Legislature(2013 - 2014)SENATE FINANCE 532
03/18/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB108 | |
| SB80 | |
| SCR16 | |
| HB23 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SCR 16 | TELECONFERENCED | |
| += | HB 23 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 80 | ||
| = | SB 108 | ||
SENATE FINANCE COMMITTEE
March 18, 2014
9:06 a.m.
9:06:05 AM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 9:06 a.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
Senator Fred Dyson; Chuck Kopp, Staff, Senator Fred Dyson;
Laura Brooks, Heath Care Administrator, Department of
Corrections; Robert Lawrence, Doctor, Chief Medical
Officer, Department of Corrections; Representative Mark
Neuman; Suzanne Armstrong, Staff, Senator Kevin Meyer.
PRESENT VIA TELECONFERENCE
Dave Powers, Doctor, Bristol Bay Health, Dillingham; Henry
Phillips, Doctor, Teladoc, Nashville; Sheela Tallman,
Premera Blue Cross Blue Shield, Seattle; Ron Hale, Hospital
Administration, Alaska Psychiatric Institute, Anchorage;
Carly Wier, Self, Anchorage; Lorali Simon, Usibeli Coal
Mine, Healy.
SUMMARY
SCR 16 REQ GOV TO INVESTIGATE COAL RESOURCES
SCR 16 was HEARD and HELD in committee for
further consideration.
SB 80 OUT-OF-STATE PHYSICIAN LICENSE
SB 80 was HEARD and HELD in committee for further
consideration.
SB 108 LIMIT PUBLIC ACCESS TO CRIMINAL RECORDS
SB 108 was REPORTED out of committee with a "do
pass" recommendation and with previously
published zero fiscal notes: FN1(LAW), FN2(ADM),
and FN3(ADM); a new zero fiscal note from the
Department of Health and Social Services; and a
new fiscal impact note from the Alaska Court
System.
2d CSHB 23(RLS)
KNIK ARM CROSSING; AHFC
2d CSHB 23(RLS) was HEARD and HELD in committee
for further consideration.
SENATE BILL NO. 108
"An Act relating to the confidentiality of certain
records of criminal cases; and providing for an
effective date."
9:07:31 AM
Co-Chair Meyer communicated that the bill introduction and
public testimony had been heard the previous day.
SENATOR FRED DYSON, SPONSOR thanked the committee for
hearing the bill. He was available to answer questions.
Senator Olson observed that public testimony the prior day
had been overwhelmingly in favor of the bill. He wondered
if any opposition had been expressed. Senator Dyson replied
that the only active opposition was from the Office of
Victim's Rights. The office was concerned that the public
information on CourtView helped individuals to identify
potential patterns of bad behavior. The sponsor had
provided a workaround with the Department of Health and
Social Services (DHSS) that would allow the agency through
training to gain access to confidential records if the
legislation passed. He asked his staff to elaborate.
CHUCK KOPP, STAFF, SENATOR FRED DYSON, explained that the
exception of access to information made confidential by the
legislation had been brought to the sponsor by the Office
of Public Advocacy and DHSS. The entities had asked that
persons responsible for the safety and welfare of child
placement, vulnerable adults, and seniors with disabilities
have access to the information for the placement of the
individuals. Additionally, individuals who currently had
access to the Alaska Public Safety Information Network (the
state criminal justice information system) would continue
to have access to the information. The amendment to the
bill had been made in Section 2. He noted that the change
had resulted in a fiscal note from the Alaska Court System.
Senator Dyson advised that there would always be pragmatic
reasons to trample on personal liberties and Bill of Rights
issues. He acknowledged that decisions would be difficult
due to heartfelt testimony on the downsides of particular
personal liberties. He believed the legislature needed to
be vigilant about upholding personal liberties. The current
issue was related to privacy and due process.
9:12:08 AM
Co-Chair Kelly MOVED to REPORT CSSB 108(JUD) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 108(JUD) was REPORTED out of committee with a "do
pass" recommendation and with previously published zero
fiscal notes: FN1 (LAW), FN2 (ADM), and FN3 (ADM); one new
zero fiscal note from the Department of Health and Social
Services; and one new fiscal impact note from the Alaska
Court System.
