Legislature(2007 - 2008)SENATE FINANCE 532
03/27/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB152 | |
| HB13 | |
| HB315 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 13 | TELECONFERENCED | |
| + | HB 315 | TELECONFERENCED | |
| + | HB 233 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 152 | ||
SENATE FINANCE COMMITTEE
March 27, 2008
9:10 a.m.
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:10:41 AM.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
Senator Fred Dyson
MEMBERS ABSENT
None
ALSO PRESENT
Sarah Fisher-Goad, Deputy Director, Operations, Alaska
Industrial Development and Export Authority (AIDEA) and
Alaska Energy Authority (AEA), Department of Commerce,
Community and Economic Development; Peter Crimp, Program
Manager, Alaska Industrial Development and Export Authority
and Alaska Energy Authority, Department of Commerce,
Community and Economic Development; Mike Notar, IBEW Local
1547, Juneau; John Bitney, Staff, Representative John
Harris; Representative Mike Hawker; Darwin Peterson, Staff,
Co-Chair Stedman; Brian Andrews, Deputy Commissioner,
Treasury Division, Department of Revenue; Linda Hay, Staff,
LB&A Committee, Representative Ralph Samuels; Pat Davidson,
Legislative Auditor, Legislative Audit Division, Legislative
Affairs Agency; Paul Johnson, Chair, Big Game Commercial
Services Board; Jennifer Strickler, Chief, Professional
Licensing, Division of Corporations, Business, and
Professional Licensing, Department of Commerce, Community
and Economic Development
PRESENT VIA TELECONFERENCE
Meera Kohler, President CEO, Alaska Village Electric
Cooperative; Debbie Schnebel, Senior Vice President, Scott
Balice Strategies; Tamara Cook, Director, Legislative Legal
Services, Legislative Affairs Agency; Robert Fithian,
Executive Director, Alaska Professional Hunters Association
SUMMARY
CSHB 152(FIN)
"An Act establishing a renewable energy project
account and a renewable energy fund and describing
their uses and purposes."
CSHB 152(RES) was heard and HELD in Committee for
further consideration.
CSHB 13(FIN)
"An Act relating to prepayments of accrued
actuarial liabilities of government retirement
systems; relating to the Alaska Municipal Bond
Bank Authority, the Alaska Housing Finance
Corporation, and the state bond committee;
establishing the Alaska Pension Obligation Bond
Corporation; permitting the Alaska Municipal Bond
Bank Authority or a subsidiary of the authority, a
subsidiary of the Alaska Housing Finance
Corporation, the state bond committee, and the
Alaska Pension Obligation Bond Corporation to
assist state and municipal governmental employers
by issuing bonds, notes, commercial paper, or
other obligations to enable the governmental
employers to prepay all or a portion of the
governmental employers' shares of the unfunded
accrued actuarial liabilities of retirement
systems; authorizing a governmental employer to
issue obligations to prepay all or a portion of
the governmental employer's shares of the unfunded
accrued actuarial liabilities of retirement
systems and to enter into a lease or other
contractual agreement with a trustee, the Alaska
Municipal Bond Bank Authority or a subsidiary of
the authority, a subsidiary of the Alaska Housing
Finance Corporation, the state bond committee, or
the Alaska Pension Obligation Bond Corporation in
connection with the issuance of obligations for
that purpose, and relating to those obligations;
relating to revision of the employer contribution
rate in connection with financed prepayment of
unfunded accrued actuarial liabilities of
government retirement systems; and providing for
an effective date."
SCS CSHB 13(FIN) was REPORTED out of Committee
with a "do pass" recommendation and with a new
indeterminate fiscal note by the Department of
Revenue and a new zero fiscal note by the
Department of Administration.
HB 315 "An Act extending the termination date of the Big
Game Commercial Services Board; and providing for
an effective date."
HB 315 was REPORTED out of Committee with a "do
pass" recommendation and with fiscal note #3 by
Department of Commerce, Community and Economic
Development.
CSHB 233(L&C)
"An Act relating to giving notice of unclaimed net
margin distributions made by electric and
telephone cooperatives."
CSHB 233(L&C) was scheduled but not heard.
9:14:27 AM
CS FOR HOUSE BILL NO. 152(FIN)
"An Act establishing a renewable energy project account
and a renewable energy fund and describing their uses
and purposes."
