Legislature(2001 - 2002)

05/18/2002 10:13 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Call of the Chair --
Bills Related to the Special Session
<Pending Introduction and Referral>
* SB2002 MUNICIPAL BOND REIMBURSEMENT
Moved CS(FIN) Out of Committee
* SB2003 APPROP: STATE TROOPERS
Moved Out of Committee
* SB2004 G.O. BONDS: SCHOOLS/MUSEUM/UNIVERSITY
Moved Out of Committee
* SB2005 MUNICIPAL BOND REIMBURSEMENT
Moved Out of Committee
* SB2009 ALASKA VETERANS ADVISORY COUNCIL
Moved Out of Committee
Bills Previously Heard/Scheduled
-- Teleconference Upon Request --
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 18, 2002                                                                                       
                             10:13 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 2nd SS #2, Side A                                                                                                        
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete Kelly convened the meeting at approximately 10:13 AM.                                                             
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Dave Donley, Co-Chair                                                                                                   
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
Senator Loren Leman                                                                                                             
                                                                                                                                
Also Attending:  SENATOR RICK HALFORD; CAROL CARROLL, Director,                                                               
Administrative Services Division, Department of Military and                                                                    
Veterans Affairs                                                                                                                
                                                                                                                                
Attending via Teleconference:  There were no teleconference                                                                   
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB2002-MUNICIPAL BOND REIMBURSEMENT                                                                                             
                                                                                                                                
The Committee adopted an amendment and reported the bill from                                                                   
Committee.                                                                                                                      
                                                                                                                                
SB2005-MUNICIPAL BOND REIMBURSEMENT                                                                                             
                                                                                                                                
The bill moved from Committee.                                                                                                  
                                                                                                                                
SB2004-G.O. BONDS: SCHOOLS/MUSEUM/UNIVERSITY                                                                                    
                                                                                                                                
The bill moved from Committee.                                                                                                  
                                                                                                                                
SB2009-ALASKA VETERANS ADVISORY COUNCIL                                                                                         
                                                                                                                                
The Committee  heard from  the Department  of Military and  Veterans                                                            
Affairs. The bill moved from Committee.                                                                                         
                                                                                                                                
SB2003-APPROP: STATE TROOPERS                                                                                                   
                                                                                                                                
The bill moved from Committee.                                                                                                  
                                                                                                                                
Co-Chair  Kelly  announced  the  legislation  to  be heard  at  this                                                            
meeting is  similar to legislation  the Committee acted upon  during                                                            
the regular legislative session.                                                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 2002                                                                                                       
     "An   Act  relating   to  construction,   rehabilitation,   and                                                            
     improvement   of  schools  and  education-related  facilities;                                                             
     relating   to   municipal   bond   reimbursement   for   school                                                            
     construction; and providing for an effective date."                                                                        
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator Wilken questioned  if this contains language from HB 451 and                                                            
whether it contains "any forward or backward linkage".                                                                          
                                                                                                                                
SENATOR  RICK  HALFORD  replied  SB  2002  includes  the  amendments                                                            
adopted by  the Senate Rules Committee  to the original HB  451, but                                                            
not those amendments  adopted by the full Senate.  He informed he is                                                            
preparing  an amendment  to SB  2002 to  address the  length of  the                                                            
program.                                                                                                                        
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 2005                                                                                                       
     "An Act relating to municipal bond reimbursement for school                                                                
     construction; and providing for an effective date."                                                                        
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly  explained  this legislation   is identical  to  the                                                            
original  version of  HB 451  and  contains authorization  to  issue                                                            
bonds. He noted it does not list specific projects.                                                                             
                                                                                                                                
Senator Austerman asked  if the intent is to report SB 2005 from the                                                            
Senate  Finance  Committee   to  be  amended  in  the  Senate  Rules                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly responded  his intention is  that no further  action                                                            
would be taken on this  bill once it is referred to the Senate Rules                                                            
Committee and  that the bond authority  would be granted  through SB                                                            
2002.                                                                                                                           
                                                                                                                                
Senator Austerman  asked the reason  for reporting SB 2005  from the                                                            
Senate Finance Committee.                                                                                                       
                                                                                                                                
