                                                                                                                                
Representative J. Davies requested further information                                                                          
regarding exclusion of "punitive damages".  Representative                                                                      
Rokeberg replied that the intent was to provide a cure for                                                                      
grievance by allowing a private right of action.  If there                                                                      
is a breech, then private right presides.  Representative J.                                                                    
Davies advised that the reality is that these situations                                                                        
sometimes do get litigated and that there are circumstances                                                                     
in which punitive damages make sense.  Representative                                                                           
Rokeberg replied that happens only in instances where the                                                                       
money has been reserved in trust.  The concern here is that                                                                     
the money is available at the time of recording.                                                                                
                                                                                                                                
Representative Rokeberg pointed out that each time there is                                                                     
a property closing, there are two contracts involved;                                                                           
                                                                                                                                
? The contract with the buyer and seller of the                                                                                 
property; and                                                                                                                   
? The contract between the buyer and the lender.                                                                                
                                                                                                                                
Co-Chair Therriault clarified that an escrow agent must have                                                                    
the funds in hand and under control before the transaction                                                                      
of the title can take place.  Representative Rokeberg                                                                           
explained that previously, they were recording before the                                                                       
money was in hand and it was not determined who was in                                                                          
charge of carrying the "float".                                                                                                 
                                                                                                                                
Representative J. Davies noted that when an agent violates                                                                      
the proposed law, the resulting remedy is civil court.                                                                          
Representative Rokeberg replied that in some cases, the                                                                         
Title Company could be sued for not following the law.  At                                                                      
this time, there is no law, so there is no cause of action                                                                      
before them.  Co-Chair Therriault clarified that the                                                                            
proposed legislation would make it easier to bring forward a                                                                    
civil action.  Representative J. Davies advised that either                                                                     
the Department of Law would be paid to do the work or it                                                                        
would rest upon the Alaska Court System.  Representative                                                                        
Rokeberg responded that is what the Courts are to be used                                                                       
for.  He suggested that this action would begin a mini                                                                          
privatization.                                                                                                                  
                                                                                                                                
Representative J. Davies referenced Page 2, Line 6, asking                                                                      
what "segregation" of the money meant.  Representative                                                                          
Rokeberg explained the intent is that the funds are not                                                                         
commingled.  Representative J. Davies understood that it                                                                        
meant having different bank accounts.  He emphasized that                                                                       
the two statements specify keeping separate bank accounts.                                                                      
Representative Rokeberg stated that Subsection (a) provides                                                                     
for the segregation and Subsection (b) provides for the                                                                         
account.  Co-Chair Therriault acknowledged the confusion                                                                        
caused by the wording.  Representative G. Davis suggested                                                                       
that there must be a system within the banks, which                                                                             
segregates or separates the accounts.                                                                                           
                                                                                                                                
Co-Chair Therriault noted that the discussion before the                                                                        
Committee was if there was one account or a separate escrow                                                                     
account for each transaction.  He suggested that a legal                                                                        
drafter be consulted to clarify the language.                                                                                   
                                                                                                                                
Representative Grussendorf additionally, voiced concern with                                                                    
the language and recommended that someone from the Division                                                                     
of Banking testify regarding these procedures.                                                                                  
Representative Rokeberg clarified if Committee members were                                                                     
concerned if segregated meant separate accounts.  Co-Chair                                                                      
Therriault stated that the Committee needed clarification if                                                                    
segregation would be a bookkeeping function rather than                                                                         
separate account.                                                                                                               
                                                                                                                                
(Tape Change HFC 99 - 42, Side 2).                                                                                              
                                                                                                                                
Co-Chair Therriault reiterated that the issue needs to be                                                                       
clarified.  He requested that legal counsel comment on the                                                                      
concern.  Co-Chair Therriault questioned if the House                                                                           
Finance Committee would need to prepare a zero fiscal note                                                                      
to accompany the legislation.                                                                                                   
                                                                                                                                