SARAH FISHER-GOAD, DEPUTY DIRECTOR, OPERATIONS, ALASKA
INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (AIDEA) AND
ALASKA ENERGY AUTHORITY (AEA), DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, reported that the
Administration does support the establishment of the fund;
Governor Palin stated support for a $250 million
appropriation. Ms. Fisher-Goad said that Steve Haagenson,
Executive Director of the Alaska Energy Authority, is in the
process of working on developing the state energy plan,
which would emphasize regional planning for rural areas.
Ms. Fisher-Goad noted that several recommendations for
changes from the Senate Resources Committee's version of the
bill have been submitted. She reported some concern
regarding the appropriation process as the projects move
forward.
She referred to a handout in the members' packets entitled
"Alternative Energy RFP - Eligible and Complete Applications
Preconstruction." She reported that AEA, with the Denali
Commission, solicited alternative energy projects. The list
of the projects is unranked. There was $4 million from the
Denali Commission and $1 million in state funds for this
RFP. There are more projects than funding available at this
time.
9:17:37 AM
PETER CRIMP, PROGRAM MANAGER, ALASKA INDUSTRIAL DEVELOPMENT
AND EXPORT AUTHORITY AND ALASKA ENERGY AUTHORITY, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, observed
that there is a lot of demand for alternative energy
projects.
Senator Huggins thought it was important for the state to
have goals regarding alternative energy. Ms. Fisher-Goad
commented on projects that address the goals of the state
energy plan.
Senator Thomas suggested that there were already a number of
projects in place in the state, and he thought there should
be coordination between existing and new projects.
Ms. Fisher-Goad thought it was an excellent point. AEA
provides consultation and technical assistance regarding
effective projects.
9:22:18 AM
Senator Elton referred to Section 2, the responsibilities of
the authority. He concluded that the only involvement the
legislature has, according to Section 2, is to set up the
account. He opined that the legislature cedes authority to
make a loan or grant. Ms. Fisher-Goad reported that Section
2 was an amendment to the AEA Existing Power Project Fund.
It emphasizes the grant portion of the program. The section
that deals with the legislature's role is on page 4,
paragraph (i). She pointed out that it where it says
"fiscal year may be used for grants" should say "fiscal year
may be appropriated for grants."
Co-Chair Stedman asked why the projects are not ranked and
do not use annual appropriations. Ms. Fisher-Goad thought
it was a timing issue. It depends on how the legislature
wants the structure.
9:26:57 AM
Co-Chair Hoffman reported that fuel costs are adjusted after
the barge gets to Bethel and will soon be $7 per gallon. He
thought the passage of this bill assumes that it addresses
the high cost of energy. He thought the state should be
looking at viable, renewable projects that provide immediate
effects. He referred to the list of $1.2 billion potential
projects. He thought there was a need for a more aggressive
approach in order to bring rural costs down. He requested a
plan from ASA to address that issue.
Ms. Fisher-Goad related the number one concern, the cost of
energy in rural communities. She reported that Mr.
Haagenson was in Bethel to meet about with a housing group
in order to find rural solutions to energy issues. Co-Chair
Hoffman asked when a concrete plan might be in place. Ms.
Fisher-Goad thought by December 2008. She termed it a very
aggressive approach.
9:31:45 AM
Senator Dyson identified with Co-Chair Hoffman's comments.
He thought that on page 2, line 20, coal should be added
along with natural gas. He noted that on page 3, line 27,
the list should also include clean coal.
Ms. Fisher-Goad responded that it is a matter of renewal
energy vs. alternative energy development and what the fund
should be used for. The focus of the fund is on renewable
energy. Senator Dyson maintained that if natural gas is
considered, only after the renewables are considered, coal
should likewise be considered. Ms. Fisher-Goad reiterated
that the fund is for renewable sources. She questioned if
natural gas should be in the bill. She said AEA is not
taking a position on that.
9:35:42 AM
Senator Dyson referred to page 2. He repeated his argument
that if clean coal is available, it should be included. Ms.
Fisher-Goad thought the policymakers should look at that
issue. The bill emphasizes a clean fuel, a renewable
resource.
Senator Dyson asked about page 4, line 15. He questioned
why a community the size of Juneau could not be included.
He wondered if the Administration is in favor of the 10,000
population cut off. Ms. Fisher-Goad said Juneau has
renewable resources. Senator Dyson wondered if any larger
communities should be included.
