Legislature(2009 - 2010)
04/17/2010 05:22 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| SB230 | |
| SB238 | |
| SB236 | |
| SB24 | |
| SB25 | |
| SB284 | |
| SB237 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 17, 2010
5:22 p.m.
5:22:38 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 5:22 p.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Allan Austerman
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
None
ALSO PRESENT
James Armstrong, Staff, Co-Chair Bill Stoltze; Sara Fisher-
Goad, Deputy Director, Operations, Alaska Industrial
Development and Export Authority and Alaska Energy
Authority (AEA), Department of Commerce, Community and
Economic Development; Craig Tillery, Deputy Attorney
General, Civil Division, Department of Law; Thomas
Obermeyer, Staff, Senator Bettye Davis; Jomo Stewart,
Staff, Senator Kevin Meyer and Co-Committee Aide, Senate
Education Committee; Weston Eiler, Staff, Senator Bert
Stedman; Ben Mulligan, Staff, Co-Chair Bill Stoltze;
Senator Hollis French; John Bitney, Staff, Representative
John Harris; Eddy Jeans, Director, School Finances and
Facilities, Department of Education and Early Development;
Jay Livey, Staff, Senator Lyman Hoffman, Sponsor.
SUMMARY
SB 24 LOUIS MILLER BRIDGE
SB 24 was REPORTED out of Committee with a "do
pass" recommendation and with attached new fiscal
impact note by the Department of Transportation
and Public Facilities.
SB 25 RICHARD DEWEY DUVALL FERRY TERMINAL
SB 25 was REPORTED out of Committee with a "do
pass" recommendation and with attached new fiscal
impact note by the Department of Transportation
and Public Facilities.
CS SB 32(FIN)
MEDICAID: HOME/COMMUNITY BASED SERVICES
CSSB 32(FIN) was SCHEDULED but not HEARD.
CS SB 230(FIN)
MEDICAID:HOME/COMMUNITY BASED SERVICES
HCS CSSB 230(FIN) was REPORTED out of Committee
with a "do pass" recommendation.
CS SB 236(EDC)
TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
HCS CSSB 236(FIN) was REPORTED out of Committee
with "no recommendation" and attached previously
published fiscal note: FN1 (REV).
CS SB 237(FIN)
SCHOOL CONSTRUCTION DEBT REIMBURSEMENT
HCS CSSB 237 was REPORTED out of Committee with a
"do pass" recommendation and with two new
attached fiscal impact notes by the Department of
Education and Early Development.
SB 238 MEDICAID FOR MEDICAL & INTERMEDIATE CARE
SB 238 was REPORTED out of Committee with a "do
pass" recommendation and with attached previously
published fiscal note: FN1 (DHS).
SB 246 INCREASING NUMBER OF SUPERIOR CT JUDGES
SB 246 was SCHEDULED but not HEARD.
CS SB 284(FIN)
CAMPAIGN EXPENDITURES
HCS CSSB 284(FIN) was REPORTED out of Committee
with "no recommendation" and attached previously
published fiscal notes: FN1 (GOV), FN2 (ADM).
5:23:59 PM AT EASE
5:26:12 PM RECONVENED
CS FOR SENATE BILL NO. 230(FIN)
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and other appropriations; making appropriations to
capitalize funds; and providing for an effective
date."
5:26:12 PM
Vice-Chair Thomas MOVED to ADOPT HCSSB 230(FIN) (26-
GS2824\M, Kane, 4/17/10) as a working document before the
committee. There being no OBJECTION, the committee
substitute was ADOPTED.
JAMES ARMSTRONG, STAFF, CO-CHAIR BILL STOLTZE, provided a
sectional overview of the CS:
· Sections 1 through 3: governor's supplemental/capital
put into the current version at $122,224,900
· Sections 4 through 6 (page 8 through 16): governor's
deferred maintenance at $118,420,000
· Sections 7 through 9 (pages 17 to 60): governor's
portion of the regular capital budget totaling
$1,685,162,600
· Sections 10 through 12: grants to municipalities and
unincorporated communities totaling $466,293,300
· Sections 13 to 15 (pages 114 to 147): grants to the
named recipients totaling $138,982,900
· Sections 16 through 18 (pages 148 to 152): cruise ship
revenue-funded projects at $49,525,000
· Sections 19 through 21 (HB 424, currently in the
Senate): education general obligation bonds
appropriations totaling $397,200,000
· Sections 22 through 62 (pages 157 to 175): the
language portion of the bill
Mr. Armstrong noted that $10,766,400 worth of operating
budget items were distributed throughout the bill.
Mr. Armstrong listed total spending by category:
· General funds: $1,406,939,400
· Other state funds: $554,595,200
· Federal funding: $1,027,040,400
· Total funds: $2,998,575,000
Mr. Armstrong reminded the committee that number changes
had been discussed the night before and that there were two
additional changes. One was an intent language change by
Mr. Carpenter on a project in Sitka, to which the other
body agreed. Another $250,000 appropriation for a Kachemak
Bay project was grouped with other university projects.
5:31:21 PM
Mr. Armstrong detailed changes to the language section in
the committee substitute:
· Page 159, lines 12-17: Lease sales in the past couple
of days generated NPR-A revenues; an amendment adds
technically correct language.
· Page 161, lines 28-31: As per the Senate and the
Department of Revenue (DOR), $4,766,400 was stripped
out of HB 424 (Education G.O. Bond Bill); funding
related to the bonds was put into the CS.
Representative Doogan verified that the item would become a
general fund appropriation. Mr. Armstrong responded that he
was correct, contingent upon passage in November.
Mr. Armstrong continued:
· Page 162, lines 2-14: Intent language related to the
Department of Transportation and Public Facilities
(DOT/PF) ferry purchase. He noted that the Senate had
worked with DOT/PF regarding the item; the language is
compromise language.
Co-Chair Stoltze elaborated that the language was intended
to increase the likelihood that the ferry would be
constructed in the state of Alaska.
5:34:31 PM
Mr. Armstrong continued:
· Section 37, lines 24-29 (Page 163): New section
dealing with in-state gasline provisions; the inserted
language was developed with the Finance Committee's
co-chairs and the Speaker's office.
Co-Chair Stoltze acknowledged Co-Chair Hawker's work on the
item.
Representative Gara asked whether the section was for $8.2
million for the in-state gasline project. He referred to
other legislation (by Representative Chenault) with a $10
million fiscal note and wondered if that was in addition to
the amount in the capital budget.
Co-Chair Hawker clarified that the two appropriations (the
entire Section 37) on page 174 were contingent on the
failure of the legislation.
Mr. Armstrong continued with language changes, noting that
the next sections were standard district re-appropriations:
· Page 173, lines 21 to page 174, through line 19: Re-
appropriation of the legislature's lapsing funds.
· Lines 21-26, Section 55(a): $2.2 million for various
renovations and repairs to legislative buildings and
facilities.
· Section 55(b): Re-appropriation to the Legislative
Council to conduct an independent, third-party,
scientific, and multi-disciplinary study of the
potential for a large line development in Bristol Bay
drainage, not to exceed $750,000.
· Section 55(c): Request from the Municipality of
Anchorage to the Legislative Budget and Audit
Committee for an electrical power procurement
practices study and design, not to exceed $800,000. He
noted the item was a late request and that the
Anchorage Metropolitan Area Transportation Study
(AMATS) increment in the numbers section of the
capital budget had been reduced by the same amount.
· Section 55(d): Puts the remaining balance of whatever
is left over in the legislative accounts into the
budget reserve fund.
· Section 55(e): $750,000 to the Department of Commerce,
Community, and Economic Development to deal with
Endangered Species Act (ESA) issues.
