Legislature(1993 - 1994)
04/20/1993 08:50 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 20, 1993 8:50 a.m. TAPES SFC-93, #64, Side 1 (350-end) SFC-93, #64, Side 2 (end-000) SFC-93, #66, Side 1 (000-end) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 8:50 a.m. PRESENT In addition to Co-chairs Frank and Pearce, Senators Kelly, Kerttula, Rieger, Sharp and Jacko were present. ALSO ATTENDING: Commissioner Bruce Campbell, Department of Transportation & Public Facilities; Ron Lind, Director, Plans, Programs & Budget, DOT/PF; Gary Bader, Director, Administrative Services, Department of Education; Bob Poe, staff for Senator Pearce; Rick Soley, staff for Senator Frank; Mike Greany, Director, Dave Tonkovich, and Jeff Hoover, Fiscal Analysts, Legislative Finance Division; and aides to committee members. ALSO PARTICIPATING BY TELECONFERENCE: Judith M. Brady, Executive Director, Alaska Municipal Bond Bank Authority from Anchorage. SUMMARY INFORMATION SB 50 - An Act making appropriations for capital projects; and providing for an effective date. By request of the Senate Finance Committee, Commissioner Bruce Campbell and Ron Lind, Director, Plans, Programs & Budgets, DOT/PF explained the basic federal highway funding approval process and requirements, and why some projects appear in the capital budget. Discussion was held by Senators Kelly, Pearce, and Kerttula regarding the new ferry vessel. SB 50 was held in committee. SB 7 - An Act relating to reimbursement of school construction debt; and providing for an effective date. Bob Poe, staff for Senator Pearce, explained the sectional analysis for CSSB 7(FIN). CSSB 7(FIN) was ADOPTED and held in committee. CSSB 60 - An Act making appropriations to the school (HES) construction grant fund for school projects; and providing for an effective date. CSSB 60(FIN) work draft "M" was handed to the committee but not adopted. The bill was held in committee. CSHB 66 - An Act relating to an exemption from and deferral (FIN) am of municipal property taxes for certain primary residences, to property tax equivalency payments for certain residents, to the determination of full and true value of taxable property in a municipality; and providing for an effective date. Co-chair Frank MOVED to ADOPT CSCSHB 66(FIN). Senator Kelly OBJECTED. Discussion followed regarding the disabled veterans exemption. The committee requested legal counsel to speak to the CS. The bill was held in committee. CSSB 145 - An Act establishing the position of state medical (STA) examiner; and relating to preparation of death certificates. CSSB 145(STA) was REPORTED OUT of committee with a new fiscal note from DH&SS of $89.0, and zero fiscal notes from Alaska Court System and the Department of Public Safety. CSSB 88 - An Act relating to grants to municipalities, named (CRA) recipients, and unincorporated communities; establishing capital project matching grant programs for municipalities and unincorporated communities; establishing a local share requirement for capital project grants to municipalities, named recipients, and unincorporated communities; and providing for an effective date. CSSB 88(FIN) work draft "J" was ADOPTED for discussion purposes. The bill was held in committee. SENATE BILL NO. 50: An Act making appropriations for capital projects; and providing for an effective date. Co-chair Pearce invited Commissioner Bruce Campbell, Department of Transportation & Public Facilities to join the members at the table Mr Campbell. COMMISSIONER BRUCE CAMPBELL provided the committee with a handout (copy on file) and said that the department had been asked to explain how state and federal funds are handled to complete projects in Alaska. He introduced Ron Lind, Director, Plans, Programs & Budget, the Department of Transportation & Public Facilities, to the committee. RON LIND said that he would provide definitions for some commonly used terms. He said "apportionment" meant Alaska's upper limit for a category of work available for federal funds usually over multiple years. "Authorization" meant spending approval given by the legislature for use of either state or federal funds. "Obligation" is a key issue and the reason authorization is needed by the legislature. An "obligation" is a federal government commitment to pay based on eligible work that is performed by DOT/PF. A document is signed for each project phase with the federal agency in Juneau. If a project is not committed or signed up for the year that it is available, those funds are lost. It is a use it or lose it process. Usually the amount of money available for obligation is less than the upper limit or apportionment available. At the end year, if DOT/PF has obligated or signed documents with the federal government and Alaska cannot use the obligated dollars available, the excess goes to other states. To date this has not occurred. At the same time, if other states have not used all their funds, Alaska could ask for an increase in its federal share. In order to take advantage of those extra dollars, DOT/PF must have work ready to go with authorizations signed. He said that the rest of the handout explained the typical funding process and why state authorizations are needed. He explained that if the legislature limited DOT/PF by making obligations project specific and if there was any failure or delay with that specific project, there would be no assurance