Legislature(2011 - 2012)BARNES 124

04/13/2012 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 3:30 p.m. Today --
+ SB 25 AIDEA: SUSTAINABLE ENERGY/ INTEREST RATE TELECONFERENCED
Heard & Held
+ SB 136 INCOME TAX CREDIT FOR EMPLOYING A VETERAN TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
           HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         April 13, 2012                                                                                         
                            3:44 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Craig Johnson, Vice Chair                                                                                        
Representative Dan Saddler                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Lindsey Holmes                                                                                                   
Representative Bob Miller                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SS FOR SENATE BILL NO. 25(FIN)                                                                                           
"An  Act  establishing the  sustainable  energy  transmission  and                                                              
supply development  program in  the Alaska Industrial  Development                                                              
and  Export Authority;  relating  to  the  interest rates  of  the                                                              
Alaska Industrial  Development and Export Authority;  and relating                                                              
to  taxes  paid on  interests  in  property owned  by  the  Alaska                                                              
Industrial  Development  and Export  Authority  and to  the  local                                                              
contribution  for   public  education  funding  related   to  that                                                              
property."                                                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 136(FIN) AM                                                                            
"An Act providing  a tax credit  for employing a veteran  that may                                                              
be taken  against a liability for  the tax on corporation  income;                                                              
and providing for an effective date."                                                                                           
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 25                                                                                                                   
SHORT TITLE: AIDEA: SUSTAINABLE ENERGY/ INTEREST RATE                                                                           
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
                                                                                                                                
01/19/11       (S)       PREFILE RELEASED 1/7/11                                                                                
01/19/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/11       (S)       L&C, FIN                                                                                               
02/08/12       (S)       SPONSOR SUBSTITUTE INTRODUCED-REFERRALS                                                                
02/08/12       (S)       L&C, FIN                                                                                               
02/16/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/16/12       (S)       Heard & Held                                                                                           
02/16/12       (S)       MINUTE(L&C)                                                                                            
02/21/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/21/12       (S)       -- MEETING CANCELED --                                                                                 
02/23/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/23/12       (S)       Moved CSSB  25(L&C) Out of Committee                                                                   
02/23/12       (S)       MINUTE(L&C)                                                                                            
02/24/12       (S)       L&C RPT CS  4DP 1NR      NEW TITLE                                                                     
02/24/12       (S)       DP: EGAN, DAVIS, PASKVAN, MENARD                                                                       
02/24/12       (S)       NR: GIESSEL                                                                                            
03/29/12       (S)       FIN AT 1:00 PM SENATE FINANCE 532                                                                      
03/29/12       (S)       Heard & Held                                                                                           
03/29/12       (S)       MINUTE(FIN)                                                                                            
04/11/12       (S)       FIN RPT CS  6DP 1NR      NEW TITLE                                                                     
04/11/12       (S)       DP: HOFFMAN, STEDMAN, THOMAS, EGAN,                                                                    
                         MCGUIRE, ELLIS                                                                                         
04/11/12       (S)       NR: OLSON                                                                                              
04/11/12       (S)       TRANSMITTED TO (H)                                                                                     
04/11/12       (S)       VERSION: CSSSSB 25(FIN)                                                                                
04/11/12       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/11/12       (S)       Scheduled But Not Heard                                                                                
04/11/12       (S)       FIN AT 1:00 PM SENATE FINANCE 532                                                                      
04/11/12       (S)       Moved CSSSSB  25(FIN) Out of Committee                                                                 
04/11/12       (S)       MINUTE(FIN)                                                                                            
04/12/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/12/12       (H)       L&C, FIN                                                                                               
04/13/12       (H)       FIN AT 9:00 AM HOUSE FINANCE 519                                                                       
04/13/12       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 136                                                                                                                  
SHORT TITLE: VETERANS DRIVERS LICENSE, TAX CREDIT                                                                               
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
                                                                                                                                
01/17/12       (S)       PREFILE RELEASED 1/6/12                                                                                
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       STA, FIN                                                                                               
01/24/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
01/24/12       (S)       Scheduled But Not Heard                                                                                
01/26/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
01/26/12       (S)       Heard & Held                                                                                           
01/26/12       (S)       MINUTE(STA)                                                                                            
01/31/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
01/31/12       (S)       Moved CSSB 136(STA) Out of Committee                                                                   
01/31/12       (S)       MINUTE(STA)                                                                                            
02/01/12       (S)       STA RPT CS  5DP     NEW TITLE                                                                          
02/01/12       (S)       DP: WIELECHOWSKI, KOOKESH, PASKVAN,                                                                    
                         MEYER, GIESSEL                                                                                         
02/06/12       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/06/12       (S)       Heard & Held                                                                                           
02/06/12       (S)       MINUTE(FIN)                                                                                            
02/24/12       (S)       FIN RPT CS  6DP      NEW TITLE                                                                         
02/24/12       (S)       DP: STEDMAN, THOMAS, EGAN, MCGUIRE,                                                                    
                         OLSON, ELLIS                                                                                           
02/24/12       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/24/12       (S)       Moved CSSB 136(FIN) Out of Committee                                                                   
02/24/12       (S)       MINUTE(FIN)                                                                                            
03/05/12       (S)       TRANSMITTED TO (H)                                                                                     
03/05/12       (S)       VERSION: CSSB 136(FIN) AM                                                                              
03/05/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/05/12       (H)       L&C, FIN                                                                                               
04/13/12       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
MICHAEL PAWLOWSKI, Staff                                                                                                        
Senator Lesil McGuire                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented a PowerPoint presentation and                                                                  
answered questions on SB 25 on behalf of the sponsor, Senator                                                                   
Lesil McGuire.                                                                                                                  
                                                                                                                                
MARK DAVIS, Deputy Director                                                                                                     
Investment Finance & Analysis                                                                                                   
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of SB 25.                                                                
                                                                                                                                
TED LEONARD, Executive Director                                                                                                 
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of SB 25.                                                                
                                                                                                                                
DAN BOCKHORST, General Manager                                                                                                  
Ketchikan Gateway Borough (KGB)                                                                                                 
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 25.                                                                           
                                                                                                                                
SENATOR BILL WIELECHOWSKI                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as sponsor of SB 136.                                                                          
                                                                                                                                
KENDRA KLOSTER, Staff                                                                                                           
Senator Bill Wielechowski                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented SB 136  on behalf of the  sponsor,                                                            
Senator Bill Wielechowski.                                                                                                      
                                                                                                                                
ALBERT HOWARD, Mayor                                                                                                            
City of Angoon                                                                                                                  
Angoon, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of SB 136.                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:44:56 PM                                                                                                                    
                                                                                                                                
CHAIR  KURT OLSON  called the  House Labor  and Commerce  Standing                                                            
Committee  meeting   to  order  at  3:44  p.m.     Representatives                                                              
Thompson,  Holmes,  Miller,  Johnson,  Saddler,   and  Olson  were                                                              
present at the call to order.                                                                                                   
                                                                                                                                
         SB 25-AIDEA: SUSTAINABLE ENERGY/ INTEREST RATE                                                                     
                                                                                                                                
3:45:15 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the first  order of business  would be                                                              
CS FOR  SPONSOR SUBSTITUTE  FOR SENATE BILL  NO. 25(FIN), "An  Act                                                              
establishing  the  sustainable  energy   transmission  and  supply                                                              
development  program  in the  Alaska  Industrial  Development  and                                                              
Export Authority;  relating to  the interest  rates of the  Alaska                                                              
Industrial  Development  and  Export Authority;  and  relating  to                                                              
taxes  paid  on   interests  in  property  owned  by   the  Alaska                                                              
Industrial  Development  and Export  Authority  and to  the  local                                                              
contribution  for   public  education  funding  related   to  that                                                              
property."                                                                                                                      
                                                                                                                                
3:45:18 PM                                                                                                                    
                                                                                                                                
MICHAEL  PAWLOWSKI, Staff,  Senator  Lesil McGuire,  Alaska  State                                                              
Legislature,  on behalf  of  Senator  Lesil McGuire,  presented  a                                                              
PowerPoint  presentation  on  Alaska's  Sustainable  Strategy  for                                                              
Energy  Transmission and  Supply (ASSETS).   He  stated that  this                                                              
bill  has a  companion bill,  HB 327,  and some  members may  have                                                              
previously heard  the companion bill  at a House Energy  Committee                                                              
meeting.    He referred  to  the  disclaimer  on slide  1  of  the                                                              
PowerPoint,  which reflects  that  the bill  is not  designed  for                                                              
specific  projects  since the  bill  is  designed to  address  the                                                              
breadth of energy projects in Alaska.                                                                                           
                                                                                                                                
3:46:17 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI  explained   the  agenda.    He  stated   that  his                                                              
PowerPoint presentation  on ASSETS will  focus on highlights  from                                                              
selected reports on  capital financing, the sectional  analysis of                                                              
the bill,  powers and limitations  of the  fund the bill  purports                                                              
to establish, and  the decision and policy decisions  necessary to                                                              
select AIDEA as the vehicle [slide 1].                                                                                          
                                                                                                                                
MR. PAWLOWSKI  identified the problem,  which is that  significant                                                              
capital  investment  will  be  required   to  develop  the  energy                                                              
infrastructure Alaska needs [slide 3].                                                                                          
                                                                                                                                
MR. PAWLOWSKI  reviewed the  Alaska energy  pathway toward  energy                                                              
independence [slide  4].  He stated  that Alaska Energy  Authority                                                              
(AEA)  prepared a  report  in July  2010  that broke  out  capital                                                              
needs  statewide  based  on  Alaska  Native  Regional  Corporation                                                              
areas.  He pointed  out the immediate needs for the first  zero to                                                              
10 years totaled approximately $2 billion.                                                                                      
                                                                                                                                