· Page 160, lines 18-30: A general fund appropriation to
the bond bank to issue a 1 percent, 15-year note to
the City of Galena to help cover financial needs. He
noted that Devon Mitchell (Alaska Municipal Bond Bank
Authority, DOR) had written a letter of support for
the item.
5:39:49 PM
Vice-Chair Thomas queried contingency language on line 174.
Mr. Armstrong responded that the language applied to
various bills in the event that they passed the
legislature. For example, contingency language on page 175
related to the bond bank stipulates that the appropriation
made in Section 30(a) is contingent upon an agreement being
reached between the Alaska Municipal Bond Bank Authority
and the City of Galena that the loan is secured by the city
and is subject to state aid intercept provisions (AS
44.85.170).
Co-Chair Stoltze referred to passenger vessel provisions.
Co-Chair Stoltze introduced amendments to the bill. He
informed the committee that he would not offer Amendment 1
at that time but still had it ready in the event that there
was positive progress on the Alaska Crime Lab legislation.
The amendment would provide the appropriate language in the
capital budget related to the item.
Co-Chair Stoltze noted that he would not offer Amendment 2,
but that it would also be held.
Co-Chair Stoltze MOVED to ADOPT Amendment 3 (26-
LS8005\A.69, Kane, 4/17/10):
*Sec. A. FUND TRANSFER. The proceeds from the sale
of loans by the Alaska Energy Authority to the Alaska
Industrial Development Authority under a memorandum of
understanding dated February 17, 2010, estimated to be
$20,600,000, are appropriated to the power project fund
(AS 42.45.010).
*Sec. B. CONTINGENCY. The appropriation made in
sec. A of this Act is contingent on passage by the
Twenty-Sixth Alaska State Legislature and enactment
into law of a version of SB 301.
*Sec. C. LAPSE. The appropriation made in sec. A
of this Act is for the capitalization of a fund and
does not lapse.
Co-Chair Hawker OBJECTED for discussion.
Mr. Armstrong noted that the amendment represented a late
request from the Alaska Industrial Development and Export
Authority (AIDEA). A fund transfer appropriation would be
needed for SB 301 if it passed.
5:42:59 PM
SARA FISHER-GOAD, DEPUTY DIRECTOR, OPERATIONS, ALASKA
INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY AND ALASKA
ENERGY AUTHORITY (AEA), DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT, explained that after SB 301 had
passed the House Finance Committee, Legislative Legal
Services suggested that an appropriation would be necessary
to allow proceeds to be deposited into the Power Project
Fund. She informed the committee that an amendment had been
offered in the House Rules Committee to clarify the issue.
The bill passed and was concurred in the Senate, so the
language added by Amendment 3 would be required.
Co-Chair Hawker REMOVED his OBJECTION. There being no
further objection, Amendment 3 was ADOPTED.
Co-Chair Stoltze MOVED to ADOPT Amendment 4:
On Page 131
Insert after lines 28-30:
It is the intent of the legislature that operational
information will be shared with other Railbelt
utilities in an effort to better understand the
impacts of non-firm, renewable sources of energy on
the Railbelt grid.
Co-Chair Hawker OBJECTED for discussion.
Mr. Armstrong directed attention to page 131, lines 28
through 30 in the numbers section and explained that the
amendment would insert intent language to clarify that
operational information would be shared with other Railbelt
utilities in an effort to better understand the impacts of
non-firm, renewable sources of energy on the Railbelt grid.
Representative Doogan queried the meaning of "non-firm."
Representative Kelly explained that "firm power" was the
commitment by the utility to keep the lights on 24 hours
per day, seven days per week; the specified location is
counted as part of the capacity of the utility. "Non-firm"
means the utility would give power when it was able but
would not reserve capacity specifically for the specified
location.
5:45:55 PM
Co-Chair Hawker REMOVED his OBJECTION. There being no
further objection, Amendment 4 was ADOPTED.
Representative Kelly MOVED to ADOPT Conceptual Amendment 5:
Page 166, Line 28 following "project"
Insert:
"and the Fairbanks North Star Borough Library Fiber
Optic project"
Co-Chair Stoltze OBJECTED for discussion.
Representative Kelly explained that the amendment would
allow the expansion of the use of the existing
appropriation for the Birch Hill Disaster Communications
Project (page 166, line 28) to include the Fairbanks North
Star Borough Library Fiber Optic project. He detailed that
the library is running out of bandwidth.
Co-Chair Stoltze REMOVED his OBJECTION. There being no
further objection, Conceptual Amendment 5 was ADOPTED.
Representative Kelly moved Amendment 6 (26-GS2824\T.4,
Kane, 4/17/10):
Page 158, following line 24:
Insert a new subsection to read:
"(c) The sum of $2,000,000 is appropriated from
the general fund to the Department of Commerce,
Community, and Economic Development for payment as a
grant under AS 37.05.316 to the Alaska Travel Industry
Association to finance a national television campaign
to promote Alaska and increase the number of visitors
to Alaska for the fiscal year ending June 30, 2011."
Co-Chair Stoltze OBJECTED for discussion.
Representative Kelly explained that the travel industry had
made a request to take its funding of nearly $20 million
through various mechanisms; changes made in the Senate
included about $5 million funds added. The amendment would
add another $2 million funds to help the struggling
industry. He hoped that a longer-term solution would be
found in the coming legislative session.
Co-Chair Stoltze noted that the item was a one-time
appropriation.
5:49:59 PM
Representative Doogan queried the total for appropriations
to the travel industry. Representative Kelly replied that
the total was currently $9 million through the vehicle
rental tax plus another $5 on top; the amendment would
bring the total to $16 million.
Representative Doogan stated that he did not support the
additional increment and would vote against the amendment.
He had not heard from the travel industry about the item.
He had watched the amount grow from less than $10 million
to $16 million without any information about what the money
would be used for.
Representative Gara spoke against the amendment. He pointed
out that the legislature had given the travel industry $9
million the previous year. Before the amendment, the amount
was up to $14 million, a 50 percent increase. He believed
the $9 million had been up from $5 million a few years ago.
He was concerned that state money keeps increasing while
contributions from the membership did not.
Representative Gara continued that in other states, the
industry contributed a state tax and got a tax credit
towards contributing to marketing. In Alaska, there is no
state tax on most tourism operators, except for the biggest
ones. He called the money a "state handout" and questioned
the match between industry and the state.
5:53:10 PM
Representative Fairclough noted a possible technical
problem; the amendment was made from another version of the
bill, making the numbering wrong; the amendment should say
"page 161, following line 12." Co-Chair Stoltze agreed the
technical change should be made.
Vice-Chair Thomas expressed mixed feelings about the
amendment because of the way the fishing industry had been
treated. He maintained that the fishing industry paid $9.5
million self-assessment for marketing and gets $2.5 million
from the state. He pointed out that the fishing industry
had to fight to get $1 million in additional funds into the
budget, and the amount had been cut. He expressed
disappointment. He referred to past discussions about
taxes. He stated that the fishing industry was self-
sustaining, has a fishermen's fund, and assesses 7 percent
of its gross for marketing and enhancement. He asserted
that the tourism industry should do the same.
Vice-Chair Thomas recalled that when the salmon industry
was struggling, it created the salmon task force and worked
to remedy the situation. The salmon production tax was
intended to help the industry work its way to solvency. He
commented that the Alaska tourism industry had harmed the
fishing industry with a stand on the halibut fishery the
previous year; 1,700 Southeastern fishermen went from 100
percent quota to 40 percent, a net loss of over $30 million
per year. He requested that when the tourism industry
markets itself, it should not harm another Alaskan
industry. He argued that the response would have been very
strong if they had gone after the oil industry.
Vice-Chair Thomas reported that he expected to see an
additional $3 million or $4 million contribution back to
the state.
