Legislature(2001 - 2002)

04/26/2001 08:43 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 26, 2001                                                                                           
                          8:43 PM                                                                                               
                                                                                                                                
TAPE HFC 01 - 99, Side A                                                                                                        
TAPE HFC 01 - 99, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 8:43 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Carl Moses                                                                                                       
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Mike Tibbles,  Staff, Representative;  Peter Ecklund,  Staff,                                                                   
Representative Williams  ; Kurt Parkan, Deputy  Commissioner,                                                                   
Department  of Transportation  and  Public Facilities;  Wendy                                                                   
Redman,  Vice President,  Statewide  Programs, University  of                                                                   
Alaska;                                                                                                                         
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
David  Mork,  Wrangell;  Robert  Prunella  Manager,  City  of                                                                   
Wrangell.                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 175    An  Act  making  an  appropriation  to  the  Alaska                                                                   
          Industrial Development and Export Authority for                                                                       
          power projects; and providing for an effective                                                                        
          date.                                                                                                                 
                                                                                                                                
          CSHB 175 (FIN) was REPORTED out of Committee with                                                                     
          a "do pass" recommendation.                                                                                           
                                                                                                                                
HB 191    An  Act authorizing  financing  for certain  public                                                                   
          transportation  projects;   giving  notice  of  and                                                                   
          approving  the  entry  into,  and the  issuance  of                                                                   
          revenue obligations  that provide participation in,                                                                   
          lease-financing      agreements      for      those                                                                   
          transportation  projects;   and  providing  for  an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          CSHB 191 (FIN) was REPORTED out of Committee with                                                                     
          a "do  pass" recommendation  and with a  new fiscal                                                                   
         impact note by the Department of Revenue.                                                                              
                                                                                                                                
HB 234    An  Act relating to  the financing of  construction                                                                   
          and  renovation of certain  public facilities;  and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          HB 234 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 238    An Act relating to the  power transmission intertie                                                                   
          fund of the Alaska Energy Authority.                                                                                  
                                                                                                                                
          CSHB 238 (FIN) was REPORTED out of Committee with                                                                     
          a  "do pass"  recommendation  and with  a new  zero                                                                   
          fiscal note by the House  Finance Committee for the                                                                   
          Department of Community and Economic Development.                                                                     
HOUSE BILL NO. 175                                                                                                            
                                                                                                                                
     An Act making an appropriation to the Alaska Industrial                                                                    
     Development and Export Authority for power projects;                                                                       
     and providing for an effective date.                                                                                       
                                                                                                                                
HOUSE BILL NO. 238                                                                                                            
                                                                                                                                
     An Act relating to the power transmission intertie fund                                                                    
     of the Alaska Energy Authority.                                                                                            
                                                                                                                                
Members were  provided with a proposed  committee substitute,                                                                   
work draft for HB 175 22-LS0705\T, Cramer 4/26/01.                                                                              
                                                                                                                                
Members were provided with proposed  committee substitute for                                                                   
HB 238, work draft 22-LS0868\F, 4/26/01 (copy on file).                                                                         
                                                                                                                                
MIKE   TIBBLES,  STAFF,   REPRESENTATIVE  WILLIAMS   provided                                                                   
information on  HB 175 and HB  238. He noted that  there were                                                                   
previous  discussions  regarding  where the  funding  source,                                                                   
payment mechanism and repayment.                                                                                                
                                                                                                                                
Vice-Chair   Bunde   MOVED  to   ADOPT   proposed   committee                                                                   
substitute,  work  draft   for  HB 175,  22-LS0705\T,  Cramer                                                                   
4/26/01. There being NO OBJECTION, it was so ordered.                                                                           
                                                                                                                                
