Legislature(1993 - 1994)

03/21/1994 09:11 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 21, 1994                                        
                            9:11 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #45, Side 1 (120-end)                                                
  SFC-94, #45, Side 2 (end-000)                                                
  SFC-94, #47, Side 1 (000-end)                                                
  SFC-94, #47, Side 2 (end-500)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 9:11 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to Co-chair Pearce, Senators Kelly, Jacko, Sharp                 
  and  Kerttula  were  present.   Co-chair  Frank  and Senator                 
  Rieger  joined  the  meeting  after   it  was  in  progress.                 
  (Senator   Kerttula  was  not   present  when   the  meeting                 
  reconvened at 5:22 p.m.)                                                     
                                                                               
  ALSO ATTENDING:   David Gray,  aide to Representative  Jerry                 
  Mackie; Duane  Guiley, Director, School  Finance, Department                 
  of Education;  Bruce Campbell,  Commissioner, Department  of                 
  Transportation & Public Facilities; Paul Fuhs, Commissioner,                 
  Department  of   Commerce  &  Economic   Development;  Jetta                 
  Whittaker,  fiscal  analyst,  and   Mike  Greany,  Director,                 
  Legislative Finance Division; aides to committee members and                 
  other members of the legislature.                                            
                                                                               
  VIA TELECONFERENCE:  Robert Hatfield,  Jr., President & CEO,                 
  Alaska  Railroad Corporation  from Anchorage;  and  Frank X.                 
  Chapados, Acting Chairman,  Railroad Corporation Board  from                 
  Anchorage spoke  to SB  148 and  SB 338.   When the  meeting                 
  reconvened   at  5:22   p.m.,   Phyllis  C.   Johnson,  Vice                 
  President/General Counsel from  Anchorage; John Burns,  real                 
  estate representative  from  Anchorage;  and  Mark  LoPatin,                 
  LoPatin & Co., Detroit, MI., joined the teleconference.                      
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  CSSB 312(HES): An Act relating to school construction grants                 
                 and to interscholastic school activities; and                 
                 providing for an effective date.                              
                                                                               
                 David  Gray,  aide  to  Representative  Jerry                 
                 Mackie, spoke in  support of  SB 312.   Duane                 
                 Guiley, Director, School  Finance, Department                 
                 of  Education,  spoke to  questions regarding                 
                                                                               
                                                                               
                 the bill.   Extensive  discussion was had  by                 
                 the committee regarding school bonds, grants,                 
                 reimbursement,   and  temporary   facilities.                 
                 Amendments  1 and  2  FAILED to  be  adopted.                 
                 Amendment 3,  MOVED  by  Senator  Rieger,  is                 
                 pending.  SB 312 was  HELD in committee until                 
                 March  23,  1994  at  8:00   a.m.,  or  until                 
                 Senators Frank and Rieger compose an amenable                 
                 amendment addressing committee issues.                        
                                                                               
  SB 360:        An  Act amending  the medical  assistance and                 
                 community  developmental  disabilities grants                 
                 appropriations in sec. 38, ch.  65, SLA 1993;                 
                 and providing for an effective date.                          
                                                                               
                 Co-chair Pearce  spoke in  support of  SB 360                 
                 and explained that since only $400,000 of the                 
                 $1.6M had been used in  FY94, this bill would                 
                 enable  grantees  to   complete  their   FY94                 
                 operations  having  a  zero-net general  fund                 
                 impact.    SB  360,   an  appropriation,  was                 
                 REPORTED out of committee with a "do pass."                   
                                                                               
  CSSB 148(TRA): An Act  relating to  legislative approval  of                 
                 certain   acts   of   the   Alaska   Railroad                 
                 Corporation; taxation of certain  property of                 
                 the Alaska Railroad  Corporation; members  of                 
                 the board and chief executive officer  of the                 
                 Alaska Railroad Corporation; meetings  of the                 
                 board  of directors  of  the Alaska  Railroad                 
                 Corporation; and providing  for an  effective                 
                 date.                                                         
                                                                               
                 A   teleconference   was   held  and   Robert                 
                 Hatfield,  Jr.,  President   &  CEO,   Alaska                 
                 Railroad Corporation, and Frank  X. Chapados,                 
                 Acting Chairman, Railroad  Corporation Board,                 
                 in  Anchorage,  were  questioned  by  Senator                 
                 Sharp  regarding  the  Ship   Creek  Landings                 
                 Project.  Due  to lack  of time, the  meeting                 
                 was  recessed  and  the   teleconference  was                 
                 scheduled to continue at 5:00 p.m. today.                     
                                                                               
                 The meeting  reconvened at 5:22  p.m. and the                 
                 teleconference  continued.     Mark  LoPatin,                 
                 LoPatin  &   Co.,  in  Detroit,   joined  Mr.                 
                 Hatfield, other Railroad  Board members,  Ms.                 
                 Johnson, and  Mr.  Burns,  at  the  Anchorage                 
                 site.                                                         
                                                                               
  CSSB 338(L&C): An Act  relating to  the issuance  of revenue                 
                                                                               
                                                                               
                 bonds for acquisition and construction of the                 
                 Northern Crossroads Discovery Center  for the                 
                 Ship  Creek Landings  Project; relating  to a                 
                 study  of  the   feasibility  and   financial                 
                 viability   of   the    Northern   Crossroads                 
                 Discovery Center; relating to construction of                 
                 the Northern Crossroads Discovery Center; and                 
                 providing for an effective date.                              
                                                                               
                 See summary above for SB 148.                                 
                                                                               
  SENATE BILL 360:                                                             
                                                                               
       An Act  amending the  medical assistance and  community                 
       developmental  disabilities  grants  appropriations  in                 
       sec.  38,  ch.  65,  SLA  1993;  and  providing for  an                 
       effective date.                                                         
                                                                               
  CO-CHAIR  PEARCE  announced  that  SB  360  was  before  the                 
  committee.   She said  the House  passed its  companion bill                 
  last week.                                                                   
                                                                               
  Co-chair Pearce said there was an  April 1, 1994 deadline on                 
  SB 360.   She went on to  explain that the bill  amended the                 
  developmentally  disabilities  grants  appropriations.   She                 
  read her sponsor  statement (see Attachment A, copy  on file                 
  in the committee minute book).                                               
                                                                               
  On page 1,  line 10, there  was a typographical  error.   It                 
  should read "line 23".  She said this would be taken care of                 
  as a technical amendment.                                                    
                                                                               
  SENATOR KERTTULA MOVED for passage of  SB 360 from committee                 
  with individual recommendations.  No  objection being heard,                 
  it was REPORTED OUT of committee with a "do pass."  It is an                 
  appropriation.  Co-chair Pearce and Senators  Sharp, Rieger,                 
  Jacko, Kelly, and Kerttula signed "do pass."                                 
                                                                               
  CS FOR SENATE BILL NO. 312(HES):                                             
                                                                               
       An Act relating  to school  construction grants and  to                 
       interscholastic school activities; and providing for an                 
       effective date.                                                         
                                                                               
  Co-chair  Pearce  announced  that  SB  312  was  before  the                 
  committee,  and  had been  sponsored  by the  Senate Finance                 
  Committee at the request of Representative Mackie.                           
                                                                               
  Senator Kerttula  asked who  had the  competence to  oversee                 
  school  construction  and  what was  the  plan  in order  to                 
  initiate the  bill.  Co-chair  Pearce remarked  there was  a                 
  zero fiscal note so positions would not be required.                         
                                                                               
                                                                               
  DUANE  GUILEY,  Director,  School  Finance,  Department   of                 
  Education, said an architect had  been hired last year  that                 
  had 40 years of experience and  had designed over 200 school                 
  buildings.  Currently,  this architect was serving  as staff                 
  to the Bond Reimbursement and  Grant Review Committee.  This                 
  Committee had an architect on the  committee and was looking                 
  at different  approaches toward cost  effective construction                 
  in  order to conserve  state dollars given  the backlog that                 
  continued to build.                                                          
                                                                               
  In answer to Senator  Kerttula, Mr. Guiley said that  one of                 
  the architects had written articles about building in arctic                 
  and perma-frost areas  and had  experience in this  climate.                 
  Mr. Guiley went on to say that it was his belief  the system                 
  was being enhanced so  that in the future  it would be  more                 
  effective than it had been.                                                  
                                                                               
  DAVID GRAY, aide  to Representative Jerry Mackie,  said that                 
  Representative  Mackie had spent considerable time trying to                 
  generate interest in this bill.  The bill was in response to                 
  concern  regarding  school  project   prioritization,  costs                 
  involved,  varied  needs,   and  the  kind  of   review  the                 
  legislature could  expect.  Senator Kerttula  reiterated the                 
  need for a timely review.                                                    
                                                                               
  Mr. Gray said  that originally school districts had  to wait                 
  for  the  Department  of  Education's   decision  on  school                 
  construction.    The  state then  gave  the  school district                 
  permission to  pursue their  own building.   SB  312 was  an                 
  attempt to mesh those two processes.                                         
                                                                               
  SENATOR   JACKO    MOVED   amendment   1    which   provided                 
  reimbursements to those communities that  fell into the time                 
  span between  April 1,  1990 and  April 30,  1993, when  the                 
  program  had been suspended.   Two boroughs  in his district                 
  would  benefit  -  Bristol Bay  Borough  and  Aleutians East                 
  Borough.                                                                     
                                                                               
  SENATOR RIEGER  asked the  fiscal effect  of the  amendment.                 
  Senator Jacko answered that the total reimbursement would be                 
  $4M so  the  fiscal  effect would  be  the same  as  if  the                 
  reimbursement process  would have  been in  place.   Senator                 
  Kerttula gave some history on school bonding.                                
                                                                               
  CO-CHAIR  FRANK  asked if  this  amendment would  effect any                 
  other districts and if it would  also mean an immediate cash                 
  reimbursement  to the school  districts.  He  also wanted to                 
  know the fiscal impact and the process used to reimburse.                    
                                                                               