MR. PAWLOWSKI  referred to the  Railbelt integrated resource  plan                                                              
(RIRP),  prepared by  the AEA  in February  2010, which  projected                                                              
capital  spending estimates  will range  from  $13.625 to  $21.109                                                              
billion [slide 5].                                                                                                              
                                                                                                                                
3:47:33 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI referred  to the Southeast integrated  resource plan                                                              
(SEIRP),  which   has  generated   substantial  controversy,   but                                                              
identifies  the needs  for  infrastructure projects  in  Southeast                                                              
Alaska [slide 6].                                                                                                               
                                                                                                                                
MR.  PAWLOWSKI provided  a  summary  of capital  estimates  noting                                                              
there are billions  of dollars of infrastructure that needs  to be                                                              
built within Alaska in the next zero to 10 years [slide 7].                                                                     
                                                                                                                                
3:48:10 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI explained  that last year the energy section  of the                                                              
capital budget included  legislative intent [slide 8].  The intent                                                              
language  read, "It  is the  intent of  the  legislature that  the                                                              
state's  capital investment  into energy  generation projects  not                                                              
exceed 50  % of the  total investment  required to fully  complete                                                              
those  projects."    He  highlighted  that   this  language  isn't                                                              
binding, but  it is an attempt  to recognize that the  legislature                                                              
would  like  to  see  some  private  sector  funds  involved  when                                                              
building projects  so the funding for  100 percent of the  cost of                                                              
the project  is not entirely  the legislature's responsibility  to                                                              
fund.   Senator McGuire has heard  from many utilities  throughout                                                              
the state  that the problem  facing many  utilities is the  access                                                              
to capital.                                                                                                                     
                                                                                                                                
MR. PAWLOWSKI related  that financing Alaska Energy Pathway:   AEA                                                              
July 2010 shows  the dilemma the utilities and the  Railbelt face.                                                              
He pointed out  the projected capital expenditures as  compared to                                                              
the high debt  capacity that cannot meet the capital  expenditures                                                              
[slide 9].                                                                                                                      
                                                                                                                                
MR.  PAWLOWSKI  referred to  the  right  hand of  the  slide  that                                                              
illustrates  the  importance  of  financing   debt  service  as  a                                                              
percent of Revenue  [slide 10].  The project illustrated  is for a                                                              
stylized  hydroelectric  project from  the  SEIRP.   He  indicated                                                              
that a  significant portion  of the  rates that  Alaskans pay  are                                                              
paid  through  the  utility  to  pay  for   debt  service  to  the                                                              
bondholders or investors in the power project.                                                                                  
                                                                                                                                
MR. PAWLOWSKI  stated that  the challenge that  SB 25 is  intended                                                              
to address  is the  state's large  capital needs  and the  limited                                                              
budgets as oil production  continues to decline,  The  state needs                                                              
something  sustainable where  investments in  projects are  repaid                                                              
and return  money to  the treasury.   He explained  that SB 25  is                                                              
designed to  create a  new sustainable and  supply program  within                                                              
the AIDEA [slide 11].                                                                                                           
                                                                                                                                
3:50:00 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI  provided   a  sectional  analysis  of  SB   25  by                                                              
addressing  the  significant  sections  first.    He  stated  that                                                              
Sections   16-17   would   create   a   new   sustainable   energy                                                              
transmission  and  Supply  (SETS)  development  program  and  fund                                                              
within  the Alaska  Industrial  Development and  Export  Authority                                                              
(AIDEA  [slide  12].   He  related  that  he  uses   this  reverse                                                              
sectional approach  since the  material portions  of the bill  are                                                              
near the end of the  bill.  He referred to page 11, line  5, which                                                              
adds  new sections  defining a  program within  AIDEA, creating  a                                                              
fund, and  specifying how AIDEA  can use the  fund balances.   The                                                              
purpose of  the fund  is specifically limited  to energy  projects                                                              
to give  focus and clarity  to the program.   He referred to  page                                                              
12, line 3,  to the powers and  duties of the proposed  authority.                                                              
He then referred  to page 12, lines  13-14, which would  provide a                                                              
new  power to  AIDEA to  defer  principal payments  or  capitalize                                                              
interest on qualified energy developments.                                                                                      
                                                                                                                                
3:51:35 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI  referred again to  page 12, line  3, to the  powers                                                              
and  duties  of   the  authority  for  funding  qualified   energy                                                              
development.   He stated that  the purpose of  this section is  to                                                              
delineate  the powers  that AIDEA  has as  it relates  to the  new                                                              
fund.   He pointed  out that the  fund has  powers in addition  to                                                              
what AIDEA  currently has  due to the  specific economics as  they                                                              
relate  to energy  projects.   He  explained that  the  additional                                                              
powers are  found on page  12, lines  13-14, which provides  AIDEA                                                              
with  the  power   to  defer  principal  payments.     He  further                                                              
explained  that an  energy project  may not  have revenues  during                                                              
the  construction  phase,  so  this  would  allow  AIDEA  to  make                                                              
interest-only  payments, while  AIDEA earns  the  interest on  the                                                              
investment it has made,  but that is passed on to  the ratepayers.                                                              
This would  allow the  drawing out  of that  initial phase  during                                                              
the construction to  try to lower the cost of power  ultimately to                                                              
consumers.                                                                                                                      
                                                                                                                                
3:52:33 PM                                                                                                                    
                                                                                                                                
MR.   PAWLOWSKI  explained   that  under   existing  statutes   AS                                                              
44.88.090, AIDEA  has the power to  borrow money and issue  bonds.                                                              
He  explained that  a revolving  loan  fund is  one  in which  the                                                              
legislature appropriates  to a fund and  the money is loaned  out,                                                              
but once the  money is loaned out  more money is not available  to                                                              
fund  projects until  the fund  is repaid.   He  pointed out  that                                                              
under  the  bill, AIDEA  has  an  ability  to go  to  the  capital                                                              
markets  and leverage  the proceeds  it  has from  loans to  raise                                                              
additional capital  to refresh the fund.   He emphasized  that the                                                              
reason  this  program is  sustainable  is  partly related  to  the                                                              
existing  power AIDEA  has to  borrow money.    He explained  that                                                              
specific language  is included  in this section  to make it  clear                                                              
that AIDEA  has the  ability to  use proceeds  and returns on  its                                                              
investments to  borrow money against  those proceeds, governed  by                                                              
credit  rating limits  and leverage  limits, and  accrue funds  to                                                              
invest  in infrastructure.    The  capitalization that  goes  into                                                              
AIDEA is not necessarily  the limit for the capitalization  of the                                                              
money that can go out on the street.                                                                                            
                                                                                                                                
3:53:56 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI  referred to page 12,  lines 6-9, to paragraph  (1),                                                              
which allows  AIDEA to use  the fund  to finance qualified  energy                                                              
development  projects,   insure  project  obligations,   guarantee                                                              
loans or  bond, and establish  reserves.   He explained that  this                                                              
language gives  AIDEA a suite of  powers to work with  the private                                                              
sector to create  financing environments that will  facilitate the                                                              
development  of a  project.   He pointed  out  that often  private                                                              
capital  might come  in looking  for a  credit  backstop from  the                                                              
state.    He  related  that  previous  bills   that  attempted  to                                                              
transfer  power  created   the  situation  in  which   the  credit                                                              
backstop  came  back  to  the state;  however,  AIEDA  is  not  an                                                              
obligation  of the  state  since it  is  a distinct  and  separate                                                              
entity.   He reiterated  the reason to  establish a separate  fund                                                              
and  to allow  AIDEA loan  guarantee power  is to  allow AIDEA  to                                                              
support  the  economics of  projects  and  work with  the  private                                                              
sector.   He related  this is  another way in  which this  program                                                              
differs from a revolving loan fund.                                                                                             
                                                                                                                                
3:55:16 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI said  that it was important to the sponsor  to place                                                              
limits on AIDEA.   He referred to Section 16, to page  13, line 5,                                                              
of proposed  AS 44.88.740.   This requires AIDEA  to come back  to                                                              
the  legislature for  approval if  the project  financing  exceeds                                                              
more than  one-third of  the capital  cost of  a qualified  energy                                                              
development  or  loan guarantee  that  exceeds  $20 million.    He                                                              
referred to  page 13, lines  13-14, to subsection  (b) (1) &  (2),                                                              
which would  allow AIDEA  to extend  financing to  30 years for  a                                                              
general  project  and   50  years  for  a  transmission   line  or                                                              
hydroelectric   project.     He  emphasized   that   hydroelectric                                                              
projects are  long life  investments so  the longer financing  can                                                              
be  extended  the  lower  the  cost  to   ratepayers.    The  bill                                                              
originally  envisioned a much  broader range  of qualified  energy                                                              
developments.   He referred to page  13, lines 16-25, of  proposed                                                              
Section 17,  which provides  a definition  for "development  fund"                                                              
and  also  a definition  for  "qualified  energy  development"  in                                                              
proposed AS 44.88.900 (16) as follows:                                                                                          
                                                                                                                                
      (A) transmission, generation, conservation, storage,                                                                      
     or distribution of heat or electricity;                                                                                    
                                                                                                                                
    (B)    liquefaction,    regasification,    distribution,                                                                    
     storage, or use of natural gas;                                                                                            
                                                                                                                                
        (C) distribution or storage of refined petroleum                                                                        
     products.                                                                                                                  
                                                                                                                                
