Legislature(1999 - 2000)
03/09/1999 01:45 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 9, 1999
1:45 P.M.
TAPE HFC 99 - 42, Side 1.
TAPE HFC 99 - 42, Side 2.
TAPE HFC 99 - 43, Side 1.
TAPE HFC 99 - 43, Side 2.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:45 P.M.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Vice Chair Bunde Representative Kohring
Representative Austerman Representative Moses
Representative J. Davies Representative Williams
Representative G. Davis
ALSO PRESENT
Representative Carl Morgan; Representative Norman Rokeberg;
Kay Murphy, Mortgage Operations Director, Alaska Housing
Finance Corporation, Department of Revenue; John Bitney,
Legislative Liaison, Alaska Housing Finance Corporation,
Department of Revenue; Wendy Redman, Vice President,
University of Alaska, Fairbanks; Dan Spencer, Chief
Financial Analyst, Office of Management and Budget; Ginger
Blaisdell, Fiscal Analyst, Legislative Finance Division;
Tracy Cramer, Director of Administration for Exxon Valdez
Oil Spill (EVOS) Trustee Council, Department of Fish and
Game.
SUMMARY
HB 13 An Act relating to the characterization of, use
of, segregation of, deposit of, interest on, and
disbursement of escrow money; relating to the
recording, filing, and delivery of escrow
documents; relating to civil penalties for
violations of certain escrow provisions by escrow
settlement agents; relating to the supervision by
the Department of Commerce and Economic
Development of escrow settlement agents;
authorizing the adoption of regulations to
implement certain escrow provisions; and providing
for an effective date.
CS HB 13 (FIN) was reported out of Committee with
a "do pass" recommendation and with a zero fiscal
note by the House Finance Committee.
HB 93 An Act relating to the Alaska Housing Finance
Corporation's rural assistance loan program and to
the definition of 'housing' for purposes of the
corporation's housing assistance loan program; and
providing for an effective date.
HB 93 was reported out of Committee with "do pass"
recommendation and with a zero fiscal note by the
Department of Revenue.
HB 100 An Act making and amending capital, supplemental,
and other appropriations, and appropriations to
capitalize funds; ratifying certain expenditures;
and providing for an effective date.
CS HB 100 (FIN) was reported out of Committee with
"no recommendation".
HJR 13 Relating to using oil spill settlement funds to
create an endowment for the sciences at the
University of Alaska.
CS HJR 13 (FIN) was reported out of Committee with
a "do pass" recommendation and with a zero fiscal
note by the House Hess Committee dated 3/8/99.
HOUSE BILL NO. 93
"An Act relating to the Alaska Housing Finance
Corporation's rural assistance loan program and to the
definition of 'housing' for purposes of the
corporation's housing assistance loan program; and
providing for an effective date."
REPRESENTATIVE CARL MORGAN explained that the proposed
legislation would modify AHFC's Rural Mortgage program to
allow two changes:
? The Rural Mortgage program would allow for
refinancing of home loans in the same manner any
conventional mortgage allows. While many people
around the nation have taken advantage of low
interest rates to refinance their home mortgages,
state law simply does not provide the option under
the rural lending program.
? The current definition in state law limits the
term "housing" to either single family or owner
occupied duplexes. The proposed legislation would
bring the term into compliance with current
industry standards for lending by allowing owner-
occupied housing up to four units. The Rural
Mortgage program would be allowed to finance up to
a four-plex.
Representative Morgan asked members to note that the bill
would not allow the program to make loans that are not
allowed under conventional lending practices or industry
standards. The bill attempts to allow the loan program to
make the same kind of loans allowed for any conventional
urban loan program.
The Rural Mortgage loan program is a revolving fund. Alaska
Housing Finance Corporation (AHFC) has reported that default
rates in the program are the same or less than the rate of
defaults on conventional urban loans. The legislation would
attempt to make changes that would allow a lending program
to make the same kind of loans considered standard practice
under conventional lending. Representative Morgan stressed
that this is an issue of "fairness" for rural borrowers and
would be good business for AHFC.