Mr. Crimp addressed the coal vs. renewable resources
question. He related that there are many ways, in addition
to renewable energy, to get to the goal of displacing the
use of diesel fuel. He listed several methods of energy
conservation. The emphasis of the bill is renewable energy.
Senator Dyson inferred that the fund could not be used to
develop a non-renewable energy like fish waste or logging
slashings.
9:40:57 AM
Co-Chair Stedman related that on the list of submitted
projects there is only one geothermal project. He wondered
why there seems to be a lack of interest in this area. He
also thought communities that could not get natural gas
should be given priority. Mr. Crimp replied that AEA is
reacting to the proposals that have been submitted. He said
there is another group that looks at helping communities
develop projects and there should be more in the future.
Co-Chair Hoffman reported that Naknek Cooperative has been
trying to drill for a geothermal source. He said that AEA
has not been supportive of this endeavor because of a fear
that no thermal energies would be found. He argued that the
attempt should be made. He questioned AEA's decision. Mr.
Crimp replied that AEA has not responded to any funding
request from Naknek. Co-Chair Hoffman argued that the
process needs to go forward and should be supported by AEA.
9:46:03 AM
Senator Elton summarized that any waste from a resource that
is managed on a sustained yield basis would be eligible for
this loan fund. Mr. Crimp said that interpretation is
correct. He listed the energy sources that the bill would
address such as logging slash, sawmill waste, paper from
municipal waste, and other biomass resources. Senator Elton
added fish oil to the list.
MIKE NOTAR, IBEW LOCAL 1547, JUNEAU, spoke in support of HB
152 because it helps to address lower energy costs by
utilizing renewable energy sources and provides
opportunities for training and work opportunities for
Alaskan electrical workers.
9:48:57 AM
MEERA KOHLER, PRESIDENT, CEO, ALASKA VILLAGE ELECTRIC
COOPERATIVE, testified in support of HB 152. She discussed
pioneer wind projects and the difference they are making in
rural Alaska. She explained the potential for wind energy
in rural Alaska and the need for additional funds.
Co-Chair Hoffman said it seems as though, with the continued
escalation in fuel costs, there needs to be a more active
role in trying to address energy problems. The wind
projects are a significant advancement in reducing
dependence on fossil fuels, especially in rural areas. He
wondered how much the wind projects cost. Ms. Kohler said
about $3 million. The $20 million could be used to leverage
other federal dollars. She explained that there is a
practical limit to how many wind turbans can be constructed
each year. She campaigned for a reliable funding program.
Co-Chair Hoffman said that the solution will have to be
stretched out for many years at $20 million funding. He
maintained that more effort and funding must be provided now
in order to solve high energy costs problems. He thought
AEA and the Administration should take the lead.
JOHN BITNEY, STAFF, REPRESENTATIVE JOHN HARRIS, pointed out
that there could be some modifications to the bill that
would address some of the questions posed today, such as
clarifying that the funds are subject to appropriation. He
addressed Senator Dyson's concerns about the exclusion of
coal. He said he would check into expanding the options to
include coal. The intent of the bill is not to try to limit
access to energy, but to try to expand it.
9:56:16 AM
Senator Dyson suggested other types of fuel that should not
be excluded: logging slashing, fish oil, fish waste, and
farm waste.
Senator Thomas asked if the sponsor would be moving forward
quickly on this legislation. Mr. Bitney commented that the
bill should be viewed as long term. He spoke positively
about trying to address energy cost needs in a timely
manner.
Senator Elton voiced concern about the Administration's
reimbursable services agreement for funding of AEA's
executive director's salary, since the Governor appoints
every member of the authority. He worried that it would
become a political actor's fund. Mr. Bitney said the
sponsor was trying to identify a process of getting
previously evaluated projects to the legislature. He
assured that the legislature would be included in the
appropriation process.
Senator Huggins noted that the Railbelt Energy Fund is a
political animal. He wanted assurance that this bill would
not become the same. Mr. Bitney thought there were several
ways to address energy needs in Alaska. He pointed out that
this bill deals with smaller renewable energy projects,
unlike the Railbelt Fund, which is at a larger, more
expensive level.
Senator Huggins compared this fund to the Railbelt Energy
Fund and the potential for abuse. He wished to see a
viable, functional, long-term, time-tested approach that
will not fall victim to "how we see the Railbelt Energy
Fund".