MR.  PAWLOWSKI stated  the sponsor's  intent is  to provide  basic                                                              
energy infrastructure,  such as local gas distribution,  bulk tank                                                              
farm for  generation, power  line, or  hydroelectric project,  and                                                              
energy efficiency  projects.  He  highlighted that this  authority                                                              
is granted to AIDEA  specifically within this section of  the bill                                                              
as  a new  and distinct  mission  for AIDEA.    He concluded  that                                                              
these are  the substantive sections  of the bill.   He related  he                                                              
would now  like to point  out several  conforming sections of  the                                                              
bill.                                                                                                                           
                                                                                                                                
3:57:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    HOLMES   asked    whether   "qualified    energy                                                              
development"  could be owned  by anyone,  such as  a nonprofit,  a                                                              
for profit  business, a utility,  or local government without  any                                                              
ownership limitations.                                                                                                          
                                                                                                                                
MR.  PAWLOWSKI answered  yes.   He elaborated  that  the point  of                                                              
AIDEA is to  work with the private  sector and to bring  the state                                                              
as the support  for the private  sector, but put the community  or                                                              
cooperative in the  leadership role and provide access  to capital                                                              
to  make  their  projects  feasible.     In  further  response  to                                                              
Representative Holmes,  he explained that the purpose of  AIDEA is                                                              
to assist  with statewide  regional projects.   Thus  the bill  is                                                              
not limited  to specific  areas of  the state  and is intended  to                                                              
provide financing to any communities that can make it work.                                                                     
                                                                                                                                
3:58:46 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI referred  to Section  6,  on page  4, beginning  on                                                              
line 21.  He  explained that this statute defines  AIDEA's mission                                                              
by  the  addition   of  the  word  "energy"  to  the   legislative                                                              
determination.     The  bill  contains  conforming   language  and                                                              
technical  changes, such  as on  page 5,  line 11  to reflect  the                                                              
name  change to  Export-Import  Bank of  the  United States.    He                                                              
recapped  that the mission  is changed  to add  "energy" to  match                                                              
the fund created in Sections 16-17 for energy projects.                                                                         
                                                                                                                                
3:59:51 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI referred  to Sections  10-14 beginning  on page  8,                                                              
line 22.   He  related that  under SB  25, the  state will  invest                                                              
some  of  its  capital  through  AIDEA  in  infrastructure.    The                                                              
principal and  interest payments will  come back through AIDEA  to                                                              
the  state   in  the  form  a   dividend.    He  emphasized   that                                                              
fundamental  to this concept  is that  AIDEA must  earn a rate  of                                                              
return on  the loans or  investments that it  makes.  He  referred                                                              
again to  Section 10, beginning  on line  22, through Section  14,                                                              
on page  10 to  line 15,  which represents  conforming changes  to                                                              
allow the  Sustainable Energy Transmission  Supply (SETS) Fund  to                                                              
comport  to the  same  interest  requirements.   He  characterized                                                              
this as the  cost of capital and  not free or low interest  loans,                                                              
but loans.   Currently,  utilities in Alaska  are borrowing  money                                                              
outside Alaska  so the interest  and principal payments leave  the                                                              
state.   He  emphasized  that  these changes  will  circulate  the                                                              
interest and  principal payments  in the  state by allowing  AIDEA                                                              
to work with the local entity to obtain financing.                                                                              
                                                                                                                                
4:01:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLMES  wondered about  the interplay between  this                                                              
and the  30 to 50-year  rate.   She inquired as  to the amount  of                                                              
the interest rates.                                                                                                             
                                                                                                                                
MR. PAWLOWSKI  deferred to  AIDEA since  it would  be tied to  the                                                              
cost of  funds in the market  rate.  He  referred to page  9, line                                                              
18, to the  definition of the "cost  of funds" which read,  "means                                                              
the  earnings,   expressed  as  an   annual  interest  rate,   the                                                              
authority would receive  on a comparable financial  security, and,                                                              
for  a loan  participation..."   He  continued,"...  with a  fixed                                                              
interest  rate,  the  cost  of funds  must  equal  or  exceed  the                                                              
minimum interest rate."   Thus a floor on the interest  rate AIDEA                                                              
can offer;  however, there  is an exception  under which AIDEA  is                                                              
able to  offer a  lower interest rate.   He  referred to page  10,                                                              
lines  16-31, of  Section 15,  which allows  AIDEA  to reduce  the                                                              
rate of interest  to up to one  percent under current  statutes to                                                              
meet  sufficient   job  creation,  rural  development,   or  other                                                              
economic  development  incentive criteria.    This bill  adds  [on                                                              
page 10,  line 20] "renewable energy  development" to express  the                                                              
state's   policy   to   move   towards    renewable   energy   and                                                              
hydroelectric by  allowing a lower  interest rate  - of up to  one                                                              
percent - to finance  those projects.  He concluded  this comports                                                              
with the policy the legislature has put into place.                                                                             
                                                                                                                                
4:03:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES asked  to clarify  that "renewable  energy"                                                              
refers to the Alaska definition, which includes hydroelectric.                                                                  
                                                                                                                                
MR. PAWLOWSKI answered yes.                                                                                                     
                                                                                                                                
4:03:47 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI  stated  that  the  purpose   of  the  bill  is  to                                                              
establish  a new  program within  AIDEA.   He  related that  AIDEA                                                              
works very  closely with  commercial lending  institutions in  the                                                              
state.   He referred to  proposed Section 8  on page 6,  beginning                                                              
on line  23,  which makes  conforming changes  to AIDEA's  current                                                              
loan  participation   program.    He  explained  that   commercial                                                              
lending  institutions,  such  as Wells  Fargo  or  First  National                                                              
Bank, make loans  and AIDEA provides the credit backstop  and buys                                                              
loans up  to 90 percent.   He  referred to page  7, lines 4-6,  in                                                              
proposed Section  6, which  requires AIDEA to  retain at least  10                                                              
percent of the principal  amount of the loan retained by  the loan                                                              
originator.    He  further  explained  that  inserting  "qualified                                                              
energy  development  and  energy  efficiency  allows  the  private                                                              
sector to continue  to make loans and work with AIDEA  through the                                                              
normal system  so AIDEA does not  crowd out the private  sector in                                                              
its work to  provide credit backstops, loan guarantees,  or direct                                                              
loans.    This provision  was  added  to  the bill  to  keep  this                                                              
consistent, he  stated.  He recapped  that the state agency  would                                                              
have increased  finance powers  to finance energy  infrastructure,                                                              
but it is important  for the private sector to be able  to compete                                                              
and  work with  AIDEA yet  not have  AIDEA  push them  out of  the                                                              
market.                                                                                                                         
                                                                                                                                
4:05:33 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI referred to page 2,  lines 3-31 through page 4, line                                                              
20,  to proposed  Sections 3-5,  which  were added  in the  Senate                                                              
Finance  Committee.   He  referred to  proposed  Section 3,  which                                                              
would allow  AIDEA, when building a  facility or when there  is an                                                              
interest  in an AIDEA  facility in  a community  - that  is exempt                                                              
from state  or borough taxes - to  deduct the value from  the full                                                              
determined  taxable  value  as  it relates  to  the  base  student                                                              
allocation and funding  in the education program.   He referred to                                                              
page 3,  lines 22-26 for  the specific  language.  He  pointed out                                                              
that  the education  statutes have  a local  mill requirement  and                                                              
required local  match for  the state  contribution.  He  clarified                                                              
that this bill would  exempt property owned by the  AIDEA from the                                                              
city or borough tax rate upon which the 4 mills is calculated.                                                                  
                                                                                                                                
4:06:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON   asked  whether   this  relates  to   new                                                              
properties or is retroactive.                                                                                                   
                                                                                                                                
MR. PAWLOWSKI  answered that  the bill is  retroactive in that  it                                                              
does  not ask  for additional  monies; however  moving forward  if                                                              
infrastructure  is  in  the community  -  and  the  community  has                                                              
decided  to  exempt  from  taxes  -  the  state  will  not  deduct                                                              
education  funding  by  requiring  a  higher   local  match.    He                                                              
explained  that  if   the  bill  works  as  intended   and  energy                                                              
infrastructure is built  in communities and the community  decides                                                              
to  exempt  the project  from  city  or borough  taxes,  that  the                                                              
community could potentially lose education funding.                                                                             
                                                                                                                                
CHAIR  OLSON  asked whether  there  is  a formal  opinion  on  the                                                              
effect on education funding.                                                                                                    
                                                                                                                                
MR. PAWLOWSKI  offered to provide  it.  He  explained that he  has                                                              
not asked for  a specific legal  opinion, but it has been  defined                                                              
within  the  fiscal  note  just  received.    He  elaborated  that                                                              
initially an earlier  exemption in SB 25 created problems  for the                                                              
Municipality  of Anchorage  since it was  not an  elective.   This                                                              
new language was  drafted in consultation with the  municipalities                                                              
that were affected.                                                                                                             
                                                                                                                                
4:08:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked whether this provision  is voluntary                                                              
so if communities  do not want to  exempt the projects  they don't                                                              
have to do so.                                                                                                                  
                                                                                                                                
MR.  PAWLOWSKI answered  yes.   He related  that the  MOA has  the                                                              
FedEx terminal  owned by  AIDEA and the  tax value  to the MOA  is                                                              
substantial so they would not necessarily choose to exempt it.                                                                  
                                                                                                                                
4:09:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  asked  whether  the MOA  could  pick  and                                                              
choose if a municipality  only wants to exempt a project,  such as                                                              
the FedEx terminal or if it is all or nothing.                                                                                  
                                                                                                                                
