Legislature(1995 - 1996)
03/13/1996 01:45 PM House FIN
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HOUSE FINANCE COMMITTEE
MARCH 13, 1996
1:45 P.M.
TAPE HFC 96 - 74, Side 1, #000 - end.
TAPE HFC 96 - 74, Side 2, #000 - end.
TAPE HFC 96 - 75, Side 1, #000 - #620.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:45 P.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Representative Jeannette James; Don Nessi, Deputy Assistant
Secretary for Native American Programs, U.S. Department of
Housing and Urban Development (HUD), Washington D.C.; Bryce
Edgmon, Aid, Representative Richard Foster; John Bitney,
Legislative Liaison, Alaska Housing Finance Corporation
(AHFC), Department of Revenue, Anchorage; Jacqueline C.
Johnson, Executive Director, Tlingit-Haida Regional Housing
Authority, Juneau; Dan Fauske, Executive Director, Alaska
Housing Finance Corporation (AHFC), Department of Revenue,
Anchorage; Kay Murphy, Director, Mortgage Operations, Alaska
Housing Finance Corporation (AHFC), Department of Revenue,
Anchorage; Mr. Dillion, (Testified via teleconference),
Anchorage; Sam S. Kito III, Legislative Liaison/Special
Assistant, Office of the Commissioner, Department of
Transportation and Public Facilities; Bob Bartholomew,
Deputy Director, Income & Excise Audit Division, Department
of Revenue; Arthur Snowden II, Administrative Director,
Alaska Court System; Elmer Lindstrom, Special Assistant to
the Commissioner, Office of the Commissioner, Department of
Health and Social Services.
SUMMARY
HB 192 An Act relating to housing programs of the Alaska
Housing Finance Corporation, the corporation's
supplemental housing development grants to
regional housing authorities, and to housing
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programs of regional housing authorities, and
permitting regional housing authorities to make,
originate, and service loans for the purchase and
development of residential housing.
CS HB 192 (FIN) was reported out of Committee with
"no recommendations" and with a zero fiscal note
by the Alaska Housing Finance Corporation (AHFC).
HB 284 An Act relating to the Alaska Commercial Fishing
and Agriculture Bank.
CS HB 284 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes
by the Commercial Fisheries (Limited) Entry
Commission and the Department of Revenue and a
House Finance Letter of Intent.
HB 520 An Act relating to death investigations and
inquests, coroners, public administrators, and
medical examiners, including the state medical
examiner; relating to the jurisdiction of district
court judges and magistrates in certain cases
involving death.
CS HB 520 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes
by the Alaska Court System and the Department
Health and Social Services and a zero fiscal note
by the Department of Public Safety.
HJR 49 Proposing amendments to the Constitution of the
State of Alaska creating a highway fund.
HJR 49 was HELD in Committee for further
consideration.
HOUSE BILL 284
"An Act relating to the Alaska Commercial Fishing and
Agriculture Bank."
Co-Chair Hanley asked if it was Representative Brown's
intent to move Amendment #2 which had been held from the
previous meeting. Representative Brown noted that she did
not want to move the amendment but planned to instead move
the Letter of Intent.
Representative Mulder suggested amending language in the
bill on Page 11, Section #20, deleting all material from
Lines 15 - 23. Representative Mulder MOVED the amendment.
There being NO OBJECTION, it was adopted.
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Representative Brown spoke to the Letter of Intent which
would request that Commercial Fishing and Agriculture Bank
(CFAB) identify appropriate measures for financing options
and then report those findings back to the Legislature.
Representative Mulder MOVED to report CS HB 284 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
Representative Brown MOVED to adopt the Letter of Intent.
There being NO OBJECTION, it was adopted.
CS HB 284 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Commercial
Fisheries (Limited) Entry Commission and the Department of
Revenue.
HOUSE BILL 192
"An Act relating to housing programs of the Alaska
Housing Finance Corporation, the corporation's
supplemental housing development grants to regional
housing authorities, and to housing programs of
regional housing authorities, and permitting regional
housing authorities to make, originate, and service
loans for the purchase and development of residential
housing."
Co-Chair Foster MOVED to adopt work draft #9-LS0463\U,
Chenoweth, 3/08/96, as the version before the Committee.
Representative Brown OBJECTED for purposes of discussing the
changes.
