Legislature(2007 - 2008)HOUSE FINANCE 519
03/12/2008 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB357 | |
| HB338 | |
| HB414 | |
| HB356 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 338 | TELECONFERENCED | |
| + | HB 356 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 357 | TELECONFERENCED | |
| += | HB 414 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 12, 2008
1:47 p.m.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:47:45 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Les Gara
Representative Mike Hawker
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas Jr.
MEMBERS ABSENT
Representative John Harris
Representative Reggie Joule
ALSO PRESENT
Eleanor Wolfe, Staff, Representative Kurt Olson; Mark Davis,
Director, Division of Corporations, Business, Professional
Licensing, Department of Commerce, Community and Economic
Development; Dave Feekan, Alaska Association of Realtors;
Gene Duval, Chair, Alaska Real Estate Commission; Sarah
Fisher-Goad, Deputy Director of Operations, Alaska Energy
Authority, Department of Commerce, Community and Economic
Development; Chris Anderson, Deputy Director of Credit,
Alaska Energy Authority; Del Conrad, CEO, Rural Alaska Fuel
Services; Jane Pierson, Staff, Representative Jay Ramras.
PRESENT VIA TELECONFERENCE
Susan Browne, Administrator, Violent Crimes Compensation
Board.
SUMMARY
HB 338 An Act relating to the power project fund and the
bulk fuel revolving loan fund; authorizing the
Alaska Energy Authority to borrow money from the
power project fund for the bulk fuel revolving
loan fund and to repay money borrowed; and
providing for an effective date.
CS HB 338 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with attached new
zero fiscal note by the Department of Commerce,
Community and Economic Development and new fiscal
note by the Department of Commerce, Community and
Economic Development.
HB 356 An Act relating to an exemption from municipal
property taxes for certain real property that is
exempt from levy and collection of real property
taxes when conveyed by the federal government to
implement the Alaska Native Claims Settlement Act
or when conveyed under a land exchange authorized
by that Act involving land or an interest in land
that is made exempt from local property taxes by
that Act; and providing for an effective date.
CS HB 356 (CRA) was REPORTED out of Committee with
a "do pass" recommendation and with attached zero
fiscal note by the Department of Commerce,
Community and Economic Development.
HB 357 An Act requiring errors and omissions insurance
for real estate licensees; renaming the real
estate surety fund as the real estate recovery
fund and relating to that fund, and redefining the
procedures and criteria used by the Real Estate
Commission to make an award from the fund to a
person suffering a loss caused by certain
misconduct of real estate licensees; requiring a
real estate licensee to maintain an office in the
state; and providing for an effective date.
CS HB 357 (L&C) was REPORTED out of Committee with
a "do pass" recommendation and with attached zero
fiscal note #1 by Department of Commerce,
Community and Economic Development and zero fiscal
note #2 by Department of Commerce, Community and
Economic Development.
HB 414 An Act relating to the crime victim compensation
fund.
HB 414 was REPORTED out of Committee with a "do
pass" recommendation and with attached zero fiscal
note #1 by the Department of Administration.
HOUSE BILL NO. 357
An Act requiring errors and omissions insurance for
real estate licensees; renaming the real estate surety
fund as the real estate recovery fund and relating to
that fund, and redefining the procedures and criteria
used by the Real Estate Commission to make an award
from the fund to a person suffering a loss caused by
certain misconduct of real estate licensees; requiring
a real estate licensee to maintain an office in the
state; and providing for an effective date.
1:49:12 PM
ELEANOR WOLFE, STAFF, REPRESENTATIVE KURT OLSON (SPONSOR),
informed the Committee that HB 357 was introduced at the
request the Alaska Association of Realtors. The legislation
is intended to mandate errors and omissions (E&O) insurance
for real estate agents. The bill would also change the
nature of the surety fund to a recovery fund that would be
used if there is fraud or deceit. The E&O insurance would
cover the majority of the complaints people now have against
the surety fund.
