Legislature(1997 - 1998)
03/25/1997 09:03 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 25, 1997
9:03 A.M.
TAPES
SFC-97, # 69, Sides 1 & 2 (000-590, 590-234)
CALL TO ORDER
Senator Bert Sharp, Cochair, Senate Finance Committee,
convened the meeting at approximately 9:03 A.M.
PRESENT
In addition to COCHAIR SHARP, SENATORS DONLEY, PHILLIPS,
TORGERSON and ADAMS were present when the meeting was
convened. COCHAIR PEARCE and SENATOR PARNELL arrived while
the meeting was in progress.
Also Attending:
TOM WILLIAMS, Staff, Senate Finance Cochair Sharp; MARGOT
KNUTH, Assistant Attorney General, Department of Law; NANCY
SLAGLE, Director, Administrative Services, Department of
Transportation and Public Facilities; FORREST BROWNE,
Investment Officer, Department of Revenue; and aides to
committee members.
Also Attending Via Teleconference:
CAPT. TED BACHMAN, Alaska State Trooper, Anchorage; KEN
LANCASTER, Mayor, Soldotna.
SUMMARY INFORMATION
SB 126 STATE EMPLOYEES RIP AMENDMENTS
TOM WILLIAMS explained changes in a proposed CS work
draft. SENATOR PHILLIPS MOVED for adoption of the
proposed CS. Without objection, CSSB 126(FIN) was
ADOPTED. SENATOR PHILLIPS MOVED CSSB 126(FIN) from
committee with individual recommendations and
accompanying fiscal notes. There was no objection and
CSSB 126(FIN) was REPORTED OUT of committee with an
indeterminate fiscal note from Office of Management and
Budget and a zero fiscal note from Department of
Administration.
SB 68 TASK FORCE ON PRIVATIZATION
SENATOR DONLEY MOVED to RESCIND previous committee
action of reporting out CSSB 68(FIN). Without
objection, the action was rescinded. SENATOR DONLEY
MOVED to ADOPT CSSB 68(FIN). It was ADOPTED without
objection. SENATOR DONLEY MOVED Amendment #4. Without
objection, Amendment #4 was ADOPTED. SENATOR DONLEY
MOVED Amendment #3. Senators Torgerson and Adams
objected. A vote was taken and the amendment failed by
a 5 to 1 vote. SENATOR ADAMS MOVED CSSB 68(FIN) from
committee with individual recommendations and an
updated fiscal note, then WITHDREW his motion. SENATOR
DONLEY MOVED to RESCIND previous action of failing to
adopt Amendment #3. COCHAIR PEARCE objected. SENATOR
DONLEY WITHDREW his motion to rescind. SENATOR ADAMS
renewed his motion to move the bill from committee.
Without further objection, CSSB 68(FIN) was REPORTED
OUT with new fiscal notes from Legislative Affairs
Agency (17.9), Office of Management and Budget
(indeterminate) and Office of the Governor
(indeterminate).
SB 3 MINOR'S CURFEW VIOL. HEARD IN DIST. CT.
COCHAIR PEARCE, Sponsor, testified on behalf of the
bill. Testimony was also heard from CAPT. TED BACHMAN
and MARGOT KNUTH. SENATOR ADAMS MOVED Amendment #1. A
vote was taken and Amendment #1 FAILED by a vote of 4
to 2. COCHAIR PEARCE MOVED CSSB 3(JUD) from committee
with individual recommendations and accompanying fiscal
notes. Without objection, CSSB 3(JUD) was REPORTED OUT
with a previous fiscal note from the Court System
(24.3), previous fiscal notes from the Departments of
Administration (indeterminate) and Health and Social
Services (indeterminate), and a zero fiscal note from
the Department of Public Safety.
SB 136 BUDGET AND APPROPRIATION BILLS
Amendments #1 and #4 had been previously adopted.
Amendment #3, which had been held, was not offered.
SENATOR PARNELL MOVED Amendment #5. COCHAIR SHARP
objected, then withdrew his objection. There being no
further objection, Amendment #5 was ADOPTED. SENATOR
PARNELL MOVED CSSB 136(FIN) from committee with
individual recommendations and a zero fiscal note.
