Legislature(2011 - 2012)HOUSE FINANCE 519

04/14/2012 09:30 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued at 7:25 p.m. --
+ SB 182 PUPIL TRANSPORTATION FUNDING TELECONFERENCED
Moved HCS CSSB 182(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 23 FILM PRODUCTION TAX CREDIT/AUDITS TELECONFERENCED
Moved HCS CSSB 23(FIN) Out of Committee
+= SB 160 BUDGET: CAPITAL TELECONFERENCED
Moved HCS CSSB 160(FIN) Out of Committee
+= SB 66 AIDEA: NEW MARKETS TAX CREDIT PROGRAM TELECONFERENCED
Moved HCS CSSB 66(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 14, 2012                                                                                           
                         10:25 a.m.                                                                                             
                                                                                                                                
                                                                                                                                
10:25:21 AM                                                                                                                   
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze  called the House Finance  Committee meeting                                                                   
to order at 10:25 a.m.                                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Peter  Ecklund,  Staff,  Representative  Bill  Thomas;  James                                                                   
Armstrong,     Staff,    Representative     Bill     Stoltze;                                                                   
Representative Steve  Thompson; Mark Davis,  Deputy Director,                                                                   
Alaska   Industrial   Development   and   Export   Authority,                                                                   
(AIDEA),  Department  of  Commerce,  Community  and  Economic                                                                   
Development;   Joe   Michel,   Staff,   Representative   Bill                                                                   
Stoltze.                                                                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 23(FIN)                                                                                                                    
          FILM PRODUCTION TAX CREDIT/AUDITS                                                                                     
                                                                                                                                
          HCS CSSB 23(FIN) was REPORTED out of committee                                                                        
          with a "do pass" recommendation and with new                                                                          
          fiscal  notes from  the Department  of Revenue  and                                                                   
          the   Department   of   Commerce,   Community   and                                                                   
          Economic  Development and  a new  zero fiscal  note                                                                   
          from the Legislature.                                                                                                 
                                                                                                                                
CSSB 66(FIN)                                                                                                                    
          AIDEA: NEW MARKETS TAX CREDIT PROGRAM                                                                                 
                                                                                                                                
          HCS  CSSB 66(FIN)  was  REPORTED  out of  committee                                                                   
          with  a "do pass" recommendation  and with  two new                                                                   
          zero  fiscal  notes  from Department  of  Commerce,                                                                   
          Community    and    Economic    Development,    and                                                                   
          Department of Education and Early Development.                                                                        
                                                                                                                                
CSSB 160(FIN) BUDGET: CAPITAL                                                                                                   
                                                                                                                                
          HCS  CSSB 160(FIN)  was REPORTED  out of  committee                                                                   
          with a "do pass" recommendation as amended.                                                                           
                                                                                                                                
CSSB 182(EDC)                                                                                                                   
          PUPIL TRANSPORTATION FUNDING                                                                                          
                                                                                                                                
          HCS  CSSB 182(FIN)  was REPORTED  out of  committee                                                                   
          with  a "do  pass"  recommendation  and with  three                                                                   
          new   fiscal  impact   notes  from  Department   of                                                                   
          Education  and Early Development  and two  new zero                                                                   
          notes  from  Department   of  Education  and  Early                                                                   
          Development.                                                                                                          
                                                                                                                                
10:25:34 AM                                                                                                                   
                                                                                                                                
CS FOR SENATE BILL NO. 182(EDC)                                                                                               
                                                                                                                                
     "An Act amending the amount of state funding provided                                                                      
     to school districts for pupil transportation."                                                                             
                                                                                                                                
Vice-chair Fairclough MOVED to ADOPT Work Draft HCS CSSB182                                                                     
(FIN) 27-LS1283\O, (4/13/12, Mischel).                                                                                          
                                                                                                                                
Co-Chair Stoltze OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
PETER ECKLUND,  STAFF, REPRESENTATIVE BILL  THOMAS, explained                                                                   
the changes  in the  current version  of the legislation.  He                                                                   
noted  that  several  new provisions  were  added.  The  bill                                                                   
maintained  the  supplemental  payment  of slightly  over  $8                                                                   
million to  cover increased  costs for pupil  transportation.                                                                   
He  remarked that  the  supplemental  payment for  the  Kenai                                                                   
Borough was increased  by $1.2 million in FY  13. He reported                                                                   
that the Senate  version contained a provision  that made the                                                                   
FY  2013   pupil  transportation  expenditure   adjusted  for                                                                   
inflation  according to  the Consumer  Price Index (CPI)  the                                                                   
base  amount to  determine future  funding. The  new CS  uses                                                                   
the FY 13  expenditure as the  base and adds 1.5  percent for                                                                   
FY  2014 and  FY  2015 and  does  not provide  the  inflation                                                                   
factor in  FY 2016;  intended as a  measure to negotiate  for                                                                   
cost  containment   in  future   contract  negotiations.   He                                                                   
elaborated that  most school  districts will renegotiate  its                                                                   
contracts  in  2016.  The  CS  retained  the  provision  that                                                                   
required   the  school   districts   to  adopt   standardized                                                                   
regulations    for   safe    and    cost   efficient    pupil                                                                   
transportation    which   included   standardized    contract                                                                   
conditions.                                                                                                                     
                                                                                                                                