  Senator Jacko reminded Co-chair Frank that it was limited to                 
  those districts that  had built facilities  with cash.   Co-                 
  chair Pearce  still wanted to  know if  any other  districts                 
  could be included in this amendment.  Senator Kelly said his                 
                                                                               
                                                                               
  concern  was  major  rehabilitation projects  that  would be                 
  eligible with this amendment.                                                
                                                                               
  Mr. Guiley said  the department  was not aware  of how  many                 
  dollars  were  spent  during that  time  period  because the                 
  program  had  been suspended  and there  was  no need  for a                 
  district to report to the Department of Education (DOE) cash                 
  expenditures  for  major  rehabilitation,   construction  or                 
  modernization projects.   He explained to the  committee how                 
  it would work.  Payments that  were made by the municipality                 
  during 1992  would qualify under  this program and  would be                 
  effective immediately.    If the  bill was  signed into  law                 
  before June 30,  1994, it  would mean a  fiscal impact  this                 
  fiscal year.  At this time,  there was no money appropriated                 
  for this purpose.  Final fiscal impact would result in 1995.                 
  This amendment did not  call for an approval from DOE so any                 
  project  that was  built  during that  time period  would be                 
  subject to  reimbursement provided it  exceeded the $150,000                 
  cap.   DOE would have  some discretion to approve facilities                 
  that provided excess space and were overly expensive.                        
                                                                               
  Senator  Sharp seemed  to think $150,000  was low.   Senator                 
  Jacko  said that  he  had not  specified  the $150,000  cap.                 
  Discussion followed  by Senators  Sharp and  Jacko regarding                 
  rehabilitation projects.                                                     
                                                                               
  SENATOR KELLY asked  how DOE defined a  major rehabilitation                 
  project.   Mr. Guiley  said that  under current statute  two                 
  types of projects  qualified for  major maintenance.   Those                 
  projects  were expected to  extend the life  of the facility                 
  through  a protection  of the structure,  such as  a bearing                 
  wall or roof, or  a major code upgrade project  that brought                 
  the school into compliance with current fire marshall codes,                 
  Americans with  Disabilities Act,  and  other access  codes.                 
  They were projects that the nature of the code violation was                 
  such that the building would be  subject to being closed and                 
  could no longer be used for educational purposes.                            
                                                                               
  In answer to Senator Kelly, Mr. Guiley said that under DOE's                 
  requested project list  from school  districts, there was  a                 
  backlog of  $72M worth  of major  maintenance projects,  and                 
  $680M backlog of school construction  projects (requested by                 
  the  districts in  the FY95  cycle).   He did not  know what                 
  amount of those would be subject to reimbursement.                           
                                                                               
  Senator  Kerttula said he would  have some concern whether a                 
  70 percent reimbursement could be  had on cash projects that                 
  may  have originally been funded through state discretionary                 
  funds.  He requested  that it be mandatory for  districts to                 
  provide information about the source of the funds for school                 
  projects.  Co-chair Pearce stated  that the bill would carry                 
  with it the requirement for an  appropriation as it would go                 
  through that approval process.                                               
                                                                               
                                                                               
  Co-chair  Frank  asked  Mr.  Guiley  to  restate  the  facts                 
  regarding the Anchorage situation.   Mr. Guiley said that SB
  7   had  an   amendment   that   provided  for   retroactive                 
  reinstatement  of  the  school bond  debt  program  to allow                 
  districts to come forward and  claim reimbursement for bonds                 
  that had been  sold during the  time period the program  had                 
  been suspended.  During public hearings, testimony was heard                 
  by the  Anchorage School District  that they had  sold bonds                 
  and  would be eligible  based on their  understanding of the                 
  amendment.  No  other district  came forward and  identified                 
  bonds.   DOE testified that they  had no way of  knowing the                 
  limit  of  bonds due  to the  fact  that districts  were not                 
  required  to  report  to  the  department during  that  time                 
  period.  The municipal bond bank was consulted and they said                 
  they were not aware of any bonds.  After the bill  passed, a                 
  letter  was  received  from  North  Slope   School  District                 
  indicating that they  had sold $20M  worth of bonds in  that                 
  interim, and were subject to retroactive reimbursement.                      
                                                                               
  Mr. Guiley asked to comment on existing statute AS 14.11.102                 
  in  paragraph a.   He  said it  did require the  district to                 
  notify DOE prior to  October 15, of their desire  to receive                 
  an allocation for  reimbursement under AS 14.11.100.   Since                 
  October 15 had already passed for FY94 and FY95, there was a                 
  possibility that no one would be eligible for reimbursement.                 
  Co-chair Pearce stated that was not Senator Jacko's intent.                  
                                                                               
  In answer to Co-chair Frank in  reference to the North Slope                 
  reimbursement, Mr. Guiley said  that reimbursement was  part                 
  of  the  $50M  allocation.   He  said  that  $200M had  been                 
  authorized for new  bond debt  and was allocated  throughout                 
  the state based  on municipality  size.  All  municipalities                 
  with less than 60,000 population, shared in the $50M.  North                 
  Slope competed on a  priority basis with other  districts of                 
  equal size of  their share of  the $50M reimbursement.   Mr.                 
  Guiley said it was retroactive but it had to come out of the                 
  $50M allocation.                                                             
                                                                               
  Senator Kelly voiced his opinion  that it was unconscionable                 
  that DOE did not  know $20M worth of bonds had  been sold in                 
  the North Slope Borough.                                                     
                                                                               
  In answer to Senator Sharp, in reference to amendment 1, Mr.                 
  Guiley said that the phase "two  years earlier" was based on                 
  audited projects and  on the timeliness of  the availability                 
  of  the  data.    The   program  had  historically  provided                 
  reimbursement for expenses  incurred two years prior.   This                 
  would reinstate the program under  a similar model that  did                 
  exist  prior  to the  suspension  of  the model.    He again                 
  explained the two year reimbursement process.                                
                                                                               
  Co-chair Frank and  Senator Kerttula gave their  opinions on                 
  the reason for the prior two year expenditure reimbursement.                 
  Senator  Kerttula  asked  what would  stop  a  district from                 
                                                                               
                                                                               
  borrowing cash to build a school and  then in two years come                 
  to the state for 70 percent  reimbursement.  Mr. Guiley said                 
  that was one of  the problems with  the two year program  in                 
  that there was no prior approval through DOE if the district                 
  decided they could  afford to  build and would  subsequently                 
  effect  the cash  flow of  the state  two years  later.   In                 
  answer to Senator  Kerttula, Mr. Guiley said  this amendment                 
  only applied  to the  time frame  of April  1, 1990  through                 
  April 30, 1993.   Mr. Guiley said that last  year's bill did                 
  not provide for an opportunity for cash reimbursement.                       
                                                                               
  Senator Rieger stated  that the  package proposed last  year                 
  was  inequitable  statewide.   He  said the  legislature was                 
  forced  to  go  to  bonded  debt reimbursement  because  the                 
  Governor's proposal used up all of the grant money available                 
  for a selected part  of the state.  Senator Kerttula said it                 
  was important  to know if  Bristol Bay  had participated  in                 
  that  for equity.  Senator Jacko said the amendment targeted                 
  Bristol  Bay and North Slope's  and it was his understanding                 
  there was an inequity.                                                       
                                                                               
  Co-chair Frank asked how those two districts had the cash to                 
  build  their schools.    Senator Jacko  said  the money  was                 
  generated from raw fish  taxes and the boroughs had  not had                 
  the ability to sell bonds.                                                   
                                                                               
                          Recess 9:55am                                        
                        Reconvene 10:00am                                      
                                                                               
  Senator Jacko asked  if the  amendment should be  tightened.                 
  Co-chair Pearce reminded the committee that there was no way                 
  to  tell the  fiscal impact  of amendment  1.  She  felt the                 
  amendment did not  belong on SB 312 and would  rather see it                 
  taken care of in the appropriation process.                                  
                                                                               
  End SFC-94 #54, Side 1                                                       
  Begin SFC-94 #54, Side 2                                                     
                                                                               
  Co-chair  Frank asked if  DOE had control  over criteria for                 
  school projects  including its appropriateness to  the needs                 
  of the district.   He wanted to know if a district wanted to                 
  build a new school twice as big as its projected population,                 
  could DOE refuse  to approve the  project.  Mr. Guiley  said                 
  that  much  of the  authority  that  DOE had  was  listed in                 
  regulations in  order to  clarify existing statutes.   SB  7                 
  created  a Bond  Reimbursement  and Grant  Review Committee.                 
  One of the responsibilities of that Committee was to develop                 
  cost  effective  school construction  criteria.   This  bill                 
  would  provide  an  opportunity  to implement  the  criteria                 
  developed by that  Committee.  He  said that DOE had  shared                 
  the funding of projects where a district had wanted to build                 
  a project greater than the approved square footage.  In such                 
  a case, DOE provided funding for  the square footage per the                 
  guidelines  and  the  district  funded  100 percent  of  the                 
                                                                               
                                                                               
  difference in excess.                                                        
                                                                               
  Co-chair Pearce  said  that SB  312  only related  to  grant                 
  review.  Mr. Guiley agreed.                                                  
                                                                               
  In answer to Senator Kerttula,  Senator Rieger said that the                 
  repealer  in  Section  2  was  what  DOE  used  to  directly                 
  administer interscholastic athletics.   In  the mid to  late                 
  80s, Alaska Student Athletic Assoc.,  Inc. (ASAAINC) was set                 
  up which took  over the duties  of the department.   Because                 
  the statute was still on the books, there was a concern that                 
  an  appeal  over  a  student's  eligibility could  still  be                 
  appealed to DOE.  Section 2 deleted the statutes that linked                 
  DOE  with  governance  of  interscholastic athletics.    Mr.                 
  Guiley agreed.                                                               
                                                                               
  Co-chair Pearce reminded the committee  that amendment 1 had                 
  been MOVED.  Co-chair Pearce OBJECTED.  The amendment FAILED                 
  to  be adopted on a vote of 6 to 1 (All members were opposed                 
  except for Senator Jacko who was in favor of the amendment).                 
                                                                               