HB 13 was HELD in Committee for further consideration.                                                                          
HOUSE JOINT RESOLUTION NO. 13                                                                                                   
                                                                                                                                
Relating to using oil spill settlement funds to create                                                                          
an endowment for the sciences at the University of                                                                              
Alaska.                                                                                                                         
                                                                                                                                
CO-CHAIR GENE THERRIAULT stated that HJR 13 would support                                                                       
recent action of the Exxon Valdez Oil Spill (EVOS) Trustees                                                                     
to create a long-term research and monitoring endowment                                                                         
using $115 million dollars of the expected reserve.                                                                             
                                                                                                                                
The EVOS Trustee Council allocates money obtained from                                                                          
settlement of the Exxon Valdez spill litigation.  Over the                                                                      
years, EVOS funds have largely been used to purchase land                                                                       
for habitat preservation.  The Council has been lacking in                                                                      
the area of research, leaving a gap in understanding future                                                                     
spills and how to respond to them.  It would be beneficial                                                                      
to know if types of marine ecosystems are extra sensitive to                                                                    
certain cleanup activities, and if so, how to respond to                                                                        
spills in those areas.                                                                                                          
                                                                                                                                
Co-Chair Therriault concluded that an endowment of this                                                                         
nature would fulfill the intent of the Exxon Valdez Spill                                                                       
settlement and the mission of the Trustee Council, which is                                                                     
to restore, rehabilitate, replace, enhance, and acquire                                                                         
equivalent resources and services in the oil spill regions.                                                                     
                                                                                                                                
Representative Austerman questioned how many endowed chairs                                                                     
there would be.  Co-Chair Therriault explained that number                                                                      
has not yet been determined.  It would depend on what the                                                                       
Trustees ascertained appropriate.  The chairs would be                                                                          
involved in the areas of research instruction and public                                                                        
service on spill impacted areas.                                                                                                
                                                                                                                                
Representative Austerman voiced concern that $2-$3 million                                                                      
dollars would be used to cover chair costs and, that                                                                            
additionally, the University would be supplemented with                                                                         
research money.  He requested that the University submit a                                                                      
program intent list for use of these funds.  Co-Chair                                                                           
Therriault advised that the proposed bill asks that the EVOS                                                                    
Council consider this proposal and pointed out that this                                                                        
entity operates completely independent of the Legislature.                                                                      
                                                                                                                                
Representative J. Davies commented that the endowment would                                                                     
be established by the Trustee Council.  They are required to                                                                    
see that funding is spent appropriately.  He added, when an                                                                     
endowed chair is established, the endowment will generate                                                                       
usually five times other research in that area, thus, income                                                                    
would be leveraged by that factor.  Representative J. Davies                                                                    
instructed that a researcher can not operate in a vacuum;                                                                       
they are dependent on accessing utilities and facilities                                                                        
that a university system can offer.  Support functions for                                                                      
research are audited by the Department of Defense.                                                                              
                                                                                                                                
Co-Chair Therriault envisioned that the Trustees could endow                                                                    
a chair at the University.  That chair would most likely be                                                                     
an expert in marine sciences, and could provide them with                                                                       
advice.                                                                                                                         
                                                                                                                                
Representative Austerman suggested that there could be other                                                                    
research organizations that would like to be a part of the                                                                      
process.  He urged that this be a competitive bid for the                                                                       
EVOS Council to consider.  Co-Chair Therriault explained                                                                        
that the actual research was separate from the endowment of                                                                     
the chair.  If the EVOS Council was going to endow chairs to                                                                    
help oversee proposals, they would most likely choose a                                                                         
university.  He ascertained that the Alaska State                                                                               
Legislature would want them to consider the Alaska                                                                              
University system.  The proposed legislation only states                                                                        
that Alaska should use a portion of the funds for endowed                                                                       
chairs.                                                                                                                         
                                                                                                                                