MR. PAWLOWSKI  answered that  it would be  up to the  municipality                                                              
to  pick  and  choose, which  is  the  reason  for  the  phrasing,                                                              
"excluding  property owned  by the  Alaska Industrial  Development                                                              
and Export  Authority that  is exempt from  city or borough  tax,"                                                              
so  the exemption  of city  and borough  tax is  up to  them.   He                                                              
pointed out that the  AIDEA property is not exempt in  the regular                                                              
tax  statute  and the  original  language  created problems.    He                                                              
offered to provide the information that led to the changes.                                                                     
                                                                                                                                
CHAIR  OLSON asked  him to  provide it  to the  committee and  Mr.                                                              
Pawlowski offered to do so.                                                                                                     
                                                                                                                                
MR.  PAWLOWSKI  related  that  AIDEA  returns   a  dividend,  must                                                              
collect  interest,  and is  the  commercial  lending  institution,                                                              
which is why AIDEA was chosen.                                                                                                  
                                                                                                                                
4:09:58 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI  referred to  a  flowchart  that outlines  how  the                                                              
money would move  through the proposed capitalization  [slide 19].                                                              
He   explained  that   the  state   of   Alaska  establishes   the                                                              
Sustainable   Energy   Transmission  and   Supply   (SETS)   fund,                                                              
capitalizes  the  fund through  $125  million  as per  the  fiscal                                                              
note.   He  explained the  AIDEA would  use  the proceeds  through                                                              
financing  mechanisms  to support  energy  projects.   The  return                                                              
from  the   investments  would  come  back   to  the  fund.     He                                                              
highlighted that  AIDEA has the ability  to the borrow money,  can                                                              
use the  capital markets to refresh  the capital fund, and  return                                                              
a dividend  back to the  state.  He pointed  out that last  fiscal                                                              
year that  return was  $29 million.   He referred  members to  the                                                              
most recent  credit report from  Standard and Poor's for  details,                                                              
although  he  deferred  to AIDEA  to  explain  the  due  diligence                                                              
processes and the mechanics of AIDEA.                                                                                           
                                                                                                                                
4:12:37 PM                                                                                                                    
                                                                                                                                
MARK  DAVIS,  Deputy  Director,  Investment  Finance  &  Analysis,                                                              
Alaska  Industrial  Development  and  Export   Authority  (AIDEA),                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED),  explained that  SB 25  will provide  AIDEA with  several                                                              
tools  to finance  qualified  energy projects.    First, it  would                                                              
create a  direct loan  program.   Currently, the  banks or  credit                                                              
union bring  a package  to AIDEA -  the loan arm  - and AIDEA  can                                                              
take up  to 90 percent,  but AIDEA works  with the banks and  does                                                              
not  directly deal  with  the customer.    Under the  bill,  AIDEA                                                              
would  provide loan  participations or  direct  loans for  energy.                                                              
Thus if  a utility  needed a  loan, AIDEA  could conceivably  make                                                              
that   loan.     He  responded   to  an   earlier  question   from                                                              
Representative  Holmes, noting it  could be  any type of  utility,                                                              
including a  rural electrical  cooperative, a  nonprofit or a  for                                                              
profit company.                                                                                                                 
                                                                                                                                
4:13:37 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked  how this would affect existing loans  an entity                                                              
may have with AIDEA.                                                                                                            
                                                                                                                                
MR. DAVIS  answered that SB  25 limits the  capital from AIDEA  to                                                              
one-third of  the capital.   In further  response to Chair  Olson,                                                              
he interpreted that to mean the aggregate.                                                                                      
                                                                                                                                
4:14:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES  recalled  he  mentioned  any  utility  and                                                              
asked for further clarification.                                                                                                
                                                                                                                                
MR.  DAVIS  clarified  that he  meant  other  projects,  not  just                                                              
limited to utilities.                                                                                                           
                                                                                                                                
4:14:10 PM                                                                                                                    
                                                                                                                                
MR. DAVIS said the  next thing would be to establish  reserves and                                                              
ensure loan  or bond guarantees.   Currently, AIDEA does  not have                                                              
power  to create  a backstop  or  loan guarantee.    He related  a                                                              
scenario  in  which  Golden  Valley  Electric  Association  (GVEA)                                                              
could  borrow via  the capital  markets, which  can be  expensive.                                                              
The  GVEA could  issue  bonds, but  may  have limitations  on  its                                                              
bonding capabilities.   This bill would allow the GVEA to  issue a                                                              
bond  and seek  a bond  guarantee  from AIDEA.    He related  that                                                              
AIDEA would  use its  AA rating  bond issue as  a backstop,  which                                                              
could  substantially  reduce  the  cost  of  the  bonding  to  the                                                              
utility.    He  pointed  out  this  is  ultimately  beneficial  to                                                              
ratepayers.   Additionally, SB 25 would  allow AIDEA to work  with                                                              
outside capital.   Currently, given the economy, pension  funds or                                                              
insurance  funds  want  to  invest and  used  to  invest  in  real                                                              
estate,  the  stock market,  or  bonds  and Treasury  bills.    He                                                              
pointed out that  Treasury bills are at  two percent so no  one is                                                              
currently  investing in  them.   He predicted  that  if this  bill                                                              
were  to pass,  that  several  of these  firms  could put  up  100                                                              
percent of  the funds  for energy  projects so  long as the  firms                                                              
had AIDEA's  credit backstop.  Thus  SB 25 could provide  the risk                                                              
adversity  these firms need.   Again,  the reserve  fund could  be                                                              
used  to  leverage  other funds  to  attract  outside  capital  to                                                              
Alaska for energy projects.                                                                                                     
                                                                                                                                
4:16:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether the  tools  proposed to  be                                                              
given to  the SETS  fund for  loan participation  be useful  tools                                                              
for other AIDEA business units.                                                                                                 
                                                                                                                                
MR. DAVIS  answered that  AIDEA already has  the capacity of  loan                                                              
participation  with  limitations  on debt  to  equity  ratios  for                                                              
various  projects,  including  commercial real  estate  and  other                                                              
projects; however,  AIDEA currently  does not  have any  guarantee                                                              
or credit backstop for any of AIDEA's programs.                                                                                 
                                                                                                                                
REPRESENTATIVE  SADDLER   asked  whether  those  tools   would  be                                                              
helpful.                                                                                                                        
                                                                                                                                
MR.  DAVIS responded  that  it could  be  useful,  hypothetically,                                                              
speaking, given the current market.                                                                                             
                                                                                                                                
4:17:10 PM                                                                                                                    
                                                                                                                                
MR.  DAVIS pointed  out another  tool is  that SB  25 would  allow                                                              
AIDEA   to   defer  payments   to   capitalize   interest,   which                                                              
essentially  is the  term of  patient capital.    He related  that                                                              
sometimes taking  interest only on a  loan can lower the  up-front                                                              
costs and  capitalize interest on  the back end  of the loan.   He                                                              
explained  that can  be  useful with  large energy  projects  that                                                              
tend to have high  initial costs which flatten out over  time.  He                                                              
characterized this  as very typical of  these types of project  so                                                              
it  makes  sense  for  an  energy  fund   to  have  that  ability.                                                              
Additionally,  another  tool,  which hasn't  been  discussed  thus                                                              
far,  is that  the bill  will  allow AIDEA  to  work with  public-                                                              
private partnerships  (PPP).   He referred to  page 12, lines  15-                                                              
17, to paragraph  (4), which allows  AIDEA to enter into  operate-                                                              
transfer  agreements.   He  suggested  that  a utility  could  use                                                              
outside capital to  finance a project, obtain a  construction loan                                                              
with  other financing,  provide  a  credit backstop  using  AIDEA,                                                              
then  transfer  the ownership  of  the  project  by lease  to  the                                                              
utility for  operation, while retaining  security interest in  the                                                              
project as security  for financing.  He characterized  these types                                                              
of agreements  as very  typical in commercial  financing, but  not                                                              
usually done  by a state entity.   He summarized that  these types                                                              
of  tools  are useful,  particularly  given  the  current  market,                                                              
since lots  of investment money exists  - lighter financing  - but                                                              
no one want to take that much risk.                                                                                             
                                                                                                                                
4:19:00 PM                                                                                                                    
                                                                                                                                
MR. DAVIS  explained that  SB 25 would  allow AIDEA  to go out  to                                                              
the  market to  raise money  or lend  at  the current  rates.   He                                                              
stated the current  fixed interest rate is 6.10 percent  - whether                                                              
it is  for a  five or  25 year loan  - and  the variable  interest                                                              
rate is currently 5.07  percent, regardless of the term.   He said                                                              
these  are market  indexes to  the Federal  Home  Loan Bank  Board                                                              
(FHLBB) of Seattle,  which is the entity that tends to  lend money                                                              
to banks  in Alaska.   Thus,  the AIDEA tracks  its interest  with                                                              
the Federal  Home Loan Bank of Seattle.   He concluded  that these                                                              
rates  would be  competitive and  AIDEA would  not undercut  local                                                              
institutions.                                                                                                                   
                                                                                                                                
4:19:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON  related his  understanding  that  Golden                                                              
Valley Electric  Association (GVEA) is  not interested in  working                                                              
with AIDEA  since they  would pay  6 percent  interest since  GVEA                                                              
can still currently  borrow at 3 to  3.5 percent.  He  inquired as                                                              
to whether SB 25  would make AIDEA more competitive or  if it will                                                              
still be the standard.                                                                                                          
                                                                                                                                