Representative Kelly asked if anyone was opposed to the
bill. Ms. Wolfe said there had not been a lot of opposition.
1:52:57 PM
MARK DAVIS, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS,
PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT, explained that HB 357 is in
response to a 2007 legislative audit of the Alaska Real
Estate Commission. The audit recommended that the Commission
be continued and recommended changes in the surety fund. The
fund has had difficulty providing consumers with protection.
Other states have moved towards the mandatory E&O insurance
proposed in HB 357. The policy would provide uniform
protection for all realtors. The bill does not go into
effect if a reasonable policy cannot be found.
Representative Thomas noticed that the bill requires
realtors obtaining a real estate license to have physical
offices in the state and asked if that had been a problem.
DAVE FEEKAN, ALASKA ASSOCIATION OF REALTORS, clarified the
reason for changing the surety fund. The fund was put in
place in 1974 in place of bonding. The fund is a self-funded
program that covers fraud, deceit, misrepresentation, and
conversion of trust. The fund has $250,000 to $500,000 by
statute, but has been declining. In the past two years there
have been an inordinate number of frivolous claims filed
with resulting high administrative costs. Mandatory
insurance would deal with some of the claims.
1:58:07 PM
Mr. Feekan said the goal of the language is not restraint of
business but supervision and record-keeping. A person can
get a real estate license after only a forty-hour course and
passing a test. This person then handles one of the largest
financial transactions of most people's lives. The bill
requires the licensee to have an office so that they can be
supervised and keep the required records.
Representative Crawford asked the difference in cost for E&O
insurance and paying into the surety fund. Mr. Feekan did
not think the surety expense would change from its current
cost of $30 every two years. Judging from the cost in other
states, the insurance cost would be approximately $150-200
per individual (as part of a group policy), for $100,000
coverage/$1,000 deductible. The majority of E&O claims are
less than $10,000.
2:02:49 PM
Representative Gara turned to page 9, line 12, and asked why
the word "misrepresentation" was taken out. He wanted to
make sure the legislation was not making it harder for
someone who had been defrauded by a real estate agent to
recover. Mr. Feekan did not know why it was taken out.
Representative Gara asked if he would be comfortable leaving
the word in. Mr. Feekan said the industry would not have a
problem with that. Ms. Wolfe said she would get more
information.
GENE DUVAL, CHAIR, ALASKA REAL ESTATE COMMISSION, spoke in
support of the bill. The Commission believes the changes
will better protect the public and close loopholes. They
thought the requirement of an office in the state was
important because of the internet realtors, which are hard
to supervise.
2:05:55 PM
PUBLIC TESTIMONY CLOSED.
Vice-Chair Stoltze MOVED to report HB 357 out of Committee
with individual recommendations and with the accompanying
fiscal notes. There being NO OBJECTION, it was so ordered.
CS HB 357 (L&C) was REPORTED out of Committee with a "do
pass" recommendation and with attached zero fiscal note #1
by Department of Commerce, Community and Economic
Development and zero fiscal note #2 by Department of
Commerce, Community and Economic Development.
HOUSE BILL NO. 338
An Act relating to the power project fund and the bulk
fuel revolving loan fund; authorizing the Alaska Energy
Authority to borrow money from the power project fund
for the bulk fuel revolving loan fund and to repay
money borrowed; and providing for an effective date.
Vice-Chair Stoltze MOVED to ADOPT work draft 25-LS1332\E,
Kane, 2/22/08, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
2:10:42 PM
REPRESENTATIVE MARY NELSON, SPONSOR, explained that the bill
would allow the Alaska Energy Authority (AEA) to borrow from
the Power Project Fund (PPF) for use in the Bulk Fuel
Revolving Loan Fund (BFRLF). The PPF has a balance of $10.8
million. Due to the ever-increasing cost of energy
throughout the state, especially in remote rural villages,
the ability of AEA to offer loans has been hindered because
larger loans are required to buy the same quantity of fuel.
