Legislature(1993 - 1994)

04/20/1993 08:50 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             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.                        
                                                                               

Document Name Date/Time Subjects