Legislature(2001 - 2002)

05/17/2002 05:44 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Meeting will convene call of the Chair>
* Reappropriations & Capital
Appropriations
<Pending Introdcuction and Referral>
* Municipal Bond Reimbursement
<Pending Introdction and Referral>
* G.O. Bonds: Schools/Museum/University
<Pending Introduction and Referral>
* Regulatory Com. of Alaska:Sunset & Misc
<Pending Introduction and Referral>
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 17, 2002                                                                                            
                          5:44 PM                                                                                               
                                                                                                                                
TAPE HFC SS-02 - 1, Side A                                                                                                      
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House Finance Committee meeting                                                                    
to order at 5:44 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Harris                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
Representative Carl Moses                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative Bill Hudson                                                                                                      
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator John Torgerson; Representative Drew Scalzi; Annalee                                                                     
McConnell, Director, Office of Management and Budget, Office                                                                    
of the Governor.                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 2001   An Act setting timelines for issuance of final                                                                        
          orders  by  the Regulatory  Commission  of  Alaska,                                                                   
          amending the  authority of the commission  to enter                                                                   
          compromise  settlement  orders, and  extending  the                                                                   
          commission's  termination  date to  June 30,  2006;                                                                   
          and providing for an effective date.                                                                                  
                                                                                                                                
          CSHB 2001 was REPORTED out of Committee with a "do                                                                    
          pass" recommendation  and with a new  fiscal impact                                                                   
          note  by the Department  of Community  and Economic                                                                   
          Development.                                                                                                          
                                                                                                                                
HB 2002   An Act relating to the issuance of general                                                                            
          obligation  bonds  for the  purpose  of paying  the                                                                   
          cost   of    design,   construction,    and   major                                                                   
          maintenance  of educational and museum  facilities;                                                                   
          and providing for an effective date.                                                                                  
          HB 2002 was heard and HELD in Committee for                                                                           
          further consideration.                                                                                                
                                                                                                                                
HB 2003   An  Act relating  to  municipal bond  reimbursement                                                                   
          for  school  construction;  and  providing  for  an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          HB 2003 was heard and HELD in Committee for                                                                           
          further consideration.                                                                                                
                                                                                                                                
HB 2007   An  Act  making  an appropriation  to  reverse  the                                                                   
          effect of art. IX, sec.  17(d), Constitution of the                                                                   
          State  of   Alaska;  making  an   appropriation  to                                                                   
          balance  revenue and  general fund  appropriations;                                                                   
          making  an  appropriation   to  the  Department  of                                                                   
          Revenue   for  management  of  the   constitutional                                                                   
          budget  reserve fund;  making appropriations  under                                                                   
          art. IX,  sec. 17(c), Constitution of  the State of                                                                   
          Alaska,  from  the  constitutional  budget  reserve                                                                   
          fund; and providing for an effective date.                                                                            
                                                                                                                                
          HB 2007 was REPORTED out of Committee with a "do                                                                      
          pass" recommendation.                                                                                                 
HOUSE BILL NO. 2001                                                                                                           
                                                                                                                                
     "An Act setting  timelines for issuance  of final orders                                                                   
     by  the Regulatory  Commission of  Alaska, amending  the                                                                   
     authority   of  the  commission   to  enter   compromise                                                                   
     settlement  orders,   and  extending   the  commission's                                                                   
     termination date to June  30, 2006; and providing for an                                                                   
     effective date."                                                                                                           
                                                                                                                                
Co-Chair Mulder  explained that the legislation  would extend                                                                   
the  Regulatory  Commission  of   Alaska  and  was  virtually                                                                   
identical to  the version that  was previously passed  by the                                                                   
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Mulder MOVED  to report  HB 2001  out of  Committee                                                                   
with the accompanying fiscal note.  There being NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
CSHB 2001  was REPORTED  out of  Committee  with a "do  pass"                                                                   
recommendation  and with  a  new fiscal  impact  note by  the                                                                   
Department of Community and Economic Development.                                                                               
HOUSE BILL NO. 2007                                                                                                           
                                                                                                                                