Without objection, CSSB 136(FIN) was REPORTED OUT with
a zero fiscal note from the Office of Management and
Budget.
SB 34 DOT MAINTENANCE FACILITY AT SOLDOTNA
SENATOR TORGERSON, Sponsor, testified on behalf of SB
34. Testimony was also heard from NANCY SLAGLE, MAYOR
KEN LANCASTER and FORREST BROWNE. SENATOR ADAMS MOVED
Amendment #1. Without objection, Amendment #1 was
ADOPTED. SB 34, as amended, was HELD for further
consideration.
SENATE BILL NO. 126
"An Act relating to the retirement incentive program for
state employees; and providing for an effective date."
COCHAIR SHARP called attention to the proposed CS work draft
before the committee and invited Mr. Williams to address it.
TOM WILLIAMS, Staff, Senate Finance Cochair Sharp, referred
to the work draft which incorporated amendments to Section
3, page 2, and Section 4, line 20, in Section 22 (f)(1),
which had previously been Section 22 (f). The Division of
Retirement and Benefits recommended the reference be changed
and Legal Services concurred.
SENATOR PHILLIPS inquired if the suggestion made by APEA and
AFT to go from three years to five years was considered.
MR. WILLIAMS responded that those provisions change the way
one would calculate who would be included in the pool. The
intent of SB 126 was to encourage the administration to
utilize the existing pool, not to change the nature of it.
SENATOR PHILLIPS acknowledged it was a policy decision.
COCHAIR SHARP called for a motion on the CS. SENATOR
PHILLIPS MOVED for adoption of the proposed CS. COCHAIR
SHARP referenced the technical amendment on page 2, line 20.
He asked if there were further questions or testimony.
There being none, CSSB 126(FIN) was ADOPTED without
objection.
SENATOR PHILLIPS MOVED CSSB 126(FIN) from committee with
individual recommendations and accompanying fiscal notes.
There was no objection and CSSB 126(FIN) was REPORTED OUT of
committee with an indeterminate fiscal note from Office of
Management and Budget and a zero fiscal note from Department
of Administration.
SENATE BILL NO. 68
"An Act relating to the Task Force on Privatization; and
providing for an effective date."
COCHAIR SHARP explained that the bill had been reported out
of committee on 3-21-97 but there had been a difference
between the actual amendment and what the drafter put in the
CS, so he wanted to bring it back before committee for
clarification.
SENATOR DONLEY MOVED to RESCIND previous committee action of
reporting out CSSB 68(FIN). Without objection, the action
was rescinded.
SENATOR DONLEY commented that he had spoken with SENATOR
PARNELL about his concern. He explained that the specific
amendment adopted previously dealt with modifying the number
of members of the task force. The amendment draft sent over
by Legal Services was different than what they intended to
draft. The proposed CS before the committee reflects the
actual motion to Section 2, page 2. COCHAIR SHARP stated
for clarification that the confusion was over page 2, lines
6-7, and that the proposed CS was the correct version.
SENATOR DONLEY concurred, adding that it was what had been
discussed and voted on.
SENATOR DONLEY MOVED to ADOPT CSSB 68(FIN). It was ADOPTED
without objection. SENATOR DONLEY MOVED Amendment #4. He
explained that he and SENATOR PARNELL developed the
language. Under the CS, the task force selects a chair and
vice-chair from among its members on page 2, line 14. That
would be deleted and replaced with co-chairs, one of which
would be selected by the Senate President and one by the
House Speaker. They both thought that with past experience
with the Long Range Financial Planning Commission it would
be a good idea to keep the legislature more active in it and
have more direct control. COCHAIR SHARP called for
discussion or objection. There being none, Amendment #4 was
ADOPTED.
SENATOR DONLEY MOVED Amendment #3. It would adopt a new
fiscal note to fund the additional public member proposed in
the CS and a full-time staff person to carry out the duties
of the task force from July 1, 1997 to December 1, 1998.
Senators Torgerson and Adams objected. SENATOR ADAMS
opposed the additional staff position, as did SENATOR
TORGERSON, who added that he would rather hire a contractual
facilitator rather than a staff person.