Representative Bunde shared concerns voiced by                                                                                  
Representative Austerman regarding administrative overhead                                                                      
costs.                                                                                                                          
                                                                                                                                
In response to Representative Bunde, Co-Chair Therriault                                                                        
stated that the grants are not a moneymaker for the                                                                             
University; although, they would help to spread the fixed                                                                       
costs of the University system over a larger pool.                                                                              
Representative Bunde responded that it would add to the                                                                         
University's cash flow.                                                                                                         
                                                                                                                                
Representative Austerman suggested language written on Page                                                                     
4, Line 5 be replaced with "relevant areas or research".                                                                        
                                                                                                                                
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA-STATEWIDE                                                                    
SYSTEM, FAIRBANKS, disagreed with Representative Austerman                                                                      
that the endowment chairs do not pay attention to what is                                                                       
requested.  The EVOS Trustee Council is a very political                                                                        
body.  The intent of the resolution will have an impact on                                                                      
that body.  What the University envisions would be                                                                              
particularly in the areas of research and public service.                                                                       
In the public service area, there exists faculty in the                                                                         
cooperative extension service and through the marine                                                                            
advisory program.  She noted that those are the primary arms                                                                    
which have dealt with impact and the effects of spill in                                                                        
that region.                                                                                                                    
                                                                                                                                
Ms. Redman continued, the two key areas of focus for the                                                                        
Trustees have been:                                                                                                             
                                                                                                                                
? The need for continual and long term research; and                                                                            
? Providing a way to get all the research previously                                                                            
undertaken out to the public.  The research does                                                                                
not do any good unless it is used.  That research                                                                               
needs to be translated into documents.                                                                                          
                                                                                                                                
Ms. Redman addressed the issue of endowed shares.  She                                                                          
stated that the University would treat these type of endowed                                                                    
shares like any other donations made to the University.                                                                         
Essentially, it passes to the University of Alaska                                                                              
foundation, and then like a donation, it would be decided                                                                       
how to spend those funds, then establishing a work plan for                                                                     
that chair.                                                                                                                     
                                                                                                                                
Representative J. Davies pointed out that one of the key                                                                        
elements for a long-term research plan is graduate students.                                                                    
Major amounts of research are not undertaken without some                                                                       
graduate students working on the program.                                                                                       
                                                                                                                                
Representative G. Davis referenced Page 2, Line 23, and                                                                         
asked why those locations were classified.  Ms. Redman                                                                          
replied those units were either affected or have programs                                                                       
with faculty that work there.                                                                                                   
                                                                                                                                
Representative Austerman asked about the price tag of $2-$3                                                                     
million dollars per chair.  Ms. Redman stated that it would                                                                     
be closer to $2 million dollars if there are no graduate                                                                        
students involved.  Representative Austerman asked what the                                                                     
$2 million dollars per chair would buy. Co-Chair Therriault                                                                     
pointed out that it was a small endowment, which spins off a                                                                    
particular cost of a function.  Ms. Redman added that the                                                                       
actual administrative costs anticipated per year would be                                                                       
$100 thousand dollars to cover salary benefits, clerical                                                                        
support, travel, commodities and contractual costs.                                                                             
                                                                                                                                
TRACY CRAMER, DIRECTOR OF ADMINISTRATION FOR EVOS,                                                                              
DEPARTMENT OF FISH AND GAME, stated that the EVOS Trustee                                                                       
Council would like to see the resolution passed because of                                                                      
investments results.  At this point in time, all of the                                                                         
joint trust funds are in the treasury and are invested in                                                                       
treasury securities with an average of 100 days security.                                                                       
Currently, the treasury is earning 4.5% to 5% on a large                                                                        
amount of money.                                                                                                                
                                                                                                                                
