Legislature(2013 - 2014)SENATE FINANCE 532
04/02/2013 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB13 | |
| SB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 48 | TELECONFERENCED | |
| *+ | SB 88 | TELECONFERENCED | |
| + | HB 30 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 13 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 2, 2013
2:07 p.m.
2:07:55 PM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 2:07 p.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
David Livingstone, Managing Director, CITI Corp; Pat Kemp,
Commissioner, Department of Transportation and Public
Facilities; Verne Rupright, Mayor, City of Wasilla; Heather
Shattuck, Staff, Senator Pete Kelly; William Streur,
Commissioner, Department of Health and Social Services;
Angela Rodell, Deputy Commissioner, Treasury Division,
Department of Revenue; Deven Mitchell, Executive Director,
Alaska Municipal Bond Bank Authority, Department of
Revenue; Representative Mike Chenault; Valerie Davidson,
Alaska Native Tribal Health Consortium; Flora Roddy, Self,
Fairbanks.
PRESENT VIA TELECONFERENCE
Larry Devilbiss, Mayor, Matanuska-Susitna Borough; Dan
Sullivan, Mayor, Anchorage; Berkley Tilton, President,
Knik-Fairview Community Council, Wasilla; Darcie Salmon,
Assemblyman, Mat-Su; Lincoln Bean, Chair, Alaska Native
Health Board, Anchorage.
SUMMARY
SB 13 KNIK ARM BRIDGE AND TOLL AUTHORITY
SB 13 was HEARD and HELD in committee for further
consideration.
SB 48 PERS CONTRIBUTIONS BY MUNICIPALITIES
SB 48 was SCHEDULED but not HEARD.
SB 88 ALASKA NATIVE MEDICAL CENTER HOUSING
SB 88 was HEARD and HELD in committee for further
consideration.
CSHB 30(FIN)
STATE AGENCY PERFORMANCE AUDITS
CS HB 30 (FIN) was SCHEDULED but not HEARD.
SENATE BILL NO. 13
"An Act relating to bonds of the Knik Arm Bridge and
Toll Authority; relating to reserve funds of the
authority; relating to taxes and assessments on a
person that is a party to an agreement with the
authority; and establishing the Knik Arm Crossing
fund."
Vice-Chair Fairclough looked at slide 16 of the PowerPoint,
"Knik Arm Crossing, Financial Briefing" (copy on file). She
remarked that the Resource Committee had conversations with
the Department of Revenue (DOR) regarding moral obligation
of the state. She shared that she was led to believe that
if the bonding agencies looked at Alaska and the moral
obligation, it would be moved to a debt owed by the State
of Alaska. She requested a comment regarding her
understanding of "moral obligation."
DAVID LIVINGSTONE, MANAGING DIRECTOR, CITI CORP, responded
that her assumptions were correct. He furthered that a
straight moral obligation, with no offsetting revenues,
would be analogous as a debt to the state. He shared that
Knik Arm Bridge and Toll Authority (KABATA) would use
availability payments that were backed by the state's moral
obligation. He furthered that the payments would be reduced
by toll revenues, which would reduce how the rating
agencies would view the moral obligation. The rating
agencies would assume that the toll revenues would reduce
the state's obligation to pay. He remarked that he had
looked at the toll revenues in a variety of sensitivities,
and felt that the rating agencies would impact the state's
rating.
Senator Olson looked at slide 9, and requested an
explanation of the factor of 1.5 percent. Mr. Livingstone
replied that CITI financed projects based on traffic and
revenue studies. He remarked that he examined the studies
to determine the accuracy of the projections. He stressed
that predicting the future is never precise, but pointed
out that he had analyzed approximately 10 studies for
traffic and revenues. He explained that there was an equal
number of traffic above and traffic below, and generally
they were all within 10 or 15 percent of projections. He
felt that the projections were fairly accurate.
Senator Olson remarked that the Transportation Resource
Board found that the estimates were too optimistic. Mr.