Mr. Tibbles explained that the  proposed committee substitute                                                                   
splits  into  two separate  appropriations  the  amount  that                                                                   
would  be  a grant  and  the  amount  that  would be  a  zero                                                                   
interest  loan.  House  Bill  238 creates  a  new  fund.  The                                                                   
appropriation  in HB  175, section  1  would be  appropriated                                                                   
into the  new fund created  in HB 238.  The problem  with the                                                                   
previous version  was that state of Alaska  law required that                                                                   
loans  from  the Alaska  Industrial  Development  and  Export                                                                   
Authority  (AIDEA) Revolving  Loan Fund  be repaid back  into                                                                   
the  fund.  Money would  be  appropriated  to the  new  Power                                                                   
Transmission Intertie Loan Fund  and then be loaned on a zero                                                                   
interest basis. The repayments  would be made to the Railbelt                                                                   
Energy Fund.  Section 2  of HB 238  sets up the  requirements                                                                   
for  the  loan  program.  Subsection   (e)  states  that  the                                                                   
authority shall  deposit repayments of loans  to the Railbelt                                                                 
Energy Fund.                                                                                                                    
                                                                                                                                
Representative  John  Davies   questioned  why  the  Railbelt                                                                   
Energy Fund  would be appropriate. Co-Chair  Mulder explained                                                                   
that when the natural gas pipeline  is developed and there is                                                                   
gas power  there would be a  need for an intertie  throughout                                                                   
South Central  Alaska. The  purpose is  to assure that  there                                                                   
are enough funds in the Railbelt  Energy Fund to intertie the                                                                   
entire Railbelt.                                                                                                                
                                                                                                                                
Mr.  Tibbles referred  to  page  2, line  14  of  HB 175.  He                                                                   
explained that  the appropriation of $2.5 million  dollars to                                                                   
the Matanuska  Electric Association, which is  contained as a                                                                   
loan in section 1,  should be  included as a grant in section                                                                   
2.                                                                                                                              
                                                                                                                                
Representative Harris  MOVED to ADOPT Amendment  1: change "a                                                                   
no interest  loan" on  line 14,  page 2  to "grant"  and move                                                                   
lines  14 - 18  into section  2. He  explained  that it  is a                                                                   
railbelt energy project and would qualify as a grant.                                                                           
                                                                                                                                
Representative  John  Davies  pointed out  that  the  funding                                                                   
source is the Constitutional Budget Reserve.                                                                                    
                                                                                                                                
Mr. Tibbles  explained  that the project  is consistent  with                                                                   
the other grant projects.                                                                                                       
                                                                                                                                
Representative  Croft thought that  it would make  more sense                                                                   
to leave the project in section 1.                                                                                              
                                                                                                                                
Representative Lancaster explained  that funds were requested                                                                   
from the Railbelt Energy Fund.  The decision was made to take                                                                   
the  funds from  the Constitutional  Budget  Reserve and  put                                                                   
into  the  Railbelt  Energy Fund.  Projects  related  to  the                                                                   
Railbelt  would  be grants;  others  would  be made  as  zero                                                                   
interest  loans  repaid  to  the  Railbelt  Energy  Fund.  He                                                                   
stressed that all those in receipt of funds are in support.                                                                     
                                                                                                                                
Representative  Hudson  summarized that  the  funds from  the                                                                   
Constitutional   Budget   Reserve    to   Alaska   Industrial                                                                   
Development   and   Export   Authority   (AIDEA)   would   be                                                                   
appropriated  as loans or  grants and never  be paid  back to                                                                   
the CBR.                                                                                                                        
                                                                                                                                
Representative Croft acknowledged  that it is a loan from the                                                                   
Constitutional Budget Reserve  and pointed out that a debt is                                                                   
being created  in two places.  He stressed the  difficulty of                                                                   
assessing which  projects should be logically  related to the                                                                   
Railbelt.                                                                                                                       
                                                                                                                                
Representative Lancaster  explained that the grant  to Copper                                                                   
Valley for  $500 thousand dollars is  a pay back for  a study                                                                   
they completed for the Glennallen  Intertie, which never came                                                                   
to  fruition.   Grants  to  Southeast  Communities   are  for                                                                   
studies, not physical plants.                                                                                                   
                                                                                                                                
Representative  Whitaker   summarized  that  there   is  $101                                                                   
million  dollars  for  power   transmission  projects:  $32.5                                                                   
million  dollars for  non-Railbelt areas;  and $60.8  million                                                                   
dollars  for the  Railbelt. He  stressed that  there is  $101                                                                   
million  dollars  for  power   transmission  projects:  basic                                                                   
infrastructure.  Some of  the money  would go  back into  the                                                                   
Railbelt Energy Fund  for future use. He pointed  out that 80                                                                   
percent of  the state's  population is  in the Railbelt,  but                                                                   
only 60  percent of  the funds  go to  the Railbelt.  He felt                                                                   
that this  discrepancy would be  offset by building  the fund                                                                   
for future need. He stressed the  importance of funding basic                                                                   
infrastructure.                                                                                                                 
                                                                                                                                