     "An Act  making an appropriation  to reverse  the effect                                                                   
     of art.  IX, sec.  17(d), Constitution  of the  State of                                                                   
     Alaska; making  an appropriation to balance  revenue and                                                                   
     general fund appropriations;  making an appropriation to                                                                   
     the  Department   of  Revenue  for  management   of  the                                                                   
     constitutional     budget    reserve    fund;     making                                                                   
     appropriations under art. IX, sec. 17(c), Constitution                                                                     
     of the State of Alaska, from the constitutional budget                                                                     
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
Co-Chair Mulder explained that  HB 2007 would make a separate                                                                   
appropriation from  the Constitutional Budget  Reserve (CBR),                                                                   
as  opposed to  placement in  a capital  budget or  operating                                                                   
budget. He  explained that an  appropriation from the  CBR is                                                                   
needed to pass the budget if there  are insufficient funds in                                                                   
the General Fund  to pay for state operating  costs. A three-                                                                   
quarter  vote is required:  30  of 40 members  in the  House.                                                                   
Without 30  votes, funds  contained in  the General  Fund and                                                                   
other sub accounts  are swept from the General  Fund into the                                                                   
CBR under the debt repayment provisions  in the Constitution.                                                                   
Included  in these  funds are:  Marine Highway  Stabilization                                                                   
Fund, Power Cost Equalization,  Alaska Science and Technology                                                                   
Foundation,   and  dividends   paid   by  Alaska   Industrial                                                                   
Development and  Export Authority (AIDEA) and  Alaska Housing                                                                   
Finance  Corporation (AHFC).  If these  funds are swept  into                                                                   
the  CBR, things  like water  and sewage  projects funded  by                                                                   
AHFC in rural Alaska would not be funded.                                                                                       
                                                                                                                                
Representative  Bunde pointed  out that  the legislature  has                                                                   
been  using money  from the  CBR  to balance  the budget  and                                                                   
cover the fiscal  gap. He noted that $5 billion  dollars have                                                                   
been  spent in  this way  and must  be paid  back when  state                                                                   
revenues are available beyond what is spent.                                                                                    
                                                                                                                                
Co-Chair  Mulder MOVED  to report  HB 2007  out of  Committee                                                                   
with the accompanying fiscal note.  There being NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
HB  2007 was  REPORTED  out of  Committee  with  a "do  pass"                                                                   
recommendation.                                                                                                                 
HOUSE BILL NO. 2003                                                                                                           
                                                                                                                                
     "An Act relating to municipal bond reimbursement for                                                                       
     school construction; and providing for an effective                                                                        
     date."                                                                                                                     
                                                                                                                                
SENATOR  JOHN  TORGERSON reviewed  SCS  HB 451  (RLS),  which                                                                   
would  be  used  in the  creation  of  a  proposed  committee                                                                   
substitute  to   HB  2003   [work  draft,  22LS1810\C].   The                                                                   
legislation authorizes  local governments  to go out  to vote                                                                   
for bonds.  He noted  that the  Senate adopted the  following                                                                   
language:                                                                                                                       
                                                                                                                                
     (1)  be                                                                                                                    
         (A)  a rural educational attendance area;                                                                              
          (B)  a municipal school district and, as of June                                                                      
          30 of the                                                                                                             
          previous fiscal year, have a population of less                                                                       
          than 1,000; or                                                                                                        
          (C)    a municipal school district that operates                                                                      
                 schools on a military reservation; and                                                                         
                                                                                                                                
Senator  Torgerson   explained  that  two   local  government                                                                   
reimbursement   programs  would   be  established.   Existing                                                                   
programs  would be  funded  at  a 70  percent  level and  the                                                                   
appropriation  would  be open-ended  for  four  years. A  new                                                                   
program would be  created at 60 percent, which  would require                                                                   
the Department  of Education and Early Development  to review                                                                   
the program for compliance. The new language would read:                                                                        
                                                                                                                                
     (11)   subject to  (h), (i), and  (j)(2) - (5)  [(j)(2),                                                                   
     (3), (5)] of this section,  and after projects funded by                                                                   
     the  bonds,  notes,  or  other  indebtedness  have  been                                                                   
     approved  by the  commissioner, 70  percent of  payments                                                                   
     made by  a municipality during  the fiscal year  for the                                                                   
     retirement  of  principal  and interest  on  outstanding                                                                   
     bonds, notes,  or other  indebtedness authorized  by the                                                                   
     qualified  voters of the  municipality on or  after June                                                                   
     30, 1999,  but before  July 1, 2006  [July 1,  2008], to                                                                   
     pay costs of school construction,  additions to schools,                                                                   
     and major rehabilitation  projects and education related                                                                   
     facilities that  exceed $200,000, are approved  under AS                                                                   
     14.07.020(a)(11),  and are not  reimbursed under  (n) or                                                                   
     (o) of this section;                                                                                                       
                                                                                                                                
     (12)   subject  to (h), (i),  and (j)(2),  (3), and  (5)                                                                   
     [(j)(2),  (3),  (5)]  of  this section,  60  percent  of                                                                   
     payments made  by a municipality during  the fiscal year                                                                   
     for  the   retirement  of  principal  and   interest  on                                                                   
     outstanding   bonds,   notes,  or   other   indebtedness                                                                   
     authorized by  the qualified voters of  the municipality                                                                   
     on or after  June 30, 1999, but before July  1, 2006, to                                                                   
     pay costs of school construction,  additions to schools,                                                                   
     and major rehabilitation  projects and education related                                                                   
     facilities   that   exceed    $200,000,   are   reviewed                                                                   
     [approved]  under  AS  14.07.020(a)(11),   and  are  not                                                                   
     reimbursed under (n) or (o) of this section.                                                                               
                                                                                                                                