JOHN BITNEY, LEGISLATIVE LIASON, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, ANCHORAGE, stated that
Alaska Housing Finance Corporation (AHFC) supports the
proposed legislation which will assist rural borrowers to
take advantage of the better interest rates currently
available. The original statutes were not written to
include the concept of "refinancing" or to address that the
rates would decline to what they currently are.
Co-Chair Therriault restated that current statute does not
allow for refinancing; the language would be inclusive of up
to a four-plex. He asked if this would be a subsidized loan
program.
KAY MURPHY, MORTGAGE OPERATIONS DIRECTOR, ALASKA HOUSING
FINANCE CORPORATION, DEPARTMENT OF REVENUE, explained that
the program was funded from a revolving loan fund by
corporate receipts of AHFC. The interest rate is set by
statute at 1% less than the Corporation's taxable loan
program.
Co-Chair Therriault questioned if additional staffing would
be needed to implement the program. Ms. Murphy responded
that AHFC was not anticipating any additional staffing. She
added, because rural borrowers can not refinance their
loans, AHFC has refinanced them under other programs within
the Corporation. A volume of loans has already been
addressed.
Representative Grussendorf asked if an owner would be
required to live on the property. Ms. Murphy replied that
it would need to be owner occupied housing and having four
or fewer units. Mr. Bitney pointed out that there is a non-
owner occupied program, which would not be addressed, in the
proposed legislation. Representative Foster commented that
he had proposed an identical bill six years ago. He voiced
strong support for the legislation.
Representative Bunde suggested that a subsidy needs to be
fair and that to date, rural communities have not had the
same opportunity to take advantage of loan programs
available to the urban communities.
Representative Kohring questioned the level of risk with
loans offered to rural Alaska. He suggested that risk
factor be reflected in the default rate. Ms. Murphy replied
that the delinquency rate in the rural loan program was
slightly less than the overall portfolio, which is a little
over 3%, with a good payment history.
Representative Kohring inquired if it would be a streamlined
refinance. Ms. Murphy explained that there is a streamline
refinance program, which is a continual program without a
cut off date. With the passage of HB 93, AHFC would be able
to offer streamline refinancing to rural loan borrowers
within the rural loan program.
Representative Kohring questioned how many loans would be
eligible for the program. Ms. Murphy replied that in the
rural loan program, there are over 500 loans which are over
8% at this time.
Representative Kohring asked what definition of "rural" was
used. Ms. Murphy replied that if a community was not
connected on a road system, it would consist of a population
of 6500 or less; if it was connected on a road system, it
would have a population of 1600 or less.
Representative G. Davis questioned the definition of
"community". Ms. Murphy replied that for the higher
populated areas around Anchorage and Fairbanks, a community
would be within 50 miles of the Anchorage City center, which
would be considered urban, and within 25 miles of Fairbanks
City center would also be considered urban. She noted this
was an attempt by AHFC to define community.
Representative Kohring MOVED to report HB 93 out of
Committee with individual recommendations and with the
accompanying zero fiscal note. There being NO OBJECTION, it
was so ordered.
HB 93 was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note by the Department
of Revenue dated 2/24/99.
HOUSE BILL NO. 13
"An Act relating to the characterization of, use of,
segregation of, deposit of, interest on, and
disbursement of escrow money; relating to the
recording, filing, and delivery of escrow documents;
relating to civil penalties for violations of certain
escrow provisions by escrow settlement agents; relating
to the supervision by the Department of Commerce and
Economic Development of escrow settlement agents;
authorizing the adoption of regulations to implement
certain escrow provisions; and providing for an
effective date."
REPRESENTATIVE NORMAN ROKEBERG explained that HB 13 was
submitted at the request of the Alaska State Escrow
Association and was reintroduced in an effort to assure
consumers that their money would be safely received in a
timely manner, and properly accounted for when delivered to
a settlement agent for a residential real property
transaction. Currently, there are no Alaskan laws
addressing that concern.
He continued, an increasing number of incidents have
occurred demonstrating the need for Alaska to join the large
number of states having "good funds" legislation. In the
age of growing electronic commerce, people are shopping the
Internet for mortgages and there is an increase in
competition from "outside" mortgage companies caused by low
interest rates. Problems have arisen from failure of these
companies to properly fund transactions in a timely fashion
or in some cases left with bankruptcy. Representative
Rokeberg summarized that when drafting the bill, he worked
with various interest groups and financial institutions
throughout Alaska.