Ms. Cramer spoke to the issue of the endowed shares.  She                                                                       
stated that the Trustee Council would consider the endowed                                                                      
shares, however, the federal trustees are concerned that                                                                        
given their trust responsibility, they may not be able to                                                                       
hand over a sum of funds, even with an agreement to the                                                                         
University of Alaska.                                                                                                           
                                                                                                                                
Representative Austerman asked if the resolve to the endowed                                                                    
chairs was not included in the legislation, would the EVOS                                                                      
Council still support the bill.  Ms. Cramer replied that the                                                                    
Trustee Council does not have an objection to the first                                                                         
resolve.  They would appreciate any assistance that the                                                                         
Legislature could provide toward their limited authorization                                                                    
toward investments, addressed by the second resolve.                                                                            
                                                                                                                                
Co-Chair Therriault examined the way the 1st resolve was                                                                        
worded and if it would be taken as a "directive".  Ms.                                                                          
Cramer replied that it appeared fine to her.                                                                                    
                                                                                                                                
Representative J. Davies asked information regarding a                                                                          
recent action creating a long-term endowment.  Ms. Cramer                                                                       
responded that in 1984, the trustee council concluded an                                                                        
environmental impact statement that analyzed the resources                                                                      
and services injured.  Part of that statement included the                                                                      
establishment of the restoration reserve.  The Trustee                                                                          
Council has allocated $12 million dollars each year into                                                                        
that reserve.  The basic assumption is that after the last                                                                      
payment on September 1, 2000, research will continue to be                                                                      
made by the State.                                                                                                              
                                                                                                                                
Ms. Cramer continued, over the last eighteen months, the                                                                        
Trustee Council has been going through a public review                                                                          
process regarding how that money should be spent.  It                                                                           
amounts to roughly $170 million dollars. Based on public                                                                        
comments, the Trustee Council took action on March 1, 1999,                                                                     
and allocated $150 million dollars for research activities.                                                                     
It was assumed that this money would continue to be a                                                                           
perpetual endowment, inflation proofed and that any                                                                             
expenditures would come after inflation proofing.                                                                               
                                                                                                                                
Representative J. Davies MOVED an amendment to Page 4, Line                                                                     
4, deleting "use" and inserting "consider using".                                                                               
Representative Bunde OBJECTED.  He stated that a clear                                                                          
message should be sent to EVOS.  Co-Chair Therriault noted                                                                      
that he would not object to the language change.                                                                                
Representative Bunde WITHDREW his OBJECTION.                                                                                    
                                                                                                                                
Representative Grussendorf MOVED to report CS HJR 13 (FIN)                                                                      
out of Committee with individual recommendations and with                                                                       
the accompanying fiscal note.                                                                                                   
                                                                                                                                
Representative Austerman OBJECTED for the purpose of                                                                            
discussion.  He noted that he was uncomfortable with the                                                                        
School of Fisheries research history. Representative                                                                            
Austerman WITHDREW his OBJECTION.                                                                                               
                                                                                                                                
Representative Kohring OBJECTED for the purpose of comment.                                                                     
He agreed with Representative Austerman, and asked that                                                                         
other research options should be explored within the private                                                                    
sector.  He added that the legislation was moving away from                                                                     
the mission of what was intended with the Prince William                                                                        
Sound and endowing of chairs.  He commented that the area                                                                       
has been studied for the past ten years and asked why                                                                           
additional research was needed.  Representative Kohring                                                                         
WITHDREW his OBJECTION.                                                                                                         
                                                                                                                                
Representative Bunde OBJECTED for the purpose of a                                                                              
statement.  He commented that it was important that the                                                                         
instructional component not be ignored within the                                                                               
resolution.  Representative Bunde WITHDREW his OBJECTION.                                                                       
                                                                                                                                
There being NO final OBJECTION, it was so ordered.                                                                              
                                                                                                                                
CS HJR 13 (FIN) was reported out of Committee with a "do                                                                        
pass" recommendation and with a zero House Hess fiscal note                                                                     
dated 3/8/99.                                                                                                                   
HOUSE BILL NO. 13                                                                                                               
                                                                                                                                