10:03:36 AM
Senator Olson asked Ms. Kohler about the expense of energy
in rural Alaska and how to facilitate the cooperation
between the renewable energy fund, AEA, and power producers.
Ms. Kohler responded that that could be achieved through
this legislation with the impartial advisory board
mechanism. She thought that was the difference between the
Railbelt Energy Fund and this fund. Senator Olson commented
on the frustrations in Naknek possibly being alleviated by
such a process.
AT-EASE: 10:05:56 AM
RECONVENED: 10:12:29 AM
HB 152 was heard and HELD in Committee for further
consideration.
AT-EASE: 10:13:24 AM
RECONVENE: 10:13:54 AM
CS FOR HOUSE BILL NO. 13(FIN)
"An Act relating to prepayments of accrued actuarial
liabilities of government retirement systems; relating
to the Alaska Municipal Bond Bank Authority, the Alaska
Housing Finance Corporation, and the state bond
committee; establishing the Alaska Pension Obligation
Bond Corporation; permitting the Alaska Municipal Bond
Bank Authority or a subsidiary of the authority, a
subsidiary of the Alaska Housing Finance Corporation,
the state bond committee, and the Alaska Pension
Obligation Bond Corporation to assist state and
municipal governmental employers by issuing bonds,
notes, commercial paper, or other obligations to enable
the governmental employers to prepay all or a portion
of the governmental employers' shares of the unfunded
accrued actuarial liabilities of retirement systems;
authorizing a governmental employer to issue
obligations to prepay all or a portion of the
governmental employer's shares of the unfunded accrued
actuarial liabilities of retirement systems and to
enter into a lease or other contractual agreement with
a trustee, the Alaska Municipal Bond Bank Authority or
a subsidiary of the authority, a subsidiary of the
Alaska Housing Finance Corporation, the state bond
committee, or the Alaska Pension Obligation Bond
Corporation in connection with the issuance of
obligations for that purpose, and relating to those
obligations; relating to revision of the employer
contribution rate in connection with financed
prepayment of unfunded accrued actuarial liabilities of
government retirement systems; and providing for an
effective date."
REPRESENTATIVE MIKE HAWKER, sponsor, related that HB 13
would empower the state to issue pension obligation bonds
(POB's) in order to finance part of the unfunded liability
of the state's pension systems. Alaska faces billions of
dollars in unfunded liability and has contractual and
constitutional obligations to make up that liability. This
bill allows the state to pursue a proven financial technique
and approach the international capital markets to borrow
money at a lower cost to pay off the pension liability and
save the state significant amounts of money.
Co-Chair Stedman asked for clarification of soft and hard
liabilities. Representative Hawker explained that the
obligation to the pension system is a soft liability,
because it does not have a document behind it other than a
moral and contractual obligation to the pension fund. A
hard liability is when you go to the capital markets and
sign a loan document with specific repayment terms. He
explained that this bill would involve a hard debt
obligation substituting for a soft debt obligation. The
payment of the hard obligation is subject to a recurring
legislative appropriation.
10:17:40 AM
Co-Chair Stedman MOVED to ADOPT Amendment 1:
Page 3, line 20, following ".":
Insert "However, a subsidiary created for the purpose
of financing or facilitating the financing of
prepayment of a governmental employer's share of
unfunded accrued actuarial liability of retirement
systems may only borrow money and issue bonds if the
state bond rating is AA- or better."
Page 5, line 26, following "37.15.955":
Insert ", but only if the state bond rating is AA- or
better"
Page 8, line 26, following "if":
Insert "the state bond rating is AA- or better and if"
Page 11, line 2, following "37.16.900":
Insert ", but only if the state bond rating is AA- or
better"
Page 15, line 14, following "if":
Insert "the state bond rating is AA- or better and if"
Page 19, line 12, following "AS 44.85.085":
Insert ", but only if the state bond rating is AA- or
better"
Page 23, line 7, following "may":
Insert ", if the state bond rating is AA- or better,"
Page 23, line 27, following "appropriate":
Insert ", but only if the state bond rating is AA- or
better"
Page 25, line 1, following "reasonable":
Insert "; however, to carry out this paragraph, bonds
and other obligations may only be issued if the state
bond rating is AA- or better"
Co-Chair Stedman OBJECTED for discussion purposes.