  Senator Rieger MOVED  amendment 2.  Senator  Kelly OBJECTED.                 
  Senator Rieger  said that  amendment 2  addressed a  concern                 
  that  DOE  might  consider  students   who  were  housed  in                 
  temporary  facilities   and  portables   as  being   housed.                 
  Amendment 2  attempted to  clarify that  "unhoused" includes                 
  students in portables or in temporary housing.                               
                                                                               
  In answer to  Co-chair Frank, Mr.  Guiley said that on  some                 
  occasions  districts  receive   reimbursement  from  DOE  to                 
  purchase classroom space or  to construct portable classroom                 
  space,  or sometimes  finance  them through  available  fund                 
  balance, excess earnings, etc.                                               
                                                                               
  Again, in  answer to Co-chair  Frank, Mr.  Guiley said  that                 
  historically, the cost of relocatables averaged from $12,000                 
  to $400,000.   Co-chair  Frank remarked  at the wide  range.                 
  Mr. Guiley said the type  of construction, utilities housed,                 
  self-contained heating systems,  intercoms, etc., caused the                 
  difference.  DOE was attempting to  come up with an adequate                 
  definition of a  relocatable, and  was attempting to  ignore                 
  all  students  housed  in  temporary facilities  for  future                 
  purposes.  He would not have any problem with the amendment.                 
                                                                               
  In answer to  Senator Jacko, Mr. Guiley felt  this amendment                 
  would not overlook  districts that had helped  themselves in                 
  an overcrowding  situation and would  not leave them  out of                 
  the  priority sequence.   Senator Jacko  felt the  effect of                 
  amendment 2 was the  same as amendment 1.   Mr. Guiley  said                 
  this was  an eligibility  question and  not a  appropriation                 
  question.     Currently,  there   were  about  260  portable                 
  classroom  units  that  were  being  used.   Under  the  old                 
  process,  if a  district  housed a  child  in a  relocatable                 
  classroom, that classroom  was counted  in the gross  square                 
                                                                               
                                                                               
  footage available to the school  district and therefore made                 
  the district ineligible to receive a new school construction                 
  grant.  Senator Jacko said the end result was the same.  Co-                 
  chair Pearce disagreed with him and explained the effect  of                 
  the amendment again.                                                         
                                                                               
  In answer to Co-chair Frank, Mr. Guiley said last year in SB
  60  there  were   three  grants  that  provided   funds  for                 
  relocatable  or portable classroom spaces.  In one case, the                 
  legislature  provided an  amount $690,000  for two  portable                 
  classroom facilities  in western Alaska.   The bid  that had                 
  just come  in on  those two  were over  $800,000.   Co-chair                 
  Frank  asked  if  these  relocatables  would  be  considered                 
  permanent.  Mr. Guiley said that most states use relocatable                 
  units  that  were  pre-manufactured,  installed  on  a  axle                 
  assembly,  and  it  allowed  them  to be  moved  to  another                 
  location.                                                                    
                                                                               
  Co-chair Frank felt  there should  be some consistency  when                 
  building relocatables and  portables.   Mr. Guiley said  the                 
  most  expensive  relocatables  were built  on  site  and the                 
  district chose to call them relocatables even though DOE did                 
  not define them as  such.  In answer to Co-chair  Frank, Mr.                 
  Guiley  believed  that  DOE   was  focusing  on  "temporary"                 
  facilities (pre-manufactured, etc.) rather  than those built                 
  on site with post and pad construction.                                      
                                                                               
  In  answer to Senator Jacko,  Mr. Guiley said that sometimes                 
  in the past, the state  had given grants to provide cash  to                 
  districts  to build temporary  classroom facilities,  or, at                 
  least, to what districts referred to as portable classrooms.                 
  What DOE was  attempting to do was come up with a definition                 
  of a  temporary classroom  facility that  would be  excluded                 
  from  the  available  gross  square  footage  therefore  not                 
  disadvantaging  a  district  that  helped themselves.    Mr.                 
  Guiley said that the issue of  a district building with cash                 
  was separate from this relocatable issue.                                    
                                                                               
  In  answer   to  Senator   Frank,  Mr.   Guiley  said   that                 
  relocatables were eligible for reimbursement.                                
                                                                               
  Senator Kelly stated  that temporary housing was  not such a                 
  bad  solution  since  student  population sometimes  shifted                 
  between districts.  Co-chair Pearce  invited him to Sandlake                 
  School which  had 165  percent population  for the  original                 
  school  and the  rest were  housed in  relocatables.   Those                 
  relocatables had become permanent and would remain with that                 
  school until a new school was built.  Senator Kelly asked if                 
  a bond issue  had taken  care of that  situation.   Co-chair                 
  Pearce  said  it  might be  solved  but  she  felt that  all                 
  districts in the state should  have their projects looked at                 
  with the same discretion  by DOE for grants.   Senator Kelly                 
  said that  it did not  make any difference  to a student  if                 
  he/she was  in a  temporary building.   He went to  a school                 
                                                                               
                                                                               
  that had  temporary classrooms  and forty  years later  they                 
  were still there.   To everyone's amusement, he said  he was                 
  not a good  example, but  there were some  good students  to                 
  come out of that school.                                                     
                                                                               
  Senator Kerttula said he went to  school in a freight car in                 
  Palmer, Alaska.  Co-chair Frank said  he spent seventh grade                 
  in a portable.                                                               
                                                                               
  Senator  Rieger said that the  amendment he had offered with                 
  Senator Kerttula  spoke to  AS 14.11.013,  and that  was the                 
  only place in  the statutes he  could find any criteria  for                 
  prioritizing.   He wanted to know  if it would apply to debt                 
  reimbursement and  the grant  program equally.   Mr.  Guiley                 
  said it did not apply to  the bond reimbursement program but                 
  only  to  the grant  program.   Senator  Rieger  asked where                 
  identical language  could be  added for  bond reimbursement.                 
  Mr. Guiley turned Senator Rieger's attention to AS 14.11.100                 
  (j)  4.  which  currently  dealt  with adequate  housing  of                 
  students for the bond debt reimbursement program.  In answer                 
  to Senator Rieger, Mr. Guiley  agreed that parallel language                 
  would be needed to give DOE authority to treat them both the                 
  same.                                                                        
                                                                               
  Senator  Rieger asked for  an at ease  so he could  draft an                 
  amendment.                                                                   
                                                                               
                         Recess 10:13am                                        
                        Reconvene 10:23am                                      
                                                                               
  Senator Rieger WITHDREW amendment 2.                                         
                                                                               
  Senator Rieger MOVED  amendment 3.  Senator  Kelly OBJECTED.                 
  Senator Rieger explained the amendment.                                      
                                                                               
  Co-chair Frank  spoke to  substandard housing for  students.                 
  He objected  to the  idea that  a $200,000-400,000  facility                 
  would  be  paid for  by  the  state and  then  later another                 
  facility  would be  built.   He knew  it was  hard to  draft                 
  legislation in order to avoid this situation.                                
                                                                               
  Senator Rieger said that districts  chose the word temporary                 
  instead  of  portable  because   a  portable  could   become                 
  permanent.  This legislation was just asking DOE to consider                 
  the fact that portables  exist.  A problem arose  because an                 
  earlier  interpretation  kept  DOE  from  considering  these                 
  situations.  This would not  mandate that every temporary or                 
  portable facility be replaced.                                               
                                                                               
  Senator Kelly estimated that this could cost the state up to                 
  $300M.    He  felt the  definition  of  temporary facilities                 
  applied only to those that were found to be substandard.  He                 
  MOVED that after  the words  "temporary facility" the  words                 
  "found  to be  substandard by  the  department" be  added to                 
                                                                               
                                                                               
  amendment 3.                                                                 
                                                                               
  Co-chair Frank agreed with  this change to amendment 3.   He                 
  wanted to know if the word "substandard" had been defined by                 
  DOE or another more appropriate word could be used.                          
                                                                               
  Mr. Guiley said that DOE had  not defined "substandard."  He                 
  said  that  code  violations  and  other violations  made  a                 
  facility substandard.   He  also pointed  out the  temporary                 
  housing  issue also went beyond  the facility, and took into                 
  consideration the  core areas of  the main facility.   There                 
  was a problem  when core areas,  like the gym or  cafeteria,                 
  were stressed with overpopulation.                                           
                                                                               
  Co-chair Frank stated  that good language should  be drafted                 
  to achieve  the real  purpose and  that was  not to  rebuild                 
  temporary  facilities  when  they  were  adequate.   He  was                 
  frustrated  that the  committee  was attempting  with  these                 
  amendments to solve several problems.   Co-chair Frank asked                 
  that SB  312 be  held.   Senator  Rieger did  not object  to                 
  holding the bill.                                                            
                                                                               
  Senator Kerttula  mentioned that temporaries  were sometimes                 
  moved around in bigger districts.  Co-chair Frank felt there                 
  should be a policy that handled temporaries well, since they                 
  were an effective tool.                                                      
                                                                               
  Co-chair  Pearce  announced that  SB  312 would  be  HELD in                 
  committee.    She ask  DOE  to  find out  the  fiscal impact                 
  relating to amendment 1.  Senator  Sharp asked the report be                 
  listed in individual  amounts in  order to place  a cap,  if                 
  necessary, on the amendment.                                                 
                                                                               
  Co-chair Pearce asked  Co-chair Frank and Senator  Rieger to                 
  draft new language for SB 312.                                               
                                                                               
  Senator  Sharp  asked Mr.  Guiley  if  any  new  bonds  were                 
  floating around in  order to finance new  schools carrying a                 
  rate of  9 percent or over, tax free.   Since the bonds were                 
  being  sold at $115  premium, in effect, a  $10M issue was a                 
  $1.5 free  money paid  back  in the  form of  the 9  percent                 
  interest over  a four year  period.  He  asked if the  state                 
  paid that percent and, if it did,  he had a problem with it.                 
  Mr. Guiley said  that once a  project was improved for  bond                 
  reimbursement,  districts  were  only  required  to  present                 
  ballot language  to  DOE  for approval.    Once  the  ballot                 
  language was  approved, the  district was  free to  sell the                 
  bonds  whichever  time  period the  district  felt  was most                 
  appropriate for their cash flow needs.  The state reimbursed                 
  those  bonds, some  outstanding at  100, 90 and  80 percent,                 
  none at 70 percent.    Typically, there must be at least a 1                 
  percent spread in the  new interest versus the  old interest                 
  rate  for it to be feasible for the district to refund those                 
  bonds.   Districts  can use  the  interest received  off the                 
                                                                               