9:12:18 AM
AT EASE
9:13:50 AM
RECONVENED
SENATE BILL NO. 80
"An Act relating to the practice of telemedicine and
relating to licenses for out-of-state physicians or
podiatrists to practice telemedicine in this state
under certain circumstances."
9:14:16 AM
Senator Dyson explained that SB 80 introduced into Alaska's
Medical Practice Act the practice of telemedicine, sets
parameters for prescription of controlled substances
without an in-person contact between physician and patient,
establishes a definition for telemedicine, and provides
that health care insurers may not require in-person contact
between a health care provider and patient before payment
is made for services. With Alaska's large rural and remote
areas, the need for telemedicine is especially acute with
much of the state designated as medically underserved by
the federal Health Resources and Services Administration.
The legislation will provide expanded opportunity for
health care delivery for individuals and businesses
throughout Alaska. Currently, the only delivery of
telehealth in Alaska is via the Alaska Federal Health Care
Access Network (AFHCAN), established in 1998 to provide
telehealth services for federal beneficiaries in Alaska,
including Alaska Natives. The Alaska Native Tribal Health
Care Consortium (ANTHC) manages the telehealth program and
provided statewide health and information technology
services to Alaska Natives and American Indians, in
additions to supporting the local tribal health
organizations. The bill will allow the cost-saving and
efficiencies of telehealth to be delivered to the many
other constituencies in Alaska that do not qualify to
participate in the ANTHC telehealth program. In Alaska and
nationwide, the ongoing discussion of how to provide
greater access to health care at a reasonable cost is
becoming ever more relevant. Telemedicine is emerging as a
key element in the delivery of health services to children,
seniors, and other vulnerable populations through the
integration of technology and provider car. The Patient
Protection and Affordable Care Act is leading to increased
demand that physicians interact with more patients.
Telemedicine allows physicians to consult with more
patients, and enables patients to meet with their
physicians in a shorter time period. In terms of economic
advantages, telemedicine saves travel time and expense for
patients who otherwise have to leave home and work to see a
health care provider, provides for more timely diagnosis of
ailments, and reduces unnecessary ER visits.
9:19:24 AM
Mr. Kopp stated that the build out recipient of the state's
broadband network in Southwest and Western Alaska the
ANTHC, which created the Alaska Federal Health Care Network
expanding telemedicine statewide. He announced that GCI had
employees in very remote locations, and were using
telemedicine. The physicians were given a Cease and Desist
order, because, under state regulations, prescription of
medication or diagnosis of a patient must not be done based
solely on a patient-supplied history. In order for a
physician to prescribe medication, there must be an in-
person visit. He stressed that the regulations were old
fashioned, and enacted before telehealth was advanced.
Alaska Natives and federal entities had access to the
current telehealth network, but others would not be allowed
access. The legislation sought to allow those people to
take part in the telehealth network. He stressed that the
cost of a trip to a medical clinic for some Alaskans was
extremely expensive. He pointed out that the ANTHC
announced that telehealth had saved over $10 million in
travel costs for the clientele that were served. The
legislation introduced into statute the practice of
telemedicine. The sponsor met twice with the State Medical
Board, and had conversations to conclude on the current
language in the bill. He stated that the Department of
Corrections (DOC) requested an exception to continue
prescribe controlled substances electronically, due to the
DOC diversity that were going through withdrawals or have
behavioral disorders while incarcerated.
9:22:57 AM
Mr. Kopp stated that the bill was in line with other
states' that allowed for physical examinations to take
place electronically: California, Kansas, Maryland, New
Mexico, Ohio, Texas, Vermont, Hawaii, Louisiana, Nevada,
North Carolina, South Dakota, and Virginia. He presented
the sectional analysis (copy on file):
Section 1 - Adds a new section in the Medical Practice
Act (AS 08.64) establishing the practice of
telemedicine. Remains unchanged.