Livingstone replied that he was unfamiliar with that
analysis, and furthered that he financed projects based on
studies prepared by CDM Smith.
2:15:01 PM
Vice-Chair Fairclough wondered how the proposal would
control cost. Mr. Livingstone responded that there were a
number of reasons why the proposal provided a lower cost.
He stated that the normal procurement would hire an
engineering firm; bid to contractors; and there may be
change orders. He stressed that the engineering firm would
hire a contractor to both design and construct the project.
This alleviates the potential for design and construction
disagreements. He stressed that he the construction costs
for similar projects that separated contracting and design
firms were significantly greater than the owners' initial
estimates. He felt that using one firm for both contracting
and design would decrease cost.
Vice-Chair Fairclough wondered what the bank's risk would
be related to the Endangered Species Act. She stressed that
Alaska was holding the risk under the payments. She
wondered how the risk was weighted, when the federal
listing was beyond control. She pointed out that there were
daily risks related to earthquakes and other natural
disasters, but remarked that the federal government used
specific science to list specific species as "endangered."
Mr. Livingstone responded that there were wildlife surveys
that were completed in the Knik Arm, and along the right-
of-way. He remarked that the beluga whale was an endangered
species. He stressed that there were many conversations
between KABATA and the federal government regarding how the
bridge should be built to minimize the impact on the beluga
whales.
Senator Hoffman looked at slide 12, "Revenue Sensitivity
Results from Monte Carlo Simulations." He wondered if the
slide represented the total revenue for 45 years with a
downside of $5 billion with an aggressive upside of $9
billion. Mr. Livingstone replied in the affirmative, and
furthered that the results were formulated by an outside
firm, CDM Smith.
Senator Hoffman queried the numbers derivation of the
represented scenarios. He wondered if the toll charges were
constant or fixed under each scenario, and wondered if the
set toll would be in place for 45 years. Mr. Livingstone
replied that that the scenarios took into account both the
traffic and the toll rate. He remarked that the same toll
rate was assumed for each scenario.
Senator Hoffman queried the toll rate. Mr. Livingstone
replied that the toll rate started at $5 per passenger car,
with a lower rate for motorcycles and a greater rate for
trucks. This rate would start upon bridge opening in 2016.
He pointed out that the rate would increase with inflation
by approximately 2 percent.
2:21:07 PM
Senator Hoffman wondered who would make the final
determination of rate increase. Mr. Livingstone replied
that the KABATA Board would make that final decision. He
stressed that the projections were based on assumed
inflation. He pointed out that it would be assumed that the
rate would not be increased, if that particular year
experienced no inflation.
Senator Hoffman asked if the board had the authority to
raise the rate higher than inflation, if there was a
downside. Mr. Livingstone responded that the KABATA Board
had the discretion to increase the toll rates at any time.
Senator Hoffman looked at slide 14, "Sensitivity Results."
He asked for further detail of the severe downside and
aggressive upside under the five different scenarios. Mr.
Livingstone replied that the state had the initial funding
of $150 million in the reserve. He remarked that the state
would be asked to appropriate $627 million over time in the
aggressive upside. He stated that the $627 million would
allow for no requests until 2025. The first request would
be $8.9 million in 2025, and the largest request in any
year would be $37.5 million in 2044. He furthered that, in
the aggregate, the total appropriation requests, over time,
would be $627 million. He explained that the total state
liability would be $777 million. He stated that late in
their analysis, the project would generate revenues in
excess of the expenses at a total of $910 million that
would be returned to the state to fund other transportation
needs across the state. He stressed that the project would
generate $133 million for the state.
Senator Hoffman looked at slide 12, and surmised that it
represented total revenues over 45 years of slightly under
$5 billion. Mr. Livingstone agreed, and furthered that the
projections assumed that KABATA and the state would expand
the bridge as traffic warrants. He declared that the money
for expansions was included in the scenarios. He remarked
that the state had the option to defer the cost assumptions
for expansion, but stressed that the downside would cause
much more congested on the bridge.