Representative Nelson said that Rural Alaska Fuel Services
is often asked to provide loans to communities that would
otherwise be unable to get loans. The payback rate is 100%.
Although the bridge loan program has been functioning well
since 2004, HB 338 is necessary because there is no
statutory authorization for AEA to operate the program.
Communities have struggled to purchase bulk fuel because of
significant decreases in or total elimination of municipal
assistance and revenue sharing. The loans help communities
purchase fuel at the beginning of the cold season. The
fiscal note is small and for contractual services. The
Department of Commerce, Community and Economic Development
is optimistic that the demand for the program will fall with
the reinstatement of state revenue sharing (Statement on
File).
2:14:52 PM
Co-Chair Meyer opened public testimony.
SARAH FISHER-GOAD, DEPUTY DIRECTOR OF OPERATIONS, ALASKA
ENERGY AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT (DCCED), said the BFRLF provides a
financing source for communities of 2,000 or less to
purchase an annual supply of fuel. She said AEA only commits
to loans based on cash available. The bill provides a
backstop source of funds to allow AEA to better meet the
needs of borrowers. There is an intense demand and repayment
cycle. The bill limits the lending ability by restricting
the amount based on the June 30 cash balance for the PPF, to
$2 million or 10% of the available cash balance. The current
cash balance of the PPF is approximately $10.8 million,
limiting loans to approximately $1 million. If the balance
goes below $5 million, the BFRLF would be suspended
(Statement on File).
Representative Thomas asked if AEA can garnish a community's
revenue sharing if that community has outstanding debt. Ms.
Fisher-Goad answered that although AEA has the ability to
collateralize the loans and request payments, a community
would not eligible for a new loan until the balance was paid
off.
Representative Thomas pointed out that the history sheet
(Copy on File) shows several communities with three or four
years of unpaid balance.
Representative Kelly asked if the interest rate changed over
time. Ms. Fisher-Goad replied that the first time an entity
borrows the interest rate is zero percent. The rate then
changes to the municipal rate of approximately 4.5%.
CHRIS ANDERSON, DEPUTY DIRECTOR OF CREDIT, ALASKA ENERGY
AUTHORITY, added that delinquencies are averaging less than
3% and tend to be seasonal.
2:22:25 PM
DEL CONRAD, CEO, RURAL ALASKA FUEL SERVICES, has been
managing the Bulk Fuel Bridge Loan Program on behalf of
DCCED since its inception. The bridge loan program was set
up with a $500,000 grant from the Denali Commission in 2004
when the first price shock hit rural Alaska. A significant
number of communities had been turned down for loans by AEA.
The Denali Commission made a grant to the State. The State,
in conjunction with the Alaska Village Electrical
Cooperative (AVEC) and Rural Alaska Fuel Services (RAFS),
set up a loan program which has been run by RAFS.
Mr. Conrad explained that in order to be eligible, a
community or borrowing entity has to be turned down by AEA.
This could happen for a variety of reasons, such as an
outstanding debt or an IRS lien. At that point the entity
becomes eligible for the bridge loan program. If the
community repays on a timely basis, they can get the loan
for another two years at zero percent interest. The goal is
to help high risk, financially unsustainable communities
move back into the regular borrowing process. About $6.5
million has been loaned over the past four years.
2:27:38 PM
Representative Kelly asked if Mr. Conrad functions primarily
as a banker in relation to the program. Mr. Conrad answered
that related to the fuel provision, he is primarily a
banker. Related to the bridge loan, he is part banker and
part consultant. He meets with community administrators and
helps them sort through costs. The largest issue is
typically that a community will keep prices too low and not
enforce collections in an attempt to help its residents.
Representative Kelly asked if the responsibility stays with
the utility. Mr. Conrad said yes, but added that he assists
the community in problem-solving.
PUBLIC TESTIMONY CLOSED.
Vice-Chair Stoltze MOVED to report CS HB 338 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 338 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with attached new zero fiscal note
by the Department of Commerce, Community and Economic
Development and new fiscal note by the Department of
Commerce, Community and Economic Development.