Section 2 - Clarifies how prescription of drugs
without a physical examination is to occur by setting
three requirements: 1) the prescription drug is not to
be a controlled substance, 2) the physician is located
in the state and able to provide follow-up care, and
3) the person consents to sending a copy of records of
the encounter to their primary care provider if the
prescribing physician is not their primary care
provider and the physician sends the records to the
primary care provider. It deletes the license for out
of state physician or podiatrist to practice
telemedicine.
Section 3 - Creates a definition for the practice of
telemedicine by adding a new paragraph to the Medical
Practice Act's definition section AS 08.64.380. It
deletes the langrage pertaining to personal interview
requirements for physician licensure for out-of-state
telemedicine license.
Section 4 - Adds a new section to the state insurance
code and provides that an insurance company that
offers a health care insurance plan that provides
coverage for telemedicine may not require that prior
in person contact occur between doctor and patient
before payment is made for covered services. It
deletes the language amending the license fee statute
and add an out-of-state license fee.
Section 5 - Provides an effective date for
applicability of new section AS 21.54.102 dealing with
health care insurance plans.
9:26:28 AM
Senator Olson queried the reason the physician should be
located within the state. Mr. Kopp responded that the
provision was included, because the physician must be
available for follow-up care.
Senator Olson wondered if he could treat patients while on
vacation. Mr. Kopp responded that medical regulation
already provided exception for existing physician-patient
relationships.
Senator Olson felt that Section 2 allowed for prescribing
medication without a physical examination. Mr. Kopp replied
that there an exception already outlined in regulation.
Senator Dyson furthered that the Medical Board was fairly
conservative, and there was some concern regarding some
large national firms that were currently practicing
telemedicine nationwide. He remarked that the medical board
wanted to preserve the traditional doctor/patient
relationship.
Senator Olson wondered if the Alaska Medical Association
was supportive of the legislation. Mr. Kopp replied that
the board may be neutral, and may be supportive. The
Association did not support the out-of-state licensing of
physicians.
Senator Olson asked if the Alaska State Medical Board
supported the bill. Mr. Kopp replied that the Board asked
for the removal of out-of-state licensing. He furthered
that the sponsor had been working with the association, and
he believed that the association was in support of the
legislation.
Senator Olson queried the position of the Alaska Medical
Association. Mr. Kopp responded that they were supportive
of the legislation.
Senator Olson asked for the position of the Alaska State
Medical Board. Mr. Kopp replied that they were either
neutral or in support, but not in opposition to the
legislation.
9:31:17 AM
Senator Olson wondered if there were conversations with the
rural providers to see how they view the legislation.
Senator Dyson replied that he believed there was enthusiasm
from the rural communities and rural medical centers.
Senator Olson stressed that there were some private
physicians that were treating patients. He queried the
position of these private providers. Mr. Kopp replied that
the sponsor had not received a position statement from
those providers.
Co-Chair Meyer remarked that the file did not contain many
position letters, so it was assumed that most people were
neutral on the legislation.
Co-Chair Meyer wondered if the Labor and Commerce
subcommittee's concerns had been addressed. Senator
Dunleavy replied in the affirmative.
Co-Chair Meyer wondered if there was a new fiscal note
forthcoming. Mr. Kopp replied that there was a new fiscal
note forthcoming.
Co-Chair Meyer stressed that DOC had some concerns, and
would perhaps comment on the fiscal note.
9:35:27 AM
LAURA BROOKS, HEATH CARE ADMINISTRATOR, DEPARTMENT OF
CORRECTIONS, introduced herself.
ROBERT LAWRENCE, DOCTOR, CHIEF MEDICAL OFFICER, DEPARTMENT
OF CORRECTIONS, introduced himself.
Ms. Brooks stated that DOC had worked with the sponsor on
some of the language of the bill. She stated that DOC was
one of the first agencies to use telemedicine in order
provide improved medical services to inmates across the
state. Psychiatrists began using telemedicine in 1998.