Representative Kelly commended the Alaska Seafood Marketing
Institute (ASMI) but stressed the need for more help for
tourism. He believed the state should help.
Vice-Chair Thomas spoke further to struggles in the halibut
industry, describing his quota and income. He had gone from
$105,000 to $35,000. He stressed the enormity of the impact
on fishermen.
Representative Austerman stated that he would support the
increment, even though it went against his inclination. He
noted that he had made argument in the past regarding the
total the state put into ASMI as compared to how much it
put into the tourism industry. He wanted parity. He
acknowledged that both industries were important to
Alaska's economy. He argued that he had difficulty
increasing tourism marketing dollars without increasing
seafood marketing dollars.
Representative Austerman informed the committee that he had
spent four years working for a past governor as a fishery
policy advisor. During that time, he was handed $50 million
to bring the salmon industry out of the economic slump it
was in. As an illustration, the industry was getting $0.05
and $0.06 per pound for pink salmon, compared to $0.35 to
$0.40 per pound that it had gotten in the past. He
emphasized that the $50 million was federal dollars, and it
effectively brought the industry back, largely through
marketing. He thought spending the money could get results.
However, there would not be the same kind of money
available from the federal government to help the tourism
industry recover. He had wrestled with the issue, but
believed state dollars were necessary. He was still opposed
to moving the appropriation to the industry itself.
Representative Austerman stated that he wanted a marketing
plan for the state that promotes tourism and seafood as
well as other homegrown products and markets Alaska as a
place to come to and do business. He hoped the Finance
Committee would acknowledge the need for a marketing
program for all aspects of Alaska.
6:03:37 PM
Representative Joule told the committee that he would
support the amendment. He had grown up in Kotzebue
observing tourism. He had then resided at the University of
Alaska and worked as a tour guide to pay his way to
college. He reported that his children volunteered for
tourism work and got jobs in the industry when they could
legally work. However, there are no more tourists in the
area.
Representative Joule thought the increment would help in
places where people are struggling. He pointed out that the
industry had been asked to come up with different ways of
raising funds, and they had, but the legislature was not
ready to go the route proposed. He acknowledged the
concerns stated and believed Alaska should be a destination
market.
Representative Kelly pointed out that there was a match on
the increment of $2.7 million.
6:07:09 PM
Representative Gara asked whether the match was included in
the total.
Representative Doogan MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Joule, Kelly, Salmon, Thomas, Austerman,
Fairclough, Foster, Hawker, Stoltze
OPPOSED: Gara, Doogan
The MOTION PASSED (9-2). Amendment 6 was ADOPTED.
6:08:27 PM AT EASE
6:35:32 PM RECONVENED
Co-Chair Stoltze MOVED to ADOPT Amendment 2a (26-
LS8005\A.70, Kane, 4/17/10):
*Sec. A. DEPARTMENT OF LAW. (a) The amount
necessary for the purpose, not to exceed $12,443,959,
is appropriated from the general fund to the
Department of Law to pay the principal of the award of
damages entered against the state in Donald H.
Carlson, et al. v. State, Commercial Fisheries Entry
Commission, 3 AN-84-5790 Civil (Anchorage Superior
Court).
(b) The amount necessary for the purpose, not to
exceed $7,029, is appropriated from the general fund
to the Department of Law to pay the costs entered
against the state in Donald H. Carlson, et al. v.
State, Commercial Fisheries Entry Commission, 3 AN-84-
5790 Civil (Anchorage Superior Court).
(c) The amount necessary for the purpose, not to
exceed $7,482,569.73, is appropriated from the general
fund to the Department of Law, to pay the award of
attorney fees entered against the state in Donald H.
Carlson, et al. v. State, Commercial Fisheries Entry
Commission, 3 AN-84-5790 Civil (Anchorage Superior
Court).
(d) The amount necessary for the purpose, not to
exceed $62,356,738, is appropriated from the general
fund to the Department of Law, to pay the interest on
the principal of the award of damages entered against
the state in Donald H. Carlson, et al. v. State,
Commercial Fisheries Entry Commission, 3 AN-84-5790
Civil (Anchorage Superior Court).
(e) If the amount available for appropriation
from the general fund is insufficient to fully fund
the appropriations made in (a) - (d) of this section,
the amount necessary to fully fund any of the
appropriations made in (a) - (d) of this section is
appropriated from the budget reserve fund (AS
37.05.540) to the Department of Law for the purpose
specified.
(f) It is the intent of the legislature that the
Department of Law administer the appropriations made
in this section in a manner that minimizes their
expenditure.
*Sec. B. LAPSE. The appropriations made in sec. A
of this Act lapse June 30, 2014.
*Sec. C. Section A of this Act takes effect
immediately under AS 01.10.070(c).
Co-Chair Hawker OBJECTED for discussion.
Co-Chair Stoltze explained that the amendment was a fairly
large appropriation related to the on-going Carlson
litigation.
CRAIG TILLERY, DEPUTY ATTORNEY GENERAL, CIVIL DIVISON,
DEPARTMENT OF LAW, provided a brief overview of the Carlson
case. The lawsuit began in 1984 as a challenge to
legislation that charged commercial non-resident fisherman
three times more than residents for entry permits and crew
licenses. The case has been to the state supreme court and
is currently there for the fifth time. Four previous
decisions have found that some surcharge to non-resident
commercial fishermen is permissible, but the surcharges
have to be justified by calculating the resident's per-
capita contribution to the budget. It was also found that
the differential calculation does not have to be exact; a
50 percent margin above the actual differential is
allowable on non-resident fees. Class members are entitled
to refunds for payments in excess of the allowable
differential. Most important for the current discussion,
the interest provided under the state revenue code statutes
was applied so that on the claims arising from 1984 through
2004, interest accrues at an average of just over 11
percent compounded quarterly.
Mr. Tillery informed the committee that on March 22, 2010,
Judge Michalski entered a final judgment on the Carlson
case in the amount of $82,290,295. The amount is broken
down as follows:
Principle: $12.44 million
Prejudgment interest: $62.35 million
Attorney's fees: $7.48 million
Costs: $7,000
Mr. Tillery continued that under an administration plan
that had been adopted, when the money was appropriated it
was to be paid into a refund trust account administered by
a private company. The trust account is owned by the class
but subject to the continuing jurisdiction of the court.
Money under the original plan could not be distributed from
the trust account until there was a final judgment and the
money had been deposited in the account. The plan
originally provided that if the judgment was paid in full
in the account by May 14 [2010], interest would be staid as
of January 31, 2010. Because interest accrues at a little
over $20,000 a day, the incentive was significant.
(6:39:35)
Mr. Tillery continued that the state had recently appealed
the final judgment on two grounds. First, the notion that
the interest was correctly calculated at 11 percent
compounded quarterly was directly challenged; the state has
argued that there should be no interest and that if there
is interest it should be at the normal prejudgment rate.
Second, the state has challenged the very large attorney's
fees award primarily because the award was based on a
percentage under Rule 82; the state believes the
substantial increase in the fees is not justified.
Mr. Tillery stated that as required by AS 09.52.70, the
state has submitted an appropriation to the legislature for
the full amount of the judgment broken into the individual
components. He added that the state had requested that the
appeal be expedited. There was some objection; mediation
resulted in agreement that the refund administration plan
would be modified to provide that the interest would not
accrue on the award from January 31, 2010, if the state
paid the full amount of the amended final judgment into the
trust account by June 30, 2010. Further, the agreement
provides that the trust fund will not be distributed until
further order of the court, after all appeals have been
ended, including those to the U.S. Supreme Court. In
addition, the agreement provides that the amount of money
no longer required to be paid will be refunded to the state
together with interest earned if the judgment is modified
in any way as a result of the appeals.
Mr. Tillery concluded that an expedited briefing schedule
has been established as ordered by the state supreme court.