2:25:55 PM
Senator Olson looked at slide 4, and queried an example of
the state's liability. Mr. Livingstone responded with slide
6, and pointed out the specific events. He stated that
there was a contract between KABATA and the private partner
that held 21 events. He explained that there were two types
of "unforeseen surface conditions", but he only listed one
on the list. He stressed that KABATA was not taking a
"blind risk" with this project. He pointed out that there
were various extensive studies that were used as
information with the private partner.
Senator Olson wondered if the state would be liable for the
risk, if the project fails. Mr. Livingstone deferred to the
Department of Law (DOL).
PAT KEMP, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES, introduced himself.
Co-Chair Meyer wondered if Commissioner Kemp had any
testimony that he would like to share. Commissioner Kemp
explained that the Department of Transportation and Public
Facilities (DOT/PF) was not privy to much of the shared
information regarding KABATA. He explained that he was on
the KABATA Board; DOT/PF had sub-recipient rights from the
federal government; and worked with KABATA regarding right-
of-way. He stressed that he was not an expert regarding the
details with their reports.
Co-Chair Meyer wondered if Alaska had ever had a
Public/Private Partnership (PPP) Commissioner Kemp replied
that DOT/PF had never done a PPP, but furthered that there
may be PPP for the road to Ambler. He stressed that DOT/PF
did not do the PPP financing, bit mostly focused on the
engineering and environmental issues related to preparing a
project.
2:32:34 PM
Co-Chair Meyer wondered if there were any suggestions
regarding the liability concerns. He wondered if the bridge
belonged to the state or KABATA. Commissioner Kemp
responded that sight conditions were the responsibility of
KABATA, but deferred most of the liability concerns to DOL.
He remarked that the contractor does the geotechnical work,
so some liability may fall to the contractor.
Senator Bishop asked for a restatement of DOT/PF's
participation in the project. Commissioner Kemp replied
that KABATA was the sub-recipient of federal highway funds,
so DOT/PF had no oversight until the environment document
was complete. He furthered that the federal highway program
turned the project over to DOT/PF to monitor the
expenditures.
Senator Bishop wondered who would provide the snow removal
for the bridge. Commissioner Kemp replied that KABATA would
provide the snow removal.
Co-Chair Meyer wondered if DOT/PF was responsible for the
roads that were attached to the bridge. Commissioner Kemp
responded that DOT/PF would be responsible for those roads.
Senator Dunleavy understood that this project proposal was
unique in Alaska, but pointed out that there were many toll
roads and bridges in other parts of the United States. He
felt that there could be insurance that might deal with
liability concerns.
Senator Olson stressed that the project may not yield
enough revenue, because of the small population in Alaska.
2:37:36 PM
Senator Olson noted that Commissioner Kemp's background was
in surface transportation. He wondered if bedrock drilling
was a concern. Commissioner Kemp responded that he hoped
the geotechnical work would be done properly. He furthered
that the requirements include an exploratory hole for every
pier.
Senator Olson wondered if earthquakes were a concern.
Commissioner Kemp responded that there were methods that
were used to design around the potential for an earthquake,
but stressed that he was not familiar with the geology
around the bridge.
Senator Bishop shared that he felt that there was
technology to ensure that bridges could withstand
earthquakes.
Vice-Chair Fairclough queried the estimated cost of the
road from both sides of the bridge. Commissioner Kemp
responded that the Mat-Su side was approximately $150 to
$200 million, and the Anchorage side was approximately $250
million.
Co-Chair Meyer wondered who would pay for the cost of those
roads. Mr. Livingstone replied that the excess toll and
federal aid would pay for those roads.
Vice-Chair Fairclough understood that payments would not be
due until 2025, and wondered if the completion date for
traffic would be 2025. Commissioner Kemp did not know the
answer.
Vice-Chair Fairclough stressed that it was important to
understand the payment plan for the project.