Representative  Lancaster  pointed out  that  section 3  also                                                                   
funds the Power Cost Equalization FY02 shortfall.                                                                               
                                                                                                                                
Representative  Lancaster observed that  section 6 of  HB 175                                                                   
refers to  HB 238, which is  the mechanism that  allows AIDEA                                                                   
to receive the funding.                                                                                                         
                                                                                                                                
Representative Foster  MOVED to report CSHB 175  (FIN) out of                                                                   
Committee. There being NO OBJECTION, it was so ordered.                                                                         
                                                                                                                                
CSHB  175 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation.                                                                                                           
                                                                                                                                
Representative Lancaster  MOVED to report CSHB  238 (FIN) out                                                                   
of Committee with  the accompanying fiscal note.  There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
CSHB  238 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with a new zero fiscal  note by the                                                                   
House Finance  Committee for the Department of  Community and                                                                   
Economic Development.                                                                                                           
HOUSE BILL NO. 191                                                                                                            
                                                                                                                                
     An  Act   authorizing  financing   for  certain   public                                                                   
     transportation projects;  giving notice of and approving                                                                   
     the entry into, and the issuance  of revenue obligations                                                                   
     that   provide    participation   in,    lease-financing                                                                   
     agreements  for   those  transportation   projects;  and                                                                   
     providing for an effective date.                                                                                           
                                                                                                                                
Co-Chair Mulder  MOVED to ADOPT  work draft 22LS766\J,  dated                                                                   
4/26/01. There being NO OBJECTION, it was so ordered.                                                                           
                                                                                                                                
PETER  ECKLUND,   STAFF,  REPRESENTATIVE  WILLIAMS   provided                                                                   
information on  the proposed  committee substitute.  He noted                                                                   
that  projects  were  spread  out  through  rural  Alaska.  A                                                                   
project  in  Kodiak   was  added.  Projects   in  Matsu  were                                                                   
exchanged at the same dollar amount.                                                                                            
                                                                                                                                
Representative Davies  noted that other versions  of the bill                                                                   
contained projects  in rural  Alaska relating to  resurfacing                                                                   
for dust control.  Mr. Ecklund noted that there  are projects                                                                   
for  area  roads   in  rural  Alaska,  which   would  be  for                                                                   
blacktopping or dust controlled.                                                                                                
                                                                                                                                
KURT    PARKAN,    DEPUTY   COMMISSIONER,    DEPARTMENT    OF                                                                   
TRANSPORTATION AND PUBLIC FACILITIES  explained that projects                                                                   
in the original  legislation for dust control were  part of a                                                                   
$15  million dollar  component.  Some of  these projects  are                                                                   
included on  page 2. Items  7, 8, 9, 10  and 13 were  part of                                                                   
the original package  of projects. Almost $10  million of the                                                                   
$15 million dollar request was included.                                                                                        
                                                                                                                                
Representative Croft  clarified that no funding  was included                                                                   
for Barrow  road resurfacing  and only  one of the  requested                                                                   
fast  ferries were  included.  Ten million  dollars for  area                                                                   
roads  and  trails  in  Fairbanks   were  not  included.  The                                                                   
Soldotna  East   Redoubt  Avenue  rehabilitation   was  fully                                                                   
funded.                                                                                                                         
                                                                                                                                
Mr. Parkan noted that STIP projects were included.                                                                              
                                                                                                                                
Representative  John  Davies  MOVED  to  ADOPT  Amendment  1:                                                                   
delete  "Fairbanks: South  Cushman  Street Improvements"  and                                                                   
insert  "Borough Wide  Road and  Trail" on  page 2, line  28.                                                                   
This is the Boroughs 5th priority.  There being NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
Representative Croft MOVED to ADOPT Amendment:                                                                                  
                                                                                                                                