BRYCE EDGMON, AID, REPRESENTATIVE RICHARD FOSTER, stated
that the legislation before the Committee addresses existing
programs within Alaska Housing Finance Corporation (AHFC)
and would also provide for individual regional housing
authorities to investigate rural areas of the State in order
to provide additional financing tools to make home mortgages
more available. He provided Committee members with a
sectional analysis of the proposed committee substitute.
[Copy on file]. Mr. Edgmon presented an overview of the
sectional analysis.
Representative Brown questioned the relationship between
regional housing authorities and AHFC. She asked which
agency would determine who would receive the loans.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION (AHFC), ANCHORAGE, responded, the regional
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housing authorities are restricted to who they can grant a
loan to. Currently, statute allows loans made only to those
areas defined as "rural" communities. The proposed
legislation would expand the authority to make loans outside
of rural communities.
The types of loans made would continue to be tied to
interest rates. Mr. Bitney concluded that statutes define
regional housing authority boundaries as identical to
regional corporation boundaries.
JACQUELINE C. JOHNSON, EXECUTIVE DIRECTOR, TLINGIT-HAIDA
REGIONAL HOUSING AUTHORITY, JUNEAU, in response to
Representative Martin's concern, replied that matching the
supplemental grant program to the AHFC loan program does not
exist at present. Instead, the supplemental housing grant
funds match the U.S. Housing and Urban Development (HUD)
appropriated dollars. She stressed that this would be a
separate issue from mortgage lending. She pointed out,
also, that the dollars primarily used for regional housing
authority had been allocated to low income rentals. "Real
loan" programs began years ago as a result of not many loans
being generated to the rural communities.
Ms. Johnson continued, a problem arose because the statute
does not allow regional housing authorities to provide the
loan service. The proposed legislation requests that
change. Representative Martin asked how small of an area
could qualify. Ms. Johnson advised that because the State
had concerns with the rural sized communities, they created
fourteen regional housing authorities. Each one is required
to come back for Legislative approval, thus prohibiting
small villages from creating their own housing authority.
Representative Martin asked if there was anything in the
legislation that could treat urban areas differently from
rural areas. Mr. Bitney explained that the authorized
projects listed on Page 3, would tie areas to the projects
being constructed by the regional housing authority. The
legislation would not authorize AHFC to go "outside" those
projects.
He noted that the statute allows AHFC to authorize up to an
eight-plex unit without any type of determination. There
must be a feasibility study and an evaluation provided by
AHFC. The statute allows AHFC to go beyond an eight-plex,
although a special determination must first be provided.
The interest rate on the program would remain the same as it
currently is. The legislation would only "modify" the
existing program. Mr. Bitney indicated that no preference
would be created.
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Representative Martin inquired if more than one authority
could exist in an urban area to encourage competition. Mr.
Bitney suggested that beyond a regional housing authority, a
party could rely on banks. Mrs. Johnson added that each
housing authority does have public housing offered, and that
development corporations do exist that deal with only
housing services. She concluded, in urban areas, different
needs exist as do different funding source mechanisms.
Representative Brown asked for further information regarding
the "unfavorable" report on the Interior Regional Housing
Authority.
DAN FAUSKE, EXECUTIVE DIRECTOR, ALASKA HOUSING AUTHORITY
(AHFC), ANCHORAGE, stated, last spring when the incident
occurred, AHFC immediately froze that account and sent a
team to work with the new management. At that time, a duel
signatory was put into effect. No new funds were
transferred until the money concern was sorted out. The
issue has been resolved at this time.
Representative Brown WITHDREW the OBJECTION to move the
committee substitute. There being NO further OBJECTION, the
work draft, #9-LS0463\U, Chenoweth, 3/08/96, was adopted.
Mr. Bitney stated that with the version adopted by the
Committee, the fiscal impact would be reduced to zero.
Representative Kohring MOVED to adopt Amendment #1. [Copy
on file]. The amendment would lower the qualification age
from 60 years to 55 years for senior housing.
Representative Martin OBJECTED for discussion purposes.
Representative Kohring explained that the amendment would
allow people under the age of 60 years to be eligible to be
considered for senior housing loans. He felt that there
existed a housing demand among those persons who have not
yet reached the age of 60, assuming that they have met the
other criteria.
Representative Martin stated that AHFC currently has a large
demand for senior housing. If the age limit is lowered, the
problem will become maximized. Representative Brown
questioned the fiscal impact of the amendment.