DARWIN PETERSON, STAFF, CO-CHAIR STEDMAN, offered a
Conceptual Amendment to Amendment 1, on behalf of
Representative Hawker, to add "the equivalent of" before
"AA-" throughout the bill. Co-Chair Stedman explained that
the AA- rating is Standard and Poor's and the intent is to
include equivalent ratings from other rating agencies such
Moody's.
Mr. Peterson explained the intent of Amendment 1 is to
prohibit the state from issuing POB's if the state's credit
rating is not the equivalent of AA- or better. Co-Chair
Stedman pointed out that the state is currently AA, although
the bonds would be issued at AA-. Mr. Peterson continued to
explain that the intent of the amendment would ensure that
if the state's credit rating falls below an acceptable
level, the state would cease issuing any new POB's until the
debt is paid off or the credit rating improves.
Representative Hawker testified in support of the amendment.
BRIAN ANDREWS, DEPUTY COMMISSIONER, TREASURY DIVISION,
DEPARTMENT OF REVENUE, reported that the Department has no
problem with the amendment. He reported that the state is
now rated at AA+ by Standard and Poor.
Senator Elton asked for clarification about the issuance of
bonds. Mr. Peterson replied that the state can not issue
bonds unless its rating is AA- or better, regardless of the
individual ratings of the bonds. Senator Elton asked why
that approach was taken, rather than stipulating the rating
of the POB's. Mr. Andrews explained that POB's carry a
credit rating one notch below the state's credit rating.
The amendment tightens up the bill.
10:23:05 AM
Senator Elton shared an approach which would prohibit the
issuance of a low-rated bond. Representative Hawker thought
that was a viable approach, but the amendment would work as
well. Senator Elton said he was just asking for
clarification. Representative Hawker thought the amendment
would be preferable because it refers to the state's overall
rating when a transaction is entered.
Senator Thomas asked if a significant event such as a
downward price of oil would have an effect on the state's
credit rating. Mr. Andrews explained that credit rating
agencies look at several factors.
Co-Chair Stedman WITHDREW his OBJECTION to Amendment 1.
Amendment 1, as amended, was ADOPTED.
10:27:17 AM
Co-Chair Stedman MOVED to ADOPT Amendment 2:
Page 3, line 19, following "may":
Insert ", subject to AS 37.15.903,"
Page 6, line 2:
Delete "may not exceed $5,000,000,000"
Insert "is limited as provided in AS 37.15.903"
Page 6, following line 10:
Insert a new section to read:
"Sec. 37.15.903. Pension obligation bond limit. The
total unpaid principal amount of bonds, including
refunding bonds, but excluding refunded bonds, issued
by all state entities added together, for the purposes
of financing prepayment of all or a portion of a
governmental employer's share of unfunded accrued
liability of retirement systems, may not exceed
$5,000,000,000."
Page 11, line 9:
Delete "may not exceed $5,000,000,000"
Insert "is limited as provided in AS 37.15.903"
Page 19, line 12, following "AS 44.85.085":
Insert "; this assistance is limited as provided in
AS 37.15.903"
Page 23, line 7, following "may":
Insert ", subject to AS 37.15.903,"
Page 23, line 25, following "debt":
Insert ", subject to AS 37.15.903,"
Page 25, line 1, following "reasonable"
Insert "; bonds issued under this paragraph are subject
to AS 37.15.903"
Co-Chair Stedman OBJECTED for discussion purposes.
Mr. Peterson explained that the amendment restricts the
state's ability to issue bonds in excess of $5 billion.
Representative Hawker approved of the amendment. Mr.
Andrews agreed.
Co-Chair Hoffman asked if other states have limitations.
Mr. Andrews did not know.
10:28:27 AM
DEBBIE SCHNEBEL, SENIOR VICE PRESIDENT, SCOTT BALICE
STRATEGIES, explained that it varies state by state. States
where the legislature is in session for longer periods have
the ability to approve the exact amount being issued.
Co-Chair Stedman related that the idea to limit the amount
was so that the legislature could come back and request an
increase if necessary. The $5 billion would be issued over
a few years, which would give the Administration an
opportunity to review the process and consider an extension.
Senator Thomas referenced lines 10-14 and asked if they were
specifically addressing the retirement unfunded liability.
Mr. Peterson said yes.