A roll call vote was taken on the MOTION to adopt Amendment
IN FAVOR: Donley
OPPOSED: Torgerson, Phillips, Adams, Pearce, Sharp
And so, the MOTION FAILED (1-5).
COCHAIR SHARP called attention to the $17.9 thousand fiscal
note from Legislative Affairs Agency and noted it
accommodated the additional member. He invited additional
comments or amendments to SB 68 and there were none.
SENATOR ADAMS MOVED CSSB 68(FIN) from committee with
individual recommendations and an updated fiscal note.
SENATOR DONLEY reiterated his position that for the task
force to be effective it needed personnel. He referred to
significant staff cuts taken by the legislature and appealed
to the committee to rescind their action in failing to adopt
Amendment #3.
SENATOR ADAMS WITHDREW his motion at the request of the
Cochair.
SENATOR DONLEY MOVED to RESCIND previous action of failing
to adopt Amendment #3. COCHAIR PEARCE objected and spoke to
her objection. She appreciated the concerns and agreed that
to be credible, complete and have integrity, the task force
would need good staff with excellent writing and researching
skills. It was her belief that there existed latitude
within the legislative budget to provide staffing without
the need to attach a fiscal note to the bill. She
acknowledged inconsistencies in the past regarding fiscal
notes attached to task force bills, but noted that in the
past two years, the leadership of both houses stepped
forward to provide adequate staffing. She believed there
were adequate funds in the budget to do so again, if needed.
She added that Legislative Finance, Legislative Research,
and Legal Services staff were underutilized during the
interim, and the task force could benefit from some of their
skills and availability.
SENATOR ADAMS agreed and added that Legislative Council
could also get someone on contract.
SENATOR DONLEY WITHDREW his motion to rescind. SENATOR
ADAMS renewed his motion to move the bill from committee.
Without further objection, CSSB 68(FIN) was REPORTED OUT
with new fiscal notes from Legislative Affairs Agency
(17.9), Office of Management and Budget (indeterminate) and
Office of the Governor (indeterminate).
SENATE BILL NO. 3
"An Act authorizing prosecution and trial in the district
court of municipal curfew violations."
COCHAIR PEARCE, Sponsor, brought up a news item in Juneau
last fall, in which the Assembly put a curfew aside because
they found they had no avenue to prosecute offenders. She
read the Sponsor Statement relating to SB 3 (copy on file).
Following is an excerpt of the first and last paragraphs:
"Currently, juvenile offenses other than traffic,
tobacco, fish and game, parks and recreational
facilities, or alcohol violations, are handled through
municipal courts where these exist, or are not handled
at all because of the Division of Family and Youth
Services caseload.
SB 3 will mandate that all juvenile curfew
violations be handled in District Court. Alaska
Delinquency Rules will not apply, and the minor accused
of the offense will be charged, prosecuted, and
sentenced in the District Court in the same manner as
an adult. When a minor is charged, prosecuted and
sentenced for an offense under this subsection, the
minor's parent, guardian, or legal custodian will be
present at all proceedings."
COCHAIR PEARCE pointed out the Judiciary CS was before the
committee. She stated there was a "quilt of ability" for
juveniles to be handled in court in the state. Some judges
take a more active interest at the juvenile level, one of
whom was Judge Froehlich of Juneau, who sets aside Friday
afternoons for juvenile cases. He was aggressive in
prosecuting violations of alcohol and tobacco and informed
her that the lion's share of people he has seen on those
charges would also come before him on a curfew violation.
Her intention was to give communities the tools they need to
intervene in children's problems before they become large.
If they can be stopped with a curfew violation, young people
could be diverted from a life in the corrections system.
COCHAIR PEARCE mentioned the Court System fiscal note of $24
thousand, stating they were not sure how many cases they
might see. Anchorage might choose to go with an ordinance
and start prosecuting their curfews at the district court
level rather than at the municipal level.
Section 2 was a suggestion from Anchorage Assemblyman Joe
Murdy which would allow the option for community work in
place of fines. The reason it was permissive was based on a
recent case in which the judge decided if a youth was
sentenced to community work, it was the sort of sentence
that should have a jury trial. She wanted to make sure the
cases didn't automatically go to a jury trial, so it was
made permissive. In some Anchorage cases the parents of the
offender were unwilling to pay the fine. She was hopeful
that between parental and court pressure they could get
young people to do community service to work off their fine.