Representative Rokeberg advised that the bill had been
rewritten, resulting from an attached fiscal note in a
previous Committee hearing. The new version would eliminate
the regulatory necessity of the Department of Commerce and
Economic Development to oversee that particular chapter of
law.
Representative Foster MOVED to adopt work draft 1-LS026\M,
Bannister, 2/19/99, as the version before the Committee.
There being NO OBJECTION, it was adopted.
Representative Rokeberg explained the changes to the work
draft:
? Amendment #1, addressed on Page 2, Line 5,
language after "transaction agreement" was
deleted.
? Amendment #2 was not addressed in the proposed
bill since that particular section "Civil Penalty"
was replaced by "Civil Action" on Page 3, Lines
22-27. That section removes all departments from
the legislation and makes the violation of the
"good funds act" a private right of action.
? Amendment #3 was withdrawn.
? Amendment #4 was addressed on Page 6, Lines 28-29;
however, the definition has also had the following
language added after "dwelling units", as "any
number of apartments are in a horizontal property
regime formed under AS 34.07 or any number of
unites if the unites are in a common interest
community created under AS 34.08".
? Amendment #5 deals with the "Civil Penalty"
section that has been changed to the "Civil
Action" section.
? Amendment #6 was pending, however, all references
to the Department of Commerce and Economic
Development, its supervisory authority,
investigative authority, and regulation making
authority are deleted from Version M. Also,
deleted is reference to the referral to the
attorney general's office if voluntary compliance
was not obtained.
? Amendment #7 deals with the "Civil Penalty"
section that is no longer in the legislation.
? Amendment #8 is not needed as the removal through
the Department of Commerce and Economic
Development since there are no provisions for an
audit.
Representative Bunde asked why the bill addresses only
residential property and not commercial property.
Representative Rokeberg explained that because of the large
amounts of money involved in commercial transactions and the
different funding mechanisms, those projects were excluded.
The primary focus of the legislation is consumer protection
issues related to residential properties.
Representative J. Davies requested further information
regarding exclusion of "punitive damages". Representative
Rokeberg replied that the intent was to provide a cure for
grievance by allowing a private right of action. If there
is a breech, then private right presides. Representative J.
Davies advised that the reality is that these situations
sometimes do get litigated and that there are circumstances
in which punitive damages make sense. Representative
Rokeberg replied that happens only in instances where the
money has been reserved in trust. The concern here is that
the money is available at the time of recording.
Representative Rokeberg pointed out that each time there is
a property closing, there are two contracts involved;
? The contract with the buyer and seller of the
property; and
? The contract between the buyer and the lender.
Co-Chair Therriault clarified that an escrow agent must have
the funds in hand and under control before the transaction
of the title can take place. Representative Rokeberg
explained that previously, they were recording before the
money was in hand and it was not determined who was in
charge of carrying the "float".
Representative J. Davies noted that when an agent violates
the proposed law, the resulting remedy is civil court.
Representative Rokeberg replied that in some cases, the
Title Company could be sued for not following the law. At
this time, there is no law, so there is no cause of action
before them. Co-Chair Therriault clarified that the
proposed legislation would make it easier to bring forward a
civil action. Representative J. Davies advised that either
the Department of Law would be paid to do the work or it
would rest upon the Alaska Court System. Representative
Rokeberg responded that is what the Courts are to be used
for. He suggested that this action would begin a mini
privatization.
Representative J. Davies referenced Page 2, Line 6, asking
what "segregation" of the money meant. Representative
Rokeberg explained the intent is that the funds are not
commingled. Representative J. Davies understood that it
meant having different bank accounts. He emphasized that
the two statements specify keeping separate bank accounts.
Representative Rokeberg stated that Subsection (a) provides
for the segregation and Subsection (b) provides for the
account. Co-Chair Therriault acknowledged the confusion
caused by the wording. Representative G. Davis suggested
that there must be a system within the banks, which
segregates or separates the accounts.
Co-Chair Therriault noted that the discussion before the
Committee was if there was one account or a separate escrow
account for each transaction. He suggested that a legal
drafter be consulted to clarify the language.