The agreement stops the running of interest at $20,000 per
day as of January 31, 2010, eliminates the primary downside
appealed (the continual accrual of interest), and provides
that if the state wins the appeal, the money plus interest
will be returned.
Co-Chair Stoltze clarified that the amount was not being
given away, but being put into escrow.
6:43:15 PM
Vice-Chair Thomas queried the interest rate the state would
get. Mr. Tillery responded that the state would get
whatever is earned while the money is in the trust account.
Co-Chair Hawker WITHDREW his OBJECTION. There being no
further objection, Amendment 2a was ADOPTED.
Representative Austerman MOVED to ADOPT Conceptual
Amendment 7:
Page 173, line 31
Delete:
"for a"
Co-Chair Hawker OBJECTED for discussion.
Representative Austerman explained that the amendment would
remove two words that had inadvertently been put into the
legislation on line 31, 4(a).
Representative Doogan clarified that the language would be
"the potential large mine developed."
Co-Chair Hawker REMOVED his OBJECTION. There being no other
objection, Conceptual Amendment 7 was ADOPTED.
Vice-Chair Thomas MOVED to report HCS CSSB 230(FIN) out of
Committee with individual recommendations.
HCS CSSB 230(FIN) was REPORTED out of Committee with a "do
pass" recommendation.
Co-Chair Hawker MOVED that Legislative Finance Division and
Legislative Legal Services be authorized to make any
necessary technical and conforming changes to the bill.
There being no objection, it was so ordered.
Mr. Armstrong acknowledged the work that was done on the
legislation.
Co-Chair Hawker stated that he was going to recommend "do
pass" for the bill but that he had many reservations.
6:47:51 PM AT EASE
6:54:41 PM RECONVENED
SENATE BILL NO. 238
"An Act amending the eligibility threshold for medical
assistance for persons in a medical or intermediate
care facility."
6:54:58 PM
THOMAS OBERMEYER, STAFF, SENATOR BETTYE DAVIS, explained
that the legislation would amend and restore the Medicaid
eligibility threshold for medical assistance for
individuals in a medical or intermediate care facility from
a specified monthly income limit to 300 percent of the
social security income benefit rate. The threshold is also
used for people who receive home and community-based waiver
services. In 2003, the legislature froze the Medicaid long-
term services income eligibility limit at $1,656 per month;
at that time the amount was 300 percent of the supplemental
security income (SSI). The change created an income ceiling
for waiver eligibility, effectively freezing the
eligibility limit for the past seven years rather than
allowing the limit to adjust annually in tandem with the
SSI. In 2009, the income equivalent was $2,022. The result
was that small social security cost-of-living adjustments
have disqualified many needy, disabled people from the
program. Alternatives for preserving eligibility,
particularly for those requiring lifetime or long-term care
include the creation of a Medicaid qualifying income trust
known as the Miller Trust. Trusts have procedural
drawbacks, including numerous responsibilities and
restrictions, limited access to income, assistance of an
attorney, and a trustee to manage trust assets.
Mr. Obermeyer asserted that Medicaid services are critical
to the well-being of Alaska's most vulnerable citizens. He
believed that supporting SB 238 would ensure that eligible
Alaskans would continue to receive nursing-home care and
in-home services. In addition, the legislature would not
have to amend statutes every year or two as the federal
poverty level guidelines and supplemental security income
levels increase with the cost of living.
Mr. Obermeyer pointed out that the bill had a zero fiscal
note; making the adjustment would not increase costs to the
state.
Representative Gara commented that when the legislation was
presented by the Commission on Aging as a priority, they
were not sure if the fiscal note would be zero. The same
number of people would qualify but they need to hire an
attorney and create a Miller Trust to move their assets in
order to qualify. People would not have to create a Miller
Trust if the threshold is changed.
Co-Chair Stoltze opened and closed public testimony.
Vice-Chair Thomas MOVED to report SB 238 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
SB 238 was REPORTED out of Committee with a "do pass"
recommendation and with attached previously published
fiscal note: FN1 (DHS).
CS FOR SENATE BILL NO. 236(EDC)
"An Act relating to tax credits for cash contributions
by taxpayers that are accepted for certain educational
purposes and facilities; and providing for an
effective date."
6:59:39 PM
Vice-Chair Thomas MOVED to ADOPT HCS CSSB 236(FIN) (Version
26-LS1191\N, Chenoweth/Bullock, 4/17/10) as a working
document before the committee.
Co-Chair Stoltze OBJECTED for discussion.
JOMO STEWART, STAFF, SENATOR KEVIN MEYER and CO-COMMITTEE
AIDE, SENATE EDUCATION COMMITTEE, gave an overview of
differences between the Senate version of the bill and the
CS. First, under the original Senate bill, the cap had been
raised on the tax credits from the $150,000 currently in
statute to $25 million; the CS would lower the cap to $5
million (which mirrors the House version). Second, the CS
includes language provided in the House regarding
affiliated groups. The affiliated groups language clarifies
that each donating corporation would not be able to claim a
$1 million tax credit, but would have to divide the credit.
Co-Chair Stoltze noted concerns about tax credits but
thought the bill had been trimmed back.
Co-Chair Stoltze opened and closed public testimony.
Co-Chair Hawker described the fiscal note as an
indeterminate revenue note without other direct costs or
consequences.
Co-Chair Stoltze REMOVED his OBJECTION to adopting the CS.
There being no further objection, it was so ordered.
Vice-Chair Thomas MOVED to report HCS CSSB 236(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
Co-Chair Stoltze OBJECTED for discussion.
Representative Doogan commented that the legislation would
expand tax credits as opposed to coming to the legislature
to get money for educational projects. He thought it would
short-circuit the process by directly funding institutions;
he felt that the legislature should be involved in the
educational funding business.
Co-Chair Stoltze shared concerns about tax credits. He
noted that the bill had been reduced. Representative Doogan
was glad for the reduction.
There being NO further OBJECTION, the bill was ordered out
of committee.
HCS CSSB 236(FIN) was REPORTED out of Committee with "no
recommendation" and attached previously published fiscal
note: FN1 (REV).
SENATE BILL NO. 24
"An Act naming the bridge over Hammer Slough on Nordic
Drive in Petersburg the Louis Miller Bridge."
7:07:22 PM
WESTON EILER, STAFF, SENATOR BERT STEDMAN, explained that
the bill would honor Mr. Louis Miller, an Alaskan pioneer
who contributed a great deal to the community of
Petersburg. He noted that under AS 35.40.015, the state may
name public works through an act of the legislature. The
authority has been exercised over 40 times in state law.
The bill would name the bridge over Hammer Slough after Mr.
Miller, who came to Alaska during the Klondike gold rush
and arrived in Petersburg in 1901. As a carpenter he
constructed some of the first homes along Hammer Slough and
oversaw construction of the Sons of Norway Hall. Mr. Miller
operated a moorage and warehouse on the site of the
present-day bridge. The bill would recognize his
contribution to the community.
Co-Chair Hawker noted that the $4,000 fiscal note was for
new signs.
Vice-Chair Thomas MOVED to report SB 24 out of Committee
with individual recommendations and the accompanying fiscal
note.
SB 24 was REPORTED out of Committee with a "do pass"
recommendation and with attached new fiscal impact note by
the Department of Transportation and Public Facilities.
SENATE BILL NO. 25
"An Act naming the South Mitkof Island ferry terminal
the Richard 'Dewey' Duvall Ferry Terminal."