In response to a question from SENATOR PHILLIPS, COCHAIR
PEARCE did not recall receiving a position paper from the
Anchorage Municipality, but did receive one from Juneau.
She acknowledged the idea came from the assembly.
SENATOR ADAMS brought up a proposed amendment for the
committee's consideration. His understanding was that SB 3
mandates that juvenile curfew violations be handled in
district courts and the minor would be charged, prosecuted
and sentenced in the same manner as an adult. It would
shift the burden for municipal violations from municipal
hearing officers to state district court. The juvenile
would get a criminal record and potential jail time. He
believed it was a municipal rather than a state problem.
Criminal records should not belong to a youth that makes a
mistake with curfew violations. His proposal came from the
Governor's Youth and Justice working group as a
recommendation. He reiterated that curfew violations should
be a civil rather than a criminal issue, a policy issue they
must decide at the table. He wanted to keep the fines to a
maximum of $250.
COCHAIR PEARCE responded to a question by SENATOR PHILLIPS
by stating that SB 3 would not affect the Anchorage
ordinance. They could choose to change it and use the
district court system, but they presently have their own
system. The main problem is in Juneau and other communities
without their own court system and ability to prosecute
curfew offenders. She acknowledged that the Department of
Health and Social Services approached her about the
amendment proposed by SENATOR ADAMS. She believed the
department did not have the manpower to handle all the young
people and questioned the fiscal impact of the amendment.
The presence of SENATOR PARNELL was noted.
SENATOR PHILLIPS questioned if the legislation was assuming
responsibility for local government and adding more to the
state budget. He also inquired why it was different from
other ordinances around the state. He then agreed with
SENATOR ADAMS' point that it had a different attitude, that
of a criminal record versus a fine.
COCHAIR SHARP called for testimony from those on
teleconference. CAPT. TED BACHMAN, Alaska State Trooper,
deferred to Ms. Knuth, and asked to testify after her.
MARGOT KNUTH, Assistant Attorney General, Department of Law,
approached the committee. She outlined two special projects
she had been working on this year. One had to do with the
need for more prison beds and the other was trying to work
on juvenile justice issues and keep facilities from being
filled up. The governor recently sponsored a conference on
youth and justice and asked a group of ninety citizens and
experts around the state to look at the growing problem of
juvenile crime and make recommendations on what could be
done both at the local level and the state level. One of
the most significant findings was that there was a gap in
the system between doing almost nothing for minor offenses
and "then landing with both feet" on juveniles who are
committing the most serious offenses. A need for
consistent, swift and certain consequences has been
identified for the low level offenses. The problem with
utilizing the statewide DHSS system is a growing population
and decreasing budget, and they have been unable to do all
and be all. The department has had to focus their energy on
the serious offenders because of finite resources.
MS. KNUTH testified that there were a number of communities
who have identified their juveniles at risk of becoming
criminal offenders and they wish to do something. The
desire to work with low level offenders was taking different
forms throughout the state depending on the nature of the
community. She briefly described the Anchorage Court system
in which they use a hearing officer, similar to a judge.
The juvenile is cited and required to go before the hearing
officer and be held accountable. In the small communities
of Elim and Koyuk, they started a pilot project that enabled
them to use a village court system, which was different than
the hearing officer, but it focused on the same group of at-
risk kids and created an authority figure who meted out
appropriate consequences for juveniles.
MS. KNUTH continued by stating the problem with SB 3 was
fairly typical of the way the state has been trying to deal
with those at risk of becoming offenders, which was to put
it back on the state. It can be appropriate, but at the
same time, a community response would be more appropriate
and more likely to result in swift, certain and consistent
consequences. She felt there was a need for systems that
could be utilized. SENATOR ADAMS' amendment would increase
the tools that could be used by communities, which was in
the spirit of the need identified by COCHAIR PEARCE.