Mr.  Ecklund   furthered  that  SB  199   (SB  199-Vocational                                                                   
Education Funding  Factor) was  rolled into the  legislation.                                                                   
The  legislation expanded  vocational  education funding  for                                                                   
the  middle  school  level;  grades  7  through  12.  The  CS                                                                   
increased  vocational funding  by 50 percent.  In addition  a                                                                   
"mill  rate disparity"  on  the full  value  of the  required                                                                   
local contribution was  remedied. Some city or borough school                                                                   
districts  were contributing a  mill rate  of 2.7 and  others                                                                   
were paying  a rate  of 3.7.  Over time  $530 million  of the                                                                   
local  contribution shifted  from  the local  communities  to                                                                   
the  state. The  legislation proposed  to  equalize the  mill                                                                   
rate to 2.65 percent  on the full value [of  the taxable real                                                                   
and  personal  property  in  the   district].  The  provision                                                                   
repealed  a section of  law that  authorized the  calculation                                                                   
of only  50 percent  of the  mill rate  increase since  1999.                                                                   
Municipalities  would receive  an  approximately $21  million                                                                   
increase  in  state  aid  under  the  proposed  changes.  The                                                                   
municipalities  have  the  option  of  using  the  additional                                                                   
money to fully  fund education to the "local  education cap."                                                                   
He added  that current  law required  a new  city or  borough                                                                   
school  district to  phase in  the mill  rate calculation  at                                                                   
zero, two, and  four percent consecutively over  3 years. The                                                                   
provision  in  the  committee  substitute  (CS)  reduced  the                                                                   
phase-in  rates to  zero,  one, and  two  percent to  provide                                                                   
relief  from   the  immediate   impact  of  the   full  local                                                                   
contribution.                                                                                                                   
                                                                                                                                
Mr.  Ecklund expounded  that the  CS incorporated  HB 49  [HB                                                                   
49-Early   Childhood   Ed:   Parents    As   Teachers.]   The                                                                   
legislation  proposed  the  establishment   of  a  Parent  As                                                                   
Teachers Program.  The three year pilot program  was designed                                                                   
to  boost a  child's readiness  for school.  The sunset  date                                                                   
was adjusted  to 2015 to  allow for the  full three  years of                                                                   
the  pilot  program.  The original  bill  required  that  the                                                                   
Department   of  Education  and   Early  Development   (DEED)                                                                   
compare performance  of participants and  non-participants in                                                                   
the  program. The  CS required  a report  on the  "efficiency                                                                   
and effectiveness  measures that demonstrated the  results of                                                                   
the program  relating to  child school  readiness." He  noted                                                                   
that the  cost of  the program reflected  on the  fiscal note                                                                   
was $3.9 million.                                                                                                               
                                                                                                                                
Co-Chair Stoltze  offered that $25 million was  deducted from                                                                   
"local discretionary  (individual districts) funding"  in the                                                                   
capital budget and added to education spending.                                                                                 
                                                                                                                                
10:34:42 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze  WITHDREW  his OBJECTION.  There  being  NO                                                                   
OBJECTION the committee substitute was adopted.                                                                                 
                                                                                                                                