MR. DAVIS  answered that  if AIDEA  went into  the bond market  to                                                              
raise funds  it would be below  market index from FHLBB;  however,                                                              
if  the capital  energy fund  or  the RUS  funds,  which both  are                                                              
available to  GVEA and  could range between  2-3.3 percent,  which                                                              
would be  below market  rates.   He acknowledged  that AIDEA  does                                                              
not  compete with  those  rates, which  he characterized  as  good                                                              
rates;  however one  might  see a  utility  attempt to  use  those                                                              
rates for  the maximum  amount, but  fall short.   Thus this  bill                                                              
would provide  a means  to finance the  rest of  the project.   He                                                              
said that as cost  of projects increase financing tends  to become                                                              
tighter, for  example, he pointed out  that the RUS currently  has                                                              
a lot  of demand.   He characterized  the bill  as another way  to                                                              
finalize a project.                                                                                                             
                                                                                                                                
4:21:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON  related  his  understanding  that  AIDEA                                                              
would  offer  a  6 percent  interest  rate,  but  GVEA  is  likely                                                              
looking  at  approximately  2.8-3.2 percent  interest  rate.    He                                                              
stated  he had  hoped  this might  be  more competitive  to  allow                                                              
utilities  like  GVEA  to  use  Alaska  funds  for  Alaska  energy                                                              
projects.                                                                                                                       
                                                                                                                                
MR. DAVIS  responded that  it would  depend on  how the  financing                                                              
was structured.   He suggested  that one  local utility filing  to                                                              
build a plant  is in excess of  7 percent interest.  He  predicted                                                              
that  if this  utility had  used a  bond with  an AIDEA  guarantee                                                              
that AIDEA's  AA rate would have  made it considerably below  that                                                              
for financing.  He  concluded that it also depends on  whether the                                                              
utility building  the structure has  access to the federal  rates.                                                              
He said that some  do and some don't.  He offered his  belief that                                                              
GVEA  does   have  ability  to   use  the  two  funds   previously                                                              
mentioned.                                                                                                                      
                                                                                                                                
4:22:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES asked  for the  type of  risk exposure  the                                                              
state would have.                                                                                                               
                                                                                                                                
MR.  DAVIS  answered  that  AIDEA  would  need  to  maintain  good                                                              
underwriting standards,  which AIDEA has  done.  The current  loan                                                              
participation  has a default  rate of  less than  one percent  and                                                              
AIDEA's rating is over  AA.  He offered his belief that  the debt-                                                              
coverage ratio is  in the range of  1.25 to 1.34 on the  loans and                                                              
the net present value would be in the range of 1.1 to 1.3.                                                                      
                                                                                                                                
4:23:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHNSON  related  his   understanding  that   the                                                              
program would  guarantee up to 25 percent  of the loan.   He asked                                                              
whether  AIDEA  could backstop  the  whole  loan  or just  the  25                                                              
percent.   He  further asked  how this  would  affect the  state's                                                              
bond rating.                                                                                                                    
                                                                                                                                
MR.  DAVIS responded  that  SB 25  establishes  a brand  new  fund                                                              
within AIDEA, which  is totally separate from AIDEA's  Development                                                              
Enterprise Fund,  which is  the basis for  the loan  participation                                                              
and  development project  funds.    He related  his  understanding                                                              
that one  of AIDEA's  first tasks will  be to  seek a rating  from                                                              
the   rating  agencies   after  explaining   the  limitations   on                                                              
financing  - listed  on  page 13  of the  bill  under proposed  AS                                                              
44.88.740.   He offered his belief  that the bill was  designed to                                                              
not affect AIDEA's  current rating for its Development  Enterprise                                                              
Fund.                                                                                                                           
                                                                                                                                
4:24:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  remarked that AIDEA does not  know whether                                                              
the SETS  fund would  be rated  AA based  on the  $125 million  in                                                              
initial funding.                                                                                                                
                                                                                                                                
MR. DAVIS answered  that is correct; but AIDEA also relies  on the                                                              
underwriting and  the internal controls  for projects and  project                                                              
approval.   He  elaborated that  the AIDEA  has  a project  review                                                              
commission  and  credit  commission so  those  processes  will  be                                                              
considered  as  well  as past  performance  of  AIDEA's  portfolio                                                              
during  the rating  process.   He concluded  that  AIDEA will  ask                                                              
Standard  & Poor's  (S&P),  Fitch  Ratings, and  Moody's  Investor                                                              
Service for a rating.                                                                                                           
                                                                                                                                
4:25:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked whether  anyone else  has done  this                                                              
previously.   He  noted lots  of people  have  good standards  and                                                              
practices, but it doesn't mean they don't make bad loans.                                                                       
                                                                                                                                
MR.  DAVIS said  he  aware  of similar  programs,  including  that                                                              
Michigan has  one in process  and AIDEA  has been observing  them.                                                              
He  commented  that  Michigan's  program is  broader  and  is  not                                                              
limited  to energy  projects, but  the concept  is the  same.   He                                                              
added that  a program  is also being  developed in  New York.   He                                                              
offered  his belief  that AIDEA's  overall  rating would  probably                                                              
apply to  the new fund if  the same underwriting standards  apply.                                                              
This bill will help  develop energy projects, but he  cautioned it                                                              
is  not  a lockdown  system.    He  predicted the  rates  will  be                                                              
competitive  and  the underwriting  will  be  very tight,  but  it                                                              
should provide a good rating.                                                                                                   
                                                                                                                                
4:26:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked for the  difference in the  interest                                                              
rating between the AA and A bond rating.                                                                                        
                                                                                                                                
MR. DAVIS  answered that  currently there  is not much  difference                                                              
and the  spread is less  than several  hundred basis points  since                                                              
there are not currently  many entities with a A or AA  rating.  He                                                              
advised  that  many  states have  been  denigrated  to  junk  bond                                                              
status or quadruple fees such as have California and Washington.                                                                
                                                                                                                                
REPRESENTATIVE JOHNSON asked whether California has a B rating.                                                                 
                                                                                                                                
MR. DAVIS  answered that  California has a  BBBB rating, which  he                                                              
characterized  as a "polite  rating."   In response  to a  further                                                              
question,  he said  AIDEA would  contact the  rating agencies  and                                                              
have arranged  to hire  several consultants  to work  with if  the                                                              
bill passes.   He said he has  held some conversations to  lay out                                                              
a program to get a rating.                                                                                                      
                                                                                                                                
4:28:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  asked  whether AIDEA  could  obtain  pre-                                                              
approval.                                                                                                                       
                                                                                                                                
MR.  DAVIS answered  that SB  25 will  need to  be in  place.   He                                                              
related the  consultants' views  are that the  bonds should be  at                                                              
least A-rated bonds.                                                                                                            
                                                                                                                                
REPRESENTATIVE JOHNSON  related his understanding the  bond rating                                                              
would be at least A.                                                                                                            
                                                                                                                                
MR.  DAVIS commented  that  relatively few  states  in the  market                                                              
have that  rating, but Alaska  does.  He  advised that the  raters                                                              
look to management  and the underwriting standards of  the entity.                                                              
He  pointed out  that AIDEA  already  has that  in  place and  the                                                              
raters will be advised  that the new money will be handled  in the                                                              
same fashion.                                                                                                                   
                                                                                                                                
4:29:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLER asked who does the rating for bonds.                                                                      
                                                                                                                                
MR. DAVIS  answered that rating  for bonds for general  obligation                                                              
(GO) bonds  of the agency  are derived from  the agency rating  or                                                              
the funds rating  within the agency.   He explained it would  be a                                                              
matter of  agencies performing the review  and rating.  A  revenue                                                              
bond  or conduit  bond is  rated  by the  credit  snapshot of  the                                                              
project  which is  funded  by the  revenue  bond rather  than  the                                                              
issuing  agency.    He  provided  an  example,   such  that  AIDEA                                                              
recently  issued  revenue bonds  for  Providence  [Alaska  Medical                                                              
Center]  (Providence Hospital).   Those  bonds were  based on  the                                                              
ability of  Providence Hospital to repay  the bonds at that  rate.                                                              
He suggested  that the raters looked  more at Providence  Hospital                                                              
and not  at AIDEA  since AIDEA  is not involved.   He  highlighted                                                              
that AIDEA  can issue  revenue bonds  for energy  projects if  the                                                              
project has  a strong revenue  stream.  Thus  AIDEA will use  that                                                              
tool.                                                                                                                           
                                                                                                                                
4:30:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER referred  to page  12 to  the proposed  AS                                                              
44.88.730, which  lists the  powers and  duties of the  authority.                                                              
He prefaced  that he is  not an expert in  financial matters.   He                                                              
asked  whether the  financing  capabilities offered  through  this                                                              
fund will  be sufficient or  appropriate for development  projects                                                              
such as  the proposed  Susitna-Watana Hydroelectric  project.   He                                                              
inquired  as to  which of  these funds  might be  applicable.   He                                                              
further  asked  whether  the  proposed   capitalization  would  be                                                              
sufficient  for a  huge project  and how  much  leverage the  fund                                                              
would provide.                                                                                                                  
                                                                                                                                
MR. DAVIS answered that  the SETS fund could be used,  not to fund                                                              
the whole  project, but  perhaps to build  a transmission line  to                                                              
the dam.   He pointed out that  AIDEA's bond rating would  be used                                                              
to build the transmission  line, which might be a lower  cost than                                                              
AEA's ability  to finance that same  transmission line.   Further,                                                              
an access road  might be needed  and since AIDEA is authorized  to                                                              
build industrial  roads in  AIDEA's energy  projects, a PPP  could                                                              
be formed to build  the access road.  In response to  the question                                                              
on  leverage,  he  related  that  he  contacted   two  of  AIDEA's                                                              
consultants, who indicated the ratio should be about 5 to 1.                                                                    
                                                                                                                                