KAY MURPHY, DIRECTOR, MORTGAGE OPERATIONS, ALASKA HOUSING
FINANCE CORPORATION (AHFC), ANCHORAGE, stated that the
senior housing loan program was not used very often.
Borrowers seem to fit into the "special needs" category.
She did not feel that there would be a tremendous increase
in activity through passage of the amendment.
Representative Martin asked how many seniors currently
receive aid. Ms. Murphy replied that the senior population
is the fastest growing population in Alaska. Lowering the
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age to 55 years would encompass a larger group of people.
Ms. Johnson pointed out that currently, there are subsidy
programs within the federal government using the 55 year old
category. Through adoption of the amendment, a senior
person would be able to tap into both the federal and state
level funding.
(Tape Change, HFC 96-74, Side 2).
Co-Chair Hanley expressed concern that lowering the age
would place an increasing demand on programs that currently
exist. Ms. Murphy noted that on the federal level, the
possibility exists of decreasing the age even further.
Allowances are made in the guidelines for partnerships when
only one member of the couple is 60 years of age or older.
The other partner can stay at the residence as an eligible
resident. The guidelines are established as a loan program,
and are available to seniors, 60 years of age or older.
A roll call was taken on the MOTION to adopt the amendment.
IN FAVOR: Therriault, Brown, Kelly, Kohring,
Mulder, Foster.
OPPOSED: Martin, Hanley.
Representatives Parnell, Grussendorf and Navarre were not
present for the vote.
The MOTION PASSED (6-2).
Co-Chair Foster MOVED to report CS HB 192 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
Representative Brown asked AHFC authorities if there would
be fiscal impact through adoption of Amendment #1. Mr.
Fauske replied, the result would be adjusted through the
loan process. AHFC provides estimates each year for the
anticipated loan costs. The legislation could increase that
estimate, although he assumed it would be small. If the cap
was exceeded, AHFC would request supplemental funding.
CS HB 192 was reported out of Committee with "no
recommendations" and with a zero fiscal note by the Alaska
Housing Finance Corporation (AHFC).
HOUSE BILL 520
"An Act relating to death investigations and inquests,
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coroners, public administrators, and medical examiners,
including the state medical examiner; relating to the
jurisdiction of district court judges and magistrates
in certain cases involving death."
ARTHUR SNOWDEN II, ADMINISTRATIVE DIRECTOR, ALASKA COURT
SYSTEM, spoke to HB 520 which would create a unified death
investigation system under the authority of the State
Medical Examiner within the Department of Health and Social
Services (DHSS). The bill has a net zero cost with funds
transferred from the Alaska Court System to the Department
of Health and Social Services (DHSS) reflecting the transfer
of death investigation responsibilities.
Co-Chair Foster MOVED to adopt work draft #9-LS1678\C,
Lauterbach, 3/12/96, as the version before the Committee.
There being NO OBJECTION, it was so ordered.
Mr. Snowden provided background history on the coroner
system used in Alaska. He emphasized that the old system
did not work well. Magistrates have no knowledge of
forensic pathology. If a magistrate declared the purpose of
death, and then left town, a case could not be brought
forth, without being subject to challenge. That system was
used because there was no other alternative. Using that
system, costs have always been significant.
Mr. Snowden established that a number of years ago, the
State Legislature provided funding for a State Medical Lab
in Anchorage. The proposed legislation would provide for a
professional medical examiner to better support the criminal
justice system, by investigating deaths of concern to public
health officers. The version before the Committee would
leave the public administrator functions in the Court
System. All other services would be moved to DHSS. Mr.
Snowden spoke to Amendment #1. [Copy on file]. He pointed
out that Amendment #1 would address technical changes.
Representative Grussendorf MOVED to adopt Amendment #1.
ELMER LINDSTROM, SPECIAL ASSISTANT TO THE COMMISSIONER,
OFFICE OF THE COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, stated that Amendment #1 had resulted from
suggestions made by Terry Lauterbach, legal drafter. There
being NO OBJECTION, Amendment #1 was adopted.
Mr. Lindstrom stated that DHSS supports the proposed
legislation. The role of the medical examiner has been
successfully seated in that Department. Historically,
supplemental requests have been made to address that
concern. He pointed out that this is the first year that a
need does not exist for a supplemental request or a
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reallocation within the Division of Public Health. The
legislation will provide further tools to curtail costs in
that area.
