05/04/2004 01:21 PM House RLS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled

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ALASKA STATE LEGISLATURE HOUSE RULES STANDING COMMITTEE May 4, 2004 1:21 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chair Representative Pete Kott Representative John Coghill Representative Lesil McGuire Representative Carl Morgan Representative Ethan Berkowitz Representative Beth Kerttula MEMBERS ABSENT All members present OTHER LEGISLATORS PRESENT Senator Ben Stevens Senator Gene Therriault Senator Thomas Wagoner COMMITTEE CALENDAR CS FOR SENATE BILL NO. 136(FIN) am "An Act relating to a mandatory property tax exemption for certain private property interests on military bases or installations; relating to an optional exclusion or exemption from municipal taxation for residential property; relating to an exemption from and deferral of municipal property taxes on certain types of deteriorated property; and providing for an effective date." - MOVED CSSB 136(FIN) am OUT OF COMMITTEE SENATE BILL NO. 340 "An Act relating to the detention of delinquent minors in correctional facilities; relating to emergency detention of minors for evaluation for involuntary admission for mental health treatment; relating to detention of intoxicated minors and minors incapacitated by alcohol or drugs; and providing for an effective date." - MOVED SB 340 OUT OF COMMITTEE SENATE BILL NO. 358 "An Act relating to the performance of railroad track construction work for the Department of Transportation and Public Facilities by the Alaska Railroad Corporation." - MOVED SB 358 OUT OF COMMITTEE HOUSE BILL NO. 404 "An Act relating to the Alaska Commission on Postsecondary Education; relating to the Alaska Student Loan Corporation; relating to bonds of the corporation; relating to loan and grant programs of the commission; relating to an exemption from the State Procurement Code regarding certain contracts of the commission or corporation; making conforming changes; and providing for an effective date." - MOVED CSHB 404(RLS) OUT OF COMMITTEE PREVIOUS COMMITTEE ACTION BILL: SB 136 SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTIONS SPONSOR(S): COMMUNITY & REGIONAL AFFAIRS 03/10/03 (S) READ THE FIRST TIME - REFERRALS 03/10/03 (S) CRA, FIN 03/17/03 (S) CRA AT 1:30 PM FAHRENKAMP 203 03/17/03 (S) Heard & Held 03/17/03 (S) MINUTE(CRA) 04/02/03 (S) CRA AT 1:30 PM FAHRENKAMP 203 04/02/03 (S) Moved Out of Committee 04/02/03 (S) MINUTE(CRA) 04/04/03 (S) CRA RPT 1DP 4NR 04/04/03 (S) DP: WAGONER; NR: STEVENS G, LINCOLN, 04/04/03 (S) ELTON, TAYLOR 04/10/03 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/10/03 (S) Heard & Held 04/10/03 (S) MINUTE(FIN) 02/11/04 (S) FIN AT 9:00 AM SENATE FINANCE 532 02/11/04 (S) Not Heard 04/27/04 (S) FIN RPT CS FORTHCOMING 4DP 3NR 04/27/04 (S) DP: GREEN, WILKEN, DYSON, STEVENS B; 04/27/04 (S) NR: HOFFMAN, OLSON, BUNDE 04/27/04 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/27/04 (S) Moved CSSB 136(FIN) Out of Committee 04/27/04 (S) MINUTE(FIN) 04/28/04 (S) FIN CS RECEIVED NEW TITLE 05/03/04 (S) TRANSMITTED TO (H) 05/03/04 (S) VERSION: CSSB 136(FIN) AM 05/04/04 (H) RLS AT 1:00 PM CAPITOL 124 BILL: SB 340 SHORT TITLE: DETENTION OF MINORS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR 02/16/04 (S) READ THE FIRST TIME - REFERRALS 02/16/04 (S) HES, JUD 03/03/04 (S) HES AT 1:30 PM BUTROVICH 205 03/03/04 (S) Moved SB 340 Out of Committee 03/03/04 (S) MINUTE(HES) 03/04/04 (S) HES RPT 3DP 03/04/04 (S) DP: DYSON, GREEN, WILKEN 03/19/04 (S) JUD AT 8:00 AM BUTROVICH 205 03/19/04 (S) Heard & Held 03/19/04 (S) MINUTE(JUD) 03/31/04 (S) JUD RPT 2DP 2NR 03/31/04 (S) DP: SEEKINS, THERRIAULT; NR: FRENCH, 03/31/04 (S) OGAN 03/31/04 (S) JUD AT 8:00 AM BUTROVICH 205 03/31/04 (S) Moved SB 340 Out of Committee 03/31/04 (S) MINUTE(JUD) 04/29/04 (S) TRANSMITTED TO (H) 04/29/04 (S) VERSION: SB 340 04/30/04 (H) READ THE FIRST TIME - REFERRALS 04/30/04 (H) RLS 04/30/04 (H) HB 487 SIMILAR BILL 05/04/04 (H) RLS AT 1:00 PM CAPITOL 124 BILL: SB 358 SHORT TITLE: ALASKA RAILROAD TRACK WORK SPONSOR(S): TRANSPORTATION 