Co-Chair Stedman WITHDREW his objection. There being NO
OBJECTION, Amendment 2 was adopted.
10:30:53 AM
Co-Chair Stedman MOVED to ADOPT Amendment 3:
Page 6, lines 15 - 17:
Delete "The committee, on behalf of the state, may
obligate and bind the state to set aside and pay into
the bond redemption fund, on a monthly or other
periodic basis."
Co-Chair Stedman OBJECTED.
Mr. Peterson explained that the amendment is in response to
a legal memorandum dated March 26 from Tamara Cook. She
expressed some hesitation and concern with regards to the
state's constitutional limits on what debt the state can
issue. In the second paragraph of the memorandum, she
specifically suggested looking at a sentence in Section 3 of
the bill as a potential problem. She suggested deleting
the sentence, which would allow the bond committee to
obligate and bind the state to pay bond debt.
TAMARA COOK, DIRECTOR, LEGISLATIVE LEGAL SERVICES,
LEGISLATIVE AFFAIRS AGENCY, agreed with Mr. Peterson's
description of the concern regarding the problematic
sentence. She understood that the pension obligation bonds
will not be secured by the full faith and credit of the
state. She voiced concern about the notion that the state
bond committee would be able to obligate the state.
Representative Hawker concurred with the amendment.
Mr. Andrews also concurred with Ms. Cook's interpretation.
The intent of the bill was "to use this as appropriation-
type debt."
Co-Chair Stedman WITHDREW his objection. There being NO
OBJECTION, it was so ordered.
10:34:07 AM
Co-Chair Stedman MOVED to ADOPT Amendment 4:
Page 1, lines 10 - 12:
Delete "to issue obligations to prepay all or a portion
of the governmental employer's shares of the unfunded
accrued actuarial liabilities of retirement systems
and"
Page 2, line 4:
Delete "for that purpose"
Insert "by a state entity for the purpose of prepaying
all or a portion of the governmental employee's share
of the unfunded accrued actuarial liabilities of
retirement systems"
Page 4, lines 15 - 18:
Delete "A municipality, or two or more municipalities
jointly, may issue obligations to prepay all or a
portion of each participating municipality's share of
the accrued actuarial liabilities of retirement
systems."
Page 4, line 22, following "obligations":
Insert "by a state entity"
Page 4, line 29, following "issued":
Insert "by a state entity"
Co-Chair Stedman OBJECTED.
Mr. Peterson related that Senator Elton's staff noted a
drafting error on page 1, line 9, of Amendment 4. The word
"employee's" should be "employer's".
Ms. Cook agreed that it should be changed to "employer's" on
line 9 of the amendment.
Mr. Peterson explained that Amendment 4 restricts the
bonding ability to the state and prohibits municipalities
from issuing debt. It does not prohibit the state from
issuing debt on behalf of the municipality.
10:36:00 AM
Representative Hawker agreed with Amendment 4, in light of
passage of SB 125. The bill does not expand any authorities
of municipalities beyond what they may or may not already
have.
Mr. Andrews concurred with Representative Hawker's comments.
Co-Chair Stedman WITHDREW his objection. There being NO
OBJECTION, it was so ordered.
10:37:57 AM
Mr. Andrews addressed the fiscal notes. He said that the
Department of Revenue has an indeterminate note because
potential cost savings to the state are not known at this
time. He provided information about potential savings to
the state. He referred to a handout on PERS and TERS cash
contribution and pension obligation bond analysis (copy on
file.)
Co-Chair Stedman requested that information.
Mr. Andrews noted that the matrixes were developed in
conjunction with the actuary for the state, Buck
Consultants. He turned to the first page, which shows an
interest rate of 5.25 percent. He reported that last week
the state of Wisconsin did a $900 million POB restructure at
5 percent. He highlighted the percentage of growth of 4
percent and explained the methodology. The actuarial
required rate of return was 8.25 percent.
Mr. Andrews turned to the second page to show the average
annual contribution rate that the employer needs to make
into the PERS system. He further explained reductions in
annual contributions rates based on the amount of POB.
Mr. Andrews explained the various savings matrixes.
10:42:51 AM
Mr. Andrews explained what would happen with a combination
of POB's and cash. He turned back to the first matrix and
used $1 billion cash and $1 billion POB as an example. The
annual contribution rate goes from 35.22 percent down to
30.28 percent, which leads to a reduction in the annual
dollar requirement and a net present value savings of $2.1
billion.