7:10:15 PM
WESTON EILER, STAFF, SENATOR BERT STEDMAN, explained that
the bill would name the South Mitkof Island ferry terminal
after Richard "Dewey" Duval, a long-time proponent of
marine transportation in Petersburg. Mr. Duval was an
engineer who promoted improving transportation in Southeast
Alaska through his involvement with Alaska's Inter-Island
Ferry Authority (IFA). He served on Petersburg's city
council and was a founding board member of IFA. During his
ten years of service on the board, he helped the authority
organize and was instrumental in the construction of the
ferry terminal, where he worked as agent. The bill would
recognize his contribution by naming the terminal in his
honor.
Co-Chair Stoltze noted that the city council of Petersburg
had endorsed the measure.
Co-Chair Hawker added that the $1,000 fiscal note was for a
new sign.
Vice-Chair Thomas MOVED to report SB 25 out of Committee
with individual recommendations and the accompanying fiscal
note.
SB 25 was REPORTED out of Committee with a "do pass"
recommendation and with attached new fiscal impact note by
the Department of Transportation and Public Facilities.
7:12:27 PM RECESSED
8:00:45 PM RECONVENED
CS FOR SENATE BILL NO. 32(FIN)
"An Act relating to medical assistance payments for
home and community-based services and provision of
personal care services in a recipient's home; and
providing for an effective date."
CSSB 32(FIN) was SCHEDULED but not HEARD.
SENATE BILL NO. 246
"An Act increasing the number of superior court judges
designated for the third judicial district; and
providing for an effective date."
SB 246 was SCHEDULED but not HEARD.
CS FOR SENATE BILL NO. 284(FIN)
"An Act relating to state election campaigns, the
duties of the Alaska Public Offices Commission, the
reporting and disclosure of expenditures and
independent expenditures, the filing of reports, and
the identification of certain communications in state
election campaigns; prohibiting expenditures and
contributions by foreign nationals in state elections;
and providing for an effective date."
8:00:56 PM
Co-Chair Hawker MOVED to ADOPT HCS CSSB 284(FIN) (26-
LS1448\W, Kurtz/Bullard, 4/17/10) as a working document
before the committee.
Co-Chair Stoltze OBJECTED for discussion.
BEN MULLIGAN, STAFF, CO-CHAIR BILL STOLTZE, explained the
difference between the previous version (Judiciary
Committee, Version T) and the proposed CS. On page 8, lines
5 and 6, "and in a communication that includes an audio
component" is eliminated in the proposed CS. In addition,
the word "solely" is inserted after the words
"communication transmitted."
Mr. Mulligan detailed that the intention of the change is
to make sure that only the visual report is required for
television advertisements, not the audio.
Representative Gara clarified that the intention of the CS
is that the viewer would not hear the names of the top
contributors in a television ad. Mr. Mulligan replied that
the names would just be on the screen visually.
Representative Gara queried the word "solely." Mr. Mulligan
replied that the language was suggested by the bill's
drafter and would clarify that it applied to just radio or
other audio media.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, the work draft was ADOPTED.
8:04:12 PM
SENATOR HOLLIS FRENCH, SPONSOR, discussed a U.S. Supreme
Court decision earlier in the year that for the first time
in Alaskan history allows unlimited corporate and union
expenditures to be made for or against candidates or ballot
propositions. He emphasized that Alaska has never had such
a law and both Legislative Legal Services and the state
attorney general believed state statutes needed to be
updated because of the decision.
Senator French continued that the bill is broken down into
two major sections: disclosure and disclaimer. He detailed
that by "disclosure" he meant reporting to the Alaska
Public Offices Commission (APOC) the money raised from
contributors in order to make independent expenditures for
and against candidates and ballot initiatives. The
disclaimer provisions are intended to tell Alaskan voters
who is speaking to them in advertising. The sponsors wanted
to have as protective and firm a measure as possible to
protect Alaskan voters from new entities such as unions,
corporations, and other groups.
Senator French directed attention to Section 1 and
deletions that collapse lengthy definitions, such as for
"persons" (which in Alaskan statutes means everyone).
Senator French noted that the first significant section is
Section 4, which relates to disclosure requirements for the
reports that entities make to APOC. He emphasized that the
section referred to independent expenditures by advocacy
groups, not candidates, as clarified on page 3, line 10.
Every expenditure would have to be recorded so that voters
would know who was spending money either supporting or
opposing an issue. The measure sets a limit at $50 for
reporting the address, principal occupation, and employer
of the contributor, the same limit set for candidates.
Senator French relayed that the next significant provision
was in Section 8 on page 4, which would set up a separate
"political activities" account so that APOC can better
monitor the funds spent. Section 10 directs who can speak
to voters; the bill says the state would adopt the same
ideas as in federal law. For example, a foreign corporation
or individual cannot speak to Alaskan voters without a
local subsidiary. He noted the section was debated
extensively in the House Judiciary Committee.
8:09:43 PM
Senator French anticipated that the disclaimer provisions
in Sections 13 and 14 would cause debate. The disclaimer
provisions would let Alaskans know who funds communications
about issues. Section 13 says that the three largest
contributors have to be identified. Section 14 lays out the
mechanics of each medium, whether print, radio, or
television. He noted that there had been questions about
what to do when there are ten contributors who have given
the same amount (page 8, lines 11 through 16); the section
leaves it up to the entity making the ad.
Senator French turned to Section 18, which would keep
current law in place related to campaign misconduct.
Representative Gara queried independent expenditures.
Senator French responded that when candidates run
campaigns, they collect contributions from individuals or
political action committees (PACs) at a maximum of $500 per
calendar year. The money is collected into a campaign
account out of which expenditures are paid. The
contributions in the bill are separate, independent
contributions. Because they are independent of a candidate,
there is no limit on the amount of money that can be
contributed.
Senator French underlined the lack of a limit; an entity or
person could contribute $1 million or $10 million, whereas
the average House race might cost a candidate $100,000 and
the average Senate race might cost $200,000. With the new
legislation, much more money could be spent on candidates.
8:14:14 PM
Representative Gara emphasized that the U.S. Supreme Court
has determined that there is no longer a cap on independent
expenditures. He asked whether the legislation was intended
to regulate outside corporations and environmental groups.
Senator French responded in the affirmative. Because of the
newness of the landscape, no one knew who would contribute;
it could be ExxonMobile, Greenpeace, or Bill Gates, for
example.
Representative Gara questioned what the legislation would
do in a case such as an initiative related to aerial wolf
hunting. Senator French replied that due to the disclaimer
provisions, a television ad against aerial wolf hunting
would list the top three contributors to the organization
running the campaign.
Representative Gara queried the difference the CS would
make in the example. Senator French replied that in a
television advertisement, under the CS there would be no
spoken disclaimer whatsoever; it would be written only.
Vice-Chair Thomas asked whether the legislation addressed
"truth in advertising." Senator French indicated that
language had been put in mirroring current law on page 8,
lines 17 through 26. He noted that the difficulty is that
in elections, the U.S. Supreme Court long ago ruled that a
person can say and do almost anything. He pointed to line
23, "A person who makes a communication under the
subsection may not with actual malice include…a false
statement of material fact." Someone would have to be
extreme to break the rule.
8:17:34 PM
Vice-Chair Thomas asked whether, related to the wolf-
hunting example, an entity could buy an image of a hunter
skinning a wolf that they did not film. Senator Hollis
believed that could be allowed.
Representative Fairclough referred to page 7, line 19 and
20, disclosure related to influencing the outcome of a
ballot. She wondered whether the legislation spoke to
ballot measures. Senator French explained that the section
was a remnant of an old provision allowing small
expenditures (less than $500) made independent of any other
person and made only to influence the outcome of a ballot
proposition (page 3, lines 7) and is made for a billboard,
sign, or printed material only. He directed attention to
page 3, lines 10 through 13; every report must contain the
name of the candidate, the title of the ballot proposition,
or requests in support or opposition, all of which had to
be reported to APOC (if over the limit of $250 or $500
total expenditures).
