Legislature(1993 - 1994)
03/31/1993 01:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
MARCH 31, 1993
1:50 P.M.
TAPE HFC 93 - 85, Side 1, #000 - end.
TAPE HFC 93 - 85, Side 2, #000 - end.
TAPE HFC 93 - 86, Side 1, #000 - #308.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 1:50 P.M.
PRESENT
Co-Chair Larson Representative Brown
Co-Chair MacLean Representative Foster
Vice-Chair Hanley Representative Grussendorf
Representative Hoffman Representative Martin
Representative Navarre Representative Parnell
Representative Therriault
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Nancy
Slagle, Fiscal Analyst, Legislative Finance Division; Cheryl
Frasca, Director, Division of Budget Review, Office of
Management and Budget, Office of the Governor; Brian
Andrews, Deputy Commissioner, Department of Revenue; John
Bitney, Aid to Representative Ron Larson; Jim Ayers, System
Director, Alaska Marine Highway System, Department of
Transportation and Public Facilities.
SUMMARY INFORMATION
HB 55 An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; and providing for an effective
date.
Review of CS HB 55 (FIN), work draft #8-GH1038\K
dated 3/31/93.
Co-Chair Larson distributed to the Committee a handout which
listing the non-formula/general fund to date comparison.
[Attachment #1]. He noted, the House FY 94 proposed budget
is currently $33.193 million dollars below FY 93 authorized
plus supplemental. The House proposed budget is $16.313
million dollars below the Governor's FY 94 budget. The
Committee reviewed each section of CS HB 55 (FIN) work draft
dated, 3/31/93.
1
Co-Chair Larson pointed out Sections #1 - #6 were the same
as that proposed by the Governor. Sections #1 - #6 were
adopted. Sections #7 - #10 were adopted by the Committee.
Section #11 (b) was held open for further discussion. Co-
Chair Larson understood that of the $11.143 million dollars,
$983.4 thousand dollars would be used for acquisition and
$966.3 thousand dollars would be used for improvements at
Wildwood.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
clarified that Wildwood would be covered in language
indicated in 11 (b) "the Department of Natural Resources"
for improvement and acquisition.
Representative Brown questioned the language "lease
payments". Co-Chair Larson responded that the contract
which was negotiated, explained that the city would float
the bonds for thirty years during which time the State would
pay lease payments equal to the principle and interest. At
the end of the thirty years, the leases would be turned over
to the State of Alaska from each city. Co-Chair Larson
suggested leaving Section #11 open for further discussion.
Representative Brown referenced Section #7, inquired the
from revenue anticipation notes and interest involved. Mr.
Greany explained Section #7 was a provision which would
provide the Department of Revenue short term borrowing
abilities to cover treasury cash flow short-falls. The
Committee adopted Section #12. Section #13 is a new section
to the proposed Governor's amendments.
CHERYL FRASCA, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE
OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, advised
that Section #13 addresses an IRS requirement needed to make
an appropriation.
BRIAN ANDREWS, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
clarified Section #11 (b) references two certificates of
participation while the Department of Natural Resources is
the leaser of those properties and the Department of
Administration is the Lessee of the properties. Mr. Andrews
provided the Committee with a Letter of Memorandum from the
Commissioner of Revenue, Darrel Rexwinkel, to Cheryl Frasca,
Division of Budget Review. [Attachment #2].
Section #7 consists of a catch-all phrase addressing revenue
anticipation notes. Revenue from those projects would be
allocated to paying debt service allowing a bond committee
to issue that debt.
2
Representative Brown asked what statute authority would
authorize the certificate of participation. Mr. Andrews
noted AS 37.15.011.
Representative Brown asked if the renovations at Wildwood
should proceed, given the previous action taken by the House
Finance Committee. Mr. Andrews stated that the Department
of Corrections had requested financing the facilities from
the bonding committee. He advised that if the State was not
willing to appropriate the debt service for the certificates
of participation, there would be a severe impact on the
credit rating. Representative Martin disagreed.
Representative Hanley understood that the State has a legal
obligation to pay the debt or the bond rating would be
affected. Mr. Andrews advised that the proceeds from the
sale of the bonds are dedicated to the improvements.
Mr. Andrews referenced Section #13, explaining that the
State entered into a swap arrangement with the international
airport bonds. A fixed rate obligation was established to
pay those bonds. At that time, there was a swap in which
the other party paid the fixed rate obligation and the State
paid a variable rate obligation with lower interest rates.