Senator Olson remarked that he heard Mr. Livingstone state
that the bridge would be open in 2016. The committee nodded
in affirmation.
2:42:58 PM
LARRY DEVILBISS, MAYOR, MATANUSKA-SUSITNA BOROUGH (via
teleconference), testified in support of SB 13. He shared
that every mayor in the Mat-Su borough supported the
project. He remarked that the bridge would open a window to
40 percent of the Kenai borough. He shared that the impact
of KABATA to the Mat-Su borough would be extremely
positive. He stated that the fasted demographic in the Mat-
Su borough was very near where the bridge would be built,
and he stressed that the population growth was placing
stress on that area. He remarked that the Mat-Su borough
was anticipating the project by laying out two separate
town sites near the landing of the bridge. He shared that
there were already discussions regarding a new middle
school and high school near the bridge. He felt that the
consequences of not building a bridge would be "horrific."
Senator Olson wondered if the Mat-Su was contributing any
money for the project. Mayor Devilbiss replied that there
were some corporations within the Mat-Su that were
contributing. He furthered that there was some local money
that would be used for road infrastructure on the Mat-Su
side. He shared that the Mat-Su borough passed a $60
million road-bond package in the year prior, which the
state matched.
Senator Olson stressed that the legislature was trying to
avoid the problems that were created from the Mat-Su Ferry,
which was a previously proposed project. Mayor Devilbiss
felt that the current project was much different than the
ferry.
2:48:38 PM
DAN SULLIVAN, MAYOR, ANCHORAGE (via teleconference),
testified in support of SB 13. He announced that he had
supported KABATA for many years. The bridge was first
proposed in 1959. He remarked that there was currently only
one route between the two most populated areas of the
state. He felt that it was imperative to expand the access
between Anchorage and the Mat-Su borough. He furthered that
18,000 to 20,000 daily commuters used the Glenn Highway. He
stressed that there were multiple times in the winter
months when that highway is closed, either due to a car
accident or weather. He felt that limiting those commuters
with only one access did not make logistical sense. He
shared that the Port of Anchorage was a very important hub
to the rest of Alaska. The bridge would allow for the
container trucks to avoid downtown Anchorage, which would
alleviate much of the congestion that already plagued
Anchorage. He stressed that 1000 to 1500 jobs would be
created with this project.
Co-Chair Meyer wondered if there was a concern about
property taxes being reduced if the bridge was built. Mayor
Sullivan replied that the growth in the Mat-Su was already
occurring.
Vice-Chair Fairclough wondered if there were 18,000 to
20,000 daily commuters between the Mat-Su and Anchorage.
Mayor Sullivan replied in the affirmative.
Vice-Chair Fairclough wondered what percentage of those
commuters were "hauling loads." Mayor Sullivan replied that
most of the trucks were driving north and then returning to
Anchorage empty. He agreed to provide further information.
Vice-Chair Fairclough felt that the trucks would be more
likely to use the bridge, depending on the toll rate. Mayor
Sullivan agreed.
2:55:10 PM
BERKLEY TILTON, PRESIDENT, KNIK-FAIRVIEW COMMUNITY COUNCIL,
WASILLA (via teleconference), testified in support of SB
13. He shared that he had built roads in Alaska since 1965.
He remarked that Alaska made a commitment to maintain its
roads for its citizens. He felt that the project was a road
project that would benefit the entire state. He likened the
project to the Golden Gate Bridge, because the impact was
extremely important. He understood that the project was
expensive, but it would produce an extremely positive
effect. He echoed Mayor Devilbiss and Mayor Sullivan's
remarks. He reiterated that the project was the
responsibility of the state.
2:59:28 PM
DARCIE SALMON, ASSEMBLYMAN, MAT-SU (via teleconference),
spoke in support of SB 13. He shared that he had been the
mayor of the Mat-Su from 1997 to 2000, and was an original
commissioner for KABATA from 2003 to 2009. He felt that the
project included other economic interests including the
port at Point Mackenzie, the rail spur from Point Mackenzie
into the Interior, and the bridge from Anchorage to the
Mat-Su. He felt that those three projects would result in a
360-degree intermodal transportation corridor. He felt that
the bride was essential to the economic growth of the other
two projects.