8:19:32 PM
Representative Foster asked whether the top three
contributors had to be listed on a television ad. Senator
French replied that both the CS and the version of the bill
that had entered the committee stipulate that the
information must be listed in print at the bottom of the
ad. The CS further stipulates that the information does not
have to be audibly read out.
Representative Foster stated concerns about the ability of
elders to read the information because it was too small.
Senator French referred to page 7, lines 28 and 29,
stipulating that the information has to be "easily
discernable." He spoke to the issue of elders, or people
who might listen to the television rather than watch it, or
people who cannot see or read English well.
Representative Gara noted a previous concern about printing
zip codes and area codes. Senator French explained the
compromise found on the top of page 8: A print ad must
include the name as well as city and state of residence or
principal place of business of the top three contributors;
an audio disclaimer only needs the names.
8:22:28 PM
Co-Chair Hawker opened and closed public testimony.
Representative Doogan MOVED to ADOPT Conceptual Amendment
1:
DELETE: at page 8, line 5: after "communication
transmitted" delete "solely"
INSERT: at page 8 line 5, after "or other audio
media," insert: "and in a communication that includes
an audio component,"
Co-Chair Stoltze OBJECTED.
Representative Doogan explained that the amendment would
reinstate language requiring audio as well as visual
disclaimer information on television ads. He used himself
as an example of someone who does not see small print on
television well. He believed that information about who is
trying to influence his vote was important. The amendment
would address people who do not read words on the screen
because they are distracted by other activities. He
stressed that viewers depend on audio as well as visual
cues. He believed the intent of the legislation was full
disclosure that included both.
Co-Chair Stoltze queried the sponsor's opinion of the
amendment.
8:27:30 PM
Representative Fairclough discussed vocalization in
television campaigns. Senator French acknowledged
discussion about the issue.
Representative Fairclough asked Representative Doogan for
more clarification about the amendment related to
disclosure. Representative Doogan believed that the
advertiser would lose the piece of time used to state who
paid for the ad. The point was letting people know who was
trying to influence them.
Representative Fairclough spoke in favor of the
vocalization but wanted to discern the advantages and
disadvantages to both the persons making the ads and those
hearing them. She asked whether addresses would be required
as well as the names. Senator French replied that only the
names would be required. She thought 15 seconds was a long
time for audio.
8:31:13 PM
Representative Gara directed attention to page 8. He read
examples of disclosures to demonstrate that the time needed
was short. He stressed the importance of disclosing the top
three contributors especially in ads that attack a
candidate or an issue. He argued that the core issue was
truth in disclosure and that the public has the right to
know exactly who is paying for the ad, not a "fake" name
such as "People for Jobs." He spoke in support of the
compromise version of the bill.
Co-Chair Stoltze acknowledged his lack of experience using
ads, particularly for television. He maintained that he was
in favor of full disclosure. He was opposed to an aspect of
the bill that he feared would make it too expensive for
some individuals or entities to buy ads.
8:37:48 PM
Representative Doogan thought the issue was a judgment
call. He stated his intent to get the information to
citizens about who is trying to influence them.
Representative Gara pointed out that no one could determine
how much money went into campaigns and issues because of
the U.S. Supreme Court ruling; however, hidden advertisers
could be prevented from hiding. He argued that without the
amendment, the information would only flash on the
television screen, which would aid those who were hiding.
He listed the people who would not catch the disclaimer. He
stressed the importance of full disclosure.
Representative Gara reviewed that adopting the CS would
result in the names being printed on the screen; adopting
the amendment would result in hearing who paid for the ads.
Co-Chair Stoltze asked how the disclaimer would be
displayed. Representative Gara answered that the disclaimer
would include the group's name and the names of the
contributors.
Co-Chair Stoltze asked whether the names would appear
without the amendment. Representative Gara answered that
the names would appear.
8:42:05 PM
Co-Chair Stoltze MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Salmon, Doogan, Foster, Gara, Joule
OPPOSED: Thomas, Austerman, Fairclough, Stoltze, Hawker,
Kelly
The MOTION to adopt Conceptual Amendment 1 FAILED (6/5).
Representative Gara MOVED to ADOPT Conceptual Amendment 2:
DELETE: at page 8, line 5: after "communication
transmitted" delete "solely"
INSERT: at page 8, line 5: after "or other audio
media," insert: "and in a communication that includes
an audio component,"
INSERT: at page 8, line 7: after "no contributors"
insert "or, for any of the three largest contributors
who have contributed less than $2,000:"
Co-Chair Stoltze OBJECTED.
Representative Gara explained that the amendment was a
compromise; it was the same as Amendment 1 except that it
would only apply when there are very big contributors. The
amendment would require audible reading of the names of the
three biggest contributors to the extent that any of them
donated more than $2,000.
8:44:49 PM
Vice-Chair Thomas queried the amount. Senator French
responded that the contributions are not candidate
contributions but independent expenditures, for which there
is no limit.
Vice-Chair Thomas assumed only corporations would be listed
and not individuals. Senator French responded in the
affirmative.
Representative Gara clarified that the corporation's name
would be read if the donor is a corporation, person, or
group; the amendment would apply to any entity that donated
more than $2,000.
Co-Chair Stoltze requested further information.
Representative Gara directed attention to page 8, line 6 of
the bill, which says that the second statement is not
required if the person paying for the communications has no
contributors, or for any of the three largest contributors
who have contributed less than $2,000. The audio would have
to be included if any of the three largest contributors
contributed more than $2,000.
Co-Chair Stoltze reiterated earlier concerns regarding the
message. There was a discussion about an example.
Co-Chair Stoltze MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Salmon, Doogan, Foster, Gara, Joule
OPPOSED: Thomas, Austerman, Fairclough, Kelly, Hawker,
Stoltze
The MOTION to adopt Conceptual Amendment 2 FAILED (6/5).
8:50:33 PM AT EASE
8:51:15 PM RECONVENED
Co-Chair Hawker referred to two fiscal notes. The Division
of Elections anticipated no fiscal consequences and the
Offices Commission expected an additional position to
administrate the requirements of the statute and
contractual services costing $131,000 the first year and
$79,000 per year after that.
Representative Gara maintained that the provision not
adopted by the committee was the most important part of the
bill. He believed the rejected provision was about truth in
advertising and that the public deserves to know who is
trying to buy an election. He asserted that the public is
not going to know who contributed the money for the most
effective and negative ads and would be misled by group
names designed to change voting behavior.
Co-Chair Stoltze thought there were important provisions in
the bill.
Vice-Chair Thomas MOVED to report SB 284 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HCS CSSB 284(FIN) was REPORTED out of Committee with "no
recommendation" and attached previously published fiscal
notes: FN1 (GOV), FN2 (ADM).
8:55:27 PM AT EASE
9:16:28 PM RECONVENED
CS FOR SENATE BILL NO. 237(FIN)
"An Act establishing a formula and a fund for school
construction grant funding for regional educational
attendance areas; extending the deadline for
authorizing school construction debt reimbursed by the
state; and requiring a report from the commissioner of
revenue."
9:17:52 PM
JOHN BITNEY, STAFF, REPRESENTATIVE JOHN HARRIS, SPONSOR,
described the bill as an attempt to provide a funding
mechanism for school construction and maintenance across
the state. He reported that provisions in the legislation
referenced litigation the state has faced since 1999.
Mr. Bitney provided an overview of the sections of the Q
version of the bill. Section 1 consists of the findings; no
changes have been made in the CS. Section 2 contains
provisions of HB 180 sponsored by Representative Joule that
attempts to deal with contribution rates required by local
communities to match school projects; some communities were
having difficulty meeting the 30 percent matching rates, so
the formula in the CS would bring the match rate down to 20
percent.
Co-Chair Hawker added that the committee had heard the bill
before.