                                                                               
  principle  of those bonds invested  to pay for cost overruns                 
  or reduce the amount of bond reimbursement received from the                 
  state.   So, if  the district made  money off the  bonds, in                 
  theory,  they  could  ask  for  less  from  the  state   for                 
  reimbursement towards the bond principle.                                    
                                                                               
  Senator Sharp wanted to know if  the state analyzed the rate                 
  of interest carried  on the face  of the bonds where  it was                 
  obvious that the interest rate subsidized the premium on the                 
  bonds.    Mr. Guiley  said that  DOE  had no  opportunity to                 
  analyze the interest  rates on the face of the  bonds.  Once                 
  they were approved,  the interest  rates were determined  at                 
  the  time of sale.  Senator  Sharp said that the state could                 
  pay up  to 200 percent  of the tax  free bond rate  or more.                 
  Mr. Guiley  said, based  on the  current program,  the state                 
  could find itself in that situation.  Senator Kelly said DOE                 
  should know where those bonds were.                                          
                                                                               
  In answer  to  Co-chair  Frank, Mr.  Guiley  said  the  only                 
  opportunity for DOE to review the  actual elements of a bond                 
  sale was in  the ballot issue that  went to the voters.   He                 
  went on  to say  that the  district was  required to  notify                 
  their voters  of the  total cost  of  the project  including                 
  interest over life of the bonds  in the ballot language, and                 
  that was an estimate at the time it went to the voters.  The                 
  actual interest was unknown until the bonds were sold.                       
                                                                               
  Senator Rieger was  surprised DOE  interpreted it that  way.                 
  It seemed to  him that statutes were  filled with references                 
  to school construction and he  thought it spoke to  eligible                 
  costs of school construction.  For an example, if a bond was                 
  floated for a $100M,  and cost of school construction  which                 
  was approved by DOE was  $80M, there was statutory authority                 
  to reduce the amount  of your reimbursement to only  pay for                 
  the amount  that the issue  was used to  pay the $80M.   Mr.                 
  Guiley agreed to this point.  Senator Rieger went on to  say                 
  that if a bond was floated to  raise $115M and of that $115M                 
  that was raised, only $80M was used to pay the eligible cost                 
  of school construction and the rest went  to something else,                 
  the state would reimburse whatever that fraction was -  $80M                 
  over $115M  or  whatever  the  prorated  reimbursement  each                 
  period figured out to be.  Mr. Guiley agreed again with this                 
  statement.  He went  on to say that if the  district did not                 
  use the extra proceeds  on that project and did  not receive                 
  DOE  approval for an additional project, the state would not                 
  reimburse for those extra costs.                                             
                                                                               
  Senator Rieger then asked Mr. Guiley to comment on a project                 
  submitted to DOE in the context that it would cost $80M, but                 
  there were overruns which took the  total cost to $90M.  Mr.                 
  Guiley  said  under the  old  program,  it would  have  been                 
  reimbursed $90M over  $115M.  Under  the current program  it                 
  would be  reimbursed $80M  over $115M  because the  district                 
  must receive an allocation request in advance.  In answer to                 
                                                                               
                                                                               
  Senator Rieger, Mr.  Guiley said  that actual proceeds  were                 
  tracked.                                                                     
                                                                               
  In answer to several members, Mr. Guiley said the department                 
  prorated the interest as  well as the principle.  He went on                 
  to say that  the state  paid 70 percent  of financing  costs                 
  including the actual interest premium  paid by the district.                 
  If the district was paying a  higher premium than market and                 
  was not aware of  that, currently the state would  be paying                 
  70  percent  of the  debt  service  that  the  district  had                 
  indebted itself to.  In answer to Co-chair Frank, Mr. Guiley                 
  agreed that the  state could be  taken advantage of in  this                 
  example.                                                                     
                                                                               
  Discussion continued with  Senators Rieger, Sharp, Kerttula,                 
  and Co-chair Frank regarding the  interest rate and premiums                 
  on bonds.                                                                    
                                                                               
  Co-chair Pearce said this subject should be addressed in the                 
  subcommittee and again announced that SB 312 would be HELD.                  
                                                                               
  End SFC-94 #45, Side 2                                                       
  Begin SFC-94 #47, Side 1                                                     
                                                                               
  CS FOR SENATE BILL NO. 338(L&C):                                             
                                                                               
       An Act relating  to the issuance  of revenue bonds  for                 
       acquisition and construction of the Northern Crossroads                 
       Discovery  Center for the  Ship Creek Landings Project;                 
       relating to a  study of  the feasibility and  financial                 
       viability of the Northern Crossroads Discovery  Center;                 
       relating  to construction  of  the Northern  Crossroads                 
       Discovery Center; and providing for an effective date.                  
                                                                               
  Co-chair Pearce announced that SB 148 and SB 338 were before                 
  the committee.  She welcomed Robert Hatfield, Jr., President                 
  &  CEO,  Director  Frank  Chapodos  (acting  Chairman),  and                 
  Director Michael Olson, Alaska Railroad Corporation, to  the                 
  meeting  via teleconference  from  Anchorage.   She  invited                 
  Commissioner Campbell and Commissioner Paul Fuhs to join the                 
  members at the table.                                                        
                                                                               
  Co-chair  Pearce  asked Senator  Sharp  to proceed  with his                 
  questions.                                                                   
                                                                               
  Senator Sharp said his main concern was support for the bond                 
  authorization and he wanted to  hear comments on the  timing                 
  of the authorization.                                                        
                                                                               
  ROBERT HATFIELD said that the  Board had allowed Mr. Lopatin                 
  to attempt to  get legislative approval  for the bonds.   It                 
  seemed appropriate, especially due to prior experience  with                 
  the hotel  venture, to  receive legislative  approval before                 
                                                                               
                                                                               
  going to the  bonding agencies, and spending  a considerable                 
  amount of money  in preparation of  that, only to find  that                 
  the legislature disapproved of the bond authorization.                       
                                                                               
  In  answer  to   Senator  Sharp,  Mr.  Chapodos   said  that                 
  discussion had been had at previous board meetings regarding                 
  this  project.    There  were concerns  expressed  regarding                 
  liabilities,  and after that was cleared,  it was decided to                 
  go to the legislature for approval.                                          
                                                                               
  Again, in  answer to  Senator Sharp,  Mr. Hatfield  said the                 
  Lopatin & Co. lease was for five years (until 1997) in order                 
  to produce  the first  phase  of the  project.   Legislative                 
  approval would  be needed  now if  the other  aspect of  the                 
  timing  in  regard  to  the  feasibility study,  bonds,  and                 
  construction was to happen in 1995.  If legislative approval                 
  was not received this session, construction would have to be                 
  delayed until 1996.                                                          
                                                                               
  Senator  Sharp asked  Mr. Hatfield  what the  $55M would  be                 
  spent on, and if it would include a hotel or other facility.                 
  Mr. Hatfield said the $55M was only for the Discovery Center                 
  and no hotel  or office building  would be included in  that                 
  amount.                                                                      
                                                                               
  Co-chair Frank objected to the fact that the legislature was                 
  being  asked to approve  a project without  more details and                 
  then, today, the  committee was  informed that the  railroad                 
  only had a  five year lease with Lopatin & Co.  Mr. Hatfield                 
  said the lease had options for renewal up to 105 years.   He                 
  went  on to  say that  financing would not  be given  to any                 
  project that did  not have a long term lease, and this would                 
  give  the  Railroad  Board  the  opportunity to  review  and                 
  approve  the  project for  the  longer term.    Secondly, if                 
  Lopatin & Co.  did not perform,  it would give the  Railroad                 
  Board  an opportunity  to cancel  or  end the  lease without                 
  litigation.  Co-chair Frank insisted the  legislature needed                 
  more information.   Mr. Hatfield  said that Mr.  Lopatin was                 
  the best person to answer those questions.                                   
                                                                               
  Mr.  Hatfield went  on  to assure  Co-chair  Frank that  the                 
  Railroad would have no  equity in the project.   He would be                 
  glad to give the details of  the current lease and said  the                 
  Railroad would just extend the five year lease.  He said the                 
  lease for  the public  amenity would  be a  non-compensatory                 
  lease.  Co-chair  Frank said that  Mr. Lopatin had told  the                 
  committee the Railroad  would be paid fair  market value for                 
  the land lease.  Mr. Hatfield agreed with that statement but                 
  would get more information.                                                  
                                                                               
                         Recess 11:05am                                        
                        Reconvene 5:22pm                                       
                                                                               
  Co-chair  Pearce  reconvened  the meeting.    She  said that                 
                                                                               
                                                                               
  Robert  Hatfield, Jr.,  President  &  CEO,  Alaska  Railroad                 
  Corporation, was on line via teleconference  from Anchorage,                 
  and Mr. Lopatin, via teleconference from Detroit.   She also                 
  invited  Commissioner  Fuhs  and  Commissioner  Campbell  to                 
  return to the table.                                                         
                                                                               
  Co-chair Frank voiced his concerns regarding the feasibility                 
  of the project and latent concerns of government sponsorship                 
  of  private  business.   He  had  doubt  about getting  real                 
  answers.  He  also voiced concern  over curing a default  in                 
  this type of situation.                                                      
                                                                               
  Discussion  was  had by  Co-chairs  Frank, Pearce,  Senators                 
  Kelly and Jacko, Commissioner Fuhs regarding the Red Dog and                 
  other projects, bonds,  and the state's equity  position and                 
  liability.  Commissioner Fuhs said the legislature needed to                 
  give approval before the feasibility study could be ordered.                 
                                                                               
  Mr. Hatfield said that  a fair market value lease  was being                 
  paid to the Railroad  and would remain at fair  market or be                 
  frozen  for  five  years  at  this  particular   rate.    He                 
  introduced    Phyllis    Johnson,    legal   counsel,    via                 
  teleconference from Anchorage.                                               
                                                                               