2:31:33 PM
HOUSE BILL NO. 414
An Act relating to the crime victim compensation fund.
JANE PIERSON, STAFF, REPRESENTATIVE JAY RAMRAS, explained
that HB 414 relates to the Violent Crimes Compensation
Board, established under statute in 1972 to help mitigate
damages and financial hardships suffered by victims of
violent crime. The Board provides compensation to cover
reasonable costs such as medical and counseling expenses,
lost income, and relocation costs. Most of the Board's
funding comes from Permanent Fund Dividend (PFD) monies that
are made available through ineligibility of certain
criminals. Every year the Board generates revenues through
provider refunds, inmate salaries, restitution payments and
other payments. The revenue is deposited into the General
Fund. Between 1996 and 2006, these revenues totaled
$570,000. Some of the funds were appropriated back into the
Board in years when the PFD and federal grant monies did not
cover expenditures (Statement on File).
Ms. Pierson pointed out that HB 414 would create a non-
general fund program definition for the Board, which would
generate more federal funds.
2:35:16 PM
Vice-Chair Stoltze spoke to the dedication of the Board.
SUSAN BROWNE, ADMINISTRATOR, VIOLENT CRIMES COMPENSATION
BOARD (Testified via teleconference), explained the
functions of the Board. She has personally viewed and worked
many thousands of cases.
PUBLIC TESTIMONY CLOSED.
Representative Kelly asked for clarification regarding the
fund. Ms. Browne thought the account could become self-
sustaining.
2:39:26 PM
Co-Chair Meyer referred to the zero fiscal note.
Representative Hawker stated for the record his discomfort
with designated funds. Representative Kelly agreed. Co-Chair
Meyer acknowledged the designated fund status but thought
the cause worthy. Representative Gara thought the Board was
different than other dedicated funds since they are
statutorily mandated to pay compensation to victims of
violent crimes.
2:43:21 PM
Vice-Chair Stoltze MOVED to report HB 414 out of Committee
with individual recommendations and with the accompanying
fiscal notes. There being NO OBJECTION, it was so ordered.
HB 414 was REPORTED out of Committee with a "do pass"
recommendation and with attached zero fiscal note #1 by the
Department of Administration.
HOUSE BILL NO. 356
An Act relating to an exemption from municipal property
taxes for certain real property that is exempt from
levy and collection of real property taxes when
conveyed by the federal government to implement the
Alaska Native Claims Settlement Act or when conveyed
under a land exchange authorized by that Act involving
land or an interest in land that is made exempt from
local property taxes by that Act; and providing for an
effective date.
Vice-Chair Stoltze, Sponsor, introduced the bill as
expanding the list of property that is exempted from
municipal taxation to include property that has been
conveyed under the Alaska Native Claims Settlement Act. The
legislation will provide benefits for all municipalities in
Alaska who wish to enter into land exchanges with Native
villages and regional corporations. Currently, land a Native
corporation receives in an exchange with a municipality may
not be exempt.
2:47:35 PM
Vice-Chair Stoltze clarified that the municipality would
have to want to do the land trade, in response to a question
by Representative Kelly.
Representative Hawker commented that the bill is re-
affirming the over-riding federal statute and state statute.
He was curious if municipalities could tax land that was
exempt by federal statute. Vice-Chair Stoltze thought the
bill was affirming the intent.
2:49:48 PM
Co-Chair Meyer referred to fiscal notes.
Co-Chair Chenault MOVED to report HB 356 out of Committee
with individual recommendations and with the accompanying
fiscal notes. There being NO OBJECTION, it was so ordered.
CS HB 356 (CRA) was REPORTED out of Committee with a "do
pass" recommendation and with attached zero fiscal note by
the Department of Commerce, Community and Economic
Development.
ADJOURNMENT
The meeting was adjourned at 2:51 PM.
| Document Name | Date/Time | Subjects |
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