that the federal obligation could be used in that single year and the state could possibly lose federal funds. Mr. Lind went on to explain how DOT/PF decides which projects are put in the capital budget each year, and how much money is requested for match appropriations. First, DOT/PF evaluates apportionments available by federal category for the budget year, estimates the total obligation (federal commitments available), projects the match available from other remaining years of appropriation and decides how much match is required for the budget year. The six year plan process prioritizes projects to insure that the funds available are used and allows for increase of funds or projects that can be substituted if a delay should occur in a project. All projects must be identified as already authorized, needing initial authorization or an increase of authorization. End SFC-93 #64, Side 1 Begin SFC-93 #64, Side 2 Mr. Lind went on to explain DOT/PF's expenditures over the past years and the need for additional authorizations in the next few years. In answer to Senator Rieger, Mr. Lind said that DOT/PF has enough projects ready to go to construction (which have already gone through the steps of location, design, right-of-way) that the state could take advantage of additional federal funds if available. Mr. Campbell said that a step-by-step process was definitely followed to insure federal funding. In answer to Senator Rieger, Mr. Lind said that he felt the state legislature could add any project that it desired, but before any actual work could be done, AMATS would have to amend its plan, decide to adopt the project into their plan, and make it part of the work. Outside of the AMATS area, the legislature can add any federal authorization for any eligible work in a borough or an unorganized borough realizing that the maximum level of activity must be governed by location, environment issues, and design. Another possible delay could be the required public input process. In discussing construction of the new marine highway vessel, Senator Kelly said that DOT/PF is using an $80 million figure, while a consultant who had come before the committee and said that the project would total $89 million. He asked how DOT/PF would acquire the total $89 million before smaller obligations were approved. Co-chair Pearce said there were various plans to finance the new ferry vessel, including the Exxon settlement bill for $5 million. She said that the House would rather take $7 million out of the mitigation account this year for the ferry because at the end of the year, the remainder of the mitigation account will go into the 470 fund. Mr. Lind said that DOT/PF was requesting an authorization for $60 million for the ferry. Discussion was had by Senators Kelly, Kerttula and Co-chair Pearce regarding the total cost of the new ferry. Recess 9:20am Reconvene 9:50am CS FOR SENATE BILL NO. 145(STA): An Act establishing the position of state medical examiner; and relating to preparation of death certificates. Co-chair Pearce announced that CSSB 145(STA) was before the committee with a new fiscal note for the Department of Health & Social Services in the amount of $89.0. Senator Rieger MOVED for passage of CSSB 145(STA) from committee with the accompanying fiscal notes. No objections being heard, CSSB 145(STA) was REPORTED OUT of committee with zero fiscal notes for the Department of Public Safety and the Alaska Court System and a new fiscal note for the Department of Health & Social Services in the amount of $89.0. Co-chairs Pearce and Frank, Senators Rieger, Kerttula and Sharp signed "do pass." Senator Kelly signed "no recommendation." SENATE BILL NO. 7: An Act relating to reimbursement of school construction debt; and providing for an effective date. Co-chair Pearce announced that SB 7 was before the committee and that Judith M. Brady, Executive Director, Alaska Municipal Bond Bank Authority, was joining the meeting via teleconference from Anchorage. She also invited Robert Poe, staff for Senator Pearce, to join the committee at the table. Co-chair Frank MOVED for adoption of SB 7(FIN) work draft "E". Hearing no objections, IT WAS SO ORDERED. ROBERT POE reviewed the sectional analysis (copy on file) that outlined SB 7 including grants for school construction, the review of the grant applications by school districts, reimbursement of school debt, and the authorization of the Alaska Municipal Bond Bank to facilitate the reimbursement of that school debt. Co-chair Pearce pointed out that Senator Kerttula had introduced SB 7 as a school construction reimbursement plan, and although there were some changes to CSSB 7(FIN) she asked him to speak to it. Senator Kerttula said that years had been spent on the issue of school reimbursement. He said that this legislation would provide local decision making with the state supporting the decision with 70 percent funding. He felt this bill was conservative but would help service the rural areas. Senator Kelly spoke in support of SB 7 but had a concern with the state supporting 70 percent of all swimming pools. He also had concern with new programs and said he would prefer that traditional programs be funded. His last concern was a $50,000 amount which he considered an operational expenditure and not suitable for this bill. Co- chair Frank voiced his support regarding Senator Kelly's remarks and said he would