     Delete:                                                                                                                    
     Anchorage:   Glenn Highway,  Gambell Street  to McCarrey                                                                   
     Street - $58,180;                                                                                                          
     Anchorage:  Abbott Loop North  Extension 15,000,000; and                                                                   
     Insert:                                                                                                                    
     Barrow Road Resurfacing $10.0                                                                                              
     Fast Ferries   $35.0                                                                                                       
     Fairbanks North Star Borough Area Road and Trails $7                                                                       
     Rural                                                                                                                      
     Village Road Surfacing $9.35                                                                                               
     Chief Eddie Hoffman Highway    $2.83                                                                                       
                                                                                                                                
Co-Chair  Williams OBJECTED.  Representative  Croft spoke  in                                                                   
support of  the amendment.  He noted  that the Glenn  Highway                                                                   
extension is unpopular  in his area. Removal  of this project                                                                   
would allow it  to continue on a slower process.  He observed                                                                   
that  there is  significant  objections  to  the Abbott  Loop                                                                   
North   extension.  He   stressed  that   it  would   not  be                                                                   
appropriate to have the project on an expedited basis.                                                                          
                                                                                                                                
Co-Chair  Mulder stressed  that  there is  a 30  - 45  minute                                                                   
bottleneck moving  in and out of Anchorage during  rush hour.                                                                   
He  maintained that  the bottleneck  will  become a  "Seattle                                                                   
type"  one  hour to  an  hour  and  a half  traffic  jam.  He                                                                   
emphasized  that the  project would  address future  concerns                                                                   
and  noted that  the expansion  would not  occur for  another                                                                   
decade.                                                                                                                         
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Croft, Davies,                                                                                                        
OPPOSED:  Foster,   Harris,  Hudson,   Lancaster,   Whitaker,                                                                   
          Bunde, Mulder, Williams                                                                                               
                                                                                                                                
Representative Moses was absent from the vote.                                                                                  
                                                                                                                                
The MOTION FAILED (2-8).                                                                                                        
                                                                                                                                
Representative Foster  MOVED to report CSHB 191  (FIN) out of                                                                   
Committee  with  the  accompanying  fiscal  note.  Vice-Chair                                                                   
Bunde  expressed concern  with the  East Anchorage  expansion                                                                   
project,  but  did  not  object   to  moving  the  bill  from                                                                   
Committee. There being NO OBJECTION, it was so ordered.                                                                         
                                                                                                                                
CSHB  191 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with  a new  fiscal impact  note by                                                                   
the Department of Revenue.                                                                                                      
HOUSE BILL NO. 234                                                                                                            
                                                                                                                                
     An Act relating to the financing of construction and                                                                       
     renovation of certain public facilities; and providing                                                                     
     for an effective date.                                                                                                     
                                                                                                                                
Vice-Chair   Bunde   MOVED  to   ADOPT   proposed   committee                                                                   
substitute: work  draft 22-LS0863\O, 4/25/01. There  being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
DAVID MORK, WRANGELL testified  via teleconference in support                                                                   
of the  legislation. He  stressed the  importance of  funding                                                                   
Wrangell's   harbor    project.   The   harbor    is   slowly                                                                   
deteriorating.  The   cost  of  the  project   has  increased                                                                   
approximately 14 percent from the previous year.                                                                                
                                                                                                                                
ROBERT  PRUNELLA  MANAGER,  CITY OF  WRANGELL  testified  via                                                                   
teleconference  in  support  of  inclusion  of  the  Wrangell                                                                   
harbor project.                                                                                                                 
                                                                                                                                
TAPE HFC 01 - 99, Side B                                                                                                      
                                                                                                                                
Vice-Chair  Bunde MOVED  to ADOPT Amendment  1. He  explained                                                                   
that Amendment  1 would securitize  the remaining  20 percent                                                                   
of the tobacco settlement funds  and provide a funding stream                                                                   
for tobacco cessation activities.  Existing non-profits would                                                                   
utilize  the funds. He  acknowledged that  the funding  would                                                                   
not  be dedicated  but  emphasized that  it  would provide  a                                                                   
funding stream  that the legislature can appropriate  to non-                                                                   
profits. The amount is estimated  at $4 to $5 million dollars                                                                   
with a decreasing annuity.                                                                                                      
                                                                                                                                