MS. KNUTH described the proposed amendment. First, it
created a possibility of civil penalties instead of criminal
penalties for kids who are not criminals yet but are at
risk. Rather than use the criminal system for them, it made
more sense to use civil penalties. She noted "We've run
into this problem of if the fine is too big or community
work service is ordered, then it is treated like a criminal
case and there is the right to a jury trial." The amendment
reduces the fine from $1,000 to $250, which is something the
Court of Appeals has identified as the cut-off level for a
civil penalty. Section 2 would require that DHSS was
notified of juveniles who are racking up civil penalties
because they are the youth at risk of becoming serious
offenders and they need some way to make sure there is a
whole profile so they cannot escape. A significant problem
now is there is no accountability or documentation to
identify those at risk. Section 3, the civil penalties
section, is what Anchorage is currently utilizing and wants
to keep using. The municipal prosecutor had expressed
concern that his workload would not allow more cases which
would happen if they prosecuted in district court. The
remaining sections of the amendment allow the department to
delegate to communities the ability to respond to these low
level offenses. That is what would create a formal system
for the Elim and Koyuk agreement, the Mat-Su diversion
panel, and some other systems used statewide. It would
create a reporting mechanism so that DHSS doesn't lose track
of those at risk of becoming chronic offenders. She
believed that state government needed to be doing less and
communities were asking to be empowered to do this work, so
it seemed appropriate to create a new response level for
kids at risk.
CAPTAIN TED BACHMAN, Alaska State Trooper, testified next
via teleconference from Anchorage. He added to Ms. Knuth's
comments regarding the proposed amendment. One of his
concerns was creating another subset of people who are
prosecuted in adult court. He reiterated one of the
findings of the governor's conference on juveniles that
spoke against creating any more laws that would bring
juveniles into adult court. He supported the accountability
the amendment would create at the local level for the lower
offenses. It provides another avenue that would help steer
young people in the right direction.
SENATOR ADAMS commented that he offered the amendment as a
proposal to work with the sponsor. He felt it was good
legislation but needed more work, communities need to be
involved, and there was a middle ground that could be
considered.
COCHAIR PEARCE explained that the Judiciary Committee did
look at the same idea, which had been offered by the HESS
Committee. It was her feeling that a young person who faced
a DHSS procedure is less likely to have an epiphany and
decide they didn't want to be in that situation again than a
person who had to face a judge.
End SFC-97 # 69, Side 1
Begin SFC-97 # 69, Side 2
COCHAIR PEARCE continued with a discussion about unpaid
fines resulting in court contempt problems and incarceration
in a youth facility. That was the reason for adding the
option of community service. She questioned whether DHSS
could handle the workload that would be required by the
amendment. After thinking through the proposal, she saw
there were two directions to go, and she was more
comfortable with the Judiciary CS version of the
legislation.
SENATOR ADAMS MOVED Amendment #1. COCHAIR PEARCE objected.
A roll call vote was taken on the MOTION to adopt Amendment
IN FAVOR: Phillips, Adams
OPPOSED: Parnell, Torgerson, Pearce, Sharp
And so, the MOTION FAILED (2-4).
COCHAIR PEARCE MOVED CSSB 3(JUD) from committee with
individual recommendations and accompanying fiscal notes.
Without objection, CSSB 3(JUD) was REPORTED OUT with a
previous fiscal note from the Court System (24.3), previous
fiscal notes from the Departments of Administration
(indeterminate) and Health and Social Services
(indeterminate), and a zero fiscal note from the Department
of Public Safety.
SENATE BILL NO. 136
"An Act relating to the state budget and to appropriation
bills."
COCHAIR SHARP explained that the bill had been heard
previously (3-21-97). Amendments #1 and #4 had been adopted
and there was an additional amendment before the committee.
SENATOR PARNELL informed the committee he would not offer
Amendment #3. SENATOR PARNELL MOVED Amendment #5. COCHAIR
SHARP objected for the purpose of explanation. SENATOR
PARNELL explained that it would require a report from OMB
detailing what funds and how much was expected to lapse in
the fiscal year to be submitted to the legislature by the
45th legislative day. He justified that "we're gonna know
what they need to make up in their budget through the
supplemental process, we ought to also know how much money's
left over in the budget to work with."
SENATOR ADAMS asked to hear from the administration
concerning the amendment. COCHAIR SHARP noted there was no
one present to testify on behalf of the administration. He
then withdrew his objection. There being no further
objection, Amendment #5 was ADOPTED.