3:06:10 PM
VERNE RUPRIGHT, MAYOR, CITY OF WASILLA, spoke in support of
SB 13. He stressed that the bridge was not only strategic
to the use and access to Alaska, but also a good investment
for the federal government. He remarked that the federal
government should express a greater participation in the
project. He stressed that Wasilla was experiencing a
population surge, and was the fastest population growing
area in the state. He felt that the bridge would simply
give people options, as the bridge would not shorten the
distance that was already in place through the Glenn
Highway.
SB 13 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 88
"An Act authorizing the state bond committee to issue
certificates of participation to finance the
construction and equipping of residential housing to
serve the Anchorage campus of the Alaska Native
Medical Center; and authorizing the Department of
Administration to enter into a lease-purchase
agreement for the benefit of the Alaska Native Tribal
Health Consortium."
3:13:37 PM
HEATHER SHATTUCK, STAFF, SENATOR PETE KELLY, stated that SB
88 authorized the Department of Administration to enter
into a lease purchase agreement with the Alaska Native
Tribal Health Consortium (ANTHC) for construction and
equipping of a residential housing facility to be located
on the Anchorage campus of the Alaska Native Medical Center
(ANMC). The Department of Health and Social Services and
the Alaska Tribal Health System are partners in providing
community health care services throughout Alaska.
Ms. Shattuck stated that ANMC provided comprehensive
medical services to 143,000 Alaska Native and American
Indian people across the Alaska Native Tribal Health Care
system. Patients who need medical services beyond their
local health clinic's capacity are referred to ANMC for
specialty care services. Two years ago ANTHC and the
Department of Health and Social Services began identifying
ways in which working together could result in Medicaid
cost savings for the State while providing a more robust
array of services offered within the tribal health system.
The State of Alaska manages the Medicaid Program.
Ms. Shattuck explained that the Federal government and the
State split the cost of services for most Medicaid patients
50/50. However, if the Medicaid patient is an Alaska
Native/American Indian and receives services in a tribal
facility, the State is reimbursed 100 percent of the cost.
The additional 50 percent reimbursement rate resulted in
significant savings to the State's Medicaid budget. A key
element in providing these health care services is housing.
Families who travel to Anchorage for services must have
housing to have meaningful access to care. When the new
hospital was built at the Tudor Road campus in 1997, it
included a 54 semi-private room facility adjacent to the
hospital, the Quyana House. As demand increasingly exceeded
the current 110 bed capacity, the ANTHC began contracting
with local hotels to provide for additional rooms. Even at
increased cost, this still did not meet the demand. Senate
Bill 88 addresses the critical need for patient housing by
authorizing $35 million in State Revenue bonds for
construction of a 170-bed residential housing facility with
sky bridge access to ANMC.
Ms. Shattuck stated that it is not surprising that housing
is an integral part of ANMC's plans to increase services in
the following areas: Maternal Child Health/NICU expansion,
Operating Room Expansion, Endoscopy, Telemedicine Delivery,
Advanced Radiology Services, Ophthalmology, ENT, General
Surgery, Urology, Emergency Services, and Physical Therapy.
Patients who have housing on campus will receive services
at ANMC rather than another healthcare facility in the
area. Those who are Medicaid eligible will save the State
General Fund dollars.
Ms. Shattuck announced that SB 88 anticipates state General
Fund Medicaid savings of approximately $8.8 million per
year. This number is likely to increase over the next 10
years due to increased utilization for all health care
services provided to Alaska Natives/American Indians. The
identified cost savings exceed the amount needed to pay
debt service on the bond. It is a solid investment for the
State and a good partnership outcome for the Alaska Native
Tribal Health System.