Mr. Lindstrom added that a new fiscal note would reflect the
action taken through the House Finance Committee substitute
corresponding to the Court System fiscal note. The fiscal
note reflects the public administrator position remaining in
the Court System.
Representative Brown inquired if the State examiner would be
required to fill out a Certificate of Death for everyone.
Mr. Lindstrom responded that the proposed legislation would
not provide a change to that process. If the death is
referred to the State medical examiner, it would not
necessarily be the medical examiner who fills out the death
certificate, but would be filed under that authority. Mr.
Lindstrom understood that every death in the State should
have a death certificate. Representative Brown noted that
HB 371 had been provided a DHSS fiscal note for the costs
associated with changing a death certificate.
Co-Chair Foster MOVED to report CS HB 520 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 520 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Alaska
Court System and the Department of Health and Social
Services and a zero fiscal note by the Department of Public
Safety.
HOUSE JOINT RESOLUTION 49
Proposing amendments to the Constitution of the State
of Alaska creating a highway fund.
REPRESENTATIVE JEANNETTE JAMES noted that HJR 49 would
propose amendments to the Alaska State Constitution creating
a dedicated transportation fund. The amendments would be
placed before the voters of Alaska at the next general
election.
The bill would not address an amount of motor fuel tax
increase, but merely would provide a mechanism for
allocating the proceeds from collection of fuel taxes.
She added that the resolution has received wide support
relative to the current level of fuel taxes. She thought
that Alaska's citizens would be more willing to accept a
necessary increase in their motor fuel taxes if they knew
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the money would be utilized to address the need for improved
maintenance of the roads and highways.
SAM S. KITO III, LEGISLATIVE LIAISON/SPECIAL ASSISTANT,
OFFICE OF THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES (DOTPF), testified in support of HJR 49.
He pointed out that the resolution contains the marine fuel
tax component. The Department would utilize that revenue to
transfer facilities to local governments.
Mr. Kito pointed out the Department's recommendations to
permit highway expenditures to include construction. He
suggested changing the vote from 3/5 to 3/4 consenting
votes.
BOB BARTHOLOMEW, DEPUTY DIRECTOR, INCOME & EXCISE AUDIT
DIVISION, DEPARTMENT OF REVENUE, advised that the fiscal
note provided by the Department of Revenue would change the
effective date to July 1, 1998. At that point, proceeds for
motor fuel tax would be deposited into a dedicated fund. He
added, the fiscal note only indicates the impact of gasohol
in the Anchorage area. In FY95, gasohol was required use by
the Environmental Protection Agency (EPA) in Anchorage for
duration of a two month period. During that two months, the
State lost $2.4 million dollars in revenue, resulting from
the motor fuel tax exemption. The stipulation in Anchorage
was increased from two to four months required use, as well
as two to four million gallons being sold each month during
the transition. The estimates include FY96 lost revenue in
the amount of $6 million dollars.
Representative Mulder asked if there was any Alaskan grain
used in production of gasohol. If not, he recommended
revising that statute. Representative James agreed,
indicating that there is a bill in another committee which
addresses that tax. There could be some gasohol made in
Alaska, although most of it comes from outside.
Mr. Bartholomew pointed out that DOR's dedicated fund
revenue dollars, includes a tax applied to off highway fuel.
On off highway fuel, an eight cents per gallon tax is
charged, and then a six cent per gallon refund is made. The
resulting net tax amounts to two cents per gallon. The
Department collects $3.2 million dollars per year from that
tax. That revenue is not reflected in the fiscal note.
MR. DILLION, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
testified in support of HJR 49. He requested that intent
language be added in order to tightly control the dedicated
fund, stressing that the fund be used strictly for
maintenance purposes. He recommended that a tool be
implemented to focus behavior in spending fuel tax revenue.
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He stressed that he would be against using the fund for
construction. It must be a maintenance fund, and be used
for highways only. Mr. Dillion noted that his company would
not support the marine portion of the legislation.
In response to Representative Therriault's question, Mr.
Bartholomew noted that a separate account would be
maintained for the marine fuel. Mr. Kito added, DOTPF has
established that there is not enough revenue even with the
proposed tax increases to expand beyond maintenance of the
highway system.