SENATOR PARNELL MOVED CSSB 136(FIN) from committee with
individual recommendations and a zero fiscal note. Without
objection, CSSB 136(FIN) was REPORTED OUT with a zero fiscal
note from the Office of Management and Budget.
SENATE BILL NO. 34
"An Act giving notice of and approving a lease-purchase
agreement with the City of Soldotna for a maintenance
facility of the Department of Transportation and Public
Facilities."
SENATOR TORGERSON, Sponsor, explained SB 34 was a
straightforward lease-purchase agreement with the City of
Soldotna to finance and construct a Department of
Transportation and Public Facilities maintenance facility.
The current facility would be moved off the present location
on the Kenai River. It has been a top priority for the city
for a number of years. The bill originally started out with
$6 million for the cost of the facility. Amendments in the
Transportation Committee reduced the amount to $4.5 million
with the lease payment obligation at $620 thousand per year.
SENATOR ADAMS inquired where the project was on the DOTPF
capital budget priority list.
NANCY SLAGLE, Director, Administrative Services, DOTPF,
testified in support of SB 34. She explained that the
department had requested direct funding for the facility for
the past 2-3 years. Some appropriations were provided for
remediation, design and preliminary work. It was felt SB 34
was the most appropriate method to obtain funding for
construction of the facility at this time. The project, as
well as the removal and clean-up of the old site, was
supported by the governor, but there was limited money
available because of budget constraints. She noted that
representatives from the Department of Revenue were present
to explain that they have been assured by the state's bond
counsel that the clean-up portion can be included in the
financing package, as long as there is a tie to the
exchange of the new land expected from the borough.
SENATOR TORGERSON elaborated on the land issue. In 1964,
when the borough was created, they selected a piece of DOTPF
land for the borough building. It has been on the books
since then, to be traded back to DOTPF when requested. It
surfaced as part of the agreement to move the site. The
borough has made land available to the state for the
facility just outside Soldotna and are prepared to deed the
land over to the state. There had been some discussion
about whether or not to include approximately $1.5 million
for clean-up of the contaminated maintenance yard site. The
City of Soldotna has indicated they would go either way, but
preferred not to sell revenue bonds to finance the clean-up.
MAYOR KEN LANCASTER, City of Soldotna, testified via
teleconference. He stated that it has been the city's
number one priority to move the facility off the banks of
the Kenai River. They are prepared to go to bond to build
the new facility. It had been their prior understanding
that the clean-up would be a separate item but they could go
either way. They just want the facility moved as
expeditiously as possible to protect the river.
SENATOR TORGERSON brought up a previous appropriation of
$600 thousand for clean-up, $400 thousand of which has been
spent. He noted it was an ongoing process. It was
difficult to tell how much it would cost and what the
definition of clean was. He stated the department estimated
a lower figure of $250 thousand, but no upper limit had been
established. It was dependent on what they might find. He
was uncertain if the clean-up should be included, possibly
clouding the title, particularly with the City of Soldotna
being the lead agency. He referred to a budgetary item
included by the governor last year of $1 million, one-fifth
of the project, and it was traded off for $600 thousand for
additional clean-up.
MAYOR LANCASTER added that it seemed strange to try to
inflate the cost of a new facility by $1.5 million, when it
(the clean-up) was actually occurring on another site. So
instead of the facility only costing $4.5 million, it makes
it worth $6 million. It did not make economic sense to him.
COCHAIR SHARP invited Mr. Browne to discuss the nature of
the fiscal note and proposed lease.
FORREST BROWNE, Investment Officer, Department of Revenue,
addressed the committee. The administration had suggested
several technical changes to the proposed legislation that
would minimize the cost of issuance of the financing. It
would also give more flexibility in terms of refinancing.
Their experience has been that typically, over the term of
the lease, it gets refinanced two to three times when
interest rates dip. So they have aggressively pursued
refinancing any time they can save money on the lease
payments. They had recommendations in three areas.