Mr. Bitney characterized Section 3 as the main provision of
the bill. The section establishes a funding mechanism for
schools in Regional Education Attendance Areas (REAAs). The
litigation addressed the fact that there is no statute
mechanism other than annual legislative appropriation
decisions to provide funding for the REAA schools; the bill
would provide that mechanism.
Mr. Bitney explained that the formula (subsection (b), page
2) would help identify basic need related to the cost of
building new schools. The formula is derived by taking the
annual legislative payments to municipalities for debt
service (not the total amount of indebtedness). The number
(which is just over $100 million in the current budget) is
divided by the percentage of REAA schools. The intent is to
arrive at a number representing the total cost of schools
statewide.
9:22:27 PM
Mr. Bitney identified the percent calculated by the
department as 0.683, which is further multiplied by a
number on top of page 3, or 0.244; the total would be
approximately $38 million.
Mr. Bitney referred to two Department of Education and
Early Development (DEED) fiscal notes. Co-Chair Hawker
pointed out that the fiscal note represented about $38
million per year coming into the program. He had concerns
about language missing from the fiscal note. He explained
that the formula was contrived to result in enough money
going into the fund to pay for one school on the school
construction list [per year] for the foreseeable future. He
noted that the debt service referred to was the annual debt
service on the DEED bond debt reimbursement program;
language in the CS made that clear and he wanted it in the
fiscal note. The bond debt was approximately $106 million
per year currently; he believed that dividing it by the
percentage of all schools would impute the number up. He
claimed that the 0.244 percent figure was a reverse
calculation number to make a permanent source for the REAAs
based on urban school funding. The formula dealt with the
inequity.
9:26:26 PM
Representative Austerman asked whether the section was new.
Co-Chair Hawker responded that the calculations in the
previous version of the bill were not clear.
Representative Doogan inquired whether all schools in rural
school districts would qualify whether or not they have
debt. Co-Chair Hawker responded in the affirmative.
Representative Doogan asked whether the numbers would still
work out if five hypothetical schools were built. Co-Chair
Hawker responded that the numbers would be the same because
they are not based on the number of schools built but the
relative number of urban and rural schools. Representative
Doogan restated the question. Co-Chair Hawker responded
that the variable would move slightly with more schools;
the calculation would also respond to debt service moving
up or down; if the amount of annual funding for debt
service under the debt reimbursement program goes down (or
up), the amount of money going to the rural schools would
go down (or up).
Representative Doogan asked how robust the legislation was.
He wondered how flexible the number would be if school
districts stopped bonding or if more districts built
schools. Co-Chair Hawker responded that the number was
infinitely flexible.
Representative Doogan wondered whether the program would be
at risk because of other changing variables. Mr. Bitney
offered that the variable would increase if a municipal
school district used local bonds to build a new school. He
noted that the sunset date had been removed so that the
program would continue and become a matter of annual
approval by DEED and subject to approval by local voters.
Co-Chair Hawker added that he thought Representative Doogan
was looking for information about volatility. He emphasized
that the formula was designed to make sure that rural
schools receive a fair and just portion of state money for
school debt construction. He added that the formula would
not be volatile as the variables evolve with added
districts or changed debt.
9:31:26 PM
Representative Gara thought the bill was a balanced and
reasonable approach and stated that he supported it. He
believed the intent was to do more in years when the state
had more money.
Co-Chair Hawker stressed that the formula was intended to
be reasonable and understandable and to result in
predicable funding for rural schools.
Mr. Bitney turned to Section 3; the last part asks DEED to
provide an annual report beginning in February 2012 (tied
to the July 1, 2012 effective date).
Representative Joule queried the purpose of the effective
date. Co-Chair Hawker responded that the sponsor felt the
two-year-out date was appropriate as there are currently
other schools in the bond debt package; he did not want to
overheat the construction process in rural areas.
Representative Joule pointed out that the date would also
give the administration time to settle the Kasayulie v.
State of Alaska case.
Mr. Bitney continued with Section 4, the school debt
reimbursement program statutes, which are lengthy because
various authorizations done over the years have never been
repealed as the bonds go on until they are paid off. The
changes begin on page 8. The amendment on page 8, lines 6
to 7 is a technical change to a previous authorization. The
heart of the section is the removal of the limitations on
line 14 and line 22; there would be no ending date for the
authorizations for the municipal debt reimbursement
program.
Co-Chair Hawker detailed that the sunset on the urban bond
debt reimbursement program would be eliminated.
Mr. Bitney turned to Section 5, a retroactive provision
applying to Section 2 and going back to when the local
contribution rates were enacted.
9:36:09 PM
Mr. Bitney explained that the department had modified the
two projects in the current capital budget up to a total of
$32,000 to reflect the change in the contribution rates in
Nome. He noted that in the fiscal notes, the committee
would need to address rates for projects funded over the
last two fiscal years.
Mr. Bitney concluded that Section 6 addresses the effective
date of July 1, 2012; the rest of the bill would take
effect immediately.
Representative Kelly queried the drop of the sunset date.
Co-Chair Hawker recalled that the sponsor wished to end the
Kasayulie Case. The original version proposed setting up a
$100 million fund; the amount has been dropped to $70
million to allow for latitude after the $38 million
projected for one school was spent. He viewed the fund as a
"mini capital budget" to meet the commitment to construct
one school each year. He had not been comfortable with
letting the fund build to $100 million. In addition, the
annual numbers were brought down, in exchange for letting
go of the sunset date.
9:40:10 PM
Vice-Chair Thomas MOVED to ADOPT HCS CSSB 237(FIN), (26-
LS1342\Q, Mischel, 4/17/10) as a working document before
the committee. There being NO OBJECTION, it was so ordered.
EDDY JEANS, DIRECTOR, SCHOOL FINANCES AND FACILITIES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, stated that
the department was neutral regarding the legislation. He
stated that remarks that had been made in committee about
the bill were accurate.
Co-Chair Hawker MOVED to ADOPT Conceptual Amendment 1:
Purpose: to clarify that "annual debt service" on page
2, line 30 means the annual debt service of the school
construction debt reimbursement program.
Page 2, line 30, following "be the"
Delete "annual debt service amount"
Insert "annual debt service on debt incurred under AS
14.11.100(a)"
Vice-Chair Thomas OBJECTED for discussion.
Co-Chair Hawker explained that the amendment would affect
page 2, line 30. He had been troubled with the definition
of "annual debt service amount". Since the state has $375
million each year of annual debt service, he thought the
definition should be more specific. He pointed out that the
bond debt reimbursement program statutes (AS 14.11.100(a))
are located in Section 4 of the bill. The amendment
clarifies by changing "annual debt service amount" to
"annual debt service on debt incurred under" the bond debt
reimbursement program statutes.
9:44:32 PM
Representative Gara thought the amendment made sense. He
asked the opinion of the sponsor.
JAY LIVEY, STAFF, SENATOR LYMAN HOFFMAN, SPONSOR, spoke in
support of the amendment.
Vice-Chair Thomas WITHDREW his OBJECTION. There being NO
further OBJECTION, Conceptual Amendment 1 was ADOPTED.
Representative Salmon referred to page 3 and queried the
number (0.244). Mr. Livey explained that the number used in
the past was 0.27, but the entire basis of the formula had
been changed based on Co-Chair Hawker's analysis; the
number had to change to accommodate the new formula. He
stated that the sponsor agreed with the change.
Representative Salmon asked how the number impacts the
amount. Mr. Livey replied that the difference would be
about $2 million less than the previous formula in the
original bill. Co-Chair Hawker thought the number was
higher.