Representative   Gara  applauded   the  compromises   in  the                                                                   
legislation.  He   understood  that  the  CS   corrected  the                                                                   
provision   in  law  that   allowed  a   community  to   only                                                                   
contribute  50 percent  of  its mill  rate  increases as  its                                                                   
local contribution  for school funding. When  property values                                                                   
increased  the  local  contribution only  increased  half  as                                                                   
much  in relative  value. He  asked  what the  impact of  the                                                                   
change  was on  future  state  and local  contributions.  Mr.                                                                   
Ecklund  agreed that  the CS  repealed the  law that  allowed                                                                   
only 50  percent of  the mill  rate increase calculated  into                                                                   
the local  contribution as property  values grow.  The change                                                                   
to a standard  contribution for all municipalities  equalized                                                                   
the disparity  in local contributions.  He referred to  a new                                                                   
DEED  fiscal  note.  He  cited   Page  3,  which  showed  the                                                                   
increased   state  aid   for  each   district  that   totaled                                                                   
$21,296,396.  He  exemplified  that Anchorage  would  receive                                                                   
$8,159,847 more  in state aid,  which signified a  savings to                                                                   
the municipality.  The city could  contribute the  savings to                                                                   
fund education  to the  allowable local contribution  maximum                                                                   
limit. Anchorage  currently  contributed a  2.9 mill  rate at                                                                   
full  value. The  legislation would  reduce the  contribution                                                                   
to  a  rate  of 2.65.  In  the  future,  if  assessed  values                                                                   
continue to grow that outcome could change.                                                                                     
                                                                                                                                
Representative  Gara understood  that  over  time the  change                                                                   
might require  some localities to  pay more. He asked  if the                                                                   
$21 million increase  in state aid for FY 13  was in addition                                                                   
to  the  $51  million  increase  in  education  funding.  Mr.                                                                   
Ecklund  replied   that  the   $21  million  was   additional                                                                   
funding.  He reported  that the  CS  contained an  additional                                                                   
approximately $50  million in  increased state aid  to school                                                                   
districts in FY 2012 and FY 2013.                                                                                               
                                                                                                                                
10:39:35 AM                                                                                                                   
                                                                                                                                
Representative  Neuman  relayed  that  the  Matanuska-Susitna                                                                   
Borough  school  population was  growing  at  a rate  of  432                                                                   
pupils per  year. The growth  represented a new  school every                                                                   
year. The  borough cannot  keep up  with school  construction                                                                   
at the  present assessment  of property  values. The  borough                                                                   
supported taxes in  order to build new schools.  He asked how                                                                   
the  change  to  the local  contribution  could  benefit  the                                                                   
borough.  Mr.  Ecklund  replied   that  the  legislation  was                                                                   
intended to  balance the different components  to educational                                                                   
spending. He noted  that the borough benefited  the most with                                                                   
the  transportation  funding. The  Matanuska-Susitna  Borough                                                                   
was currently  paying a mill rate  of 2.7. He  commented that                                                                   
the change  was due  to a "policy  call" by the  legislature.                                                                   
The  choice was  to either  equalize  local contributions  or                                                                   
continue with disparity on the full value.                                                                                      
                                                                                                                                
Representative    Neuman   voiced    that   the    additional                                                                   
transportation  funding  was appropriated  from  the  capital                                                                   
budget and  could not be counted  on in the future.  The mill                                                                   
rate  changes were  embedded in  the  foundation formula  for                                                                   
education.   Mr.    Ecklund   clarified   that    the   pupil                                                                   
transportation  was  a  "formula change"  and  was  permanent                                                                   
until contracts were renegotiated in 4 or 5 years.                                                                              
                                                                                                                                
Co-Chair Stoltze OPENED public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
10:43:06 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze  acknowledged  Senator  Meyer  and  Senator                                                                   
Thomas who laid the ground work for the legislation.                                                                            
                                                                                                                                
Vice-chair  Fairclough  highlighted  the  fiscal  notes.  She                                                                   
referred  to the  new fiscal  note  affecting fund  transfers                                                                   
(4/10/2012)  into  the  Public   Education  Fund  (PEF).  She                                                                   
pointed out that  the FY 2013 appropriation  requested column                                                                   
should  read  FY  2012.  The appropriation  in  FY  2012  was                                                                   
$86,811  million. For  the  out-years $41,031.3  million  was                                                                   
projected in  FY 2015 through FY  2018. She moved to  the new                                                                   
zero  (DEED)  fiscal  note  (4/13/2012)  allocated  to  Pupil                                                                   
Transportation.   She  cited   the  new   DEED  fiscal   note                                                                   
(4/13/2012)  allocated to  School Finance  and Facilities  in                                                                   
the amount  of $95.3 thousand from  FY 2013 to FY 2018  for a                                                                   
full time School  Finance Specialist II position.  She turned                                                                   
to the  new zero  DEED fiscal  note (4/13/2012) allocated  to                                                                   
the Foundation  Program. She noted  the new DEED  fiscal note                                                                   
(4/13/2012) allocated  to Early Learning Coordination  in the                                                                   
amount of $3,902.5 million in FY 2013 through FY 15.                                                                            
                                                                                                                                
Co-Chair  Thomas MOVED  to report  HCS CSSB  182(FIN) out  of                                                                   
committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal notes.                                                                                                      
                                                                                                                                