  PHYLLIS JOHNSON  said the  lease was  a circuitous  approach                 
  dependent upon a project coming on-line that required a long                 
  term lease.  The specific lease that Lopatin & Co. had was a                 
  five-year  term with two five-year  extensions.  There was a                 
  specific provision in  it for an individual  project to come                 
  on-line, at which  time a regular  long term lease would  be                 
  executed.  Whether it  was between Lopatin & Co.  or another                 
  leasee, and the  Railroad.  If the project came on-line as a                 
  non-profit entity, then the rent  would continue at the rate                 
  set at the  on-set of the lease  at fair market value  which                 
  had been  decided by an  appraiser two  years ago.   If  Mr.                 
  Lopatin negotiated a  higher rate  with another company,  it                 
  would trigger a fair market rate to the Railroad.  If a for-                 
  profit  organization  took  over  the  new  portion  of  the                 
  project, the lease would revert to project  rent which would                 
  be reappraised to current fair market value when the project                 
  started.  The lease left a small window for a  percentage of                 
  gross receipts,  but if  the parties  could not  come to  an                 
  agreement, fair market value would govern.                                   
                                                                               
  Co-chair Frank asked  Ms. Johnson  to fax the  lease to  the                 
  committee.  Ms. Johnson agreed to fax the first  nine or ten                 
  pages of the  40 page document  which contained the meat  of                 
  the lease.                                                                   
                                                                               
  Senator Sharp said he  continued to have concerns about  the                 
  amount of money that Lopatin & Co. would have to invest.  He                 
  wondered if  there was a way to  offer this project to other                 
  companies.  Co-chair Pearce and  Senator Kelly remarked that                 
  the  Railroad had  already put  out a  bid and that  was how                 
                                                                               
                                                                               
  Lopatin & Co. had come into the picture in the first place.                  
                                                                               
  In answer to Co-chair Frank, Ms.  Johnson said that rent was                 
  accruing at $1000  per acre per  year to the Railroad  Corp.                 
  for 120 acres  less a  certain number of  acres of  wetlands                 
  that were not  usable.  Mr. Hatfield said that  was the fair                 
  market  value  of  that  industrial  land.    To  everyone's                 
  amusement, Senator Kelly said it was  the going rate for mud                 
  flats in Anchorage.                                                          
                                                                               
  Mr. Lopatin corrected the word  "accruing" and said rent was                 
  being "paid" on a yearly  basis.  He went on to say that the                 
  Discovery Center was a "for-profit" project, the lease would                 
  be  appraised  at the  fair market  value,  and would  be of                 
  significant  economic benefit  to the  Railroad Corporation.                 
  He felt the surrounding  land the Railroad owned  would also                 
  come to benefit the Railroad.                                                
                                                                               
  Co-chair Pearce asked  who would put  in private dollars  to                 
  finance the  Discovery Center.   Senator  Kelly was  adamant                 
  that the tax free bonds would  be "private" money.  Co-chair                 
  Pearce went on to voice her concern over the numbers used in                 
  justifying the Discovery Center visitor estimates.                           
                                                                               
  Mr. Lopatin defended the feasibility study for the Discovery                 
  Center by  the McDowell Group.   He went on  to reassure the                 
  committee  that the project would not be totally financed by                 
  bonds and 20-30  percent of equity dollars would be invested                 
  by Lopatin & Co. through cash or grants.                                     
                                                                               
  In  answer to  Senator Kelly, Mr.  Lopatin said  that equity                 
  would be required to sell the bonds.  He went on to speak to                 
  the market  and equity required.   He assured  Senator Kelly                 
  that the  equity would  not come  from the  Railroad or  the                 
  state of Alaska.                                                             
                                                                               
  End SFC-94 #47, Side 1                                                       
  Begin SFC-94 #47, Side 2                                                     
                                                                               
  In answer to Senator Sharp, Mr. Lopatin said his company was                 
  not  a public  traded  company  but  assured  him  that  the                 
  company's  money would go in first or the bonds could not be                 
  sold.                                                                        
                                                                               
  Commissioner Fuhs pointed out the Red Dog project had been a                 
  great success.  The Discovery Center would not only help the                 
  company that  owned it  but would  provide a  wider economic                 
  benefit  over the state  and that  would justify  the public                 
  financing of the bonds.  He said Lopatin & Co. could save 2-                 
  3 points on  the bond sale and  in the end it  would benefit                 
  the state of Alaska.                                                         
                                                                               
  Senator Kelly  commented that  instead of  $55M the  project                 
  would require about $47M in bonds.   Mr. Lopatin agreed with                 
                                                                               
                                                                               
  that statement if  all the numbers  held true.  The  request                 
  for $55M would give some flexibility to the project.                         
                                                                               
  CS FOR SENATE BILL NO. 148(TRA):                                             
                                                                               
       An Act relating to legislative approval of certain acts                 
       of the Alaska Railroad Corporation; taxation of certain                 
       property of the Alaska Railroad Corporation; members of                 
       the board  and chief  executive officer  of the  Alaska                 
       Railroad  Corporation;   meetings  of   the  board   of                 
       directors  of  the  Alaska  Railroad  Corporation;  and                 
       providing for an effective date.                                        
                                                                               
  In answer  to Co-chair Pearce,  Mr. Hatfield said  the Board                 
  position on SB 148 was that Board rule by 17, mimics many of                 
  the more equity participation prohibition that was currently                 
  in this  legislation.   The Board  felt it  was an  improved                 
  document  but  pointed   out  it   was  always  subject   to                 
  interpretation.    The  Board would  prefer  not  having the                 
  legislation,  and felt it  had acted   responsibly  with the                 
  assets of the Corporation, acted in concert with the current                 
  legislation that  existed, and  felt the  Railroad had  been                 
  managed  responsibly  as  far  as  its public  response  and                 
  willingness to work with the general  public.  He offered to                 
  answer questions on these issues.                                            
                                                                               
  Co-chair Frank asked  if the Railroad had developed a policy                 
  on  this  bonding  ability  that  Congress  provided.    Mr.                 
  Hatfield said this was  the first time such a  bonding issue                 
  had come  up and  the Railroad  was asking  for approval  in                 
  order to get a sense of  how the legislature felt about  it.                 
  Co-chair Frank  spoke to  the broad  policy of  this bonding                 
  issue.                                                                       
                                                                               
  Senator Sharp asked for  the rate of return to  the Railroad                 
  in  the  Comfort Inn  project.    JOHN  BURNS,  real  estate                 
  representative, said it would not be  a rate of return since                 
  there was no investment but the market it was tied to was if                 
  it  was on a  straight land  lease.   The income  had nearly                 
  doubled if it would  have been received on an  ordinary land                 
  lease.  He went on to clarify that no cash or utilities were                 
  invested by  the Railroad.   He said  the Railroad was  a 40                 
  percent owner of a 100  percent financed improvement without                 
  a cash investment.   The only thing  he could compare it  to                 
  would be an ordinary land lease.                                             
                                                                               
  Again, in answer to  Senator Sharp, Mr. Burns said  the debt                 
  service  was  being***FIN080AM                                               
   0AASFIN    0321940911                                                       
                                                                               
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 23, 1994                                        
                            8:06 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #49, Side 1 (000-end)                                                
  SFC-94, #49, Side 2 (end-000)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Drue  Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 8:06 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chair Pearce, Senators Rieger,  Sharp and                 
  Kerttula were present.   Co-chair Frank, Senators  Jacko and                 
  Kelly joined the meeting after it was in progress.                           
                                                                               
  ALSO  ATTENDING:   Senator Fred Zharoff,  sponsor of  SB 92;                 
  Represen-tative Jerry Mackie; Duane Guiley, Director, School                 
  Finance,   Department  of   Education;  Nancy   Bear  Usera,                 
  Commissioner,  Department  of  Administration; Connie  Sipe,                 
  Executive Director, Older Alaskans Commission, Department of                 
  Administration;   Reed   Stoops,    Alaska   Air    Carriers                 
  Association; and Mike Greany,  Director, Legislative Finance                 
  Division; aides to  committee members  and other members  of                 
  the legislature.                                                             
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  CSSB 92(CRA):  An Act relating  to an  advisory vote  during                 
                 regional educational  attendance area  school                 
                 board   elections;   and  providing   for  an                 
                 effective date.                                               
                                                                               
                 Senator Zharoff,  sponsor of SB 92,  spoke in                 
                 support  of  the  bill.    CSSB  92(CRA)  was                 
                 REPORTED out of  committee with a "do  pass,"                 
                 with a zero fiscal note for the Department of                 
                 Education,  and a fiscal  note for the Office                 
                 of Governor in the amount of $0.7.                            
                                                                               
  CSSB 248(STA): An   Act  relating   to   services  for   and                 
                 protection   of   vulnerable    adults;   and                 
                 providing for an effective date.                              
                                                                               
                 Nancy Bear Usera, Commissioner, Department of                 
                 Administration, spoke  in support of  SB 248.                 
                 Senator Rieger  MOVED amendment 1.   Co-chair                 
                                                                               
                                                                               
                 Pearce OBJECTED for discussion purposes.  Ms.                 
                 Usera said  the  department  was  neutral  on                 
                 amendment  1.   No  further objections  being                 
                 heard,   amendment   1   was    ADOPTED   for                 
                 incorporation   into    a   Senate    Finance                 
                 Substitute for the  bill.  CSSB  248(FIN) was                 
                 REPORTED OUT of  committee with a "do  pass,"                 
                 with zero  fiscal notes for the Department of                 
                 Public    Safety     and    Department     of                 
                 Administration  (Pioneer  Homes),  and fiscal                 
                 notes for the  Department of  Administration-                 
                 $559.6, and the Department of Health & Social                 
                 Services-Adult  Services-$(364.5),  Northern-                 
                 $(68.0), and South Central-$(127.1).                          
                                                                               