Representative Grussendorf additionally, voiced concern with
the language and recommended that someone from the Division
of Banking testify regarding these procedures.
Representative Rokeberg clarified if Committee members were
concerned if segregated meant separate accounts. Co-Chair
Therriault stated that the Committee needed clarification if
segregation would be a bookkeeping function rather than
separate account.
(Tape Change HFC 99 - 42, Side 2).
Co-Chair Therriault reiterated that the issue needs to be
clarified. He requested that legal counsel comment on the
concern. Co-Chair Therriault questioned if the House
Finance Committee would need to prepare a zero fiscal note
to accompany the legislation.
HB 13 was HELD in Committee for further consideration.
HOUSE JOINT RESOLUTION NO. 13
Relating to using oil spill settlement funds to create
an endowment for the sciences at the University of
Alaska.
CO-CHAIR GENE THERRIAULT stated that HJR 13 would support
recent action of the Exxon Valdez Oil Spill (EVOS) Trustees
to create a long-term research and monitoring endowment
using $115 million dollars of the expected reserve.
The EVOS Trustee Council allocates money obtained from
settlement of the Exxon Valdez spill litigation. Over the
years, EVOS funds have largely been used to purchase land
for habitat preservation. The Council has been lacking in
the area of research, leaving a gap in understanding future
spills and how to respond to them. It would be beneficial
to know if types of marine ecosystems are extra sensitive to
certain cleanup activities, and if so, how to respond to
spills in those areas.
Co-Chair Therriault concluded that an endowment of this
nature would fulfill the intent of the Exxon Valdez Spill
settlement and the mission of the Trustee Council, which is
to restore, rehabilitate, replace, enhance, and acquire
equivalent resources and services in the oil spill regions.
Representative Austerman questioned how many endowed chairs
there would be. Co-Chair Therriault explained that number
has not yet been determined. It would depend on what the
Trustees ascertained appropriate. The chairs would be
involved in the areas of research instruction and public
service on spill impacted areas.
Representative Austerman voiced concern that $2-$3 million
dollars would be used to cover chair costs and, that
additionally, the University would be supplemented with
research money. He requested that the University submit a
program intent list for use of these funds. Co-Chair
Therriault advised that the proposed bill asks that the EVOS
Council consider this proposal and pointed out that this
entity operates completely independent of the Legislature.
Representative J. Davies commented that the endowment would
be established by the Trustee Council. They are required to
see that funding is spent appropriately. He added, when an
endowed chair is established, the endowment will generate
usually five times other research in that area, thus, income
would be leveraged by that factor. Representative J. Davies
instructed that a researcher can not operate in a vacuum;
they are dependent on accessing utilities and facilities
that a university system can offer. Support functions for
research are audited by the Department of Defense.
Co-Chair Therriault envisioned that the Trustees could endow
a chair at the University. That chair would most likely be
an expert in marine sciences, and could provide them with
advice.
Representative Austerman suggested that there could be other
research organizations that would like to be a part of the
process. He urged that this be a competitive bid for the
EVOS Council to consider. Co-Chair Therriault explained
that the actual research was separate from the endowment of
the chair. If the EVOS Council was going to endow chairs to
help oversee proposals, they would most likely choose a
university. He ascertained that the Alaska State
Legislature would want them to consider the Alaska
University system. The proposed legislation only states
that Alaska should use a portion of the funds for endowed
chairs.
Representative Bunde shared concerns voiced by
Representative Austerman regarding administrative overhead
costs.
In response to Representative Bunde, Co-Chair Therriault
stated that the grants are not a moneymaker for the
University; although, they would help to spread the fixed
costs of the University system over a larger pool.
Representative Bunde responded that it would add to the
University's cash flow.
Representative Austerman suggested language written on Page
4, Line 5 be replaced with "relevant areas or research".
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA-STATEWIDE
SYSTEM, FAIRBANKS, disagreed with Representative Austerman
that the endowment chairs do not pay attention to what is
requested. The EVOS Trustee Council is a very political
body. The intent of the resolution will have an impact on
that body. What the University envisions would be
particularly in the areas of research and public service.
In the public service area, there exists faculty in the
cooperative extension service and through the marine
advisory program. She noted that those are the primary arms
which have dealt with impact and the effects of spill in
that region.