Section #13 was left open to incorporate a technical
language change. The Committee adopted Section #14.
Section #15 provides a statutory change from the Governor's
language making income from the permanent fund go directly
to the earnings reserve. Inflation proofing will come from
the earnings reserve. The Committee adopted Section #15.
Mr. Greany noted that Section #16 determines inflation
proofing. The Committee adopted Section #16. Co-Chair
Larson pointed out, Section #17 is the same as that proposed
by the Governor.
Representative Hanley asked for further clarification of
Section #17. Ms. Frasca explained the 1989 reference was to
the original legislation which established the STEP program.
Those unexpected funds will lapse back into the Unemployment
Insurance Account at the end of the fiscal year. Section
Co-Chair Larson referenced Section #19 pointing out a
deletion of "$4,926,300" and inserting of "$1,991,700"
appropriation from the Commercial Fishing Revolving Loan
Fund to the general fund. The additional change made to
Section #19 would no longer indicate the drop off from the
ARLF. Section #19 would conform to Representative Ulmer's
proposed legislation, HB 123.
3
(Tape Change HFC 93-85, Side 2).
Mr. Greany added that HB 123 would address individual
fisheries loan quotas providing for administrative costs of
each program. Representative Brown questioned what the
original bill recommended for ARLF. Co-Chair Larson said
the legislation provided $5.28 million dollars for
Commercial Fishing Revolving Loan Fund. The Agricultural
Revolving Loan Fund original figure was $1.5 million dollars
and was moved to the general fund. Co-Chair Larson
explained it would conform with the past legislative
practices.
Ms. Frasca reminded the Committee at one time there were
other loan programs which returned money to the general
fund. Currently, they are inactive and the Alaska Statute
states, the return goes automatically into the general fund.
Mr. Greany provided the Committee with the FY 94 Loan
Program - Cash Flows spreadsheet. [Attachment #3].
JOHN BITNEY, AID TO REPRESENTATIVE RON LARSON, provided the
Committee with a memo from Representative Ulmer regarding HB
123 and the changes being made to the Commercial Fishing
Revolving Loan Fund. [Attachment #4]. The Committee
adopted Section #19.
Co-Chair Larson noted a change to Section #20. The
Governor's proposed bill allocated $26.8 million dollars
which is $100 thousand dollars more than that recommended in
HB 55. Representative Therriault provided the Committee
with a handout illustrating, "The Oil and Hazardous
Substance Release Response Fund". [Attachment #5]. The
Committee adopted Section #20.
Co-Chair Larson pointed out that Section #21 was the same as
that proposed by the Governor. Mr. Greany commented that
the effective date would be July 1, 1993, although the
entire bill takes effect when signed by the Governor.
Representative Brown recommended leaving the mitigation
account in the general fund and not appropriating it to the
Oil and Hazardous Substance Release Response Fund. She
suggested holding Section #21 open until Section #22 is
adopted. Representative Brown noted her opposition to
placing general fund monies into the 470 fund.
Mr. Greany pointed out that Section #22 (b) gets the money
for the response ferry from the 470 fund to the Vessel
Replacement Fund. The capital project to construct a ferry
would require an additional transaction appropriation which
would take the money from that fund to ferry construction.
Representative Brown said language written in Section #22
4
indicates an appropriation. Mr. Greany stated that Section
Marine Highway Vessel Replacement Fund.
JIM AYERS, SYSTEM DIRECTOR, ALASKA MARINE HIGHWAY SYSTEM,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, noted
that the language and intent of the Vessel Replacement Fund
clarifies that the Alaska Marine Highway System can not
expend money out of that fund without a legislative
appropriation. He pointed out that this would be the second
appropriation.
Representative Therriault recommended changing Page 4, Line
27 inserting "the mitigation account" and deleting "the oil
and hazardous substance release response fund".
Representative Brown suggested holding Section #21 and
Section #22 open.
Co-Chair MacLean asked why the capital budget authorized
only $6.4 million dollars for the VRF. Mr. Ayers stated
that the capital budget provides $66.4 million dollars
total, $7.5 million dollars come from the Vessel Replacement
Fund and the balance would be ISTEA monies.
Co-Chair Larson stated that Section #21 and Section #22
would be held open for further discussion.
Co-Chair Larson noted the Committee's intention to change
Section #23, from "$10,508,600" dollar to "$10,772,900".
Mr. Greany stated that Section #23 does not need to be
adjusted. It currently reflects the previous action of the
Committee. The Committee adopted Section #23 unamended.
