Legislature(1993 - 1994)

03/23/1994 08:06 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 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                 
  original 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