4:32:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether there is a "sweet  spot" for                                                              
the project or if it would depend on the tool used.                                                                             
                                                                                                                                
MR. DAVIS answered  that the larger the amount of  capitalization,                                                              
the  more  leverage   and  the  better  the  ability   to  perform                                                              
projects, but  the purpose of  this is to  have $125 million  this                                                              
year.   He anticipated the  legislature would  fund the SETS  with                                                              
another $125 million  next year.  He suggested that  would provide                                                              
a conservative  estimate of three  to one ratio.   He offered  his                                                              
belief  that  amount   of  capital  could  finance  quite   a  few                                                              
significant projects.   He further  anticipated the fund would  be                                                              
used for  segments of projects,  especially for parts of  projects                                                              
that  are difficult  to  finance.   He  reiterated that  the  fund                                                              
would not  cover the whole project,  but perhaps the  transmission                                                              
line.                                                                                                                           
                                                                                                                                
4:33:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  related that the project would  be limited                                                              
to using 25 percent  of the funding from the AIDEA SETS  fund.  He                                                              
asked, with  respect to  the Susitna-Watana  dam project,  whether                                                              
the dam and infrastructure  would be considered one project  or if                                                              
the  transmission  lines   would  be  a  separate  project.     He                                                              
clarified  that he  is  interested in  how AIDEA  would  determine                                                              
what would encompass the 25 percent.                                                                                            
                                                                                                                                
MR. DAVIS  offered his belief that  the transmission line  project                                                              
would be  a stand-alone  project, and  would fall  under the  one-                                                              
third limitation of  the bill.  He suggested that each  portion of                                                              
the  develop   project  would  be   discrete.    He  related   his                                                              
understanding  that  the  fund  could  be  used  for  the  overall                                                              
project.   He offered his belief  that the market would  determine                                                              
this since  investors would  be willing to  invest and define  and                                                              
determine  the investment.   He  concluded that  working with  the                                                              
private sector  will overcome the pressure  to attempt to  do more                                                              
than what is feasible to do.                                                                                                    
                                                                                                                                
4:34:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  asked  where the  roads  would  fall  in,                                                              
noting   that  he   is  not   jumping  to   the  conclusion   that                                                              
transmission  lines  would be  state-owned  since  it could  be  a                                                              
private  project.   He  asked  whether  a road  project  would  be                                                              
considered  part of  the overall  project  since the  transmission                                                              
line  project can't  be  built without  a road.    Further, a  dam                                                              
could not be built  without a road.  He asked whether  roads would                                                              
be separate  from this and  or if it could  be rolled into  the 25                                                              
percent limitation.                                                                                                             
                                                                                                                                
MR. DAVIS  agreed that an  access road for  a utility project  and                                                              
the transmission  lines could  be financed  through the  structure                                                              
of SB  25, but the  state would not  build it.   The way SB 25  is                                                              
worded, AIDEA would  have one-third of the project and  would look                                                              
for private sector  partners, such as utilities or  consortiums or                                                              
banking  institutions to  invest.   He said  he  did not  envision                                                              
these projects would involve direct state funding.                                                                              
                                                                                                                                
4:35:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  related a  scenario  in which  the  steam                                                              
generation project  across Cook Inlet  needed funding for a  road.                                                              
He inquired as to whether this project would be eligible.                                                                       
                                                                                                                                
MR.  DAVIS  answered  it  would depend  on  whether  it  met  this                                                              
definition  to qualify  as  energy development.    He offered  his                                                              
belief that the  Department of Law (DOL) would determine  this and                                                              
AIDEA  routinely confers  with  the DOL  to ensure  the  financing                                                              
proposal fits within AIDEA's statutory definition.                                                                              
                                                                                                                                
4:36:20 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  predicted it probably would  be a good project  since                                                              
the project would need 30 miles of road or transmission lines.                                                                  
                                                                                                                                
REPRESENTAIVE   JOHNSON  related   his   understanding  that   the                                                              
proposed  dam would  have about  60 miles  of road,  but not  much                                                              
transmission line.   He stated he  is interested in  understanding                                                              
how  this would  work since  it  would be  problematic  to have  a                                                              
project financed and then fall short on funding for a road.                                                                     
                                                                                                                                
4:36:42 PM                                                                                                                    
                                                                                                                                
MR.  DAVIS characterized  this  bill  as  providing the  bits  and                                                              
pieces  of  a project  once  the  larger portion  of  the  project                                                              
funding is  underway.  He envisioned  that the PPP is  directed at                                                              
those  parts of  a project.   He  referred  to the  Red Dog  Mine,                                                              
which could generate a revenue stream and pay off bonds.                                                                        
                                                                                                                                
4:37:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHNSON  inquired   as  to   whether  the   tidal                                                              
generators in  the footing  for the proposed  Knik Arm Bridge  and                                                              
Toll Authority (KABATA) could be funded.                                                                                        
                                                                                                                                
MR. DAVIS again  suggested that the project would  definitely need                                                              
to go to the DOL for legal determination.                                                                                       
                                                                                                                                
4:37:40 PM                                                                                                                    
                                                                                                                                
TED  LEONARD, Executive  Director, Alaska  Industrial  Development                                                              
and Export  Authority (AIDEA),  Department of Commerce,  Community                                                              
& Economic  Development  (DCCED), stated  that AIDEA's  management                                                              
has  looked  at  these  types  of  tools   previously  as  it  has                                                              
considered  other infrastructure  projects  and their  consultants                                                              
have indicated these  tools would be very valuable for AIDEA.   He                                                              
offered his  belief that these  tools provided in  SB 25 would  be                                                              
helpful to state in filling gap to finance energy projects.                                                                     
                                                                                                                                
4:38:51 PM                                                                                                                    
                                                                                                                                
MR.  LEONARD explained  the interest  rate process,  such that  if                                                              
AIDEA funds  a project  or a  loan out  of its  internal funds  it                                                              
would  go to  the  rates Mr.  Davis  discussed  as 5  percent  for                                                              
variable rates  and 6.1  percent for fixed  interest.   Currently,                                                              
the  fixed  rates are  based  on  AIDEA's floor  or  the  interest                                                              
earnings  over a five-year  period.   He related  that during  the                                                              
past 10-15  years, AIDEA has  not gone out  to the market to  fund                                                              
loan participations.   He  elaborated that  for very big  projects                                                              
AIDEA  would go  out  to market  and  issue a  bond, and  in  that                                                              
instance it  would be  the bond  rate less about  25 basis  points                                                              
for cost of funds  management.  He related a scenario  in which in                                                              
a  tax   exempt  bond  for  utilities   for  30  years  would   be                                                              
approximately  3.3 percent which  would add  150 basis points  and                                                              
result in about the 4.5 percent range.                                                                                          
                                                                                                                                
4:40:12 PM                                                                                                                    
                                                                                                                                
MR. LEONARD  explained that tools can  help a utility obtain  very                                                              
cheap money  is to add  the credit backstop  that would allow  the                                                              
Rural  Utilities Service  (RUS) to  look at  them more  favorably.                                                              
He  offered  his  belief  that  most  of   the  Independent  Power                                                              
Producers (IPPs)  could not get those  types of ratings for  their                                                              
projects,  only  the cooperatives  and  municipalities  could  tie                                                              
into that type of very less expensive type of capital.                                                                          
                                                                                                                                
4:40:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  him  to   elaborate  on  the  term                                                              
"credit backstop."                                                                                                              
                                                                                                                                
MR. LEONARD  responded that  the AIDEA would  provide the fund  as                                                              
the  credit  backstop,  which  in  essence  is  that  AIDEA  would                                                              
guarantee  a certain portion  of the  payment if  the entity  fell                                                              
through.  He pointed  out that if everything goes well  the credit                                                              
backstop is not  used.  He said  that typically a portion  of fund                                                              
would be  reserved to guarantee the  credit backstop and  charge a                                                              
certain  amount  of basis  points  to  give that  assurance.    He                                                              
characterized it as insurance.                                                                                                  
                                                                                                                                
REPRESENTATIVE JOHNSON compared it to cosigning a car loan.                                                                     
                                                                                                                                
4:41:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  whether   the  backstop  would  be                                                              
considered  collateral  or if  the  loan  would be  considered  as                                                              
collateral.    He  asked  for  clarification   on  whether  it  is                                                              
directly the fund or would be one step removed from the fund.                                                                   
                                                                                                                                
MR.  LEONARD answered  that  it would  be one  step  through.   He                                                              
related  a  scenario in  which  AIDEA  had  to step  in,  that  in                                                              
essence,  the  AIDEA would  pay  and  would have  the  project  as                                                              
collateral  for AIDEA's  backstop.   He recapped  that having  the                                                              
credit backstop  would remove  the worry  away from the  creditor.                                                              
He  reiterated   what  Mr.  Davis   stated,  that  as  AIDEA   has                                                              
considered infrastructure  projects - such as roads or  major port                                                              
infrastructure  - that  many consortiums  are  willing to  provide                                                              
very low rates - in  the five to seven percent range -  so long as                                                              
they  have some  type of  backstop such  as  insurance or  pension                                                              
funds.  He said  lenders are willing to receive a low  rate over a                                                              
period of time as  long as it is safe bet and AIDEA  would provide                                                              
that backstop for assurance.                                                                                                    
                                                                                                                                