HCS CSSB  182(FIN) was REPORTED  out of committee with  a "do                                                                   
pass" recommendation  and with three new fiscal  impact notes                                                                   
from Department  of Education  and Early Development  and two                                                                   
new  zero  notes  from  Department  of  Education  and  Early                                                                   
Development.                                                                                                                    
                                                                                                                                
10:47:08 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:49:45 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 23(FIN)                                                                                                
                                                                                                                                
     "An  Act relating  to transferable  film production  tax                                                                   
     credits  and film  production  tax credit  certificates;                                                                   
     requiring  the legislative audit  division to  audit the                                                                   
     Alaska   film   production    incentive   program;   and                                                                   
     providing  for   an  effective  date  by   amending  the                                                                   
     effective dates of secs. 3 and 4, ch. 63, SLA 2008."                                                                       
                                                                                                                                
Vice-chair Fairclough  MOVED to ADOPT HCS CSSB  23 (FIN) Work                                                                   
Draft   27-LS0252\OO,  (4/14/12,   Bullock)   as  a   working                                                                   
document.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
Representative Costello  reviewed the changes in  the CS. She                                                                   
noted that  on Page 6, line  30, the word "may"  was replaced                                                                   
with  "shall."  She  remarked  that  the  change  echoed  the                                                                   
intent of  the subcommittee. She  cited that on Page  9, line                                                                   
16 the word  "may" was again changed to "shall."  She related                                                                   
that  the  changes  were  oversights  and  that  the  changes                                                                   
reflected the work  of the subcommittee on SB 23,  as well as                                                                   
the bill sponsor.                                                                                                               
                                                                                                                                
Vice-chair Fairclough  MOVED to RECIND the  previous ADOPTION                                                                   
of  HCS CSSB  23  (FIN)  Work Draft  27-LS0252\XX,  (4/13/12,                                                                   
Bullock). There being NO OBJECION it was so ordered.                                                                            
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his OBJECTION  to ADOPT HCS  CSSB                                                                   
23 (FIN) Work  Draft 27-LS0252\OO, (4/14/12,  Bullock). There                                                                   
being NO OBJECTION the committee substitute was Adopted.                                                                        
                                                                                                                                
Vice-chair Fairclough  MOVED to  report HCS CSSB  23(FIN) out                                                                   
of  committee   with  individual   recommendations   and  the                                                                   
accompanying fiscal notes.                                                                                                      
                                                                                                                                
HCS CSSB  23(FIN) was  REPORTED out of  committee with  a "do                                                                   
pass"  recommendation  and with  new  fiscal notes  from  the                                                                   
Department  of  Revenue  and   the  Department  of  Commerce,                                                                   
Community  and Economic  Development  and a  new zero  fiscal                                                                   
note from the Legislature.                                                                                                      
                                                                                                                                
10:54:27 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:54:44 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 160(FIN)                                                                                               
                                                                                                                                
     "An Act  making and  amending appropriations,  including                                                                   
     capital  appropriations,   supplemental  appropriations,                                                                   
     and  other  appropriations;   making  appropriations  to                                                                   
     capitalize  funds;   and  providing  for   an  effective                                                                   
     date."                                                                                                                     
                                                                                                                                
Vice-chair  Fairclough  MOVED  to ADOPT  HCS  CSSB  160(FIN),                                                                   
Work  Draft  27-GS2600\T  (4/13/12,   Martin)  as  a  working                                                                   
document.                                                                                                                       
                                                                                                                                
JAMES   ARMSTRONG,   STAFF,  REPRESENTATIVE   BILL   STOLTZE,                                                                   
explained that the  CS contained a $28 million  increase over                                                                   
the  previous draft  version. He  noted that  $25 million  of                                                                   
the increase  was primarily due  to education  spending found                                                                   
on  Page  176,  Section  20.  Some  technical  changes  still                                                                   
needed  consideration.   He  requested  that   the  committee                                                                   
members  review the  CS and  corresponding reports  generated                                                                   
by the  Legislative Finance Division.  The final  draft would                                                                   
be presented to the committee during the afternoon meeting.                                                                     
                                                                                                                                
Co-Chair Stoltze OPENED public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
Mr.  Armstrong indicated  that the  CS was  available to  the                                                                   
public  on  BASIS   found  under  the  bill   number  in  the                                                                   
documents box on the bill page.                                                                                                 
                                                                                                                                
10:57:21 AM                                                                                                                   
RECESSED                                                                                                                        
                                                                                                                                