Senator Torgerson  observed that authorization  for Fairbanks                                                                   
was extended from July 1, 2004  to July 1, 2006 on page 8. He                                                                   
added that July  1, 2008 was also changed to July  1, 2006 on                                                                   
page 10 lines, 6, 14, and 29.  "In the principle amount of at                                                                   
least  $240  million dollars"  was  deleted  on line  25.  He                                                                   
summarized  that bonding  is contingent  on the bond  package                                                                   
passing.                                                                                                                        
                                                                                                                                
Vice-Chair Bunde  questioned who would be excluded  under the                                                                   
grant criteria on page 1. Co-Chair  Mulder explained that the                                                                   
concern with  military reservation  schools is that  they are                                                                   
not  owned  by   the  local  school  district,   which  would                                                                   
therefore  be   hesitant  to  contribute  local   money.  The                                                                   
legislation  would upgrade  military  schools,  so that  they                                                                   
could be  transferred  from the Department  of Education  and                                                                   
Early   Development    to   local   school    districts   for                                                                   
authorization  and  oversight.  Once this  occurs  the  local                                                                   
school district would own the  schools and be responsible for                                                                   
the upgrade.                                                                                                                    
                                                                                                                                
ANNALEE  MCCONNELL,   DIRECTOR,  OFFICE  OF   MANAGEMENT  AND                                                                   
BUDGET,  OFFICE  OF  THE GOVERNOR,  noted  that  the  version                                                                   
passed  by the Senate  (SCS HB  451 (RLS)  would not  provide                                                                   
continued  funding  opportunities   for  rural  schools.  The                                                                   
Administration would support the  linking of the two concepts                                                                   
together [funding for rural and  urban schools]. Urban school                                                                   
districts would be able to direct  their own schedules and do                                                                   
projects  on  the  timing  that  works  best  for  them.  She                                                                   
observed  that  in the  past  there  has  been a  major  debt                                                                   
reimbursement   program    every   few   years,    the   debt                                                                   
reimbursement  programs have driven  the timing of  schedules                                                                   
that  come  under the  reimbursement  programs.  A  different                                                                   
percent  of   support  from   local  districts  would   occur                                                                   
depending  on whether  the school  falls  within the  current                                                                   
statutory  restrictions  or  the   project  addresses  future                                                                   
growth needs.                                                                                                                   
                                                                                                                                
Co-Chair  Williams  requested  that Ms.  McConnel  point  out                                                                   
those  areas  of  the bill  and  provide  a  spreadsheet  for                                                                   
Committee  members.  Ms.  McConnell replied  that  she  would                                                                   
provide that information.                                                                                                       
                                                                                                                                
Ms. McConnell added that the Administration  had support from                                                                   
the Anchorage  School  district for the  concept of  allowing                                                                   
them to  drive their  own schedule  and work  on a  statewide                                                                   
bases. A  process for stabilization  and easier  planning for                                                                   
school  funding  would be  a  benefit,  which would  be  well                                                                   
received by the state's school districts.                                                                                       
                                                                                                                                
Ms. McConnell  observed that  the initial recommendation  was                                                                   
to put in place something that  could be done in five funding                                                                   
cycles.  The GO  bond bill  would  occur in  the first  year,                                                                   
which  would  address  rural schools.  Anchorage  and  Juneau                                                                   
already  have   projects  approved   by  the  voters.   Other                                                                   
communities,  such  as  the Mat-Su  Borough,  would  just  be                                                                   
getting their  processes underway  to do their  bond issuance                                                                   
over this cycle.  Five years was picked in order  to get past                                                                   
the "first  shot at all of  this" and allow  school districts                                                                   
to work the process into their planning cycles.                                                                                 
                                                                                                                                
HB  2003  was  heard  and  HELD   in  Committee  for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 2002                                                                                                           
                                                                                                                                
     "An Act relating  to the issuance of  general obligation                                                                   
     bonds  for the  purpose of  paying the  cost of  design,                                                                   
     construction, and  major maintenance of  educational and                                                                   
     museum facilities; and providing for an effective                                                                          
     date."                                                                                                                     
                                                                                                                                
Co-Chair   Williams   observed   that  HB   2002   duplicates                                                                   
legislation previously sent to the Senate.                                                                                      
                                                                                                                                
Co-Chair  Mulder   noted  that   a  proposed  House   Finance                                                                   
Committee  substitute would  be prepared,  which would  adopt                                                                   
the Senate Finance  Committee version. He explained  that the                                                                   
Senate Finance  Committee version funded  projects 1 -  10 on                                                                   
the  new  school  construction   list  and  appropriated  $61                                                                   
million  dollars  for  University  upgrades  and  $5  million                                                                   
dollars for the museum.                                                                                                         
                                                                                                                                
HB  2002  was  heard  and  HELD   in  Committee  for  further                                                                   
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 6:07 PM                                                                                            

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