03/03/04 (S) READ THE FIRST TIME - REFERRALS 03/03/04 (S) TRA, L&C 03/04/04 (H) TRA AT 1:30 PM CAPITOL 17 03/04/04 (H) -- Meeting Canceled -- 03/05/04 (S) TRA RPT 3DP 2NR 03/05/04 (S) DP: WAGONER, COWDERY,THERRIAULT 03/05/04 (S) NR: LINCOLN, OLSON 03/23/04 (S) L&C AT 1:30 PM BELTZ 211 03/23/04 (S) Heard & Held 03/23/04 (S) MINUTE(L&C) 04/01/04 (S) L&C AT 1:30 PM BELTZ 211 04/01/04 (S) <Bill Hearing Postponed> 04/13/04 (S) L&C AT 1:30 PM BELTZ 211 04/13/04 (S) -- Meeting Canceled -- 04/15/04 (S) L&C AT 1:30 PM BELTZ 211 04/15/04 (S) Moved SB 358 Out of Committee 04/15/04 (S) MINUTE(L&C) 04/16/04 (S) L&C RPT 2DP 2NR 04/16/04 (S) DP: BUNDE, SEEKINS 04/16/04 (S) NR: DAVIS, FRENCH 04/20/04 (S) TRANSMITTED TO (H) 04/20/04 (S) VERSION: SB 358 04/21/04 (H) READ THE FIRST TIME - REFERRALS 04/21/04 (H) RLS 04/21/04 (H) HB 529 SIMILAR BILL 05/04/04 (H) RLS AT 1:00 PM CAPITOL 124 BILL: HB 404 SHORT TITLE: STUDENT LOANS /EDUC. FACILITIES BONDS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR 01/28/04 (H) READ THE FIRST TIME - REFERRALS

01/28/04 (H) EDU, HES, FIN WITNESS REGISTER MARY JACKSON, Staff to Senator Thomas Wagoner Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Presented SB CHAIR ROKEBERG announced that the first order of business would be CS FOR SENATE BILL NO. 136(FIN) am, "An Act relating to a mandatory property tax exemption for certain private property interests on military bases or installations; relating to an optional exclusion or exemption from municipal taxation for residential property; relating to an exemption from and deferral of municipal property taxes on certain types of deteriorated property; and providing for an effective date." Number 0073 MARY JACKSON, Staff to Senator Thomas Wagoner, Alaska State Legislature, informed the committee that the companion is HB Standing Committee and the House Finance Committee. However, there are a couple of differences between the two pieces of legislation. She directed the committee's attention to the committee packet, which includes a document explaining the Senate floor amendments to [SB CHAIR ROKEBERG announced that the next order of business would be SENATE BILL NO. 340, "An Act relating to the detention of delinquent minors in correctional facilities; relating to emergency detention of minors for evaluation for involuntary admission for mental health treatment; relating to detention of intoxicated minors and minors incapacitated by alcohol or drugs; and providing for an effective date." Number 0240 PATTY WARE, Director, Division of Juvenile Justice, Department of Health and Social Services (DHSS), informed the committee that HB 487 340 health statutes to prohibit the holding of juveniles in either adult jails or juvenile facilities when the juvenile hasn't been charged with committing a crime. This legislation is necessary to be in alignment with the requirements of the federal Juvenile Justice and Delinquency Prevention Act. Furthermore, the division is working on alternatives in a range of locations across the state as there are a range of nonsecure shelters in both rural and urban locations. The state has been working on this matter for well over a decade, she related. She specified that the division has been working with the Department of Public Safety, in particular the Alaska State Troopers. Ms. Ware informed the committee that [340. MS. WARE replied yes. CHAIR ROKEBERG, upon determining there was no one else who wished to testify, closed public testimony. Number 0381 REPRESENTATIVE BERKOWITZ moved to report SB CHAIR ROKEBERG announced that the next order of business would be SENATE BILL NO. 358, "An Act relating to the performance of railroad track construction work for the Department of Transportation and Public Facilities by the Alaska Railroad Corporation." Number 0426 WENDY LINDSKOOG, Director, External Affairs, Alaska Railroad Corporation, informed the committee that SB 529 was heard Committee. She explained that ARRC entered into a collaborative process with Department of Transportation & Public Facilities (DOT&PF), the Associated General Contractors (AGC), and Local which specifically provides the limitations and guidelines with regard to how the legislation will be administered. The MOU will accompany the legislation, she noted. Ms. Lindskoog explained that SB the competitive bid process or to work directly with ARRC through a utility agreement when the department has projects that include track work. The reason for the legislation is that there didn't seem to be much interest from the private sector in bidding some projects. However, once the legislation was introduced, it was discovered that there was interest from the private sector. Therefore, the MOU struck a good compromise. Ms. Lindskoog clarified that basically ARRC will work under utility agreements for critical track work when it involves switches and cut-overs to the mainline as well as other work that require specialized equipment. MS. LINDSKOOG, in response to Chair Rokeberg, confirmed 529 CHAIR ROKEBERG surmised that the key element is the MOU, which makes the legislation generally acceptable to all interested parties in the state. MS. LINDSKOOG replied yes. CHAIR ROKEBERG, upon determining there were no further questions, closed public testimony. Number 0636 REPRESENTATIVE McGUIRE moved to report HB CHAIR ROKEBERG announced that the final order of business would be HOUSE BILL NO. 404, "An Act relating to the Alaska Commission on Postsecondary Education; relating to the Alaska Student Loan Corporation; relating to bonds of the corporation; relating to loan and grant programs of the commission; relating to an exemption from the State Procurement Code regarding certain contracts of the commission or corporation; making conforming changes; and providing for an effective date." Number 0694 DIANE BARRANS, Executive Director, Alaska Commission on Postsecondary Education (ACPE), Department of Education and Early Development (EED); Executive Officer, Alaska Student Loan Corporation (ASLC), said that she could speak to some of the technical changes that the director of Legislative Legal and Research Services proposed due to some confusing language that she recommended be deleted. However, she stated that the changes didn't result in any substantive effect. Number 0764 REPRESENTATIVE COGHILL moved to adopt 404. Number 1208 SHEILA KING, Finance Officer, Alaska Commission on Postsecondary Education, Department of Education and Early Development; Alaska Student Loan Corporation, said she understood the question to be in regard to the timing of the funds. She informed the committee that what has been projected for the next payment would be between $80-$100 million. Subsequent to that there would be an approximately $80 million [payment]. The timing is related to the availability of assets. There are some bonds that have upcoming call provisions. As the debt can be reduced in a particular indenture, then there is more flexibility with the bonding in the indenture. Ms. King noted that one of the mechanisms that has been reviewed is residual interest bonds, which means that the cash flow at the end of the loans would be captured as the front cash flows of the loans are pledged to current bonds. However, those bonds mature before the loans are totally paid off. Therefore, the thought is to issue subordinate bonds in order to collateralize the later cash flows for these bonds, which would allow recognition of the cash early. MS. KING, in further response to Chair Rokeberg, explained that in the trust being reviewed if the last maturity occurs in 2013, the loans may not pay off until 2020. Therefore, there is seven years of cash flow that could be collateralized now so as "to pledge those seven years of cash flows ... that would remain beyond the current maturities of the bonds in that trust." CHAIR ROKEBERG asked if significant discounts would have to be made to do that. MS. KING answered that whether those are discounted bonds or not will depend on the market. The rates may be slightly higher than the senior series bonds, but the bonds would still be tax exempt. Therefore, the rates would be very good. Ms. King confirmed that there