3:39:51 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-chair  Fairclough  MOVED  to ADOPT  HCS  CSSB  160(FIN),                                                                   
Work Draft 27-GS2600\O (4/14/12, Martin).                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
Mr. Armstrong  briefly described  the changes  in the  CS. He                                                                   
mentioned  that net zero  changes were  made in District  39,                                                                   
and technical  alterations completed throughout  the bill. He                                                                   
noted  an  additional  appropriation  of $4  million  to  the                                                                   
Blood Bank  of Alaska. The  total amount appropriated  in the                                                                   
Capital Budget  was $2,906,002.5 [billion.] The  total amount                                                                   
of  general   funds  appropriated   was  $1.959,   439.7  and                                                                   
$51,659.7  [million] in designated  general funds,  $66,974.4                                                                   
[million]  in other  state funds  and  $829,928.8 in  federal                                                                   
receipts. He  furthered that  a new re-appropriation  section                                                                   
of  carry forward  funds  was included  by  request from  the                                                                   
governor.                                                                                                                       
                                                                                                                                
Co-Chair  Stoltze  WITHDREW  his OBJECTION.  There  being  NO                                                                   
further OBJECTION, the committee substitute was ADOPTED.                                                                        
                                                                                                                                
Co-Chair Stoltze MOVED to ADOPT Amendment 1:                                                                                    
                                                                                                                                
     Sec.20. DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                                                           
     An amount equal  to 50 percent of the  revenue collected                                                                   
     during the  fiscal year ending  June 30, 2011,  from the                                                                   
     alcoholic  beverage tax  (AS 43.60.010),  not to  exceed                                                                   
     $19,300,400,  is appropriated from  the general  fund to                                                                   
     the  Department  of  Health   and  Social  Services  for                                                                   
     behavioral  health  grants under  AS  47.37.030 for  the                                                                   
     fiscal years  ending June 30,  2013, June 30,  2014, and                                                                   
     June 30, 2015.                                                                                                             
                                                                                                                                
3:43:21 PM                                                                                                                    
                                                                                                                                
Vice-chair   Fairclough   OBJECTED   for   the   purpose   of                                                                   
discussion.                                                                                                                     
                                                                                                                                
Mr. Armstrong  explained  Amendment 1.  He reported that  the                                                                   
amendment removed  50 percent  of revenue collected  from the                                                                   
FY  2012 fiscal  year  from the  alcoholic  beverage tax  and                                                                   
appropriated  the  funds  to the  Department  of  Health  and                                                                   
Social Services  for behavioral  health  grants for the  next                                                                   
three fiscal years.                                                                                                             
                                                                                                                                
Co-Chair Stoltze  expressed concern about procedure.  He felt                                                                   
that  the amendment  was best  addressed through  legislation                                                                   
but agreed to make an exception.                                                                                                
                                                                                                                                
Vice-chair  Fairclough WITHDREW  her  OBJECTION. There  being                                                                   
NO OBJECTION, it was so ordered. Amendment 1 was ADOPTED.                                                                       
                                                                                                                                
Co-Chair Thomas MOVED to ADOPT Amendment 2:                                                                                     
                                                                                                                                
     Page 101, following line 30:                                                                                               
                                                                                                                                
     Insert new material to read:                                                                                               
     "Appropriation Items 200,000                                                                                               
     General Fund 200,000                                                                                                       
                                                                                                                                
     Takshanuk Watershed Council                                                                                                
     - Land Acquisition and Conservation (HB 5)"                                                                                
                                                                                                                                
     Adjust fund sources and totals accordingly                                                                                 
                                                                                                                                
     Delete Section 29                                                                                                          
                                                                                                                                
There  being NO  OBJECTION, it  was so  ordered. Amendment  2                                                                   
was ADOPTED.                                                                                                                    
                                                                                                                                
Representative Wilson MOVED to ADOPT Amendment 3.                                                                               
                                                                                                                                
     Insert new project                                                                                                         
     on Page 85, after line 25                                                                                                  
                                                                                                                                
     Golden Valley Electrical Association - Liquefied                                                                           
     Natural                                                                                                                    
                         $3,750,000                                                                                             
     Fas Facility - Engineering and Design                                                                                      
                                                                                                                                
     Fund Source: General Funds (1004)                                                                                          
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  STEVE  THOMPSON,  explained the  reasons  for                                                                   
Amendment  3.   He  communicated  that  the   amendment  adds                                                                   
$3,750,000  to  the  capital  budget  for  a  plan  to  truck                                                                   
natural  gas  into  Fairbanks.  The  funds  were  needed  for                                                                   
engineering and design work.                                                                                                    
                                                                                                                                