If the investments from the proceeds of the POB are greater
than 8.25 percent, there would be further savings. On
average, the pension plan for the last 15-16 years has
earned 9.6 percent each year.
Senator Olson asked if the rate of 9.6 would continue. Mr.
Andrews said past history is a good indicator. Currently,
asset allocations are set up so that the state is looking at
a return of 8.5 percent for the next five years.
10:45:49 AM
Co-Chair Hoffman MOVED to REPORT SCS CSHB 13(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCS CSHB 13(FIN) was REPORTED out of Committee with a "do
pass" recommendation and a new indeterminate fiscal note by
the Department of Revenue and a new zero fiscal note by the
Department of Administration.
Representative Hawker pointed out an error on page 2, line
11. It should say "may" instead of "any". He thanked the
Committee for their hard work.
Co-Chair Stedman commented that it is the first step in
addressing unfunded liability.
10:48:31 AM
HOUSE BILL NO. 315
"An Act extending the termination date of the Big Game
Commercial Services Board; and providing for an
effective date."
LINDA HAY, STAFF, LB&A COMMITTEE, REPRESENTATIVE RALPH
SAMUELS, said the bill extends the sunset date of the Big
Game Commercial Services Board. It complies with the
recommendation of the Division of Legislative Audit, which
recently reviewed the activities of the Board.
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, LEGISLATIVE AFFAIRS AGENCY, explained the
recommendation to increase the Board for four years based on
the fact that the Board has only been in operation for two
years after being restarted. There were also administrative
difficulties that could be improved.
Co-Chair Stedman asked if any complaints had been received
from hunters. Ms. Davidson spoke of the sunset review,
which looked at investigations. The Board is dealing with
the issues that come before it.
Co-Chair Stedman asked if the oversight of guides is the
same on federal lands as it is on state lands. Ms. Davidson
explained that the Board licenses individuals who are
licensed guides. The differing landowners have differing
requirements of the people that operate on their land.
10:52:31 AM
Senator Thomas asked if it was possible for someone to come
back and work in the industry after having their license
removed. Ms. Davidson replied that there is a range of
sanctions with any disciplinary action.
PAUL JOHNSON, CHAIR, BIG GAME COMMERCIAL SERVICES BOARD,
said if a person has had their license pulled, they may not
return as a transporter until their restitution is done. He
commented on how permits were issued on various lands.
JENNIFER STRICKLER, CHIEF, PROFESSIONAL LICENSING, DIVISION
OF CORPORATIONS, BUSINESS, AND PROFESSIONAL LICENSING,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
testified in support the bill and the continuation of the
Board. She noted that the Board has made an effort to
strengthen the licensing laws for guides.
Ms. Strickler described projects the Board has been involved
with. She pointed out that the fiscal note is not a request
for new funds. It is based on an annual average of costs
because licenses are based on a biannual period. She listed
expensed covered in the fiscal note.
10:57:50 AM
ROBERT FITHIAN, EXECUTIVE DIRECTOR, ALASKA PROFESSIONAL
HUNTERS ASSOCIATION, spoke in favor of HB 315. The
professional guide industry is very important to rural
Alaska. It is dependant on three stewardship factors:
industry stewardship, prudent wildlife stewardship, and
public land access opportunity. The Board provides
oversight and accountability in these areas.
Co-Chair Hoffman commented about the composition of the
Board of Fish. He inquired if there has been discussion or
issues regarding the composition of the Board of Game.
Mr. Johnson replied positively about the composition of the
Board. He said there was a recent private landholder
appointment. Co-Chair Hoffman commented on the largest
private landholders, Native Corporations. He asked if they
were represented as one of the two private landholders on
the Board. Mr. Johnson said that was correct.
11:00:21 AM
Co-Chair Hoffman MOVED to REPORT HB 315 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 315 was REPORTED out of Committee with a "do pass"
recommendation and with fiscal note #3 by Department of
Commerce, Community and Economic Development.
CS FOR HOUSE BILL NO. 233(L&C)
"An Act relating to giving notice of unclaimed net
margin distributions made by electric and telephone
cooperatives."
CSHB 233(L&C) was scheduled but not heard.
ADJOURNMENT
The meeting was adjourned at 11:00 AM.
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