3:17:33 PM
Co-Chair Meyer commented that he appreciated the
possibility of cost savings related to the bill. He
understood that the premise of the bill was to provide
long-term housing on the campus for the hospitals in
Anchorage. Ms. Shattuck agreed, and furthered that there
would be a sky bridge that would connect the housing
facility with the hospital, in order to avoid the use of
taxis on inclement weather days.
Vice-Chair Fairclough wondered how it was determined that
$8 million was a fair number related to the number of
people. Ms. Shattuck responded that in FY 12, Alaska paid
Providence and Alaska Regional $29 million for Alaska
natives to receive care that could have been provided at
ANMC. She furthered that the Consortium hoped that, with
improved access, throughput, and efficiencies, they could
save the $8.8 million which would translate into a 30
percent increase for those that would receive care at ANMC.
Vice-Chair Fairclough shared that she was the former
executive director of Standing Together Against Rape
(STAR), and had worked with people who chose to go to other
medical providers for personal reasons. She wondered what
degree of certainty was available to determine if those
people would choose to be treated at ANMC.
Co-Chair Meyer remarked that the project was a Certificate
of Participation (COP), and asked for further explanation
on the funding of the project.
3:22:20 PM
WILLIAM STREUR, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES (DHSS), explained that it was not known
whether or not an individual would choose ANMC. He stated
that when a tribal member is brought into Anchorage, and
boarded at a hotel, that individual would tend to seek
treatment where they feel inclined. He felt that housing an
individual near ANMC, they would obtain easier and
accessible treatment.
Vice-Chair Fairclough felt that one-third was a
conservative estimate, and appreciated that conservative
estimate.
Co-Chair Meyer wondered if the facility contained 150 beds.
Commissioner Streur replied that the facility would contain
170 beds.
Senator Bishop wondered if part of the savings would be
because of the lack of contracting line. Commissioner
Streur responded that the $8.8 million was only related to
health care cost savings.
Senator Bishop commented that the project seemed like a
smart option.
3:26:45 PM
Co-Chair Kelly requested more information regarding savings
related difficult pregnancies. Commissioner Streur asked
for more clarification.
Co-Chair Kelly remarked that he had conversations regarding
savings related to difficult pregnancies. Commissioner
Streur responded that the project would allow for early
term pregnant women for prenatal services, would increase
the chances for a normal delivery and a healthy baby.
Co-Chair Kelly surmised that much of the prenatal care
occurred at Providence. Commissioner Streur responded in
the affirmative.
Co-Chair Kelly queried the per-night cost for a stay at
Providence versus at ANMC. Commissioner Streur agreed to
provide that information, but stressed that the high costs
were related to the length of time in the neo-natal
intensive care unit.
Senator Dunleavy wondered if there was a study for the
hotels in the area related to the impact on their business.
Commissioner Streur responded that he was unaware of any
such study.
Co-Chair Meyer wondered if the fiscal note was prepared by
DHSS. Commissioner Streur responded in the affirmative.
Co-Chair Meyer noted that the fiscal reflected a savings
for DHSS, with a fund source of federal receipts. He asked
for more information on the fiscal note. Commissioner
Streur explained that the fiscal note was a zero fiscal
note, because the federal receipts would be offset by
increased federal receipts to offset the general fund (GF).
3:31:59 PM
ANGELA RODELL, DEPUTY COMMISSIONER, TREASURY DIVISION,
DEPARTMENT OF REVENUE, introduced herself.
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, introduced himself.
Co-Chair Meyer requested information related to the COP.
Mr. Mitchell responded that the COP was more complicated
that past COPs, because of the complex partnerships. He
explained that there would be a ground lease established on
the property, with a sky bridge to ANMC, and a parking
garage built adjacent to the parcel property. He stated
that there would be a facility lease for the structure. He
explained that the two leases would be granted to a trustee
bank, that the state appoints. That trustee bank would then
lease the facility back to the state, and the lease
payments would be fractionalized into $5,000 blocks of
participation in the lease, and sold to third party
investors at varying interest rates, depending on how long
the money is given. He stated that payments made under the
lease would be matched by the trustee and the repayment of
those investors over 15 years.