4:43:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER inquired  as  to any  risk  to AIDEA  with                                                              
respect to the SETS fund.                                                                                                       
                                                                                                                                
MR.  LEONARD answered  that the  risk to  the  SETS fund  projects                                                              
would be the  risk AIDEA takes in  essence for every project  that                                                              
AIDEA invests  in since  AIDEA provides the  credit backstop.   He                                                              
stated  that instead  of  investing all  the  money, which  is  at                                                              
risk, AIDEA would  back money being paid  so the risk is  the same                                                              
as if AIDEA invested  the money directly.  He characterized  it as                                                              
the  ability  to   leverage  monies,  which  is  managed   through                                                              
reserves and through the investments.                                                                                           
                                                                                                                                
4:44:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked whether  SB 25  would help AIDEA  to                                                              
diversify.                                                                                                                      
                                                                                                                                
MR.  LEONARD answered  that he  was unsure  this  bill would  help                                                              
AIDEA in its current  mission since SB 25 does not  affect AIDEA's                                                              
current mission.   He explained that  by putting the funds  into a                                                              
separate fund that  if something did go wrong it would  not affect                                                              
the rating for the  AIDEA Development Project Fund since  there is                                                              
a  firewall between  the  two funds.    He reiterated  that  AIDEA                                                              
would go out and  obtain new bond covenants for the new  SETS fund                                                              
that  would be  different from  the covenants  in its  development                                                              
fund.   He pointed out  that is the reason  for the separate  fund                                                              
so the  ratings in the one  would not affect  the other.   He said                                                              
that AIDEA's  underwriting and general  assets would be  examined,                                                              
but  raters  will  concentrate  on  the   new  SET  fund  and  the                                                              
capitalization for it.                                                                                                          
                                                                                                                                
4:45:42 PM                                                                                                                    
                                                                                                                                
CHAIR   OLSON,   with   respect   to   underwriting    asked   for                                                              
clarification  on whether  the  project  is underwritten  for  the                                                              
amount of AIDEA participation and then adds in the backstop.                                                                    
                                                                                                                                
MR.  LEONARD  answered  yes; depending  on  the  type  of  layered                                                              
financing.   He related as  Representative Johnson discussed,  one                                                              
thing AIDEA's  development fund  could provide  is to consider  an                                                              
industrial  road  as  a separate  project  from  the  transmission                                                              
lines project,  if it  made financial  sense to  invest using  the                                                              
development  fund.     He  related  his  understanding   if  AIDEA                                                              
considered a  project to be very  good for the state,  AIDEA could                                                              
come to  the legislature to request  authorization to invest  more                                                              
than  30 percent;  however,  this  would be  at  the will  of  the                                                              
legislature.                                                                                                                    
                                                                                                                                
4:46:58 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  asked whether  AIDEA has  an idea  of which  projects                                                              
would be  more likely  to come  in on  budget.   He surmised  that                                                              
docks do not have  a good history, but roads or dams  might have a                                                              
different likelihood of success.                                                                                                
                                                                                                                                
MR.  LEONARD offered  his belief  that the  SETS fund  would be  a                                                              
safer fund than AIDEA's  development fund.  He pointed  out that a                                                              
utility,  such as  GVEA, who  is initiating  a  project, would  be                                                              
given a  rate by the RCA  at the same time.   Thus the GVEA  would                                                              
have AIDEA backstop,  but the rate payers are also  backing AIDEA.                                                              
He stated that  most of the projects  would have the RCA  involved                                                              
so  it   will  help   them  obtain  better   rates  with   AIDEA's                                                              
involvement.                                                                                                                    
                                                                                                                                
CHAIR  OLSON  related  his  understanding   that  AIDEA  would  be                                                              
working  with regulated  utilities  since they  would  be able  to                                                              
pay.                                                                                                                            
                                                                                                                                
MR. LEONARD  answered yes, in the  event the utilities would  need                                                              
the  capital.   He pointed  out,  with respect  to  the Prince  of                                                              
Wales Island,  that several mining  interests would be  considered                                                              
viable if hydroelectric power was available.                                                                                    
                                                                                                                                
4:49:07 PM                                                                                                                    
                                                                                                                                
DAN  BOCKHORST, General  Manager,  Ketchikan Gateway  Borough,  on                                                              
behalf of  the Ketchikan Gateway Borough  (KGB) stated that  SB 25                                                              
provides  a common  sense  solution  to  a glaring  public  policy                                                              
concern of the KGB.   He reminded members that the state  owns the                                                              
Ketchikan  shipyard since  it is  an AIDEA  owned  facility.   The                                                              
state has a multi-million  dollar investment in the shipyard.   In                                                              
order  to help  secure  the  financial viability  of  the  state's                                                              
investment,  the KGB  has exempted  shipyard  operations from  the                                                              
KGB's  property  tax;  however,  under   current  law,  the  KGB's                                                              
required contribution  to its school  district is not adjusted  to                                                              
reflect this  investment.   In other words,  the KGB helps  ensure                                                              
the state's  investment in  the shipyard, but  the state fails  to                                                              
recognize  that  effort  and penalizes  the  borough  by  reducing                                                              
education  funding  to  the  Ketchikan   Borough  School  District                                                              
(KBSD).   He  suggested it  was  ironic that  the  more money  the                                                              
state and federal  government invests in the shipyard  the greater                                                              
the penalty imposed on  the KGB, in fact, if SB 25  is not enacted                                                              
over the  next three years  the penalty  the borough will  receive                                                              
is triple  the current penalty  amount.   He stated that  proposed                                                              
Sections  3, 4,  and  5 of  the bill  correct  this problem.    He                                                              
stated that the KGB urges support for SB 25.                                                                                    
                                                                                                                                
4:50:59 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after  first determining  no  one  else  wished  to                                                              
testify, closed public testimony on SB 25.                                                                                      
                                                                                                                                
[SB 25 was held over.                                                                                                           
                                                                                                                                
           SB 136-VETERANS DRIVERS LICENSE, TAX CREDIT                                                                      
                                                                                                                                
4:51:24 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the final  order of business  would be                                                              
CS  FOR SENATE  BILL NO.  136(FIN)  am, "An  Act  providing a  tax                                                              
credit  for  employing a  veteran  that  may be  taken  against  a                                                              
liability for  the tax  on corporation income;  and providing  for                                                              
an effective date."                                                                                                             
                                                                                                                                
4:51:40 PM                                                                                                                    
                                                                                                                                
SENATOR BILL  WIELECHOWSKI, Alaska  State Legislature,  introduced                                                              
himself.  He thanked  members for taking time to hear SB  136.  He                                                              
introduced his staff.                                                                                                           
                                                                                                                                
4:52:10 PM                                                                                                                    
                                                                                                                                
KENDRA  KLOSTER, Staff,  Senator Bill  Wielechowski, Alaska  State                                                              
Legislature,   on   behalf   of   the    sponsor,   Senator   Bill                                                              
Wielechowski, stated  that as of  June 2011, one million  veterans                                                              
were unemployed  and the jobless rate  for post 9/11 veterans  was                                                              
at 13.3 percent.   She reported that young male veterans  ages 18-                                                              
24 have  an unemployment rate  of 21.9 percent.   She pointed  out                                                              
that  some  Google  searches  are  showing   unemployment  figures                                                              
closer to  30 percent unemployment for  veterans.  She offered  to                                                              
confirm the figures with the U.S. Department of Defense.                                                                        
                                                                                                                                
4:53:30 PM                                                                                                                    
                                                                                                                                
MS. KLOSTER  related that  the sponsor  held a  town hall  meeting                                                              
and  veterans expressed  concern about  finding jobs.   This  bill                                                              
would create  $2,000 corporate  income tax  credit for a  business                                                              
who hires  a veteran  and a  $3,000 credit for  hiring a  disabled                                                              
veteran.   The veteran must  be employed for  12 months, or  1,560                                                              
hours, which is about  30-hours a week.  This bill would  also set                                                              
up  a $1,000  tax  credit for  seasonal  employment, which  was  a                                                              
provision  requested  by  the  hotel industry.    She  reported  a                                                              
number  of  organizations   support  this  bill,  including   Vets                                                              
Helping   Vets,  Vietnam   Veterans  of   America,  and   numerous                                                              
businesses.                                                                                                                     
                                                                                                                                
4:54:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON asked whether this is per employee.                                                                      
                                                                                                                                
MS. KLOSTER  answered yes,  the tax credit  is per veteran  hired.                                                              
She explained  that for seasonal employment  it is limited  to the                                                              
first season.                                                                                                                   
                                                                                                                                
4:55:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked whether the  credit for fulltime  is                                                              
per year or one time.                                                                                                           
                                                                                                                                
MS. KLOSTER agreed it is a one-time tax credit.                                                                                 
                                                                                                                                
4:55:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  referred  to  page 2,  line  29,  to  the                                                              
requirement that  the veteran be  honorably discharged.  He  asked                                                              
whether  the sponsor  has  considered  extending this  to  general                                                              
discharge.                                                                                                                      
                                                                                                                                
MS.  KLOSTER  answered  that the  sponsor  is  specific  that  the                                                              
discharge should  be an  honorable discharge.   She indicated  the                                                              
sponsor  has worked  with  other senators  in  the body  who  have                                                              
served  in   the  military  before   deciding  on  the   honorable                                                              
discharge.                                                                                                                      
                                                                                                                                
REPRESENTATIVE SADDLER  related some  state benefits are  extended                                                              
to  those honorably  discharged  and  those who  received  general                                                              
discharge, as well.   He characterized this bill as having  a high                                                              
threshold.                                                                                                                      
                                                                                                                                