Vice-Chair  Bunde   explained  that  the  projects   for  the                                                                   
University  of Alaska were  not deleted;  they were  moved to                                                                   
create a new structure.                                                                                                         
                                                                                                                                
Vice-Chair   Bunde   noted   that    there   were   technical                                                                   
difficulties  with the  amendment  and WITHDREW  Amendment  1                                                                   
with  the intention  of  revising it  for  the next  meeting.                                                                   
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Representative  Croft MOVED  to ADOPT  Amendment 2.  Co-Chair                                                                   
Mulder  OBJECTED.  Representative  Croft explained  that  the                                                                   
amendment  would fund  the  first 4  projects  on the  school                                                                   
construction  list and  the first  46 projects  on the  major                                                                   
maintenance   list.  He  observed   that  the  projects   are                                                                   
primarily rural,  but noted that there are  projects from all                                                                   
over the  state. He  stressed  that there is  a process  that                                                                   
should be  followed. Many  of the projects  have been  on the                                                                   
list  for a  long  time. He  acknowledged  the difficulty  of                                                                   
using harbor  and university  projects in  order to  fund the                                                                   
construction and maintenance projects  contained in Amendment                                                                   
2.  He spoke  in support  of finding  other  ways to  support                                                                   
ports and harbors.                                                                                                              
                                                                                                                                
Co-Chair Mulder spoke against  the amendment. He acknowledged                                                                   
the  importance  of  building  and  maintaining  schools  but                                                                   
observed  that there  are competing  interests statewide.  He                                                                   
stressed  that  the  issue isn't  just  what  is  politically                                                                   
correct  but   what  is   politically  possible.   There  are                                                                   
statewide   needs  for  capital   construction  dollars.   He                                                                   
maintained   that   the   legislation   is   reasonable   and                                                                   
responsible.  He felt  that adoption of  the amendment  would                                                                   
amount to winning the battle but losing the war.                                                                                
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Croft, Davies                                                                                                         
OPPOSED:  Whitaker,   Foster,   Harris,  Hudson,   Lancaster,                                                                   
          Mulder, Williams                                                                                                      
                                                                                                                                
Representatives Mulder and Bunde were absent.                                                                                   
                                                                                                                                
Representative Hudson  MOVED to ADOPT Amendment 3  on page 4,                                                                   
line  15: delete  $6 million  dollars and  insert $7  million                                                                   
dollars for the Juneau Douglas  High School. He stressed that                                                                   
he agreed to  give up $7.1 million dollars  in harbor funding                                                                   
in support for the city's highest priority.                                                                                     
                                                                                                                                
Co-Chair  Mulder  MOVED  to  AMEND  Amendment  3:  delete  $1                                                                   
million  dollars  from  the  University  Center  and  add  $1                                                                   
million  dollars for  the Juneau  High  School repair.  There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
Co-Chair Mulder  MOVED to  ADOPT Amendment  4 as a  technical                                                                   
amendment: page  4, lines 24 and  25, change the  language to                                                                   
University of Alaska Anchorage  University Center Acquisition                                                                   
and Renovation.                                                                                                                 
                                                                                                                                
WENDY REDMAN, VICE PRESIDENT,  STATEWIDE PROGRAMS, UNIVERSITY                                                                   
OF ALASKA provided  information on the amendment.  She stated                                                                   
that   the   language  should   state   Anchorage   Facility,                                                                   
Acquisition and Renovation.                                                                                                     
                                                                                                                                
Co-Chair Mulder  Amended Amendment  4 to Anchorage  Facility,                                                                   
Acquisition and Renovation. There  being NO OBJECTION, it was                                                                   
so  ordered.  There  being  NO  OBJECTION,  Amendment  4  was                                                                   
adopted as amended.                                                                                                             
                                                                                                                                
Co-Chair Mulder MOVED  to ADOPT Amendment 5 page  4, lines 24                                                                   
and  25,  change   the  language  to  University   of  Alaska                                                                   
Anchorage Facility,  Acquisition and Renovation.  There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
HB  234  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 9:58 p.m.                                                                                          

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