Ms. Frasca noted that Section #24 and Section #25 were
adopted. This would distinguish disaster relief and fire
suppression from agency operations in that Department. The
Committee adopted Section #25.
Mr. Greany explained Section #26 was additional and had been
moved to the front section of the budget, which would
conform with the back section on the services of information
programs from the general fund and inter-agency receipts.
The Committee adopted Section #26. [Attachment #6].
Section #27 and Section #28 were the same as those proposed
in the Governor's FY 94 budget. The Committee adopted
Sections #27 and #28.
Representative Hanley noted that Section #29 was an
appropriation from the Mental Health Income Account to the
unreserve portions of the general fund for statewide
indirect cost recovery. Mr. Greany explained that the
5
unreserved portion of the general fund was pure general fund
not earmarked for any other expenditures. Section #29 was
adopted by the Committee.
Representative Therriault pointed out that Section #30 would
require an adjustment to reflect the changes made by the DEC
Subcommittee. This would require a deletion of "$6,491,500"
and inserting "$4,451,300". Section #30 was held open for
further discussion.
(Tape Change HFC 93-86, Side 1).
Co-Chair Larson noted that Sections #31, #32, #33 and #34
were the same as those recommended by the Governor. The
Committee adopted all four sections.
Representative Navarre MOVED a change to the language to
Section #35, Page 6, Line 29, deleting "earnings reserve
account" and inserting "permanent fund corporate receipts"
and to Line 30, Page 6, Section #35, adding before the word
"oil" inserting "royalty". There being NO OBJECTIONS, it
was accepted. Section #35 was adopted by the Committee.
Section #36 was adopted by the Committee. Section #37
incorporated a change proposed by the Governor to Section
"22 (b)". The Committee adopted Section #37.
Co-Chair Larson summarized the work of the House Finance
Committee. Sections #11, #13, #21, #22 and #30 were held
open for further deliberation.
Representative Therriault MOVED the proposed change to
Section #30. Representative Brown OBJECTED for the record
asking not to force the vote. Section #30 was adopted by
the Committee.
Co-Chair MacLean MOVED to incorporate all sections adopted
by the Committee into CS HB 55 (FIN) except for Section #11,
ordered.
ADJOURNMENT
The meeting adjourned at 3:40 P.M.
HOUSE FINANCE COMMITTEE
MARCH 31, 1993
1:50 P.M.
TAPE HFC 93 - 85, Side 1, #000 - end.
TAPE HFC 93 - 85, Side 2, #000 - end.
6
TAPE HFC 93 - 86, Side 1, #000 - #308.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 1:50 P.M.
PRESENT
Co-Chair Larson Representative Brown
Co-Chair MacLean Representative Foster
Vice-Chair Hanley Representative Grussendorf
Representative Hoffman Representative Martin
Representative Navarre Representative Parnell
Representative Therriault
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Nancy
Slagle, Fiscal Analyst, Legislative Finance Division; Cheryl
Frasca, Director, Division of Budget Review, Office of
Management and Budget, Office of the Governor; Brian
Andrews, Deputy Commissioner, Department of Revenue; John
Bitney, Aid to Representative Ron Larson; Jim Ayers, System
Director, Alaska Marine Highway System, Department of
Transportation and Public Facilities.
SUMMARY INFORMATION
HB 55 An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; and providing for an effective
date.
Review of CS HB 55 (FIN), work draft #8-GH1038\K
dated 3/31/93.
Co-Chair Larson distributed to the Committee a handout which
listing the non-formula/general fund to date comparison.
[Attachment #1]. He noted, the House FY 94 proposed budget
is currently $33.193 million dollars below FY 93 authorized
plus supplemental. The House proposed budget is $16.313
million dollars below the Governor's FY 94 budget. The
Committee reviewed each section of CS HB 55 (FIN) work draft
dated, 3/31/93.
Co-Chair Larson pointed out Sections #1 - #6 were the same
as that proposed by the Governor. Sections #1 - #6 were
adopted. Sections #7 - #10 were adopted by the Committee.
Section #11 (b) was held open for further discussion. Co-
Chair Larson understood that of the $11.143 million dollars,
7
$983.4 thousand dollars would be used for acquisition and
$966.3 thousand dollars would be used for improvements at
Wildwood.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
clarified that Wildwood would be covered in language
indicated in 11 (b) "the Department of Natural Resources"
for improvement and acquisition.