  CSSB 250(STA): An  Act   relating  to  the   Older  Alaskans                 
                 Commission  and  staff  of   the  commission;                 
                 changing  the  name  of  the  Older  Alaskans                 
                 Commission to the Alaska Commission on  Aging                 
                 and  extending the  termination  date of  the                 
                 commission; relating to the  Alaska Pioneers'                 
                 Homes  Advisory  Board; relating  to services                 
                 and   programs   for   older  Alaskans;   and                 
                 providing for an effective date.                              
                                                                               
                 Nancy Bear Usera, Commissioner, Department of                 
                 Administration, spoke in  support of SB  250.                 
                 Connie   Sipe,   Executive   Director,  Older                 
                 Alaskans     Commission,    Department     of                 
                 Administration, spoke to  questions regarding                 
                 grants   and   matching   monies  for   pilot                 
                 projects.   Senator Kelly MOVED  amendment 1,                 
                 page 7, line  1, removing the  words "program                 
                 or"  and  adding   the  word  "pilot."     No                 
                 objections  being  heard,  amendment   1  was                 
                 ADOPTED  for  incorporation  into   a  Senate                 
                 Finance  Substitute  for  the  bill.     CSSB
                 250(FIN) was REPORTED OUT of committee with a                 
                 "do pass,"  and a  zero fiscal  note for  the                 
                 Department of Administration.                                 
                                                                               
  CSSB 256(TRA): An Act relating  to the tax on  transfers and                 
                 consumption of aviation  fuel; and  providing                 
                 for an effective date.                                        
                                                                               
                 Senator Sharp  spoke in  support  of SB  256.                 
                 Discussion  was  had   by  Co-chair   Pearce,                 
                 Senators Rieger, Kelly, and  Sharp, regarding                 
                 rural landing fees and fuel taxes.   Co-chair                 
                 Pearce announced that CSSB  256(TRA) would be                 
                 HELD in committee until more information  was                 
                 obtained comparing jet  fuel prices in Alaska                 
                                                                               
                                                                               
                 with  the  lower 48  states.   (The  bill was                 
                 heard again on Friday, March 25, 1994.)                       
                                                                               
  CSSB 312(HES): An Act relating to school construction grants                 
                 and to interscholastic school activities; and                 
                 providing for an effective date.                              
                                                                               
                 Amendment  3  pending  from  a  prior  Senate                 
                 Finance  meeting  was  withdrawn.     Senator                 
                 Rieger MOVED amendments 4 and 5.   Discussion                 
                 was  had  between Senators  Rieger, Kerttula,                 
                 Sharp,  Co-chairs  Frank,  Pearce, and  Duane                 
                 Guiley, Director, School  Finance, Department                 
                 of  Education,  regarding   reimbursement  to                 
                 schools   for   school   construction   debt,                 
                 portable and temporary housing,  and interest                 
                 rate ramifications on bonds.  Amendment 5 was                 
                 amended  on  page  4,  line  2,  after  "bond                 
                 sells..." and before the words "...premium to                 
                 par  value", the  words  "an original  issue"                 
                 were  added.     In  answer  to   information                 
                 requested  by  Senator   Jacko,  Mr.   Guiley                 
                 provided Attachment A,  dated April 15, 1994.                 
                 Discussion followed.  CSSB  312(FIN) was HELD                 
                 in committee until March 24, 1994.                            
                                                                               
  CS FOR SENATE BILL NO. 312(HES):                                             
                                                                               
       An Act relating  to school  construction grants and  to                 
       interscholastic school activities; and providing for an                 
       effective date.                                                         
                                                                               
  CO-CHAIR  PEARCE  announced  that  SB  312  was  before  the                 
  committee.  She  said amendments  4 and 5  were proposed  by                 
  Senator Rieger.   She also noted  that an April 1991  report                 
  from the  Department listed  portable units  used in  Alaska                 
  (see  Attachment A,  copy on  file in  the committee  minute                 
  book).  At that time, 16 of the 54 school districts reported                 
  having portable units in use.  Anchorage had 98, 50 of which                 
  were over 20 years old.  Matsu had 54.  Fairbanks had 28, 17                 
  of  which were  over  20 years.    Kenai had  22,  Craig and                 
  Unalaska, only one.   Her objection  to bringing in so  many                 
  portable  units was that it overpopulated  a school, and the                 
  children did not have access to adequate library facilities,                 
  restrooms, etc. Schools would still  be eligible for bonding                 
  even  if  portables  met  the  per  student  square  footage                 
  requirement.  She asked Senator Rieger to move amendment 4.                  
                                                                               
  Senator Rieger MOVED amendment 4.  He went on to explain the                 
  amendment.  He called attention  to the language "materially                 
  substandard,"  and  said  he would  be  comfortable  with or                 
  without this in the amendment.  Some examples of "materially                 
  substandard"  could   be  an  uncovered  walkway   from  the                 
                                                                               
                                                                               
  portables to the rest of the school, inadequate plumbing, or                 
  inadequate  heating.    Senator  Kerttula  agreed  that  the                 
  department would need some leeway in judging this area.                      
                                                                               
  DUANE  GUILEY,  Director,  School  Finance,  Department   of                 
  Education,  said that  the amendments proposed  were in-line                 
  with the bond  reimbursement and grant review  committee who                 
  had  discussed  the future.    It also  was  in line  with a                 
  request  from the Department  of Education  Anchorage caucus                 
  suggesting that  in all situations regarding  portables, the                 
  population of students  enrolled at the facility  should not                 
  exceed 110 percent of  the design capacity of the  core area                 
  of the building.                                                             
                                                                               
  Senator  Kerttula  voiced  his  opinion  that, with  a  rare                 
  exception, all new construction paid for  by the state would                 
  be  rural  or in  the bush  because  there were  no existing                 
  basements in  churches  to house  students.   When  a  large                 
  number  of students  begin to  be housed  in  portables, the                 
  Department of Education  (DOE) should  look at the  reasons.                 
  He felt there had been a  rapid shift in population in  some                 
  districts and too large a percentage of students were  being                 
  housed in portables.  He wanted  to solve and prioritize the                 
  problem.                                                                     
                                                                               
  Co-chair  Pearce  reminded the  committee  that there  was a                 
  motion on  the floor  to ADOPT  amendment 4.   No  objection                 
  being heard, amendment 4 was  ADOPTED for incorporation into                 
  CSSB 312(FIN).                                                               
                                                                               
  Senator  Rieger  said  there had  been  concern  about bonds                 
  issued that sold  at a premium.   He said amendment  5 would                 
  put a penalty on payback.   He believed that there should be                 
  some kind of general  dis-incentive for a district  to issue                 
  bonds at premium.                                                            
                                                                               
  Senator Rieger MOVED amendment 5.                                            
                                                                               
  Mr. Guiley understood the amendment to say  that bonds might                 
  be available at  115 percent as  compared to par, and  would                 
  require  the department to reduce the eligible reimbursement                 
  to the District by  200 percent of that 15  percent increase                 
  over par  which would  be a 30  percent reduction in  the 70                 
  percent reimbursement rate.   That  would provide a  penalty                 
  for selling  the bonds  over par  keeping in  mind that  the                 
  state reimbursed 70  percent of the principle amount as well                 
  as  70  percent of  the interest  amount.   If  the interest                 
  amount  was  higher than  necessary,  the district  would be                 
  making   themselves   eligible  for   a  greater   level  of                 
  reimbursement by  the state.   That  would  deter this  from                 
  happening.                                                                   
                                                                               
  Senator Rieger confirmed  that the  new higher debt  service                 
  was what would be reduced by the additional 30 percent.  Mr.                 
                                                                               
                                                                               
  Guiley said  that was  correct under  the current  statutory                 
  definition of cost of school construction.                                   
                                                                               
  In answer  to Senator  Sharp, Mr.  Guiley said  he read  the                 
  amendment to  mean it  would apply  to all  of the  eligible                 
  reimbursement which would  include the reimbursement  of the                 
  principle amount as well.  Everyone  was amused when Senator                 
  Sharp said he felt that was a little severe.                                 
                                                                               
  Senator Rieger MOVED  an amendment  to amendment 5  changing                 
  the  wording on  page 4, line  2, to  read "by which  a bond                 
  sells  at  an original  issue  premium  to par  value".   No                 
  objection being heard, it was ADOPTED.                                       
                                                                               
  At  the request  of  Senator Sharp,  Mr.  Guiley turned  the                 
  committee's attention to  page 3,  Section 3 (o).   He  read                 
  that section  to mean that  the total  reimbursement to  the                 
  district would be  reduced by that fraction.   Under current                 
  statutes,  districts were  eligible  to  receive 70  percent                 
  reimbursement of  principle and associated  financing costs.                 
  He  would read this  to mean the  department would calculate                 
  the fraction.  For example, a 30 percent reduction to the 70                 
  percent reimbursement would result in a 21 percent reduction                 
  of  the 70  percent,  if he  was reading  it correctly.   As                 
  stated earlier,  the reimbursement amount  of the  principle                 
  would  remain  unchanged.   The  state's  obligation  on the                 
  interest  for bonds that  carry a higher  interest rate than                 
  market  value would place a  greater obligation on the state                 
  at the point to which there would be a break even.                           
                                                                               
  Discussion continued by Senators  Rieger, Kerttula and Sharp                 
  regarding reimbursement, school districts and bonding.                       
                                                                               
  Co-chair  Pearce  reminded the  committee  that there  was a                 
  motion on  the floor  to ADOPT  amendment 5.   No  objection                 
  being heard, amendment 5 was  ADOPTED for incorporation into                 
  CSSB 312(FIN).                                                               
                                                                               
  In  answer  to  Senator  Rieger,  Mr.  Guiley said,  to  his                 
  knowledge, none of the old programs (2, 5, 7 year old bonds)                 
  had been sold with no material premium at all.                               
                                                                               
  Co-chair Pearce commented that amendment  3 had been pending                 
  and it was replaced with amendment 4 (which was adopted).                    
                                                                               