Ms. Redman continued, the two key areas of focus for the
Trustees have been:
? The need for continual and long term research; and
? Providing a way to get all the research previously
undertaken out to the public. The research does
not do any good unless it is used. That research
needs to be translated into documents.
Ms. Redman addressed the issue of endowed shares. She
stated that the University would treat these type of endowed
shares like any other donations made to the University.
Essentially, it passes to the University of Alaska
foundation, and then like a donation, it would be decided
how to spend those funds, then establishing a work plan for
that chair.
Representative J. Davies pointed out that one of the key
elements for a long-term research plan is graduate students.
Major amounts of research are not undertaken without some
graduate students working on the program.
Representative G. Davis referenced Page 2, Line 23, and
asked why those locations were classified. Ms. Redman
replied those units were either affected or have programs
with faculty that work there.
Representative Austerman asked about the price tag of $2-$3
million dollars per chair. Ms. Redman stated that it would
be closer to $2 million dollars if there are no graduate
students involved. Representative Austerman asked what the
$2 million dollars per chair would buy. Co-Chair Therriault
pointed out that it was a small endowment, which spins off a
particular cost of a function. Ms. Redman added that the
actual administrative costs anticipated per year would be
$100 thousand dollars to cover salary benefits, clerical
support, travel, commodities and contractual costs.
TRACY CRAMER, DIRECTOR OF ADMINISTRATION FOR EVOS,
DEPARTMENT OF FISH AND GAME, stated that the EVOS Trustee
Council would like to see the resolution passed because of
investments results. At this point in time, all of the
joint trust funds are in the treasury and are invested in
treasury securities with an average of 100 days security.
Currently, the treasury is earning 4.5% to 5% on a large
amount of money.
Ms. Cramer spoke to the issue of the endowed shares. She
stated that the Trustee Council would consider the endowed
shares, however, the federal trustees are concerned that
given their trust responsibility, they may not be able to
hand over a sum of funds, even with an agreement to the
University of Alaska.
Representative Austerman asked if the resolve to the endowed
chairs was not included in the legislation, would the EVOS
Council still support the bill. Ms. Cramer replied that the
Trustee Council does not have an objection to the first
resolve. They would appreciate any assistance that the
Legislature could provide toward their limited authorization
toward investments, addressed by the second resolve.
Co-Chair Therriault examined the way the 1st resolve was
worded and if it would be taken as a "directive". Ms.
Cramer replied that it appeared fine to her.
Representative J. Davies asked information regarding a
recent action creating a long-term endowment. Ms. Cramer
responded that in 1984, the trustee council concluded an
environmental impact statement that analyzed the resources
and services injured. Part of that statement included the
establishment of the restoration reserve. The Trustee
Council has allocated $12 million dollars each year into
that reserve. The basic assumption is that after the last
payment on September 1, 2000, research will continue to be
made by the State.
Ms. Cramer continued, over the last eighteen months, the
Trustee Council has been going through a public review
process regarding how that money should be spent. It
amounts to roughly $170 million dollars. Based on public
comments, the Trustee Council took action on March 1, 1999,
and allocated $150 million dollars for research activities.
It was assumed that this money would continue to be a
perpetual endowment, inflation proofed and that any
expenditures would come after inflation proofing.
Representative J. Davies MOVED an amendment to Page 4, Line
4, deleting "use" and inserting "consider using".
Representative Bunde OBJECTED. He stated that a clear
message should be sent to EVOS. Co-Chair Therriault noted
that he would not object to the language change.
Representative Bunde WITHDREW his OBJECTION.
Representative Grussendorf MOVED to report CS HJR 13 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note.
Representative Austerman OBJECTED for the purpose of
discussion. He noted that he was uncomfortable with the
School of Fisheries research history. Representative
Austerman WITHDREW his OBJECTION.
Representative Kohring OBJECTED for the purpose of comment.
He agreed with Representative Austerman, and asked that
other research options should be explored within the private
sector. He added that the legislation was moving away from
the mission of what was intended with the Prince William
Sound and endowing of chairs. He commented that the area
has been studied for the past ten years and asked why
additional research was needed. Representative Kohring
WITHDREW his OBJECTION.