4:56:32 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON inquired  as to  whether there  is  a mechanism  that                                                              
prevents  stacking of  veterans,  such as  hiring  a veteran  then                                                              
firing him/her and hiring another veteran.                                                                                      
                                                                                                                                
MS. KLOSTER pointed  out the bill requires hiring the  veteran for                                                              
at least  12  months prior  to tax  credit, per  veteran, and  the                                                              
veteran must work a minimum of 1,560 hours.                                                                                     
                                                                                                                                
4:57:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  commented  that hiring  veterans  can  be                                                              
good  business sense.   He  strongly suspected  that the  business                                                              
will not only obtain  the credit, but will double their  money due                                                              
to productivity.  He  offered his belief that these men  and women                                                              
work hard and have a good work ethic.                                                                                           
                                                                                                                                
4:57:47 PM                                                                                                                    
                                                                                                                                
ALBERT  HOWARD,  Mayor,  City  of Angoon,  stated  that  he  is  a                                                              
veteran and approximately  20 percent of the 480 people  in Angoon                                                              
are veterans.   He  expressed appreciation  for the  work the  men                                                              
and women have  given.  He said that  in many ways the  state says                                                              
welcome  home and  SB 136  does just  that since  it ensures  that                                                              
community, state, and  nation shows appreciation for  the military                                                              
personnel who  have protected our country.   Most veterans  do not                                                              
want handouts,  but giving  them a better  than equal  opportunity                                                              
will  allow them  to  continue the  American  dream that  men  and                                                              
women joining  the armed  forces believe will  be there when  they                                                              
come  home.   He offered  his  belief that  a person  joining  the                                                              
military gives up  some rights while serving in the  armed forces.                                                              
He offered  his belief that  SB 136 is  positive on their  behalf.                                                              
He offered  his  support for  SB 136.   He  encouraged members  to                                                              
keep in mind  that our men and women  are in harm's way  and trust                                                              
that  the  legislature  is  doing  what is  right  for  all.    He                                                              
suggested that  supporting SB 136   will protect and maintain  the                                                              
same  or better  quality  of life  for  veterans that  have  given                                                              
time, sweat,  blood, and at times,  tears with their "get  it done                                                              
attitude" so everyone can continue the day-to-day business.                                                                     
                                                                                                                                
CHAIR OLSON  remarked that  a third  of the  committee qualify  as                                                              
veterans.                                                                                                                       
                                                                                                                                
5:02:02 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after  first determining  no  one  else  wished  to                                                              
testify, closed public testimony on SB 136.                                                                                     
                                                                                                                                
5:02:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked whether anything in the  bill limits                                                              
a  corporation in  Alaska  from employing  a veteran  outside  the                                                              
state.                                                                                                                          
                                                                                                                                
MS. KLOSTER referred  to page 1, line 6, which specifies  veterans                                                              
must be hired and working in the state.                                                                                         
                                                                                                                                
REPRESENTATIVE  JOHNSON pointed  out that  being  hired in  Alaska                                                              
does not necessarily mean they are working in Alaska.                                                                           
                                                                                                                                
5:03:00 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON suggested  they might  be hired  in  Alaska, but  are                                                              
working in North Dakota.                                                                                                        
                                                                                                                                
MS.  KLOSTER  explained she  held  a conversation  with  the  bill                                                              
drafter to  ensure the language meant  the veteran would  be hired                                                              
and working in  the state.  She  offered to confirm this  with the                                                              
bill drafter and get back to the committee.                                                                                     
                                                                                                                                
5:03:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON related  his understanding  that a  person                                                              
would  be hired  in Alaska,  but he  was unsure  that the  veteran                                                              
would  need to  work in  Alaska.   He  further  asked whether  the                                                              
business  would be eligible  for credit  if the  business hired  a                                                              
person who is  not an Alaska resident  who comes to Alaska  and is                                                              
hired.                                                                                                                          
                                                                                                                                
MS. KLOSTER  responded that the  distinction does not require  the                                                              
veteran  to  be  an Alaska  veteran  due  to  some  constitutional                                                              
issues.   Some  of the  language was  revised to  reflect "in  the                                                              
state" with  the intention  that the  veteran would  be in  Alaska                                                              
and would  be working  in Alaska;  however, constitutional  issues                                                              
arose  with  language that  specified  the  person  had to  be  an                                                              
Alaska veteran or to use that type of terminology.                                                                              
                                                                                                                                
5:05:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  asserted that  he  would  love to  go  to                                                              
court defending Alaskans  hiring Alaskans to fight for  the rights                                                              
of Alaskans.  He welcomed the challenge.                                                                                        
                                                                                                                                
MS. KLOSTER, in response  to Chair Olson, stated that she  did not                                                              
have  any  legal  documents,  but offered  to  address  it.    She                                                              
remarked  that Senator  Wielechowski  is  very dedicated  and  his                                                              
intention is  also to  ensure Alaska  veterans are  hired.  He  is                                                              
committed to Alaskans getting the jobs.                                                                                         
                                                                                                                                
5:06:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  related  his  understanding   the  Alaska                                                              
Office of  Veterans Affairs  wants to be  sure veterans in  Alaska                                                              
are signed  up to obtain the  U.S. Department of Veterans  Affairs                                                              
(VA) benefits.   He recalled that  veterans have been offered  the                                                              
opportunity to  register.  He asked  whether the sponsor  would be                                                              
amenable to  an amendment  to require employers  who receive  this                                                              
credit must  have their  employees who are  veterans apply for  VA                                                              
benefits.    He  suggested  such  an  amendment   would  help  the                                                              
employer  by  possibly   reducing  medical  costs  and   help  the                                                              
veterans  maintain   closer  contact   with  the   VA  to   obtain                                                              
information.                                                                                                                    
                                                                                                                                
MS. KLOSTER offered to discuss this with Senator Wielechowski.                                                                  
                                                                                                                                
5:07:54 PM                                                                                                                    
                                                                                                                                
MS.  KLOSTER  reported   that  Mr.  Bullock,  the   bill  drafter,                                                              
indicates  that  the   employer  receives  the  credit   when  the                                                              
employer hires a military veteran in Alaska.                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES  referred  to  page  1,  lines  5-6,  which                                                              
reads, "a  taxpayer that hires a  veteran and employs the  veteran                                                              
in the state...";  which she interpreted to mean the  veteran must                                                              
be hired in the  state and working in the state.   She interpreted                                                              
that  to mean  the  bill  drafter wanted  it  to  be as  clear  as                                                              
possible that the military veteran must be working in Alaska.                                                                   
                                                                                                                                
5:09:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON  referred  to  page  1,  line  10,  which                                                              
requires the  veteran be unemployed in  Alaska for more than  four                                                              
weeks.  He  suggested that if the  veteran has been unemployed  in                                                              
Alaska for  more than  four weeks implies  residency since  Alaska                                                              
has a residency requirement of 30 days.                                                                                         
                                                                                                                                
REPRESENTATIVE MILLER  was unsure whether  the language fixes  the                                                              
problem.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   SADDLER  suggested   one   solution  to   address                                                              
residency.   He  referred to  page 2,  line  5 to  insert, "for  a                                                              
veteran employed in  Alaska for 1,560 hours ... and on  line 9, to                                                              
add, "for  a veteran employed  in Alaska for  600 hours ...  which                                                              
would ensure the veteran would be hired and working in Alaska.                                                                  
                                                                                                                                
5:10:52 PM                                                                                                                    
                                                                                                                                
MS.  KLOSTER  concluded  by sharing  a  soldier's  statement  that                                                              
conveyed a  conversation he had held  with a governor.   She read,                                                              
"He didn't say he  was the most worried about facing the  enemy in                                                              
the night.  He  looked at me in the eyes and said,  'Governor, I'm                                                              
worried  about whether  there will  be a  job  for me  when I  get                                                              
home.'"   She said  she thought  that was really  telling and  the                                                              
reason the  legislature is  doing a variety  of things to  support                                                              
Alaska's  veterans when  they are  coming home.   She  appreciated                                                              
the committee hearing the bill today.                                                                                           
                                                                                                                                
[SB 136 was held over.]                                                                                                         
                                                                                                                                
5:11:56 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:11 p.m.                                                                                                                       

Document Name Date/Time Subjects
SB25 Sponsor Statement.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 ver S.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 Fiscal Note-1-2-022412-CED-Y.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 Fiscal Note-3-2-041112-FIN-Y.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 Supporting Documents-2011 AIDEA Annual Report.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
Changes to SS SB 25 in CS SS SB 25 version S.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 Supporting Documents-Assorted Letters.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 Supporting Documents-Legislative Research Report AIDEA.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25 Supporting Documents-SP AIDEA Rating Report.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB136 Ver R.A.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Sponsor Statement.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Sectional Analysis.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Fiscal Note-Senate Finance 3.5.12.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Fiscal Note-Dept. Revenue 2.1.12.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Summary of Changes.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Supporting Documents-Article AK Business Monthly.Hiring Military Veterans is Good Business.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Supporting Documents-Leg Research.Vet Tax Credit Report.12.28.11.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Supporting Documents-Letter Dixie Banner.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Supporting Documents-Letter Vets Helping Vets.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB136 Supporting Documents-Letter Vietnam Veterans of America Support Letter.pdf HL&C 4/13/2012 3:15:00 PM
SB 136
SB25 Power Point Presentation H L&C.pdf HL&C 4/13/2012 3:15:00 PM
SB 25
SB25CS Fiscal Note-EED-ESS-4-12-12.pdf HL&C 4/13/2012 3:15:00 PM
SB 25