Representative Brown questioned the language "lease
payments". Co-Chair Larson responded that the contract
which was negotiated, explained that the city would float
the bonds for thirty years during which time the State would
pay lease payments equal to the principle and interest. At
the end of the thirty years, the leases would be turned over
to the State of Alaska from each city. Co-Chair Larson
suggested leaving Section #11 open for further discussion.
Representative Brown referenced Section #7, inquired the
from revenue anticipation notes and interest involved. Mr.
Greany explained Section #7 was a provision which would
provide the Department of Revenue short term borrowing
abilities to cover treasury cash flow short-falls. The
Committee adopted Section #12. Section #13 is a new section
to the proposed Governor's amendments.
CHERYL FRASCA, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE
OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, advised
that Section #13 addresses an IRS requirement needed to make
an appropriation.
BRIAN ANDREWS, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
clarified Section #11 (b) references two certificates of
participation while the Department of Natural Resources is
the leaser of those properties and the Department of
Administration is the Lessee of the properties. Mr. Andrews
provided the Committee with a Letter of Memorandum from the
Commissioner of Revenue, Darrel Rexwinkel, to Cheryl Frasca,
Division of Budget Review. [Attachment #2].
Section #7 consists of a catch-all phrase addressing revenue
anticipation notes. Revenue from those projects would be
allocated to paying debt service allowing a bond committee
to issue that debt.
Representative Brown asked what statute authority would
authorize the certificate of participation. Mr. Andrews
noted AS 37.15.011.
Representative Brown asked if the renovations at Wildwood
should proceed, given the previous action taken by the House
Finance Committee. Mr. Andrews stated that the Department
of Corrections had requested financing the facilities from
8
the bonding committee. He advised that if the State was not
willing to appropriate the debt service for the certificates
of participation, there would be a severe impact on the
credit rating. Representative Martin disagreed.
Representative Hanley understood that the State has a legal
obligation to pay the debt or the bond rating would be
affected. Mr. Andrews advised that the proceeds from the
sale of the bonds are dedicated to the improvements.
Mr. Andrews referenced Section #13, explaining that the
State entered into a swap arrangement with the international
airport bonds. A fixed rate obligation was established to
pay those bonds. At that time, there was a swap in which
the other party paid the fixed rate obligation and the State
paid a variable rate obligation with lower interest rates.
Section #13 was left open to incorporate a technical
language change. The Committee adopted Section #14.
Section #15 provides a statutory change from the Governor's
language making income from the permanent fund go directly
to the earnings reserve. Inflation proofing will come from
the earnings reserve. The Committee adopted Section #15.
Mr. Greany noted that Section #16 determines inflation
proofing. The Committee adopted Section #16. Co-Chair
Larson pointed out, Section #17 is the same as that proposed
by the Governor.
Representative Hanley asked for further clarification of
Section #17. Ms. Frasca explained the 1989 reference was to
the original legislation which established the STEP program.
Those unexpected funds will lapse back into the Unemployment
Insurance Account at the end of the fiscal year. Section
Co-Chair Larson referenced Section #19 pointing out a
deletion of "$4,926,300" and inserting of "$1,991,700"
appropriation from the Commercial Fishing Revolving Loan
Fund to the general fund. The additional change made to
Section #19 would no longer indicate the drop off from the
ARLF. Section #19 would conform to Representative Ulmer's
proposed legislation, HB 123.
(Tape Change HFC 93-85, Side 2).
Mr. Greany added that HB 123 would address individual
fisheries loan quotas providing for administrative costs of
each program. Representative Brown questioned what the
original bill recommended for ARLF. Co-Chair Larson said
the legislation provided $5.28 million dollars for
Commercial Fishing Revolving Loan Fund. The Agricultural
9
Revolving Loan Fund original figure was $1.5 million dollars
and was moved to the general fund. Co-Chair Larson
explained it would conform with the past legislative
practices.
Ms. Frasca reminded the Committee at one time there were
other loan programs which returned money to the general
fund. Currently, they are inactive and the Alaska Statute
states, the return goes automatically into the general fund.
Mr. Greany provided the Committee with the FY 94 Loan
Program - Cash Flows spreadsheet. [Attachment #3].
JOHN BITNEY, AID TO REPRESENTATIVE RON LARSON, provided the
Committee with a memo from Representative Ulmer regarding HB
123 and the changes being made to the Commercial Fishing
Revolving Loan Fund. [Attachment #4]. The Committee
adopted Section #19.