Representative Bunde OBJECTED for the purpose of a
statement. He commented that it was important that the
instructional component not be ignored within the
resolution. Representative Bunde WITHDREW his OBJECTION.
There being NO final OBJECTION, it was so ordered.
CS HJR 13 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero House Hess fiscal note
dated 3/8/99.
HOUSE BILL NO. 13
"An Act relating to the characterization of, use of,
segregation of, deposit of, interest on, and
disbursement of escrow money; relating to the
recording, filing, and delivery of escrow documents;
relating to civil penalties for violations of certain
escrow provisions by escrow settlement agents; relating
to the supervision by the Department of Commerce and
Economic Development of escrow settlement agents;
authorizing the adoption of regulations to implement
certain escrow provisions; and providing for an
effective date."
Representative J. Davies MOVED to adopt Amendment #1. [Copy
on File]. Representative Rokeberg noted that he would
accept the amendment in the spirit of clarification.
There being NO OBJECTION, Amendment #1 was adopted.
Representative Foster MOVED to report CS HB 13 (FIN) with
individual recommendations and with the fiscal note. Co-
Chair Therriault advised that the fiscal note would be the
front page only of the previous fiscal note. There being NO
OBJECTION, it was so ordered.
CS HB 13 (FIN) was reported out of Committee with "do pass"
recommendation and with a new House Finance Committee zero
fiscal note.
HOUSE BILL NO. 100
"An Act making and amending capital, supplemental, and
other appropriations, and appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
Co-Chair Mulder MOVED to adopt Amendment #16 which would
restore the funding for remodeling newly acquired space in
the same building now occupied by the Public Defender,
thereby, saving additional costs of establishing a full
support system for offices separate from the current space.
[Copy on File]. There being NO OBJECTION, Amendment #16 was
adopted.
Representative Williams MOVED to adopt Amendment #17 which
would add $70 thousand general fund program receipt dollars
to the Department of Transportation and Public Facilities,
Division of Design and Engineering Services for utility
permit issuance. [Copy on File].
Co-Chair Therriault asked where the program receipts would
be generated from.
DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, stated that they would come from utilities. He
noted that the Department of Transportation and Public
Facilities does support the amendment.
There being NO OBJECTION, Amendment #17 was adopted.
Representative Bunde WITHDREW Amendment #18. [Copy on
File].
Representative Bunde MOVED to adopt Amendment #19, which
would reappropriate $430,300 in federal indirect receipts
which would be used as State funds for the Child Support
Enforcement Division (CSED) shortfall. [Copy on File].
GINGER BLAISDELL, FISCAL ANALYST, LEGISLATIVE FINANCE
DIVISION, pointed out that there is a new Amendment #19
which would replace the original Amendment #19. [Copy on
File]. The original Amendment #19 does not show the federal
receipt portion. The new Amendment #19 includes federal
receipt dollars. The total supplemental request for CSED
would be $852,189 dollars.
Representative Bunde WITHDREW the MOTION to MOVE the
original Amendment #19. There being NO OBJECTION, it was
withdrawn. Representative Bunde MOVED to adopt the NEW
Amendment #19. There being NO OBJECTION, it was adopted.
Mr. Spencer asked to speak on the record regarding timing of
program receipts. He stressed that the Department of
Revenue will not know for certain the full amount of program
receipts until after June 30, 1999. He reiterated that the
number before the Committee was a projection. If the funds
do not come in at this level, an over expenditure will be
shown for CSED.
Co-Chair Therriault questioned the charge-back recalculation
for the Department of Administration. Mr. Spencer explained
that the Department establishes the rates approximately 16
months in advance. They implemented a new version of the
CICS, mainframe computer system software. A rate adjustment
has been made based on which costs actually need recovering.
Representative Grussendorf MOVED to RESCIND action taken on
Amendment #5. Representative Bunde OBJECTED.
Representative Grussendorf voiced concern with the Committee
not funding power cost equalization (PCE) in the rural
areas. Representative Bunde replied that he supported
research on whether power cost equalization should be
continued and if it was continued, how it would be financed.
Representative J. Davies stated that for several years, the
Legislature has funded PCE at the 85% level and that there
has been a reasonable expectation in rural Alaska that it
would continue to be funded at that level. He added that
the Blue Ribbon Commission has indicated that there is
enough money in that program to cover the request at that
level. He stated that to force a change before there has
been discussion would be premature.