Representative  Wilson  added  that  the  funds  helped  keep                                                                   
energy costs  lower for rate  payers. Without  the additional                                                                   
funding  money from the  energy co-op  savings account  would                                                                   
have  been   needed.  She  thanked   the  co-chair   for  the                                                                   
amendment.                                                                                                                      
                                                                                                                                
There  being NO  OBJECTION, it  was so  ordered. Amendment  3                                                                   
was ADOPTED.                                                                                                                    
                                                                                                                                
3:47:18 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:48:22 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair   Stoltze   noted  the   compressed   schedule   for                                                                   
completion  of the  capital  budget. He  had  hoped for  more                                                                   
time  for discovery  and  public  process but  commended  the                                                                   
collaborative effort between the legislative bodies.                                                                            
                                                                                                                                
Representative Doogan  announced that he did not  support the                                                                   
FY 2013  capital budget and did  not intend to vote  in favor                                                                   
of  the bill.  He would  explain  his policy  reasons on  the                                                                   
house floor.                                                                                                                    
                                                                                                                                
Representative  Gara  commented  that  "a  lot  of  important                                                                   
things" were  contained in the  capital budget. He  also felt                                                                   
the budget was  "too big" and was uncertain how  he was going                                                                   
to vote.  He stated that  the budget  was, "too big  and good                                                                   
at the same time."                                                                                                              
                                                                                                                                
Vice-chair  Fairclough  thanked  the Co-chairs  office's  for                                                                   
all  of their  hard work  on the  budget.  She supported  the                                                                   
capital  budget with the  caveat that  future budgets  remain                                                                   
uncertain with the decline in oil production.                                                                                   
                                                                                                                                
3:53:18 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg commented that  he received  a lot                                                                   
of  feedback  on  the capital  budget.  He  opined  that  the                                                                   
capital  budget process  "may  not be  perfect  but it's  the                                                                   
best  one  around." He  felt  that  the process  "turned  the                                                                   
wealth  of  the  state  back   to  the  people."  The  budget                                                                   
accomplished a lot of good things for the state.                                                                                
                                                                                                                                
Representative Wilson  thanked the Co-chairs staff  for their                                                                   
hard work.  She thought that  the budget contained  some good                                                                   
appropriations  to   help  Fairbanks  achieve   lower  energy                                                                   
costs.                                                                                                                          
                                                                                                                                
Co-Chair  Thomas MOVED  to report  HCS CSSB  160(FIN) out  of                                                                   
committee with individual recommendations.                                                                                      
                                                                                                                                
HCS CSSB  160(FIN) was REPORTED  out of committee with  a "do                                                                   
pass" recommendation as amended.                                                                                                
                                                                                                                                
3:56:31 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:56:38 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
3:57:53 PM                                                                                                                    
RECESSED                                                                                                                        
                                                                                                                                
4:33:46 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 66(L&C)                                                                                                
                                                                                                                                
     "An  Act creating  a new markets  tax credit  assistance                                                                   
     guarantee   and   loan   program   within   the   Alaska                                                                   
     Industrial   Development   and  Export   Authority   and                                                                   
     relating   to  the   program;  and   providing  for   an                                                                   
     effective date."                                                                                                           
                                                                                                                                
Representative  Wilson MOVED to  ADOPT CS CSSB  66(FIN), Work                                                                   
Draft 27-GS1747\I (4/14/12, Martin).                                                                                            
                                                                                                                                
Representative   Doogan   OBJECTED   for   the   purpose   of                                                                   
discussion.                                                                                                                     
                                                                                                                                
4:34:24 PM                                                                                                                    
                                                                                                                                
MARK DAVIS,  DEPUTY DIRECTOR,  ALASKA INDUSTRIAL  DEVELOPMENT                                                                   
AND  EXPORT  AUTHORITY,  (AIDEA),   DEPARTMENT  OF  COMMERCE,                                                                   
COMMUNITY   AND   ECONOMIC   DEVELOPMENT,    spoke   to   the                                                                   
legislation.   He  explained   that  SB   66  provided   loan                                                                   
guarantees in  conjunction with  the federal New  Markets Tax                                                                   
Credit  Program  (NMTC). Investors  making  qualified  equity                                                                   
investments would  receive a federal  tax credit  totaling 39                                                                   
percent of the  cost of the investment. The  program required                                                                   
that the  remaining portion of  the funding come from  a loan                                                                   
through  a financial  institution.  He  noted that  the  NMTC                                                                   
programs,   intended  to  foster   economic  development   in                                                                   
economically challenged  areas was successful in  Alaska.  He                                                                   
cited  the   fish  processing  plant  [Goodnews   Bay  Salmon                                                                   
Processing  Plant]  in  Platinum   and  the  long  term  care                                                                   
facility in Kotzebue as examples.                                                                                               
                                                                                                                                