Co-Chair Meyer wondered who would own the building after
the 15 years. Mr. Mitchell responded that the state would
own the facility during the term of the lease, and after 15
years ANTHC would own the facility.
Vice-Chair Fairclough surmised that the stated would issue
the COP bonds, the state would make the payments on the
bonds, and the state would turn over ownership to ANTHC.
Mr. Mitchell responded in the affirmative.
Co-Chair Kelly stated that the payment for the bonds came
from the 100 percent Medicaid match. He furthered that the
delta from the 100 percent match came for these particular
patients, rather than the 50 percent for a "normal"
Medicaid patient.
Mr. Mitchell noted that the DOR fiscal note had an
estimation of $415,000 needed to issue the COPs for rating
agencies, bond council, financial advisory services, and
other required services in order to structure and issue the
publicly offered debt. He explained that the bill
contemplated $35 million from the proceeds of the COPs for
the project. He stated that the DOR fiscal note indicated
that $415,000 would come from the COPs to pay for the cost
of issuance. He felt that it was common at the local level
for general obligation bond issues, and the additional
funding was realized by selling the bond at the premium.
Vice-Chair Fairclough wondered why the funding method was
chosen for the facility construction. Mr. Mitchell
responded that COPs were often used in building
construction.
3:38:23 PM
Vice-Chair Fairclough queried the estimate of the cost of
the sky bridge. Ms. Rodell replied that the cost was
included in the $35 million, was did not know what portion.
Vice-Chair Fairclough queried the actual cost of the
project without the debt service. Mr. Mitchell replied that
$35 million was the amount of the COP, which was the
project fund deposit. He furthered that there could be an
additional interest earnings on the project fund of
$150,000, which was the state's anticipated contribution.
Vice-Chair Fairclough surmised that there was 2.75 interest
rate calculated for 15 years included in the package. She
felt that there ought to be a lower estimate than $35
million, because the state was paying an outside entity for
the project. Mr. Mitchell responded that the total payments
would be estimated $42 million, after the interest
differential. Ms. Rodell furthered that the other
alternative was cash, so there would be a 1 percent
earnings estimate on GF.
Mr. Mitchell stressed that the project was not proposed by
the administration.
Senator Hoffman shared that there were two other assisted
living projects in Bethel and Kotzebue that focused on
Medicaid cost savings to the state that were funded
completely with cash. He stressed that the long-term
savings for those centers and the proposed project would
occur exponentially.
3:43:05 PM
VALERIE DAVIDSON, ALASKA NATIVE TRIBAL HEALTH CONSORTIUM,
testified in support of SB 88. She stressed that the ANTHC
had a positive impact on the native communities across the
state. She stressed that Alaska benefited from various
types of care that ANTHC provided, including immunizations.
She shared that ANTHC was often the only medical provider
in rural Alaska. She shared that ANTHC was not solely
geared toward natives. She stated that the Veterans
Administration entered into agreements with the tribal
health organizations in Alaska, recognizing that the
Veterans Administration would also benefit by having the
tribal health systems provide services, so they would not
be required to build infrastructure in rural Alaska. She
stressed that the state did not build the additional
infrastructure in Alaska, because the tribal health systems
provided the health care. She shared that the average
village size in Alaska was approximately 300 people, so
sometimes services were limited beyond the local
community's capacity to provide care. When that occurred,
patients were referred to one of six regional hospitals
located throughout the state: Barrow, Bethel, Dillingham,
Kotzebue, Nome, and Sitka. She stressed that those
hospitals provided incredible services, but there were some
services that required people to be transferred to
Anchorage to ANMC. She shared that more than half of the
people that receive services at ANMC travel from outside
Anchorage in order to access health care services. She
shared some stories of patients who benefitted from health
care at ANMC.