Co-Chair Larson noted a change to Section #20. The
Governor's proposed bill allocated $26.8 million dollars
which is $100 thousand dollars more than that recommended in
HB 55. Representative Therriault provided the Committee
with a handout illustrating, "The Oil and Hazardous
Substance Release Response Fund". [Attachment #5]. The
Committee adopted Section #20.
Co-Chair Larson pointed out that Section #21 was the same as
that proposed by the Governor. Mr. Greany commented that
the effective date would be July 1, 1993, although the
entire bill takes effect when signed by the Governor.
Representative Brown recommended leaving the mitigation
account in the general fund and not appropriating it to the
Oil and Hazardous Substance Release Response Fund. She
suggested holding Section #21 open until Section #22 is
adopted. Representative Brown noted her opposition to
placing general fund monies into the 470 fund.
Mr. Greany pointed out that Section #22 (b) gets the money
for the response ferry from the 470 fund to the Vessel
Replacement Fund. The capital project to construct a ferry
would require an additional transaction appropriation which
would take the money from that fund to ferry construction.
Representative Brown said language written in Section #22
indicates an appropriation. Mr. Greany stated that Section
Marine Highway Vessel Replacement Fund.
JIM AYERS, SYSTEM DIRECTOR, ALASKA MARINE HIGHWAY SYSTEM,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, noted
that the language and intent of the Vessel Replacement Fund
clarifies that the Alaska Marine Highway System can not
10
expend money out of that fund without a legislative
appropriation. He pointed out that this would be the second
appropriation.
Representative Therriault recommended changing Page 4, Line
27 inserting "the mitigation account" and deleting "the oil
and hazardous substance release response fund".
Representative Brown suggested holding Section #21 and
Section #22 open.
Co-Chair MacLean asked why the capital budget authorized
only $6.4 million dollars for the VRF. Mr. Ayers stated
that the capital budget provides $66.4 million dollars
total, $7.5 million dollars come from the Vessel Replacement
Fund and the balance would be ISTEA monies.
Co-Chair Larson stated that Section #21 and Section #22
would be held open for further discussion.
Co-Chair Larson noted the Committee's intention to change
Section #23, from "$10,508,600" dollar to "$10,772,900".
Mr. Greany stated that Section #23 does not need to be
adjusted. It currently reflects the previous action of the
Committee. The Committee adopted Section #23 unamended.
Ms. Frasca noted that Section #24 and Section #25 were
adopted. This would distinguish disaster relief and fire
suppression from agency operations in that Department. The
Committee adopted Section #25.
Mr. Greany explained Section #26 was additional and had been
moved to the front section of the budget, which would
conform with the back section on the services of information
programs from the general fund and inter-agency receipts.
The Committee adopted Section #26. [Attachment #6].
Section #27 and Section #28 were the same as those proposed
in the Governor's FY 94 budget. The Committee adopted
Sections #27 and #28.
Representative Hanley noted that Section #29 was an
appropriation from the Mental Health Income Account to the
unreserve portions of the general fund for statewide
indirect cost recovery. Mr. Greany explained that the
unreserved portion of the general fund was pure general fund
not earmarked for any other expenditures. Section #29 was
adopted by the Committee.
Representative Therriault pointed out that Section #30 would
require an adjustment to reflect the changes made by the DEC
Subcommittee. This would require a deletion of "$6,491,500"
and inserting "$4,451,300". Section #30 was held open for
11
further discussion.
(Tape Change HFC 93-86, Side 1).
Co-Chair Larson noted that Sections #31, #32, #33 and #34
were the same as those recommended by the Governor. The
Committee adopted all four sections.
Representative Navarre MOVED a change to the language to
Section #35, Page 6, Line 29, deleting "earnings reserve
account" and inserting "permanent fund corporate receipts"
and to Line 30, Page 6, Section #35, adding before the word
"oil" inserting "royalty". There being NO OBJECTIONS, it
was accepted. Section #35 was adopted by the Committee.
Section #36 was adopted by the Committee. Section #37
incorporated a change proposed by the Governor to Section
"22 (b)". The Committee adopted Section #37.
Co-Chair Larson summarized the work of the House Finance
Committee. Sections #11, #13, #21, #22 and #30 were held
open for further deliberation.
Representative Therriault MOVED the proposed change to
Section #30. Representative Brown OBJECTED for the record
asking not to force the vote. Section #30 was adopted by
the Committee.
Co-Chair MacLean MOVED to incorporate all sections adopted
by the Committee into CS HB 55 (FIN) except for Section #11,
ordered.
ADJOURNMENT
The meeting adjourned at 3:40 P.M.
12
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