Telemedicine had allowed DOC to defer some significant
costs that would have been incurred, if the facilities were
staffed. Telemedicine was an integral part of the DOC's
operations. The wording in the bill related to controlled
substances could impact DOC in the area of psychiatry, for
the new inmates that had mental health crisis. The tele-
psychiatry allowed for safe and immediate intervention for
inmates experiencing a mental health crisis. She stated
that DOC was a 24-hour provider, so there was a 24-hour on-
call system, so a physician was always available.
Prescribing controlled substances was common for those on-
call providers, because the vast majority of the highly
intoxicated arrestees come in after hours, and were at a
high risk for alcohol withdrawal that could be life-
threatening. She estimated that approximately 3000 of those
controlled substance prescriptions were written annually,
just for that segment of the inmate population. She
remarked that DOC did not have policy concerns with the
legislation, but was concerned with the language in order
to continue to provide the services to inmates.
Dr. Lawrence stressed that there were different types of
telemedicine in the state. He explained that one type of
telemedicine was provider to provider communication, and
direct patient to provider communication. Both of the forms
of telemedicine were approved by the State Medical Board.
The legislation addressed a third type of telemedicine
where a patient was able to contact a medical provider
directly, without the existence of a prior doctor/patient
relationship. He stressed that DOC wanted to ensure that
there was no negative impact on the history of
telemedicine.
9:40:54 AM
Co-Chair Meyer wondered if the legislation included the
amended language. Dr. Lawrence replied that DOC was
currently working with the bill sponsor to draft language
that accommodates the forms of telemedicine that were
currently in practice.
Co-Chair Meyer wondered if there would be a fiscal impact
to DOC in the forthcoming fiscal note. Ms. Brooks did not
anticipate any change to the fiscal note.
Senator Olson expressed concern regarding the issue of
licensing medical practitioners. He wanted to ensure that
the medical providers were clearly following the law. Dr.
Lawrence replied that the language was included in order to
ensure that the allowance was not maliciously used, without
the relationship already established. The FDA gave
different levels of the prescription of controlled
substances, which restricted the prescription through
telemedicine regardless of state law allowance. The other
scheduled medicines were just as equally problematic in the
small communities, because of the potential for abuse.
Those restrictions must be in place without a prior
doctor/patient relationship, to ensure that both parties
understand the use of the medication.
Senator Olson noted that a person agrees to send a copy of
medical records to their primary care provider, but
stressed that many rural residents did not have a primary
care provider. He wondered if that was taken into
consideration. Dr. Lawrence replied that DOC never faced
that issue. He could not speak to how other physicians in
the state would respond to that.
Senator Olson stressed that those people who did not have
any health care coverage or protection should not be at
risk of losing their licenses. Dr. Lawrence recognized
that there was a fear of telemedicine hampering the
business side of medicine in the state.
Co-Chair Meyer stated that the new language would be
incorporated into a forthcoming committee substitute.
9:48:41 AM
DAVE POWERS, DOCTOR, BRISTOL BAY HEALTH, DILLINGHAM (via
teleconference), addressed some concerns regarding the
legislation. When he moved to Alaska in 1984, he worked in
Anchorage. At the time, he was told that each small village
had a medical provider. He found that to be true when he
worked in each village. He felt that there was better
medical care in rural Alaska than there was in rural
Colorado and Idaho. He worked to get telemedicine, as it
currently stands, in 1998, which rapidly became relied
upon. He felt that virtually no one was restricted from the
telemedicine use. He stressed that the interaction with
health aides was essential for telemedicine, so there were
no laws broken with regard to a patient's history and vital
signs. He remarked that the legislation made it seem like
the practices were not already occurring. He felt that it
made the common practices illegal.
9:55:30 AM
Co-Chair Meyer wondered if the State Medical Board was in
support of the bill. Dr. Powers responded that the
legislation was intended for those in rural Alaska with no
access to health care. He stated that the current system
was in almost every village in Alaska, and there were no
restrictions for the Natives to use that system.
Senator Olson wondered if the legislation defined the
boundaries more clearly. Dr. Powers replied that the bill
did not clarify telemedicine, and only raised concerns.
Senator Olson asked that Dr. Powers examine the forthcoming
committee substitute.
Co-Chair Meyer felt that some concerns would be address in
the forth-coming committee substitute.
HENRY PHILLIPS, DOCTOR, TELADOC, NASHVILLE (via
teleconference), addressed some concerns regarding the
legislation. He pointed out that the Medical Board took
action against some physicians in his program to pull some
licenses. The board had announced that they were against
telehealth, at least in certain circumstances. There were
approximately 15 million Americans that were in telehealth
programs, and would probably double in the next year.
Telehealth helped to solve a rural access issue. The
legislation allowed for someone to stay in their location,
and contact a physician that they do not have a previous
relationship with and not travel to that location. He
stated that 50 percent of telehealth occurred in rural
areas and the other 50 percent occurred in urban settings.
He stated that it was still difficult access your provider
in a timely manner. The legislation allowed for access to
telehealth to all Alaskans.
10:02:33 AM
SHEELA TALLMAN, PREMERA BLUE CROSS BLUE SHIELD, SEATTLE
(via teleconference), stated that she was available for
questions.
Vice-Chair Fairclough wondered how the insurance would be
handled for a person who did not have a physical
appointment with a physician. Ms. Tallman replied that
telemedicine services were provided, and she was only aware
of it if a provider used a modifier with a claim submitted.
Vice-Chair Fairclough asked if insurance companies covered
telemedicine. Ms. Tallman responded that Premera covered
telemedicine services, as long as the service is covered
under the policy.
RON HALE, HOSPITAL ADMINISTRATION, ALASKA PSYCHIATRIC
INSTITUTE, ANCHORAGE (via teleconference), introduced
himself.
Co-Chair Meyer CLOSED public testimony.
Senator Olson queried Mr. Hale's position on the
legislation. Mr. Hale replied that he could not provide an
opinion, because he was a state employee. He wanted to work
with the sponsor to enhance the language of the bill.
Senator Olson wondered if Mr. Hale had the language of the
new committee substitute. Mr. Hale replied that he had not
seen the new committee substitute.
SB 80 was HEARD and HELD in committee for further
consideration.
10:07:12 AM
AT EASE
10:08:53 AM
RECONVENED
SENATE CONCURRENT RESOLUTION NO. 16
Requesting the Governor to investigate and report to
the legislature regarding the development of a large
coal power plant and associated electric grid to
provide energy to residents of the state.
10:09:20 AM
Co-Chair Kelly explained SCR 16. He felt that the energy
portfolio in Alaska was not diversified. He remarked that
Alaska could provide the need for coal in the world for 100
years. 16 requests the Governor investigate the development
of a large coal power plant and associated electric grid
and to evaluate the costs and benefits of coal-generated
energy with respect to other energy sources. Today, it is
unfashionable to talk about our most abundant energy
source, Coal. Alaska has enough coal to provide for
peoples' needs for hundreds of years. It is a plentiful and
inexpensive source of energy. Coal power plants are more
efficient than ever. Some proposed and experimental plants
even remove carbon dioxide. Coal is far more abundant
globally than either oil or natural gas. Fashions change,
but if we fail to have this conversation today, we will
have failed to keep this option open for future generations
of Alaskans. This is that day, and we need to advance the
conversation on coal today so it remains in our vernacular
for tomorrow. Yes, coal requires mining, and there are
individuals and corporate entities that attack any effort
to disturb the earth so as to provide for mankind. They
are part of the conversation, but often shout too loudly
about issues of possible relevance outside, that do not
apply to Alaska's coal. Coal can be used to heat homes, it
can power communities. Alaska has 40 percent more coal than
the Lower 48. Alaskan coal is ultra-low sulfur fuel without
concentrations of trace elements considered harmful and is
the cleanest not only in the United States, but perhaps the
world. It is the ideal fuel, with the best chance of
attaining the mandates of the 1990 Clean Air Act
amendments. Coal is not just our past, but is also part of
our future. We have the ability to secure Alaska's energy
independence with a resource that is abundant in our state.
SCR 16 will help keep coal in our consciousness as a
solution to our energy needs. He felt that the current
fiscal note did not provide an accurate reflect the
legislation's intent.
10:16:30 AM
CARLY WIER, SELF, ANCHORAGE (via teleconference), testified
against SCR 16. She felt that it was irresponsible to build
a power plant without regard to the federal permits or
restrictions. She stressed that there were more effective
ways to embark on a dialog or make a point to the federal
government than wasting $75,000 or more to determine the
cost of a legal battle with the federal government on a
study for a coal plant that could not be built without
meeting federal regulations, and would not even address the
needs of Alaska's small and diverse rural populations. Coal
was the dirtiest available fuel, and stressed that Alaska
had many other options. She stressed that it was not
"fashion" that forced people to stop using lead in dishes
or mercury to make hats, but rather a new understanding and
rational decision making that changed the way humans used
resources. She stressed that the global markets were
demonstrating the new understanding of the dangers of coal.
LORALI SIMON, USIBELI COAL MINE, HEALY (via
teleconference), testified in support of SCR 16. She felt
that the legislature must consider the implications of all
the different energy resources, and she stressed that coal
had provided reliable and affordable energy to Alaska for
100 years. She stated that coal had would continue to be an
important aspect of Alaska's energy.
Co-Chair Meyer CLOSED public testimony.
SCR 16 was HEARD and HELD in committee for further
consideration.
2d CS FOR HOUSE BILL NO. 23(RLS)
"An Act creating the Knik Crossing Development
Corporation as a subsidiary corporation of the Alaska
Housing Finance Corporation and relating to bonds of
the Knik Crossing Development Corporation."
10:25:32 AM
REPRESENTATIVE MARK NEUMAN, outlined the basics of the
legislation. He explained that House Bill 23 amends the
Knik Arm Bridge and Toll Authority's enabling statute to
provide for a successful procurement for the Knik Arm
Crossing project and to generate the best value for the
state. Passing this legislation this session is important
to seeing the Knik Arm Crossing efficiently move toward a
successful and low-cost procurement process and facilitate
being open for traffic in 2015. The Knik Arm Crossing will
be a significant addition to Alaska's infrastructure that
will further facilitate the movement of goods and people in
the state. This bill was written in consultation with the
Knik Arm Bridge and Toll Authority (KABATA), which was
established in 2003 by the Alaska Legislature. The bill
accomplishes many items KABATA has deemed necessary to have
a successful public-private partnership procurement. Those
items are:
Increase in KABATA's Bonding Authority from $500 million
to $600 million
· The $600 million number represents the same amount
authorized under Private Activity Bond (PABs)
allocation from FHWA
· Lowers the cost of capital for the project and
ultimately lowers the cost to end users
· Private partner is the borrower of any PABs issued.
Clarify that the bridge and associated facilities are
exempt from state and local property taxes
· Like any other transportation project in our State,
the roads and bridges are not subject to property
taxation.
· Any private facilities developed outside the
crossing will be taxable
· Property tax exemption reduces the availability
payment and reduces the toll
Contractual Monetary Obligations
· Identifies the *obligations of the State of Alaska*
under a P3 process
· The legislative language applies to "monetary
liabilities" which may be incurred by KABATA under a
P3 process
· Any P3 agreement needs to be approved by the KABATA
Board of Directors, State AG's office, and ADOT&PF
· Serves to lower the cost of debt and equity to
finance the project
· Keeps the tolls affordable to the traveling public
Project reserve
· Creation of a reserve fund is to provide a backstop
for toll revenue fluctuations.
· Serves to enhance the credit worthiness of the
project and reduce project costs
· Will be repaid over the project life
Vice-Chair Neuman stated that A the above language
clarifications and additions serve to lower the cost of
capital on this much needed infrastructure project and
deliver the benefits in a timely and efficient manner.
10:33:06 AM
Co-Chair Kelly MOVED to ADOPT the committee substitute for
SCS 2d CS HB 23 (FIN), work draft 28-LS014\R (Martin,
2/13/14). There being NO OBJECTION, it was so ordered.
SUZANNE ARMSTRONG, STAFF, SENATOR KEVIN MEYER, explained
the changes in the CS. She referred the explanation of
changes (copy on file):
Section 1: Amends AS 19.75.021 Establishment of the
Authority (KABATA)
Amends existing law to prevent the dissolution of
KABATA until bonds issued by the State are satisfied.
Section 2: Amends AS 19.75.111 Powers and Duties of
Authority (KABATA)
Amends existing law to allow KABATA to enter into an
agreement with the State to pledge residual toll
revenues to pay debt service incurred by the State.
Section 3: Amends AS 19.75.211 Bonds of the Authority
(KABATA)
Amends existing law to require the State Bond
Committee to evaluate whether toll revenues are
adequate for payment of the principal and interest on
bonds issued by the State before KABATA may issue
additional toll revenue bonds.
Section 4: Amends AS 19.75.221 Trust Indentures and
Trust Agreements; Funds and Reserves (KABATA)
Amends existing law to require that if KABATA issues
bonds in addition to the toll revenue bonds issued by
the State, KABATA's trust agreement would require the
authority to agree to keep tolls at a level sufficient
to cover any prior toll revenue pledges made to
support previously issued State toll revenue bonds.
Section 5: Amends AS 19.75.231 Validity of Pledge
Amends existing law to express the Legislature's
intent that a toll revenue pledge made by KABATA to
support bonds issued by the State is valid and shall
give rise to a lien against toll revenues.
Section 6: Establishes the Framework for Issuance of
Toll Revenue Bonds for a Toll Bridge
AS 37.15.225 - Bond Authorization
Net proceeds of the sale of bonds remaining after
payment of costs of issuance and after deposit to the
Bond Reserve Fund, shall be transferred to the Knik
Arm Bridge & Toll Authority. The net proceeds may be
held by a trustee to be disbursed to pay the costs of
a toll bridge, as set out in a trust agreement.
Accrued interest paid on the bonds shall be deposited
into the Bond Redemption Fund.
Prior to the issuance of bonds, the State Bond
Committee will notify the Legislature.
AS 37.15.230 - Provides for a Toll Bridge Revenue Bond
Limit
The total unpaid principal amount of revenue bonds may
not exceed $300,000,000.
AS 37.15.235 Establishes a Toll Bridge Revenue Fund
Revenue received by the State, by contract with the
authority, from the ownership or operation of the toll
bridge and facilities, shall be deposited in this
fund.
Contracts or other agreements with the authority may
establish priorities for the payment of operations and
maintenance costs and for the payment of other
obligations (including debt obligations of the
authority), prior to payments to be made by the
authority to the State for deposit into this fund.
Revenue in the fund may be used only for:
1. Pay or secure payment of the principal of and
interest on bonds;
2. Redeem bonds before the fixed maturity date;
and
3. Subject to appropriation by the Legislature,
for any other purpose for which federal funds may
be obligated by the State under 23 U.S.C.
129(a)(3).
AS 37.15.240 Establishes the Toll Bridge Revenue Bond
Redemption Fund
A trust fund for paying and securing the payment of
the principal and interest on the bonds authorized
under AS 37.15.225 - 37.15.285 is created. There is no
limitation on the source of funds that may be
deposited into the fund, only that funds in this
account are to be used to pay principal and interest
on bonds issued under AS 37.15.225 - 37.15.285.
AS 37.15.245 Establishes Bond Terms
Provides discretion for the state bond committee to
determine the manner, amount, timing, and maturity
date for the issuance of bonds under AS 37.15.225 -
37.15.285. Interest rates may be fixed or variable.
Requires the state bond committee to consider the best
interests of the State when setting the terms of bond
issuance and requires the final bond terms be
expressed through a resolution of the bond committee.
AS 37.15.250 Bond Resolution
Provides that the bond committee shall authorize the
issuance of the bonds by adopting a resolution. The
resolution may fix the principal amount,
denominations, date, maturities, manner of sale, place
or places of payment, terms, form, conditions and
covenants of the bonds.
AS 37.15.255 Bond Reserve Fund
The resolution authorizing the issuance of bonds, may
provide for the establishment and maintenance of a
special fund - The Toll Bridge Revenue Bond Reserve
Fund.
The fund will consist of:
1. All proceeds of the bonds required to be
deposited into the fund by terms of the bond
resolution or a trust agreement;
2. An amount equal to the required debt service
reserve, as determined by the Commissioner of
Revenue; and
3. Appropriations approved by the Legislature.
Money in the fund will be applied solely to the
payment of the interest and principal on bonds
authorized and issued under AS 37.15.225 -
37.15.285.
Money in the reserve fund, excess of what is required
for the debt service reserve, may be withdrawn or may
be transferred to the bond redemption fund.
Bonds may not be issued under a trust agreement,
indenture, or bond resolution unless the required debt
service reserve for the bonds is in the reserve fund.
If the funds in the fund fall below the required debt
service reserve amount, as determined by bond
committee, the Commissioner of Revenue will notify the
Governor and the Legislature of the amount of funds
necessary to restore the account to an amount
sufficient to meet the required debt service. The
Legislature then has the discretion of appropriating
funds to replenish the fund to an amount equal to the
required debt service reserve.
AS 37.15.260 Enforcement by Bond Owner
Provides that bondholders, or their trustees, may
enforce their rights (transfer, set aside, payment of
money, and the enforcement of all terms, conditions,
and covenants) in superior court.
AS 37.15.265 Amounts Required for Payments
Starting with the year in which bonds are issued, the
bond committee will certify to the Commissioners of
Revenue and Administration, the amount, required for
the next two fiscal years, to be paid from toll
revenues or other state appropriations to:
1. The Bond Redemption Fund - to pay the
principal and interest
2. The Bond Reserve Fund - to maintain the
required debt service reserve
AS 37.15.270 Refunding
Provides the bond committee with the authority to
refund parts or all of the bonds at or before the
maturity or redemption date, if refunding is
advantageous to or in the best interest of the State.
All of the provisions that relate to the issuance of
bonds under AS 37.15.225 - 37.15.285 are applicable to
the refunding bonds.
AS 37.15.275 Bonds as Legal Investments
Provides that the bonds are legally enforceable
securities that can be purchased by individual and
institutional investors.
AS 37.15.285 Definitions
Section 7: Effective Date Clause
Provides for a July 1, 2014 effective date.
10:41:52 AM
Senator Hoffman looked at Section 3, and noticed that the
bond committee was assigned to evaluate whether the total
revenues were adequate to pay for the principal and
interest on the bonds, and if not would issue additional
toll revenues. He then looked at page 2 regarding the bond
reserve fund, and there was a provision for appropriation
by the legislature. He wondered why legislation
appropriation was necessary, if in fact Section 3 addressed
that issue with a toll adjustment. Ms. Armstrong replied
that there were discussions regarding maintaining the
authority's ability to issue bonds itself, especially if
the legislature decided that it was the appropriating
direction, so the obligations of the authority needed to
address the operations, maintenance, and the state's issued
debt that the bill proposed. She stressed that the
legislature should seriously examine that provision.
Senator Hoffman felt that it was the main concern, because
the state would maintain the obligation. He felt that the
toll would adequately fund the construction. He did not
thing that there would be support, if the state had to
cover the cost of construction.
Senator Olson stressed that there were very substantial
financial requirements and burdens that the state was
currently addressing. He asked for an update regarding the
Transportation Infrastructure Finance and Innovation Act
(TIFIA) loans. Co-Chair Meyer replied that Ms. Armstrong
was not capable of answering that question. Senator Olson
agreed to receive a response at a later date.
Co-Chair Meyer remarked that the funding of the project had
three components: 1) one-third was TIVIA bonds; 2) one-
third in revenue bonds; 3) and one-third federal highway
receipts. The funding would have very little anticipated
general fund money. Ms. Armstrong agreed with that
summation.
2d CSHB 23(RLS) was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:47:55 AM
The meeting was adjourned at 10:47 a.m.