consider amendments to that affect. GARY BADER, Director, Administrative Services, Department of Education, said that there were statutes that limit the size of a swimming pool or excluded them from programs that can be funded. He agreed to get back to the committee with more information. JUDITH BRADY, via teleconference, said that in the short time she had to review SB 7, she felt that it would not cause any problems for the bond bank. The main concern was that the bank would not lose its rating. She asked if the municipalities and the bond bank would be doing financing before a constitutional amendment took effect. When the committee answered affirmatively, she asked how the bond would be paid back. Co-chair Frank asked her and the bond council to look at the bill more extensively. He hoped that the constitutional amendment would be passed next year but in the meantime, several school districts would issue debt and wanted to know if that would cause problems for the bond bank. Ms. Brady said that the bond bank's financial advisor would forward his ideas about this issue to the committee. End SFC-93 #64, Side 2 Begin SFC-93 #66, Side 1 Senator Kerttula said that the state had a 25 year history of repayment of school construction funds that technically were not obligations of the state. Senator Sharp asked if convertible bonds could be used to lock in a percentage difference once those funds were assured to be dedicated by the voters. Ms. Brady said that was possible. She concurred that the state had a good rating and had never had a default. Discussion was had by Senators Kelly, Frank and Ms. Brady regarding who was responsible for scrutinizing the municipality regarding their ability to pay. The Department of Education would be involved in the grant and design criteria. Mr. Brady suggested that an amendment be added to the bill making the community's ability to pay as a criteria for project approval. Mr. Poe and Ms. Brady agreed to prepare an amendment to CSSB 7(FIN). Discussion was had by Senator Rieger, Co-chairs Pearce and Frank regarding an amendment to determine a threshold for project costs. Discussion was also had on the words "alternative education project" on page 3, lines 13 and 14. Co-chair Pearce asked the committee to bring amendments to CSSB 7(FIN) as soon as possible. She announced the end of the teleconference part of the meeting and that CSSB 7(FIN) would be HELD in committee until April 21, 1993. Recess 10:45am Reconvene 10:50am CS FOR SENATE BILL NO. 60(HES): An Act making appropriations to the school construction grant fund for school projects; and providing for an effective date. Co-chair Pearce announced that CSSB 60(FIN) work draft "M" was passed out to the committee. She proposed various appropriations per district as outlined in the CS. Senator Kerttula voiced his opinion that highway schools were going to have to begin to make a contribution to their projects. CSSB 60(FIN) work draft was HELD in committee until April 21, 1993. CS FOR HOUSE BILL NO. 66(FIN) am: An Act relating to an exemption from and deferral of municipal property taxes for certain primary residences, to property tax equivalency payments for certain residents, to the determination of full and true value of taxable property in a municipality; and providing for an effective date. Co-chair Frank outlined the changes in CSHB 66(FIN). He said that it would grant the authority to the municipalities to remove this exemption from the municipality taxes. Co- chair Frank MOVED for adoption of work draft "I" dated April 20, 1993. Senator Kelly OBJECTED. In answer to Senator Kelly, Co-chair Frank said that the municipality would have the option of giving disabled veterans an exemption. Senator Kelly voiced his support of the state funding the exemption for disabled veterans. Senator Sharp said that the amount on page 3, line 20, should read "up to $150,000." RICK SOLEY, staff for Senator Frank, said that it was his understanding from legal services that the municipalities would have the ability to modify the exempted amount by ordinance. Co-chair Frank asked for a memo from legal services explaining this section. Co-chair Pearce announced that CSHB 66(FIN) would be HELD in committee until April 21, 1993. Recess 10:59am Reconvene 11:00am CS FOR SENATE BILL NO. 88(CRA): An Act relating to grants to municipalities, named recipients, and unincorporated communities; establishing capital project matching grant programs for municipalities and unincorporated communities; establishing a local share requirement for capital project grants to municipalities, named recipients, and unincorporated communities; and providing for an effective date. Co-chair Frank MOVED for adoption of CSSB 88(FIN) work draft "J". Hearing no objections, IT WAS SO ORDERED. Mr. Soley outlined the changes made in CSSB 88(FIN). He said that Senator Taylor's amendments were included in this version of the bill. He said also that administrative costs had been limited. Discussion was had by Senator Kerttula, Co-chair Pearce and Mr. Soley regarding these changes. Mr. Soley pointed out that there were new fiscal notes for the Department of Community & Regional Affairs and for the Department of Administration. Co-chair Pearce announced that CSSB 88(FIN) work draft "J" would be HELD in committee until April 21, 1993. ADJOURNMENT The meeting was adjourned at approximately 11:15 a.m.