  Co-chair Pearce  asked if  Mr. Guiley  had the  answer to  a                 
  question raised by Senator Jacko.   Senator Jacko had wanted                 
  to  know  the  dollar  amount  expended  for  local  capital                 
  improvement projects by districts throughout the state.  Mr.                 
  Guiley said he  researched the  most recent school  district                 
  audits to determine how many dollars were recorded in school                 
  district  audits  for  local cash  expenditures  of  capital                 
  projects in  fiscal year 1993.   Based  upon that  analysis,                 
  there  was  a  recording  of   $9,908,651  of  local  school                 
                                                                               
                                                                               
  construction projects  not currently being reimbursed by the                 
  state through either a bond  reimbursement or grant process.                 
  That was an  estimate of what  existed on the actual  school                 
  district audits in one year of the three year suggestion for                 
  cash reimbursement process.  The list included all 54 school                 
  districts under current  statute.  The ARA  school districts                 
  would not be eligible for such reimbursement.  He took three                 
  specific school districts and looked  at three fiscal years.                 
  Of those three districts, the total was $1,061,863.  He said                 
  he provided brief descriptions of the projects.                              
                                                                               
  Mr. Guiley went  on to say  that the old cash  reimbursement                 
  program ended with projects that had to be approved prior to                 
  July 1, 1990.   Therefore, there  was a potential of  double                 
  payment  for  projects incurred  during  the time  period of                 
  April 30, 1990 through June 30, 1990.  The issues he brought                 
  forth previously related to the two year lag process whereby                 
  expenses  incurred  by the  district  in 1990  under current                 
  programs would have been eligible for reimbursement in 1992.                 
  That fiscal year  was currently  closed out.   Based on  the                 
  wording  under  current   statute,  excluding  the  proposed                 
  amendment,  the  only  expenses  eligible for  reimbursement                 
  would be those incurred  in FY93 prior to April 1993.   This                 
  would exclude any capital projects that were recorded on the                 
  city or borough books.  He had requested the information but                 
  did not have access to those books.                                          
                                                                               
  Co-chair  Pearce  asked   if  $10M   in  unreimbursed   cash                 
  expenditures was a good estimate for  1993.  Mr. Guiley said                 
  that  was  a  conservative  number in  that  the  cities and                 
  boroughs  were  not  required  to  actually  record  capital                 
  projects related to schools on the  school audit.  They were                 
  allowed  to record  them on  their own  audit because  under                 
  state  statute, they  had responsibility for  the buildings.                 
  This  number would be understated by  the amount of projects                 
  recorded  in  city  and borough  audits,  and  overstated in                 
  relation to the projects incurred by the REAAs.                              
                                                                               
  In answer  to Senator  Jacko, Mr.  Guiley said  that he  had                 
  included  all  projects of  all  dollar amounts  recorded in                 
  local capital projects.                                                      
                                                                               
  Discussion was had by Co-chairs Pearce, Frank and Mr. Guiley                 
  regarding projects in  his report  and different cities  and                 
  boroughs relating to school districts.                                       
                                                                               
  In  answer to  Co-chair  Frank, Mr.  Guiley  said that  this                 
  legislation could have  an immediate  impact on the  general                 
  fund.   Co-chair Frank  remarked that  more information  was                 
  needed.                                                                      
                                                                               
  Co-chair  Pearce  agreed with  Senator  Rieger to  HOLD CSSB
  312(FIN) for at least another day.                                           
                                                                               
                                                                               
  CS FOR SENATE BILL NO. 248(STA):                                             
                                                                               
       An  Act  relating  to services  for  and  protection of                 
       vulnerable adults; and providing for an effective date.                 
                                                                               
  Co-chair  Pearce  announced that  SB 248  would be  taken up                 
  next.     She  invited   Nancy  Bear  Usera,   Commissioner,                 
  Department of  Administration, to  join the  members at  the                 
  table.                                                                       
                                                                               
  COMMISSIONER NANCY BEAR USERA said  the bill had been  heard                 
  in two committees and was strongly supported by the senior's                 
  community.    She saw  it  was  an excellent  step  toward a                 
  central focal point  for delivery of senior  services in the                 
  state.    The fiscal  notes  were  transfers or  a  net zero                 
  impact.   The bill defined elder  abuse, response needed and                 
  responsibilities  for various  senior  programs, and  did  a                 
  better job of  protecting seniors in a  vulnerable position.                 
  She strongly supported the passage of SB 248.                                
                                                                               
  In answer to Senator Kelly, Commissioner Usera said that the                 
  Department of Administration  had housed  a majority of  the                 
  senior's programs.   Through an administrative order,  a new                 
  Division of  Senior Services  was created  which merged  the                 
  Division  of  Pioneer  Benefits   and  the  Older  Alaskans'                 
  Commission.   An accompanying  bill, SB  250, contained  the                 
  organizational  framework   for  the   Division  of   Senior                 
  Services.  It transferred all the major senior services into                 
  one division.   In the past,  Department of Health &  Social                 
  Services dealt  with vulnerable  adults as  they would  with                 
  vulnerable children.   Upon analysis, the needs  of children                 
  were very different from adults.  The determination was made                 
  that a better job of serving this constituency would be done                 
  if it was  put in a like framework.  The common thread being                 
  seniors  rather  than   vulnerability.    Consequently,  the                 
  Division of Senior Services would be under the Department of                 
  Administration because it was the right thing to do.                         
                                                                               
  Senator Rieger MOVED amendment 1.   Co-chair Pearce OBJECTED                 
  for discussion purposes.   Senator Rieger said he read  this                 
  bill in HESS  and the language  that referred to the  state,                 
  police officer or  VPO taking  immediate action to  protect,                 
  etc.  reminded  him  of  the  Busby decision  in  Anchorage.                 
  Because  of  that,  he  requested  amendment 1  be  drafted.                 
  Commissioner  Usera  said  that  she  did  not  have  strong                 
  feelings one way or the other but had supported the language                 
  in the bill prior to HESS removing it.                                       
                                                                               
  End SFC-94 #49, Side 1                                                       
  Begin SFC-94 #49, Side 2                                                     
                                                                               
  Co-chair Pearce called for  a show of hands and  amendment 1                 
  was ADOPTED unanimously.                                                     
                                                                               
                                                                               
  Senator  Rieger  MOVED  for passage  of  CSSB  248(FIN) from                 
  committee  with individual  recommendations.   No  objection                 
  being heard, it  was REPORTED  OUT of committee  with a  "do                 
  pass,"  zero  fiscal  notes from  the  Department  of Public                 
  Safety and Department of Administration (Pioneer Homes), and                 
  fiscal notes  for the  Department of  Administration-$559.6,                 
  and  the   Department  of  Health  &  Social  Services-Adult                 
  Services-$(364.5),  Northern-$(68.0),  and   South  Central-                 
  $(127.1).  Co-chair  Pearce, and Senators Rieger,  Sharp and                 
  Kerttula  signed  "do  pass."    Senator  Kelly  signed  "no                 
  recommendation."                                                             
                                                                               
  CS FOR SENATE BILL NO. 250(STA):                                             
                                                                               
       An Act relating  to the  Older Alaskans Commission  and                 
       staff of the commission; changing the name of the Older                 
       Alaskans Commission  to the Alaska Commission  on Aging                 
       and extending the  termination date of  the commission;                 
       relating to the Alaska Pioneers'  Homes Advisory Board;                 
       relating to services and  programs for older  Alaskans;                 
       and providing for an effective date.                                    
                                                                               
  Co-chair Pearce announced  that SB 250  would be heard  next                 
  and asked Commissioner Usera to remain at the table.                         
                                                                               
  Commissioner Usera said  that SB 250 was  the administrative                 
  piece that went along with  the senior's initiative that had                 
  been put forward this session.  In order to have  a division                 
  that effectively and efficiently housed the programs, it was                 
  felt that  some realignment of  the old divisions  should be                 
  done which  were served  by two  advisory boards,  the Older                 
  Alaskans Commission and  Pioneer Home Advisory Board.   This                 
  bill  maintained  both of  those commissions  separately but                 
  housed them in the same division aligning them more closely.                 
  The chairperson of one board  was now a member of  the other                 
  board.  Secondly, it changed the  name of the Older Alaskans                 
  Commission to the Alaska Commission on Aging  which was more                 
  consistent  with  the national  model.   This  was important                 
  since a large number of matching federal funds were received                 
  for the administration of these programs.                                    
                                                                               
  She went on to say that one change made in the State Affairs                 
  Committee  was  that  instead  of  the  Governor  appointing                 
  chairpersons of the  Board, seniors would appoint them.  She                 
  said that the administration had no problem with that.                       
                                                                               
  Senator Kelly asked for an explanation of Section 16 on page                 
  6, line 19.   Ms. Usera said it was a technical amendment to                 
  do with the grant process and whether the match could be in-                 
  kind  versus  cash.   Senator  Kelly  asked for  more  of an                 
  explanation.                                                                 
                                                                               
                                                                               
  Ms.  Usera  went on  to say  that  this section  allowed the                 
  Commission  the  flexibility to  reduce  or waive  the local                 
  match  requirements  for  grantees when  waiver  was  in the                 
  public interest.   Currently, the  non-profits that received                 
  some grants  had to have  match requirements and  because of                 
  the nature  of some  of the  local senior  service programs,                 
  they do not necessarily  have a cash match but  labor match.                 
  It  provided flexibility to the non-profit  group.  She said                 
  this  section  provided  regulator  authority  to  establish                 
  regulations which would  define when a  waiver of the  match                 
  could happen and under what circumstances.                                   
                                                                               
  Co-chair Pearce pointed out  that this was a portion  of the                 
  orignial Governor's bill.  Ms. Usera said the genesis of the                 
  bill was  a review by a  task force on  senior services that                 
  was established with both the  Older Alaskans Commission and                 
  the administrative  representatives of a number  of senior's                 
  programs.  This was their recommendation.                                    
                                                                               
  At   that  time,  Connie  Sipe,  Executive  Director,  Older                 
  Alaskans Commission, Department  of Administration,  arrived                 
  and Co-chair Pearce posed the question to her regarding  the                 
  waiver for grants.                                                           
                                                                               