"An Act relating to the characterization of, use of,                                                                            
segregation of, deposit of, interest on, and                                                                                    
disbursement of escrow money; relating to the                                                                                   
recording, filing, and delivery of escrow documents;                                                                            
relating to civil penalties for violations of certain                                                                           
escrow provisions by escrow settlement agents; relating                                                                         
to the supervision by the Department of Commerce and                                                                            
Economic Development of escrow settlement agents;                                                                               
authorizing the adoption of regulations to implement                                                                            
certain escrow provisions; and providing for an                                                                                 
effective date."                                                                                                                
                                                                                                                                
Representative J. Davies MOVED to adopt Amendment #1. [Copy                                                                     
on File].  Representative Rokeberg noted that he would                                                                          
accept the amendment in the spirit of clarification.                                                                            
                                                                                                                                
There being NO OBJECTION, Amendment #1 was adopted.                                                                             
                                                                                                                                
Representative Foster MOVED to report CS HB 13 (FIN) with                                                                       
individual recommendations and with the fiscal note.  Co-                                                                       
Chair Therriault advised that the fiscal note would be the                                                                      
front page only of the previous fiscal note.  There being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CS HB 13 (FIN) was reported out of Committee with "do pass"                                                                     
recommendation and with a new House Finance Committee zero                                                                      
fiscal note.                                                                                                                    
HOUSE BILL NO. 100                                                                                                              
                                                                                                                                
"An Act making and amending capital, supplemental, and                                                                          
other appropriations, and appropriations to capitalize                                                                          
funds; ratifying certain expenditures; and providing                                                                            
for an effective date."                                                                                                         
                                                                                                                                
Co-Chair Mulder MOVED to adopt Amendment #16 which would                                                                        
restore the funding for remodeling newly acquired space in                                                                      
the same building now occupied by the Public Defender,                                                                          
thereby, saving additional costs of establishing a full                                                                         
support system for offices separate from the current space.                                                                     
[Copy on File].  There being NO OBJECTION, Amendment #16 was                                                                    
adopted.                                                                                                                        
                                                                                                                                
Representative Williams MOVED to adopt Amendment #17 which                                                                      
would add $70 thousand general fund program receipt dollars                                                                     
to the Department of Transportation and Public Facilities,                                                                      
Division of Design and Engineering Services for utility                                                                         
permit issuance.  [Copy on File].                                                                                               
                                                                                                                                
Co-Chair Therriault asked where the program receipts would                                                                      
be generated from.                                                                                                              
                                                                                                                                
DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND                                                                     
BUDGET, stated that they would come from utilities.  He                                                                         
noted that the Department of Transportation and Public                                                                          
Facilities does support the amendment.                                                                                          
                                                                                                                                
There being NO OBJECTION, Amendment #17 was adopted.                                                                            
                                                                                                                                
Representative Bunde WITHDREW Amendment #18.  [Copy on                                                                          
File].                                                                                                                          
                                                                                                                                
Representative Bunde MOVED to adopt Amendment #19, which                                                                        
would reappropriate $430,300 in federal indirect receipts                                                                       
which would be used as State funds for the Child Support                                                                        
Enforcement Division (CSED) shortfall.  [Copy on File].                                                                         
                                                                                                                                
GINGER BLAISDELL, FISCAL ANALYST, LEGISLATIVE FINANCE                                                                           
DIVISION, pointed out that there is a new Amendment #19                                                                         
which would replace the original Amendment #19.  [Copy on                                                                       
File].  The original Amendment #19 does not show the federal                                                                    
receipt portion.  The new Amendment #19 includes federal                                                                        
receipt dollars.  The total supplemental request for CSED                                                                       
would be $852,189 dollars.                                                                                                      
                                                                                                                                