is a limitation on the available cash flow on an annualized basis for a period of years. She explained that the assets are pledged to bonds currently and the bond covenants don't necessarily allow cash to be taken out of the trust unless the trust exceeds a certain amount. "So, we've got the loans pledged to the trust, we've got capital reserve funds that are required under the bond indentures and thus we're looking at pledging future cash flows because that's really where our main capacity is," she specified. Number 1442 CHAIR ROKEBERG asked if the earlier referenced $80-$100 million would be available for fiscal year (FY) 2005. MS. KING informed the committee that ACPE anticipates issuing bonds in the spring of 2005, between February and March. That timeframe provides time to do the deal. Furthermore, there are some bonds that are being paid off this summer and [the aforementioned timeframe] will help with the collateralization availability for future bonds as well. CHAIR ROKEBERG recalled that over the next couple of years there is over $200 million of potential income stream available for legislative appropriation. He also recalled that it was the governor's intention to spread it over three years. MS. KING specified that the [division's] proposal is to return about $250-$260 million to the state. The aforementioned is the amount of loans that were contributed to start ASLC. In March a bond issue for $75 million of the [$250-$260 million] was closed and the money is sitting in the capital project fund waiting to be used. The three-year phase approach was used because it was determined that is what [ACPE] would most likely be able to meet given bond maturities, loan amortization schedules, cash flows, and maintaining ASLC's primary focus. Number 1609 PETE ECKLUND, Staff to Representative William Williams, Alaska State Legislature, offered to explain how the proposed list of projects in Version S was determined. He directed attention to the spreadsheet entitled "FY 2005 Education Bond Worksheet", dated 12:14 PM 5/4/2004. The last page of the spreadsheet shows that the list of projects in this legislation total $88,258,000. He explained that the major maintenance list from EED was reviewed and $23 million of the $26 million of projects on EED's major maintenance list were [included in this legislation]. He recalled that [the list includes] 27 of 31 projects. The last few projects weren't included because of the lack of good justification. Moreover, the top two projects of the school construction list were included [in this legislation] as were [most] of the projects on the University of Alaska's wish list. Mr. Ecklund pointed out that the bond total was kept between $85-$90 million. MR. ECKLUND acknowledged that there have been questions regarding why the list doesn't include any urban school projects. He explained that two years ago the legislature opened up the bonding authority for any community with bonding capacity to work with EED to place new school construction and deferred maintenance on the local ballot and receive 70:30 reimbursement. The aforementioned is available until the end of the 2004 calendar year. Mr. Ecklund recalled that about $500 million of debt has been incurred through voter approval in municipalities with bonding authority. Therefore, Version S attempts to balance the aforementioned by providing funding to those communities that don't have bonding capacity. Mr. Ecklund related that this was balanced between urban and rural areas in respect to other bonding legislation that includes transportation projects. Number 1835 REPRESENTATIVE BERKOWITZ related his observation that the list amounts to about one-third of the amount available through ASLC's bonding capacity. He acknowledged that the governor wanted this to be stretched out over three years. He inquired as to whether there is some consistency. MR. ECKLUND directed attention to page 4, Section 5, which limits the bonding capacity to $200 million between January 1, [Section 5] is attainable by ASLC to bond for over the next few years. The ASLC wouldn't