Mr. Davis  reported that banks  were reluctant to  lend since                                                                   
the  economic  downturn  in 2008.  The  program  imposed  two                                                                   
restrictions on  lending: The leveraged lender  is limited to                                                                   
interest  only  payments  for  the seven  years  of  the  tax                                                                   
credit period  and a bank  cannot foreclose during  the seven                                                                   
year  period. The  Alaska Industrial  Development and  Export                                                                   
Authority  (AIDEA)  contacted  the lending  institutions  and                                                                   
inquired how  it could support  the loan process in  order to                                                                   
revitalize the  program in Alaska.  The banks  responded that                                                                   
if  AIDEA guaranteed  the loan  the banks  will finance  NMTC                                                                   
loans  again.  He  added  that   often  the  equity  investor                                                                   
purchased  the tax  credit  at  a discount  and  subsequently                                                                   
left  money in  the  project to  use  as equity  after  seven                                                                   
years. The  project can  then refinance  with a  conventional                                                                   
loan. The  program worked well  with local banks.  He assured                                                                   
the committee  that the AIDEA  loan guarantees do  not affect                                                                   
the  state.  The  loan guarantee  was  held  against  AIDEA's                                                                   
reserves. He cited Page 2, lines 22 - 23:                                                                                       
                                                                                                                                
     Sec. 44.88.710. Effect of guarantee. (a) A guarantee                                                                       
     under AS 44.88.700 -23 44.88.799 does not create a                                                                         
     debt or liability of the state.                                                                                            
                                                                                                                                
Mr. Davis  furthered that  if the  applicant can  demonstrate                                                                   
that  they  have  been  unable  to obtain  a  loan  from  two                                                                   
financial  institutions   then  AIDEA   may  make   a  direct                                                                   
leveraged loan to the project.                                                                                                  
                                                                                                                                
4:37:09 PM                                                                                                                    
                                                                                                                                
JOE  MICHEL, STAFF,  REPRESENTATIVE  BILL STOLTZE,  explained                                                                   
the changes in  the Committee Substitute (CS).  He identified                                                                   
that on Page 5, Section 3 was added to the legislation:                                                                         
                                                                                                                                
     Sec. 3.  The uncodified  law of the  State of  Alaska is                                                                   
     amended by adding a new section to read:                                                                                   
     LEGISLATIVE  APPROVAL  OF LOAN  FROM  THE POWER  PROJECT                                                                   
     FUND.                                                                                                                      
     Provided  the Alaska  Energy Authority  approves a  loan                                                                   
     for  the  Metlakatla  Power  and  Light,  Triangle  Lake                                                                   
     hydroelectric  project, the  legislature authorizes  the                                                                   
     Alaska  Energy  Authority  to  loan  an  amount  not  to                                                                   
     exceed  $26,000,000  from  the power  project  fund  (AS                                                                   
     42.45.010)   for  the   Metlakatla   Power  and   Light,                                                                   
     Triangle  Lake   hydroelectric  project.   This  section                                                                   
     constitutes legislative  approval under  AS 42.45.010(j)                                                                   
     for a loan from the fund that exceeds $5,000,000.                                                                          
                                                                                                                                
Mr. Michel  explained that  the section provided  legislative                                                                   
approval to  obtain a  loan from the  Power Project  Fund for                                                                   
Metlakatla  Power  and  Light.  He  noted  that  on  Page  6,                                                                   
Sections 4 and 5 were also added to the bill:                                                                                   
                                                                                                                                
     Sec.  4. Section  8, ch.  10,  SLA 2010,  is amended  to                                                                   
     read:                                                                                                                      
     Sec.  8. Section  2, ch.  10,  SLA 2010,  [OF THIS  ACT]                                                                   
     takes effect November 30, 2017 [2012].                                                                                     
     Sec.  5. Section  10, ch.  71, SLA 2010,  is amended  to                                                                   
     read:                                                                                                                      
     Sec.  10. Section  2, ch.  71, SLA 2010,  [OF THIS  ACT]                                                                   
     takes effect 10 November 30, 2017 [2012].                                                                                  
                                                                                                                                
Mr. Michel  reported that  the sections  extended the  sunset                                                                   
date of the  property tax exemptions for the  Delong Mountain                                                                   
Transportation System from 2012 until 2017.                                                                                     
                                                                                                                                