The first area would clarify that the state bond committee
would coordinate the financing. It is state debt, it will
affect the state debt capacity, it will be rated as a state
debt by the national bond rating services and it would be
appropriate to be involved in that process. A second
suggestion was to eliminate the requirement that the City of
Soldotna be the nominal issuer of the debt. If there is
flexibility in that regard, it could be structured that way,
but in the event it could be combined with another financing
coming along at the same time, they might wish to do that.
As written, the bill specifies they must use the City of
Soldotna, and having the flexibility could save over the
long term. The third suggestion was to clarify that both
the facility and land will be owned by the state at the end
of the lease term. It was suggested in discussion earlier,
however the bill speaks only to the facility being owned.
They had found in previous situations that it became a
controversy as to who actually owns the land. Summarizing,
MR. BROWNE believed the changes would minimize the cost of
issuance by eliminating duplicate costs at the city and
state level for things such as bond counsel, financial
consultants and advisors, etc. The changes will also allow
the state flexibility to package the debt issuance with any
others they might have. The financial markets respond well
to the larger packages, enabling more competitive bids and
lower interest rates. The changes would also allow the
state to expeditiously refinance when interest rates dip.
He cited a $1.5 million potential interest savings on
refinancing of the Spring Creek Correctional facility.
SENATOR PHILLIPS inquired if the three suggestions outlined
were made in the Transportation Committee. MR. BROWNE
responded that they had discussed them but the feeling was
that because they were financially oriented, they would be
best discussed in the Finance Committee.
SENATOR ADAMS noted that lines 11-12 stated the state would
own the facility and questioned Mr. Browne's concern. MR.
BROWNE explained that his suggestion was to insert the words
"and the land" after "facility." He added, "There has been
confusion in lease-purchase transactions in the future where
a city has claimed ownership of the land at the end of the
term and then the state has to either buy it or renegotiate
a lease." He believed it was the intent of the sponsor that
the state would own the land when the debt was paid off.
SENATOR TORGERSON had no problem with the proposal to
include land. He had additional comments about the clean-
up. The land transfer that the borough owes the DOTPF for
the borough building land is supposed to be an appraisal
saying they owe x number of dollars, then divide it by the
assessed valuation of other acreage. What the borough is
proposing for the clean-up is to increase the amount of
acreage on the trade to give the bond counsel the feeling
that they will secure the additional money with the land and
tie it all into one facility. It went from early discussion
of about fifteen acres for a DOTPF site to forty-eight
acres. When the appraised value and number of acres are
divided out by $6 million, "it doesn't pencil anywhere." He
believed that was what the mayor was referring to.
With respect to the state bond counsel, SENATOR TORGERSON
stated that every purchase agreement he'd been involved in,
the cities have always wanted to have this authority and not
turn it over to the state. He referred to Palmer, Seward
and Kenai as lead agencies. He objected to adding the state
bond counsel and removing the city as the lead agency.
SENATOR ADAMS MOVED Amendment #1, to insert "and land" after
"facility" on page 1, line 11. SENATOR PARNELL stated for
clarification that by adopting the amendment the state would
take responsibility for environmental clean-up. SENATOR
TORGERSON had no objection to adding the language, but was
uncertain what the amount of acreage would be. He opposed
adding the clean-up to the bond proposition because it was a
state responsibility and may end up as a super clean-up
site. To request the city to bond for clean-up is "above
and beyond the call of duty of this municipality."
SENATOR PHILLIPS asked if the state was refusing to pay for
the clean-up. SENATOR TORGERSON said they didn't know a
number either, it just happened to be a convenient way to
finance the entire thing.
COCHAIR SHARP asked if the city had the capability to issue
tax-exempt bonds, or would the state's bonds qualify as tax-
exempt. MR. BROWNE responded that they both have the
ability. The city would not be on the debt, their credit
would not carry the debt. It is clearly state debt, which
was why they recommended the state be involved in the
process.
COCHAIR SHARP asked if there was any objection to Amendment
COCHAIR SHARP stated his intention to hold SB 34 along with
the Public Health Lab bill (SB 51), see where the capital
budget figure was in a couple weeks and what options would
be available at that time. And so, SB 34, as amended, was
HELD for further consideration.
COCHAIR SHARP announced upcoming bill hearings.
ADJOURNMENT
The meeting was adjourned at approximately 10:30 A.M.
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