  CONNIE  SIPE  explained  that  in  some  circumstances where                 
  start-up grants for certain organizations, such as the World                 
  Delivery of In-Home Respite Care, did not reside in the same                 
  location  where  they  were  setting  up and  arranging  for                 
  respite care, were not able to raise a total match the first                 
  year.  Many of the organizations receiving the grant may ask                 
  the client  for contributions, much of which  may be in-kind                 
  such as rent, but found it hard in the start-up year to come                 
  up with the 10 percent match even with client contributions.                 
  She noted, in  contrast, the grants  for home care  services                 
  for  people  with developmental  disabilities  had  no match                 
  requirement.  The 10  percent match had become a  barrier in                 
  starting up  some home  care providers  especially in  rural                 
  areas.  The Department of  Law had recommended handling this                 
  in regulations rather than in statute.                                       
                                                                               
  Senator  Kelly  maintained  that  it  should be  defined  in                 
  statute.  Ms. Sipe said the statutes already define a "pilot                 
  project" and she would  support an amendment to  that effect                 
  for SB 250.                                                                  
                                                                               
  Senator Kelly MOVED amendment 1  changing the words "program                 
  or" to  the word "pilot"  on page 7,  line 1.   No objection                 
  being  heard,  it was  ADOPTED  for incorporation  into CSSB
  250(FIN).                                                                    
                                                                               
  In answer  to Senator  Sharp regarding  the length  of pilot                 
  projects, Ms. Sipe  explained that  the pilot project  grant                 
  section had been used  rarely in the past.   The regulations                 
  said  that  the  Commission made  the  determination  of the                 
                                                                               
                                                                               
  length  of  time but,  at present,  were  on a  2-year grant                 
  cycle.   The pilot  project language  talked about  the fact                 
  that to  get approved as a pilot project  there had to be an                 
  estimated  projected  cost  of  operations  for the  next  3                 
  succeeding years but did not say that it would be in a pilot                 
  project status that long.  That was part of the planning for                 
  approval.    Senator Sharp  felt,  with this  incentive, the                 
  pilot  project might  become  more popular.   He  wanted the                 
  record to read that a pilot project should have a maximum of                 
  three years.                                                                 
                                                                               
  In answer to Senator Rieger regarding AS  47.65.040 (a), Ms.                 
  Sipe agreed that  (a) contradicted (b).   She said that  (b)                 
  set a percentage and then (a) capped it at 10 percent.  Most                 
  cities  and   towns  larger   than  Petersburg  would   have                 
  percentages larger than 10 percent if the percentage formula                 
  was  used in  Section  (b) but  then (a)  capped  it.   This                 
  statute was first  adopted in  1980.  She  pointed out  that                 
  grant matches of  20 or  30 percent would  be difficult  for                 
  groups to meet.   She  said the 10  percent was  significant                 
  enough.    Community mental  health  centers had  25 percent                 
  match  requirements but  were allowed to  charge fees.   The                 
  federal programs only  allowed the organizations to  ask for                 
  suggested  donations  for  nutrition,   transportation,  and                 
  support  services  which  limited  how  much cash  could  be                 
  generated  from  client  fees.   The  more  intensive client                 
  services like adult day  care could ask for fees  since they                 
  were supported with  state funds rather  than federal.   She                 
  felt the 10 percent match  was reasonable but it was an  old                 
  statute.                                                                     
                                                                               
  Senator Rieger asked if Section (b) should be repealed.  Ms.                 
  Sipe said that Section (b) could be repealed but not Section                 
  (c).    Senator Rieger  left  it  up to  Co-chair  Pearce on                 
  whether to take any  action on this issue.   Co-chair Pearce                 
  said she would let it go.                                                    
                                                                               
  Senator Kerttula  MOVED for  passage of  CSSB 250(FIN)  from                 
  committee  with individual  recommendations.   No  objection                 
  being  heard, it was  REPORTED OUT with  a "do  pass," and a                 
  zero fiscal  note for the Department of Administration.  Co-                 
  chair  Pearce,  Senators Rieger,  Kelly, Kerttula  and Sharp                 
  signed "do pass."                                                            
                                                                               
  CS FOR SENATE BILL NO. 92(CRA):                                              
                                                                               
       An Act  relating to  an advisory  vote during  regional                 
       educational attendance area school board elections; and                 
       providing for an effective date.                                        
                                                                               
  Co-chair Pearce asked the committee  to turn their attention                 
  to SB 92.   She invited Senator Zharoff to  join the members                 
  at the table.                                                                
                                                                               
                                                                               
  SENATOR ZHAROFF, sponsor of SB 92, said the bill allowed the                 
  Division  of  Elections  to  include on  an  REAA  ballot an                 
  advisory question  if it was adopted by  the regional school                 
  board  in the  area.    At  present,  statutes  allowed  the                 
  Division of  Elections to  deal with  the school  board, and                 
  there was an instance when one REAA had wanted a question on                 
  the ballot and there was no method to achieve that.  He said                 
  both the Department  of Education and Division  of Elections                 
  supported this version of SB 92.                                             
                                                                               
  Senator  Kerttula  MOVED for  passage  of CSSB  92(CRA) from                 
  committee  with  individual recommendations.    No objection                 
  being heard, it was  REPORTED OUT with  a "do pass," a  zero                 
  fiscal note  for the Department  of Education, and  a fiscal                 
  note  for the Office of the Governor  in the amount of $0.7.                 
  Co-chairs  Pearce   and  Frank,   Senators  Kelly,   Rieger,                 
  Kerttula, and Sharp signed "do pass."                                        
                                                                               
  CS FOR SENATE BILL NO. 256(TRA):                                             
                                                                               
       An Act relating to the tax on transfers and consumption                 
       of aviation fuel; and providing for an effective date.                  
                                                                               
  Co-chair  Pearce  announced  that  SB  256  was  before  the                 
  committee.                                                                   
                                                                               
  Senator  Sharp  said   the  bill   was  introduced  by   the                 
  Transportation  Committee and it  addressed the statement in                 
  last year's operations budget where  the situation was noted                 
  that rural  landing fees  in rural  airports  should not  be                 
  considered.  They  were difficult and expensive  to collect.                 
  This  bill  was another  option  to landing  fees  for rural                 
  airports.  Some organizations did support it.   Without this                 
  bill, rural landing  fees would have  to be reinstated.   He                 
  said SB  256 would sunset in  the year 2000.   It prohibited                 
  charging rural landing fees while this tax was in effect.                    
                                                                               
  Co-chair Pearce commented that  Northern Air Cargo supported                 
  the bill.   An unidentified  man in the  audience also  said                 
  that Alaska Air Carriers supported the bill.                                 
                                                                               
  Senator Sharp said he thought  Alaska Airlines supported the                 
  bill.                                                                        
                                                                               
  REED  STOOP,  Alaska  Air   Carriers  Association,  said  he                 
  believed that Alaska  Airlines would be  beneficiaries under                 
  this bill.   They  would pay  less in  fuel taxes than  they                 
  would in  landing fees if landing fees were the alternative.                 
  There had been  some mixed  correspondence but Kim  Daniels,                 
  Alaska Airlines, had  told him that  they did not object  to                 
  the bill.                                                                    
                                                                               
                                                                               
  Mr. Stoop  said his  organization was  very appreciative  of                 
  Commissioner Campbell's  efforts  last year  to suspend  the                 
  landing fee program which none of  the carriers liked.  Most                 
  agreed with  the Commissioner when he made  the decision not                 
  to  reinstate  the landing  fees.    At that  time,  the air                 
  carries agreed  that they  would not  object to  a fuel  tax                 
  increase that  would raise  an equivalent  amount of  money.                 
  They felt  it would be a fair  tax and a better alternative.                 
  If the money was not raised,  the department would be forced                 
  to make cuts  to its  operation in rural  airports and  that                 
  would hurt the air carriers.                                                 
                                                                               
  Co-chair Pearce felt  that all members  of ATA that  opposed                 
  the bill in  some way had to benefit  from having the feeder                 
  lines going  into Anchorage  and going  back out  to provide                 
  other  passenger  and  cargo  service  throughout the  state                 
  because so  many towns  and villages  were not  on the  road                 
  system  and relied on  air travel.  She  agreed that lack of                 
  upkeep at rural airports would cut down on service for these                 
  carriers.                                                                    
                                                                               
  Mr. Stoop agreed with Co-chair Pearce's statement.  He  said                 
  that an  earlier  recommendation by  Commissioner Turpin  to                 
  raise the tax 2 to 2.5 cents was unacceptable and would have                 
  raised 3 or  four times  what was being  collected in  rural                 
  landing fees.  He said SB 256 was a more modest contribution                 
  of  $1.5M  and he  knew  the Department  of Transportation's                 
  budget  cuts  were  beginning to  effect  the  rural airport                 
  maintenance support.                                                         
                                                                               
  Co-chair  Pearce  asked for  a  jet fuel  comparison between                 
  Alaska's  large cities  like  Anchorage and  Fairbanks,  and                 
  other major airports in  the lower 48.  An  unidentified man                 
  in the audience said that it was his understanding that fuel                 
  costs were more reasonable  in Alaska than in the  lower 48.                 
  Senator  Sharp said he  would have that  information for the                 
  committee in a few days.                                                     
                                                                               
  Discussion was had between Senator Kelly and Co-chair Pearce                 
  regarding  the  new  Albuquerque  airport  and  how  it  was                 
  financed.  Co-chair Pearce noted that it was an old military                 
  base and some funding was paid for or such things as fencing                 
  had already been installed by the federal government.                        
                                                                               
  Senator Rieger asked  why the year  2000 had been chosen  as                 
  the  sunset  date.   Senator  Sharp  said  he  did not  know                 
  anything special about the year  2000 but the Transportation                 
  Committee had wanted a sunset in the bill.                                   
                                                                               
  Co-chair  Pearce announced  that  SB 256  would  be HELD  in                 
  committee until Senator Sharp requested  that it back before                 
  the committee.                                                               
                                                                               
  Discussion followed  by Co-chair Pearce, Senators  Sharp and                 
                                                                               
                                                                               
  Kelly regarding the report regarding jet fuel costs in other                 
  states.                                                                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 9:40 a.m.                         

Document Name Date/Time Subjects