9:48:01 PM
Vice-Chair Thomas MOVED to ADOPT Amendment 2 (26-
LS1342\C.6, Mischel, 4/17/10):
Page 1, line 1, following "Act":
Insert "relating to energy consumption and costs,
operating costs, and energy efficiency standards for
school construction and major maintenance by the
Department of Education and Early Development;"
Page 2, following line 5:
Insert new bill sections to read:
"*Sec. 2. AS 14.07.020(a) is amended to read:
(a) The department shall
(1) exercise general supervision over the
public schools of the state except the University
of Alaska;
(2) study the conditions and needs of the
public schools of the state, adopt or recommend
plans, administer and evaluate grants to improve
school performance awarded under AS 14.03.125,
and adopt regulations for the improvement of the
public schools;
(3) provide advisory and consultative
services to all public school governing bodies
and personnel;
(4) prescribe by regulation a minimum course
of study for the public schools; the regulations
must provide that, if a course in American Sign
Language is given, the course shall be given
credit as a course in a foreign language;
(5) establish, in coordination with the
Department of Health and Social Services, a
program for the continuing education of children
who are held in detention facilities in the state
during the period of detention;
(6) accredit those public schools that meet
accreditation standards prescribed by regulation
by the department; these regulations shall be
adopted by the department and presented to the
legislature during the first 10 days of any
regular session, and become effective 45 days
after presentation or at the end of the session,
whichever is earlier, unless disapproved by a
resolution concurred in by a majority of the
members of each house;
(7) prescribe by regulation, after
consultation with the state fire marshal and the
state sanitarian, standards that will assure
healthful and safe conditions in the public and
private schools of the state, including a
requirement of physical examinations and
immunizations in pre-elementary schools; the
standards for private schools may not be more
stringent than those for public schools;
(8) exercise general supervision over pre-
elementary schools that receive direct state or
federal funding;
(9) exercise general supervision over
elementary and secondary correspondence study
programs offered by municipal school districts or
regional educational attendance areas; the
department may also offer and make available to
any Alaskan through a centralized office a
correspondence study program;
(10) accredit private schools that request
accreditation and that meet accreditation
standards prescribed by regulation by the
department; nothing in this paragraph authorizes
the department to require religious or other
private schools to be licensed;
(11) review plans for construction of new
public elementary and secondary schools and for
additions to and major rehabilitation of existing
public elementary and secondary schools and, in
accordance with regulations adopted by the
department, determine and approve the extent of
eligibility for state aid of a school
construction or major maintenance project; for
the purposes of this paragraph, "plans" include
educational specifications, schematic designs,
projected energy consumption and costs, and final
contract documents;
(12) provide educational opportunities in
the areas of vocational education and training,
and basic education to individuals over 16 years
of age who are no longer attending school;
(13) administer the grants awarded under AS
14.11;
(14) establish, in coordination with the
Department of Public Safety, a school bus driver
training course;
(15) require the reporting of information
relating to school disciplinary and safety
programs under AS 14.33.120 and of incidents of
disruptive or violent behavior;
(16) establish by regulation criteria, based
on low student performance, under which the
department may intervene in a school district to
improve instructional practices, as described in
AS 14.07.030(14) or (15); the regulations must
include
(A) a notice provision that alerts the
district to the deficiencies and the
instructional practice changes proposed by
the department;
(B) an end date for departmental
intervention, as described in AS
14.07.030(14)(A) and (B) and (15), after the
district demonstrates three consecutive
years of improvement consisting of not less
than two percent increases in student
proficiency on standards-based assessments
in math, reading, and writing as provided in
AS 14.03.123 (f)(2)(A); and.
(C) a process for districts to petition
the department for continuing or
discontinuing the department's intervention;
(17) notify the legislative committees
having jurisdiction over education before
intervening in a school district under AS
14.07.030(14) or redirecting public school
funding under AS 14.07.030(15).
*Sec. 3. AS 14.11.014(b) is amended to read:
(b) The committee shall
(1) review the department's priorities among
projects for which school construction grants are
requested;
(2) make recommendations to the board
concerning school construction grants and make
recommendations to the commissioner concerning
projects for which bond reimbursement is
requested;
(3) develop criteria for construction of
schools in the state; criteria developed under
this paragraph must include requirements intended
to achieve cost effective school construction;
(4) analyze existing prototypical designs
for school construction projects;
(5) establish a form for grant applications;
(6) establish a method of ranking grant
projects;
(7) recommend to the board necessary changes
to the approval process for school construction
grants and for projects for which bond
reimbursement is requested;
(8) set standards for energy efficiency for
school construction and major maintenance to
provide energy efficiency benefits for all school
locations in the state and that address energy
efficiency in design and energy systems that
minimize long-term and operating costs.
*Sec. 4. AS 14.11.135(6) is amended to read:
(6) "major maintenance" means a project
described in AS 14.11.013(a)(1)(C), [OR] (D), or
(E);
*Sec. 4. AS 14.11.135(7) is amended to read:
(7) "school construction" means a project
described in AS 14.11.013(a)(1)(A), (B), [(E),]
(F), or (G)."
Renumber the following bill sections accordingly.
Page 8, line 5:
Delete "sec. 3"
Insert "sec. 7"
Co-Chair Hawker OBJECTED for discussion.
Vice-Chair Thomas explained that energy consumption costs
are projected when a school is designed and energy
efficiency standards are set. The amendment would address
the actual cost of designing a school.
Representative Austerman asked whether Amendment 2
corresponded with version Q. Co-Chair Hawker responded that
it did.
Vice-Chair Thomas further explained that rural communities
have high energy costs. The amendment would make sure the
schools are built efficiently and are affordable to
operate. He provided the example of a rural school district
that designed a new, smaller school but doubled heating
costs because of high ceilings.
9:51:26 PM AT EASE
9:51:52 PM RECONVENED
Mr. Livey stated that the sponsor supported the amendment.
Mr. Jeans reported that the department had no problem with
the amendment.
Co-Chair Hawker WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 2 was ADOPTED.
9:53:11 PM
Co-Chair Hawker asked whether the sponsor approved of the
bill as amended. Mr. Livey responded in the affirmative.
Representative Doogan asked about the fiscal notes.
Mr. Jeans explained the fiscal notes. The first one was for
$37,960,000; the first appropriation would occur in 2013
and would fund the rural education school construction
grant program. The first expenditures would occur in FY 13.
The other fiscal note was for $3,700,000, the three-year
average of the actual increases in the debt reimbursement
program. Due to timing, he anticipated the first increase
in the debt reimbursement program to occur in FY 13.
Co-Chair Hawker questioned whether the second fiscal note
should be indeterminate. Mr. Jeans responded that the note
should be indeterminate, but the department had been
informed that indeterminate notes were not well received
and did their best to estimate costs. Co-Chair Hawker noted
that the numbers were informational only.
Representative Joule pointed out that the new section might
have a fiscal component. Mr. Jeans explained that the
school districts impacted in the FY 11 budget are the only
two projects affected. He was unsure how the retroactive
clause should be addressed.
Mr. Bitney detailed that the local contribution rate has
been changed from 30 to 20 [percent]; the cumulative
increase in the state share for those projects would be
$2,648,600. He suggested that there could be a lump-sum
fiscal note for prior fiscal years. He had asked
Legislative Legal Services to draft an amendment to correct
past-year errors; the item could be a technical amendment.
9:58:07 PM
Co-Chair Hawker thought it was a good idea to include the
amendment in the capital budget. Mr. Jeans concurred.
Co-Chair Stoltze noted that he preferred the sunset
provision.
Vice-Chair Thomas MOVED to report HCS CSSB 237 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 237 was REPORTED out of Committee with a "do pass"
recommendation and with two new attached fiscal impact
notes by the Department of Education and Early Development.
Co-Chair Hawker directed Legislative Legal to make
technical conforming changes.
ADJOURNMENT
The meeting was adjourned at 10:04 PM.
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