Representative Bunde WITHDREW the MOTION to MOVE the                                                                            
original Amendment #19.  There being NO OBJECTION, it was                                                                       
withdrawn.  Representative Bunde MOVED to adopt the NEW                                                                         
Amendment #19.  There being NO OBJECTION, it was adopted.                                                                       
                                                                                                                                
Mr. Spencer asked to speak on the record regarding timing of                                                                    
program receipts.  He stressed that the Department of                                                                           
Revenue will not know for certain the full amount of program                                                                    
receipts until after June 30, 1999.  He reiterated that the                                                                     
number before the Committee was a projection.  If the funds                                                                     
do not come in at this level, an over expenditure will be                                                                       
shown for CSED.                                                                                                                 
                                                                                                                                
Co-Chair Therriault questioned the charge-back recalculation                                                                    
for the Department of Administration.  Mr. Spencer explained                                                                    
that the Department establishes the rates approximately 16                                                                      
months in advance.  They implemented a new version of the                                                                       
CICS, mainframe computer system software.  A rate adjustment                                                                    
has been made based on which costs actually need recovering.                                                                    
                                                                                                                                
Representative Grussendorf MOVED to RESCIND action taken on                                                                     
Amendment #5.  Representative Bunde OBJECTED.                                                                                   
                                                                                                                                
Representative Grussendorf voiced concern with the Committee                                                                    
not funding power cost equalization (PCE) in the rural                                                                          
areas.  Representative Bunde replied that he supported                                                                          
research on whether power cost equalization should be                                                                           
continued and if it was continued, how it would be financed.                                                                    
                                                                                                                                
Representative J. Davies stated that for several years, the                                                                     
Legislature has funded PCE at the 85% level and that there                                                                      
has been a reasonable expectation in rural Alaska that it                                                                       
would continue to be funded at that level.  He added that                                                                       
the Blue Ribbon Commission has indicated that there is                                                                          
enough money in that program to cover the request at that                                                                       
level.  He stated that to force a change before there has                                                                       
been discussion would be premature.                                                                                             
                                                                                                                                
Representative Austerman voiced concern that the Department                                                                     
had not prorated PCE costs, which might suggest that it                                                                         
would be the responsibility of the Department.                                                                                  
Representative J. Davies pointed out that the Department was                                                                    
addressing it in the same manner they have in the past two                                                                      
years.                                                                                                                          
                                                                                                                                
Representative Moses pointed out that there has been a lot                                                                      
of money spent on hydroelectric power and various types of                                                                      
power in urban areas.  Many taxpayer dollars have been spent                                                                    
on getting inexpensive power to those areas.  He exclaimed                                                                      
that there must be a program established to get inexpensive                                                                     
power to the rural area, whether it be thermal, hydro or                                                                        
wind turban.  Representative Moses emphasized that until                                                                        
inexpensive power is achieved in the rural areas, it is                                                                         
paramount that the State continues to fund PCE.                                                                                 
                                                                                                                                
Representative Kohring noted that by continuing to fund PCE,                                                                    
the State would not be accomplishing any sustainable plan of                                                                    
development.  Representative J. Davies agreed that there                                                                        
does need to be a plan, however, what is being requested at                                                                     
this time is supplemental money to help the rural area get                                                                      
through until the end of the fiscal year.  He emphasized                                                                        
that money exists in the power cost equalization fund to                                                                        
cover the expense and that it should be used for that                                                                           
purpose.                                                                                                                        
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: J. Davies, Foster, Grussendorf, Moses,                                                                                
Williams                                                                                                                        
OPPOSED: Bunde, G. Davis, Kohring, Austerman,                                                                                   
Therriault, Mulder                                                                                                              
                                                                                                                                
The MOTION FAILED (5-6).                                                                                                        
                                                                                                                                
Representative Moses MOVED to RESCIND action taken on                                                                           
Amendment #8.  Co-Chair Therriault OBJECTED.                                                                                    
                                                                                                                                