Vice-Chair Fairclough supported the concept of the bill.
She queried the construction cost. Ms. Davidson replied
that the cost of construction and facilitating would be $35
million. She furthered that the cost of the sky bridge
would be $2 million.
Vice-Chair Fairclough wondered if a contractor had been
selected. Ms. Davidson responded that a contractor had not
yet been selected.
Vice-Chair Fairclough wondered if the project would fall
under the state procurement code. Ms. Davidson stated that
she was not comfortable responding to that question.
Vice-Chair Fairclough expressed was not sure why the
project was using borrowed funds, rather than using capital
funds.
Co-Chair Meyer responded that there was an anticipation of
savings to the operating budget over the 15 year period,
without needed to provide $35 million immediately.
3:57:22 PM
LINCOLN BEAN, CHAIR, ALASKA NATIVE HEALTH BOARD, ANCHORAGE
(via teleconference), spoke in support of SB 88. He stated
that the Alaska Native Health Board was a statewide
organization, which represented 25 health providers that
deliver health care in nearly every community in Alaska.
When needed care was beyond the local assistance, the
patients were sent to Anchorage.
FLORA RODDY, SELF, FAIRBANKS, testified in support of SB
88. She shared a story about her grandson's health issue.
She remarked that the project would provide necessary
assistance to many individuals, like her grandson.
Co-Chair Meyer CLOSED public testimony.
4:02:58 PM
Co-Chair Kelly stressed that the native population
currently received a 50 percent Medicaid reimbursement,
when they receive care at non-tribal hospitals. He stated
that it was important for those natives to receive care
from the tribal hospitals, in order to receive 100 percent
Medicaid reimbursement. He stated that SB 88 could provide
significant savings in the Medicaid budget.
Co-Chair Meyer agreed with Co-Chair Kelly, and asked for
more information regarding the financing of the project.
Ms. Rodell responded that there were discussions regarding
maintaining savings, and capturing the identified
population. She stated that the housing mechanism could
benefit the system. She furthered Commissioner Streur was
skeptical of the amount of savings, so there were
significant estimate decreases, and how much money could be
leveraged into a bond transaction.
Co-Chair Meyer wondered if it was a good time to invest.
Ms. Rodell replied that there were currently historically
low rates.
4:10:03 PM
AT EASE
4:10:10 PM
RECONVENED
SB 88 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 30(FIN)
"An Act relating to performance reviews, audits, and
termination of executive and legislative branch
agencies, the University of Alaska, and the Alaska
Court System; and providing for an effective date."
CSHB 30(FIN) was SCHEDULED but not HEARD.
SENATE BILL NO. 48
"An Act requiring each municipality with a population
that decreased by more than 25 percent between 2000
and 2010 that participates in the defined benefit plan
of the Public Employees' Retirement System of Alaska
to contribute to the system an amount calculated by
applying a rate of 22 percent of the total of all base
salaries paid by the municipality to employees of the
municipality who are active members of the system
during a payroll period; reducing the rate of interest
payable by a municipality with a population that
decreased by more than 25 percent between 2000 and
2010 that is delinquent in transmitting employee and
employer contributions to the defined benefit plan of
the Public Employees' Retirement System of Alaska;
giving retrospective effect to the substantive
provisions of the Act; and providing for an effective
date."
SB 48 was SCHEDULED but not HEARD.
ADJOURNMENT
4:17:38 PM
The meeting was adjourned at 4:17 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| BUSINESS PLAN version 03.27.13_Final.pdf |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| SB 88 Sectional Analysis.docx |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| Austerman & Stolze.HB 30.ACLU Review.2013-02-12.pdf |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 -- Sponsor Statement.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 History and Summary of Changes.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 Sectional Analysis.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 Sunset in Texas.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| SB 88 Sponsor Statement.docx |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| SB 88 Leters of Support.pdf |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| SB 88 Letters of Support 2.pdf |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |