Legislature(2013 - 2014)
04/09/2014 03:10 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| SB119 | |
| SB218 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
April 9, 2014
3:10 p.m.
3:10:55 PM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 3:10 p.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
Senator Click Bishop
ALSO PRESENT
Suzanne Armstrong, Staff, Senator Kevin Meyer; Jeff
Ottesen, Director, Division of Program Development,
Department of Transportation and Public Facilities;
Michelle Rizk, Associate Vice President, Statewide Planning
and Budget, University of Alaska; Deven Mitchell, Executive
Director, Alaska Municipal Bond Bank Authority, Department
of Revenue; Representative Alan Austerman.
SUMMARY
SB 119 BUDGET: CAPITAL
CSSB 119(FIN) was REPORTED out of committee with
a "do pass" recommendation.
SB 218 AK MUNICIPAL BOND BANK AUTHORITY
CSSB 218(FIN) was REPORTED out of committee with
individual recommendations and with two new
fiscal impact notes from Department of Revenue
and one new fiscal impact note from the
University of Alaska.
SENATE BILL NO. 119
"An Act making appropriations, including capital
appropriations and other appropriations; making
appropriations to capitalize funds."
3:11:54 PM
Co-Chair Kelly MOVED to ADOPT the proposed committee
substitute for CSSB 119 (FIN), Work Draft 28-GS2672\Y
(Martin, 4/9/14). There being NO OBJECTION, it was so
ordered.
3:12:31 PM
AT EASE
3:15:26 PM
RECONVENED
Co-Chair Meyer queried the changes in the committee
substitute.
SUZANNE ARMSTRONG, STAFF, SENATOR KEVIN MEYER, spoke to two
reports prepared by the Legislative Finance Division (LFD)
titled, "Multi-year Agency Summary" and "Multi-year Agency
Summary - Capital Budget" (copies on file). She looked at
the first column was the FY 15 capital column, which
totaled $2,094.229 million. The unrestricted general funds
(UGF) totaled $545.816 million. The designated general
funds (DGF) totaled $182.550 million. The other state funds
totaled $266.517 million. The federal receipts totaled
$1,099.344 million. The second column was the FY 14 capital
supplemental column, which totaled $7.31 million. It was
approximately $2 million more than the bill that was
considered on the previous Monday, because of a
supplemental amendment that was presented by the Office of
Management and Budget (OMB). The third column was the FY 14
operating supplemental column, which totaled $45 million,
of which UGF was $41 million; DGF totaled $126,000; and
other state funds were $3.9 million. The largest difference
in the bill occurred in the University of Alaska (UA) FY 15
capital budget. She looked at page 59 of the bill, which
was the heat and power plant at the University of Alaska
Fairbanks (UAF). On page 59, lines 21 through 25 contained
the appropriation which totaled $195 million, of which
$37.5 million was DGF from the Alaska Capital Income Fund.
The other fund columns noted $157.5 million, which were
bond proceeds that were under consideration in a separate
bill. She noted some intent language that stipulated that
it was the intent of the legislature that UA implement a
utility surcharge, or increase tuition, in an amount not to
exceed annual revenue of $2 million. This funding and the
fuel savings resulting from the construction of the new
plant shall be used to offset university revenue bond debt
service for the UAH heat and power plant.
Co-Chair Meyer remarked that the funding for the
engineering building was $5 million from the governor's
office request and $5 million for receipt authority. He
stated that it was his original goal to fully fund the
engineering building, but Co-Chair Kelly felt that there
needed to be adequate power and heat for the new building.
Vice-Chair Fairclough wondered if the State Library and
Archives Museum (SLAM) was funded in its entirety. Co-Chair
Meyer replied that SLAM was fully funded.
Co-Chair Kelly remarked that the maintenance money was
moved from UAF and some capital requests. He stressed that
the funding for the new facility was originally intended
for UAF deferred maintenance. Co-Chair Meyer stated that
$195 million was not the total cost for the new facility,
and additional costs would be in front of the legislature.
3:21:49 PM
Co-Chair Kelly stated that there were many different funds
shifted in order to obtain the new facility. Co-Chair Meyer
felt that Fairbanks was incurring a great sacrifice in
order to make the project seem viable from his perspective.
Ms. Armstrong spoke to Section 41, on page 109 of the bill,
lines 13 through 18, there was a $50 million
reappropriation to UA for design and construction for the
UAF combined heat and power plant. The total funding
proposed for the project in the current version of the
legislation was $245 million.
Co-Chair Meyer noted the transfer of $50,000 in the SETS
fund. Ms. Armstrong clarified that it was a transfer of $50
million.
Co-Chair Meyer asked if there were any other changes that
should be presented. Ms. Armstrong indicated in the
negative.
Vice-Chair Fairclough asked that the community revenue
sharing aspect be put on the record. She noted that there
were a great number of public testimonies that stressed the
importance of community revenue sharing. Ms. Armstrong
stated there was nothing in the legislation that pertained
to community revenue sharing. The community revenue sharing
was funded through the operating budget. She remarked that
the legislation could be viewed as a type of revenue
sharing, because of the local investments in the bill.
Co-Chair Kelly commented on the operating budget would
contain $3 million for revenue sharing.
Vice-Chair Fairclough noted that he mayor of Fairbanks was
in the audience.
Co-Chair Meyer remarked that the UAF power plant was the
largest change in the budget. He noted that the Loussac
Library was now at the original funding request of $10
million. He wondered if there were any other changes in the
committee substitute. Ms. Armstrong shared that the grant
to the Alaska Railroad for Positive Train Control was
restored to the governor's original request of $15 million.
Co-Chair Kelly queried the total request for positive train
control. Ms. Armstrong replied that the request was $15
million.
3:28:01 PM
Senator Hoffman MOVED to ADOPT AMENDMENT 1 (copy on file):
Funding Source
Amount Federal Receipts: $18,900,000
GF/Match: $2,100,000
Project Description:
This project will construct the third and final phase
of the road connecting the City of King Cove with the
City of Cold Bay and its all-weather airport. The
project will construct a 17.2 mile single lane gravel
road with turnouts. This project contributes to the
Department's Mission by reducing injuries, fatalities
and property damage and by improving the mobility of
people and goods. Funding is dependent on receipt of
funds from the Federal government.
The Aleutians East Borough owns and maintains the road
up to the National Park boundary. The state will own
the road within the National Park boundaries, but the
Aleutians East Borough agrees to maintain the road
within the National Park boundaries.
Co-Chair Meyer OBJECTED for discussion.
Senator Hoffman stated that the amendment pertained to
safety and access in the community of King Cove. He stated
that the project was in its final phase, and there were
attempts to get federal funding for access to its airport.
Co-Chair Meyer surmised that the state would match with
$2.1 million, if the state received the federal receipts
for $18.9 million. Senator Hoffman replied in the
affirmative, and furthered that the road could not be
constructed until the federal funds were appropriated and
the decision was reversed by the Secretary of the Interior.
Vice-Chair Fairclough wondered if there was funding for the
road in any other form. Senator Hoffman responded that he
was not aware of any other funding for the project.
Vice-Chair Fairclough looked at page 39, line 14, which was
a $100,000 appropriation. She wondered if there were any
existing allocations for development. She remarked that she
was in support of the road, but was merely wondering if
there were existing funds. Co-Chair Meyer deferred to the
Department of Transportation and Public Facilities
(DOT/PF).
Vice-Chair Fairclough restated her question.
JEFF OTTESEN, DIRECTOR, DIVISION OF PROGRAM DEVELOPMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, stated
that the $100,000 for permitting. He stressed that it was
considerate separate funds for a separate purpose.
Vice-Chair Fairclough wondered if there were any
construction funds. Mr. Otteson agreed to provide that
information. He remarked that there was a substantial
amount of work that was done on the airport.
Vice-Chair Fairclough surmised that the amendment would
meet current projections for construction, and there were
no other appropriations for construction. Mr. Otteson
responded that the budget requests were drafted after
extensive examination of possible previous appropriations.
Co-Chair Meyer wondered if DOT/PF supported the amendment.
Mr. Otteson responded that he was very supportive of the
amendment. He shared that he had worked on the project for
his entire career at DOT/PF.
Co-Chair Meyer REMOVED his objection. There being NO
further OBJECTION, AMENDMENT 1 was adopted.
3:34:57 PM
AT EASE
3:37:46 PM
RECONVENED
Co-Chair Meyer noted that each member of the committee
would like to be added as sponsors to AMENDMENT 1.
Ms. Armstrong sated that LFD prepared a report that
compared the prior year's budget with the current budget.
She stated that the Senate Finance Committee had
established criteria that determined to reduce UGF spending
in both the capital and operating budgets. The report
showed a reduction of $439.301 million in UGF in comparison
to the previous year's capital budget. The report also
showed an additional $44.5 million reduction in DGF. She
stated that the reduction in UGF was an effort to preserve
the reserve accounts that were available to the
legislature.
Co-Chair Meyer wondered if the bonding proceeds were the
reason that the current version of the bill was higher than
the house version of the bill. Ms. Armstrong responded in
the affirmative. She furthered that the total reduction,
comparing 2013 to 2014, it only showed a $184 million
reduction. The bond proceeds related to the addition of the
heat and power plant at UAF.
3:41:30 PM
AT EASE
3:42:52 PM
RECONVENED
3:43:09 PM
Vice-Chair Fairclough moved Amendment 2:
page 21, line 27
after the word "and" insert the word "or."
There being NO OBJECTION it was so ordered.
Co-Chair Kelly MOVED to REPORT CSSB 119(FIN) out of
committee with individual recommendations, and drafting
instructions for Legislative Legal Services and the
Legislative Finance Division to make any necessary or
conforming changes to the bill.
CSSB 119(FIN) was REPORTED out of committee with a "do
pass" recommendation.
3:45:56 PM
AT EASE
3:51:24 PM
RECONVENED
SENATE BILL NO. 218
"An Act relating to the Alaska Municipal Bond Bank
Authority; and providing for an effective date."
3:52:49 PM
Co-Chair Kelly MOVED to ADOPT the proposed committee
substitute for CSSB 218(FIN), Work Draft 28-LS1567\N
(Wallace, 4/9/14). Co-Chair Meyer OBJECTED for discussion.
Ms. Armstrong stated that there were two sections that were
added to the legislation. She looked at page 5, lines 10
through 24, Section 8, which was legislative approval for
bond authorization for the UAF heat and power plant. The
section authorized UA to issue revenue bonds, and use the
proceeds of the bonds to pay for the design, construction,
acquisition, and equipping for the heat and power plant
facility at UAF. The legislative approval and authorization
was required by statute. She pointed to page 5, lines 25
through 31, and page 6, lines 1 through 7, which was
Section 9. The section was the loan authorization for UA to
borrow an amount not to exceed $150 million by issuing
revenue bonds or entering into a loan agreement with the
Alaska Municipal Bond Bank Authority. She stated that it
provided the statutory legislative approval and
authorization for the bonds that were discussed under SB
119.
Co-Chair Meyer wondered if the municipal loan bond would
allow for bonding of additional $87.5 million. Ms.
Armstrong replied in the affirmative.
Co-Chair Kelly wondered if $70 million was a revenue bond.
Ms. Armstrong responded in the affirmative.
Vice-Chair Fairclough looked at the fiscal note, and noted
the addition of $7 million annually from the general fund,
and wondered if that should be considered university
receipts. Co-Chair Kelly replied that it did not include
the revenue bond, but rather was sourced from the bond
bank.
Vice-Chair Fairclough remarked that the fiscal reflected $7
million of new general fund money. Ms. Armstrong deferred
to Ms. Rizk to discuss the fiscal note.
Co-Chair Meyer wondered if there was an amendment to the
bill. Ms. Armstrong stated that there would be clarifying
language to the bill.
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, STATEWIDE PLANNING
AND BUDGET, UNIVERSITY OF ALASKA, looked at the fiscal
impact note from UA, and explained that the amount
represented the debt service associated with $87.5 million
that UA intended to borrow from the Alaska Municipal Bond
Bank. In addition to the amount, UA would issue $70 million
of UA revenue bonds, so UA would be responsible for the
debt service with the majority of the funding sources from
utility savings.
Co-Chair Kelly surmised that the savings would not occur
until 2018 or 2019. Ms. Rizk agreed with that summation.
Vice-Chair Fairclough wondered if the state was embarking
on its own debt service from its own loan. Ms. Rizk
responded that the operating budget reflected a significant
reduction to the UA budget of approximately $16 million.
The current fiscal climate did not allow for UA to find an
additional $7 million in addition to the contribution of
the UA revenue bonds.
3:58:42 PM
AT EASE
4:03:09 PM
RECONVENED
Vice-Chair Fairclough remarked that she was discussing the
overall bond debt for Alaska, and stressed that the Port of
Anchorage would also be requesting money.
Co-Chair Meyer asked for a summary of the financing for the
heat and power plant at UAF. Ms. Armstrong replied that SB
119 had a reappropriation of $50 million; an FY 15
appropriation of $37.5 million; and SB 218 had two
authorizations: an authorization for UA to issue revenue
bonds in the amount of $70 million and authorization for
UAF to utilize the Alaska Municipal Bond Bank Authority in
the amount of $87.5 million. The total would be $245
million.
Co-Chair Meyer stressed that the different fund sources
were the reason for the higher summary sheets.
Co-Chair Meyer REMOVED his OBJECTION. There being NO
OBJECTION, the proposed committee substitute for CSSB
218(FIN) was adopted.
Ms. Armstrong stated that there would be a conceptual
amendment.
Co-Chair Kelly MOVED the conceptual amendment:
Page 5, Line 29
After the word, "by",
insert the phrase, "issuing revenue bonds and"
Co-Chair Meyer OBJECTED for discussion.
4:08:42 PM
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, explained that the
conceptual amendment was required because the bond bank
program worked by purchasing the securities of local
jurisdictions on a private placement basis. The other
amendment provided a definition that allowed UA to
participate in the Alaska Municipal Bond Bank program that
uses the revenue bonds. He stated that the conceptual
amendment would provide two separate terminologies to match
to ensure that the Alaska Municipal Bond Bank could carry
out the legislative intent of the bill.
Co-Chair Meyer REMOVED his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Co-Chair Kelly MOVED to REPORT CSSB 218(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
CSSB 218(FIN) was REPORTED out of committee with individual
recommendations and with two new fiscal impact notes from
Department of Revenue and one new fiscal impact note from
the University of Alaska.
ADJOURNMENT
4:12:09 PM
The meeting was adjourned at 4:12 p.m.
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