Representative Austerman voiced concern that the Department
had not prorated PCE costs, which might suggest that it
would be the responsibility of the Department.
Representative J. Davies pointed out that the Department was
addressing it in the same manner they have in the past two
years.
Representative Moses pointed out that there has been a lot
of money spent on hydroelectric power and various types of
power in urban areas. Many taxpayer dollars have been spent
on getting inexpensive power to those areas. He exclaimed
that there must be a program established to get inexpensive
power to the rural area, whether it be thermal, hydro or
wind turban. Representative Moses emphasized that until
inexpensive power is achieved in the rural areas, it is
paramount that the State continues to fund PCE.
Representative Kohring noted that by continuing to fund PCE,
the State would not be accomplishing any sustainable plan of
development. Representative J. Davies agreed that there
does need to be a plan, however, what is being requested at
this time is supplemental money to help the rural area get
through until the end of the fiscal year. He emphasized
that money exists in the power cost equalization fund to
cover the expense and that it should be used for that
purpose.
A roll call vote was taken on the motion.
IN FAVOR: J. Davies, Foster, Grussendorf, Moses,
Williams
OPPOSED: Bunde, G. Davis, Kohring, Austerman,
Therriault, Mulder
The MOTION FAILED (5-6).
Representative Moses MOVED to RESCIND action taken on
Amendment #8. Co-Chair Therriault OBJECTED.
Representative Moses affirmed that this area has received a
triple hardship, including an economic and natural disaster.
These areas are hurting and their local government revenues
are down. That money is needed now! In the more removed
areas, supplies often take up to 6 weeks in shipment.
Representative Moses pointed out that this disaster would
eventually affect the entire State.
Co-Chair Mulder suggested that the request would be better
placed in the capital match grant program. He believed
that, as a supplemental for emergency disaster would be
stretching the concept of supplemental funding. Co-Chair
Mulder stated that the money would not provide direct relief
for these people as much as it would be providing community
improvement projects.
Representative G. Davis advised that capital projects would
require dollars to sustain the maintenance and upkeep. He
pointed out that such projects would require additional
local dollars in the future.
Representative Grussendorf compared this disaster to the
Millers Reach fire disaster, pointing out how the State came
forward to address that concern. He commented that now
there is an opportunity for the State to address the
disaster in the fishing areas, however, the Legislature is
not coming forward to take care of village economy.
Representative Kohring suggested that much of the monies in
the Millers Reach fire came through private funding such as
the Red Cross and United Way.
Representative J. Davies stated that the nature of this
request would not necessarily be a "capital project". The
funding would be used to provide wages and help to those
families so that they could make it through this time when
fish are not available. The primary purpose of this funding
would act as an alternate source of income to help these
people "survive".
Representative Grussendorf added that with passage of the
supplemental, these people would then have the supplies
necessary for the upcoming fishing season.
Co-Chair Mulder suggested that if funding was provided now,
the request would probably come back again in May in the
capital matching grants. Co-Chair Mulder voiced concern
regarding how the State should deal with economic disasters.
He foresaw that the commercial fishing industry is in for
some difficult years. He believes that there will be
expectation the State, and that by funding the supplemental
would not be a prudent way to address the magnitude of the
concern.
Representative Williams suggested that it could be better
for the fishing villages to receive funding at the end of
the summer season.
Representative Moses stressed that this funding was needed
months ago. These areas sometimes go 1.5 months without a
barge. He reiterated that the concern needs to be addressed
and coordinated soon.
A roll call vote was taken on the motion.
IN FAVOR: J. Davies, Foster, Grussendorf, Moses
OPPOSED: G. Davis, Kohring, Williams, Austerman,
Mulder, Therriault
Representative Bunde was not present for the vote.
The MOTION FAILED (4-6).
(Tape Change HFC 99 - 43, Side 2).
Co-Chair Therriault MOVED to report CS HB 100 (FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
CS HB 100 (FIN) was reported out of Committee with "no
recommendations".
ADJOURNMENT
The meeting adjourned at 4:15 P.M.
H.F.C. 17 3/09/99
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