Representative Moses affirmed that this area has received a                                                                     
triple hardship, including an economic and natural disaster.                                                                    
These areas are hurting and their local government revenues                                                                     
are down.  That money is needed now!  In the more removed                                                                       
areas, supplies often take up to 6 weeks in shipment.                                                                           
Representative Moses pointed out that this disaster would                                                                       
eventually affect the entire State.                                                                                             
                                                                                                                                
Co-Chair Mulder suggested that the request would be better                                                                      
placed in the capital match grant program.  He believed                                                                         
that, as a supplemental for emergency disaster would be                                                                         
stretching the concept of supplemental funding.  Co-Chair                                                                       
Mulder stated that the money would not provide direct relief                                                                    
for these people as much as it would be providing community                                                                     
improvement projects.                                                                                                           
                                                                                                                                
Representative G. Davis advised that capital projects would                                                                     
require dollars to sustain the maintenance and upkeep.  He                                                                      
pointed out that such projects would require additional                                                                         
local dollars in the future.                                                                                                    
                                                                                                                                
Representative Grussendorf compared this disaster to the                                                                        
Millers Reach fire disaster, pointing out how the State came                                                                    
forward to address that concern.  He commented that now                                                                         
there is an opportunity for the State to address the                                                                            
disaster in the fishing areas, however, the Legislature is                                                                      
not coming forward to take care of village economy.                                                                             
Representative Kohring suggested that much of the monies in                                                                     
the Millers Reach fire came through private funding such as                                                                     
the Red Cross and United Way.                                                                                                   
                                                                                                                                
Representative J. Davies stated that the nature of this                                                                         
request would not necessarily be a "capital project".  The                                                                      
funding would be used to provide wages and help to those                                                                        
families so that they could make it through this time when                                                                      
fish are not available.  The primary purpose of this funding                                                                    
would act as an alternate source of income to help these                                                                        
people "survive".                                                                                                               
                                                                                                                                
Representative Grussendorf added that with passage of the                                                                       
supplemental, these people would then have the supplies                                                                         
necessary for the upcoming fishing season.                                                                                      
                                                                                                                                
Co-Chair Mulder suggested that if funding was provided now,                                                                     
the request would probably come back again in May in the                                                                        
capital matching grants. Co-Chair Mulder voiced concern                                                                         
regarding how the State should deal with economic disasters.                                                                    
He foresaw that the commercial fishing industry is in for                                                                       
some difficult years.  He believes that there will be                                                                           
expectation the State, and that by funding the supplemental                                                                     
would not be a prudent way to address the magnitude of the                                                                      
concern.                                                                                                                        
                                                                                                                                
Representative Williams suggested that it could be better                                                                       
for the fishing villages to receive funding at the end of                                                                       
the summer season.                                                                                                              
                                                                                                                                
Representative Moses stressed that this funding was needed                                                                      
months ago.  These areas sometimes go 1.5 months without a                                                                      
barge.  He reiterated that the concern needs to be addressed                                                                    
and coordinated soon.                                                                                                           
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:  J. Davies, Foster, Grussendorf, Moses                                                                                
OPPOSED: G. Davis, Kohring, Williams, Austerman,                                                                                
Mulder, Therriault                                                                                                              
                                                                                                                                
Representative Bunde was not present for the vote.                                                                              
                                                                                                                                
The MOTION FAILED (4-6).                                                                                                        
                                                                                                                                
(Tape Change HFC 99 - 43, Side 2).                                                                                              
                                                                                                                                
Co-Chair Therriault MOVED to report CS HB 100 (FIN) out of                                                                      
Committee with individual recommendations.  There being NO                                                                      
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CS HB 100 (FIN) was reported out of Committee with "no                                                                          
recommendations".                                                                                                               
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 4:15 P.M.                                                                                              
                                                                                                                                
H.F.C. 17 3/09/99                                                                                                               

Document Name Date/Time Subjects