Co-Chair Hanley advised that there is not enough revenue
available without a tax increase to cover the needs. The
public wants to see current roads being maintained rather
than new roads being built with those funds. Co-Chair
Hanley voiced his concern adding "construction" to the use
of the fund.
Representative James noted that Commissioner Perkins had
indicated in a previous committee discussion, that federal
funds to Alaska would be reduced, which would create a
reduction to the federal tax requirement. That action would
provide a need for the State to tax, thus placing more
revenue into that account.
Mr. Kito noted that a general accounting office report had
been released in January, 1996, which indicates how the U.S.
Congress plans on putting together the next funding
authorization for the Federal Highway Trust Fund. In four
of the seven scenarios, Alaska went from receiving $230
million dollars to being allocated approximately $40 million
dollars.
Mr. Dillion questioned how the ferry system would be
integrated as part of the highway system. He understood
that ferries do not pay a fuel tax. Mr. Kito responded that
some activities on the ferry system would be permissible as
an expenditure. The primary focus would be pavement, repair
and maintenance from the dedicated fund. Representative
James agreed that within the legislation, the marine highway
would be an allowable use of fund monies for maintenance
only.
(Tape Change, HFC 96-75, Side 1).
Representative Brown asked how much the State currently
spends on highway maintenance. Mr. Kito replied the best
estimate of the direct and indirect FY95 costs is $75
million dollars. The indirect expenses would include some
administrative costs which helps to keep equipment working.
The Department does not have a clearly defined break-out of
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those costs. Representative Brown asked the current costs
of construction and improvement of harbor facilities. Mr.
Kito replied that FY97 budget requests a $1 million dollar
appropriation for the harbor fund. He added, those costs
have averaged approximately 37% of the amount collected in
fuel tax. The balance would be placed into the general
fund.
Representative Brown pointed out that passage of the
legislation would provide that revenue available to the
general fund be decreased and the amount spent on harbor
construction be increased by $7.6 million dollars. Co-Chair
Hanley suggested that costs could be added to the amount
currently spent. He voiced concern with that portion of the
bill, pointing out that it could increase by six times the
expenditures for ports and harbors. Co-Chair Hanley
recommended separating the issues.
Representative Brown asked how much the State spends on
maintaining local government roads. Mr. Kito replied that
revenue for local government road maintenance passes through
the Department of Community and Regional Affairs (DCRA) in a
revenue sharing request, for a road program component in the
amount of $4.4 million dollars. Representative Brown asked
if local governments would be entitled to some of the
maintenance money. Mr. Kito commented that provision had
been included in order to prevent incentive to take over
roads. Without increasing the tax rate, there would not be
enough revenue for the State to initiate the transfer or
sharing program. Mr. Kito noted that the "airport system"
would not be considered a "highway" within the language of
the legislation.
Mr. Kito spoke to upgrading facilities which belong to a
municipality. The Department currently is negotiating with
the municipalities to determine the level of community
acceptance. He added, the Department is currently
investigating a "tax sharing" mechanism, whereby, a
community that does accept ownership of a facility would
also receive a portion of the tax revenue collected.
Discussion followed among Committee members regarding
inclusion of the marine highway to the resolution.
Representative Brown inquired if the State currently
collects shared taxes on behalf of local governments. Mr.
Bartholomew replied that the State does not collect any
shared highway or marine fuel taxes. A minimum amount has
been collected for aviation air revenue.
Representative Brown argued that if the Constitution is to
be amended, the new language should be clear. She
recommended deletion of Section (b). Co-Chair Hanley
replied that there should exist some statutory mechanism to
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address when the State collects taxes for the
municipalities. He questioned who would pay the
administrative costs.
Co-Chair Hanley interjected that he was not in support of
including the marine fuel tax, suggesting that it be a
separate issue. Discussion followed among Committee members
regarding the marine fuel tax. Representative Brown voiced
opposition to creating a dedicated fund source.
Representative Navarre commented that the State spends far
more than collected on highway maintenance. He suggested
that the amount assessed should be increased, otherwise,
there would be no reason to pass a constitutional amendment.
Representative Navarre suggested the harbor facilities
provision be removed. He added, if a dedicated fund is to
be established, a 3/5ths vote would not provide enough
protection for a dedicated fund, and recommended that a
3/4th or 4/5th majority vote be required. Co-Chair Hanley
agreed. Representative Grussendorf elaborated his support
to include harbor maintenance.
HJR 49 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:45 P.M.
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