Representative  Guttenberg  requested confirmation  that  the                                                                   
loans  were   guaranteed  by   AIDEAS  reserves.   Mr.  Davis                                                                   
confirmed the statement.                                                                                                        
                                                                                                                                
Representative  Guttenberg  wondered  how  much was  held  in                                                                   
AIDEA  reserves.  Mr.  Davis  replied  that  AIDEA  had  $300                                                                   
million in liquid assets.                                                                                                       
                                                                                                                                
Representative Doogan WITHDREW his OBJECTION.                                                                                   
                                                                                                                                
There being  NO further  OBJECTION, the committee  substitute                                                                   
was ADOPTED.                                                                                                                    
                                                                                                                                
Representative  Gara requested  a summary  of AIDEA  programs                                                                   
that focused  on economic development  in lower  income areas                                                                   
of the state. Mr. Davis agreed to provide the update.                                                                           
                                                                                                                                
4:40:22 PM                                                                                                                    
                                                                                                                                
Vice-chair Fairclough OPENED public testimony.                                                                                  
                                                                                                                                
Vice-chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
Vice-chair Fairclough  reviewed the  fiscal notes.  She noted                                                                   
the new  zero (CED) fiscal note.  She spoke to a  fiscal note                                                                   
that  would be  attached to  the  bill when  reported out  of                                                                   
committee. The  fiscal note affected  Fund Transfers  and was                                                                   
allocated  to Savings  Public  Education  Fund.  The Red  Dog                                                                   
Mine benefited from  the Delong Mountain Road  tax exemption.                                                                   
The current valuation  of the road was $155,934,200.  In lieu                                                                   
of  the  property  taxes  the  Red  Dog  Mine  contributed  a                                                                   
payment  to  the  borough  for  education.  The  borough  was                                                                   
required to  pay the 4 mil  rate increase under  the proposed                                                                   
educational funding legislation; an additional $623,736.                                                                        
                                                                                                                                
Representative  Joule  explained that  the  borough would  be                                                                   
responsible  for  the additional  approximately  $650,000  in                                                                   
taxes  without   being  able   to  collect  because   of  the                                                                   
exemption.                                                                                                                      
                                                                                                                                
Vice-chair  Fairclough  furthered  that  the  total  assessed                                                                   
property value  was $190,000,000  and could impact  the state                                                                   
education funding  by $380,000 each year until  a solution to                                                                   
fill the  district's local  contribution  gap was found.  She                                                                   
alerted the  committee that  an amount  as large as  $380,000                                                                   
could appear on the fiscal note.                                                                                                
                                                                                                                                
Representative Wilson  MOVED to report HCS CSSB  66 (FIN) out                                                                   
of  committee   with  individual   recommendations   and  the                                                                   
accompanying fiscal notes.                                                                                                      
                                                                                                                                
HCS CSSB  66(FIN) was  REPORTED out of  committee with  a "do                                                                   
pass"  recommendation  and with  two  new zero  fiscal  notes                                                                   
from   Department  of   Commerce,   Community  and   Economic                                                                   
Development,   and   Department   of  Education   and   Early                                                                   
Development.                                                                                                                    
                                                                                                                                
4:45:38 PM                                                                                                                    
RECESSED                                                                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
7:32:02 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 7:32 PM.                                                                                           

Document Name Date/Time Subjects
SB182 CS WORKDRAFT 27-LS1283-O.pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB160 CS WORKDRAFT 27-GS2600-T.pdf HFIN 4/14/2012 9:30:00 AM
SB 160
SB182CS(FIN)-EED-TLS-4-13-12.pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB182CS(FIN)-EED-PEF-4-10-12.pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB182CS(FIN)-EED-K12-4-13-12.pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB182CS(FIN)-EED-ESS-4-13-12.pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB182CS(FIN)-EED-ESS-4-10-12(MillRate).pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB182CS(FIN)-EED-PEF-4-13-12-Corrected.pdf HFIN 4/14/2012 9:30:00 AM
SB 182
SB160 House District Summary.pdf HFIN 4/14/2012 9:30:00 AM
SB 160
SB160 CS WORKDRAFT O version.pdf HFIN 4/14/2012 9:30:00 AM
SB 160
SB160 Amendment 1- Stoltze-Thomas.pdf HFIN 4/14/2012 9:30:00 AM
SB 160
SB 160 AMENDMENT 2- THOMAS.pdf HFIN 4/14/2012 9:30:00 AM
SB 160
SB160 Amendment 3 -Wilson.pdf HFIN 4/14/2012 9:30:00 AM
SB 160
SB160 Support.pdf HFIN 4/14/2012 9:30:00 AM
SB 160