necessarily have to bond for the full amount in the first issuance, rather bonding over multiple years could occur in order to reach the cash flow needs of the projects listed. Mr. Ecklund pointed out that when a concept like this is introduced [the bonds] tend to grow, and therefore the desire was to start at a moderate level. REPRESENTATIVE McGUIRE turned to the list of projects, and asked if the Integrated Science Facility is in Phase II. MR. ECKLUND answered that although he wasn't sure what phase the project is in, he understood that the funds would complete the project. REPRESENTATIVE McGUIRE noted that there are four phases to completion, and said she had heard that only part of the phases [would be completed with the funding specified]. MR. ECKLUND specified that the funding for the Integrated Science Facility was what the University of Alaska requested, and therefore he assumed that the university requested what was necessary. Number 1996 EDDY JEANS, Manager, School Finance and Facilities Section, Education Support Services, Department of Education and Early Development, reminded the committee that a couple years ago the legislature passed Kasayulie case. Therefore, it seemed necessary to do some rural construction projects in order to come into compliance with that case. MR. JEANS explained that voters authorized $154 million in general obligation (GO) bonds for rural projects over a two-year period. In that same time, voters in municipalities across the state have authorized [in total] over $540 million and there is six months more in which additional debt could be authorized. CHAIR ROKEBERG asked if the education bonding of $88 million was capped in order to allow ASLC's desire to have cash flow management. MR. ECKLUND answered that he did that at the direction of his boss. In further response to Chair Rokeberg, Mr. Ecklund said that he didn't leave out the urban areas at the direction of his boss. He pointed out that the last page of the spreadsheet entitled "FY 2005 Education Bond Worksheet" specifies that urban communities received 48 percent of this proposal while rural communities received 45 percent and 7 percent of the total was utilized statewide. CHAIR ROKEBERG surmised that the proposal includes university funding. MR. ECKLUND replied yes, adding that it also includes EED funding. CHAIR ROKEBERG recalled mention of $150 million of statewide school authorized bonding that went to mostly the Rural Education Attendance Areas (REAA). MR. JEANS explained that the actual GO bond was for $171 million, but the governor's office reduced it by $3 million. There was one Anchorage project for $14 million, he noted. Therefore, when one factors in the $3 million reduction and the $14 million project in Anchorage, it results in the $154 million that was available to the REAAs. He confirmed that was bonded two years ago. CHAIR ROKEBERG surmised that the belief is that since the GO bonds were bonded and the urban areas were allowed the 70:30 or this apple." He indicated that he wasn't sure he understood that. MR. ECKLUND pointed out that [70:30 and 60:40 reimbursement] is available to municipalities through the end of this year. Number 2558 REPRESENTATIVE McGUIRE commented that Chair Rokeberg brings out an interesting point, particularly in Anchorage where the voters have become increasingly unwilling to approve bonding packages. Particular areas seem to be discriminated against by not having projects approved. She mentioned that the educational process for bonding is difficult. MR. JEANS clarified that the passage of TAPE 04-5, SIDE A CHAIR ROKEBERG reconvened the House Rules Standing Committee at Morgan, and Berkowitz were present upon reconvening. Representative Kerttula arrived as the meeting was in progress. Chair Rokeberg reminded the committee that before it was Number 0069 REPRESENTATIVE BERKOWITZ moved to adopt CSHB Standing Committee. ADJOURNMENT There being no further business before the committee, the House Rules Standing Committee meeting was adjourned at 11:51 p.m.

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