Co-Chair  Kelly answered that  in the event  SB 2002 does not  pass,                                                            
there  would be  opportunity  to pass  the more  limited  provisions                                                            
contained in  SB 2005. He stated agreement  exists on passage  of at                                                            
least  minimal  bonding  authority  as  contained  in  the  original                                                            
version of HB 451, sponsored by Representative James.                                                                           
                                                                                                                                
Senator Wilken  clarified SB 2005  would be moved from Committee  to                                                            
allow for flexibility, which he supports.                                                                                       
                                                                                                                                
Senator Green offered a  motion to move from Committee, SB 2005 with                                                            
individual recommendations.                                                                                                     
                                                                                                                                
There was no objection and SB 2005 MOVED from Committee.                                                                        
                                                                                                                                
AT EASE 10:20 AM / 10:22 AM                                                                                                     
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 2002                                                                                                       
     "An   Act  relating   to  construction,   rehabilitation,   and                                                            
     improvement   of  schools  and  education-related  facilities;                                                             
     relating   to   municipal   bond   reimbursement   for   school                                                            
     construction; and providing for an effective date."                                                                        
                                                                                                                                
                                                                                                                                
This bill was heard and held earlier in the meeting.                                                                            
                                                                                                                                
Senator  Halford testified  this legislation  does not include  "the                                                            
tie-in provisions"  under discussion  for HB 451. He stated  it does                                                            
include provisions  that clarify that  the 70 percent reimbursement                                                             
program  is subject  to  the full  review and  that  the 60  percent                                                            
reimbursement program is subject to a lesser review.                                                                            
                                                                                                                                
Senator  Halford  noted  a  technical  correction  is  necessary  to                                                            
replace "approved" with "reviewed" on page 6, line 11.                                                                          
                                                                                                                                
Senator Halford  next pointed  out the bill  stipulates the  program                                                            
operates until the year  2008. He proposed changing this to 2006. He                                                            
also noted the bill contains  language pertaining to a set amount of                                                            
state  debt.  He  stated  this  amount  is  no  longer  certain  and                                                            
recommended this language be amended.                                                                                           
                                                                                                                                
Senator Halford  stressed  that the approval  of debt service  would                                                            
remain contingent upon approval of the rural bond package.                                                                      
                                                                                                                                
Senator Hoffman  spoke to the proposed change to shorten  the length                                                            
of the program.  He detailed the legislation  would not take  effect                                                            
in the  current year  until after  voter approval  for the bonds  is                                                            
received  in the  November  2002 general  election.  Therefore,  the                                                            
program would be in effect from the year 2003 until 2006.                                                                       
                                                                                                                                
Senator Hoffman  cautioned to the  disproportionate amount  of bonds                                                            
issued  in   2006,  the  final  year   of  the  program,   by  those                                                            
communities,  "which  could  disrupt  the  parody  between  what  we                                                            
approved potentially for  rural schools and the open-endedness. Even                                                            
thought  there  is a  time frame  on  it, there  is not  a  monetary                                                            
limit." He stated this could be unfair.                                                                                         
                                                                                                                                
Senator Leman  clarified the correct terminology in  this context is                                                            
"schools in unorganized boroughs", rather than rural schools.                                                                   
                                                                                                                                
Senator Hoffman agreed.                                                                                                         
                                                                                                                                
Amendment  #1: This amendment  deletes the  year "2008" and  inserts                                                            
"2006" in each place it  appears in the bill: page 6, lines 1 and 9,                                                            
and page 10, lines 6 and 14.                                                                                                    
                                                                                                                                
This amendment  also deletes  "approved" and  inserts "reviewed"  on                                                            
page 6, line 11.  The amended language of Section  6(a)(12) reads as                                                            
follows.                                                                                                                        
                                                                                                                                
                (12) subject to (h), (i), and (j)(2), (3), and (5)                                                              
          of  this  section,  60  percent  of  payments  made  by  a                                                            
          municipality  during the fiscal year for the retirement of                                                            
          principal  and interest  on outstanding  bonds, notes,  or                                                            
          other  indebtedness authorized by the  qualified voters of                                                            
          the  municipality on  or after June  30, 1999, but  before                                                            
          July  1,  2006,  to  pay  costs  of school  construction,                                                             
          additions  to schools, and  major rehabilitation  projects                                                            
          and  education related  facilities  that exceed  $200,000,                                                            
          are  reviewed  under  AS  14.07.020(a)(11),  and  are  not                                                            
           reimbursed under (n) or (o) of this section.                                                                         
                                                                                                                                
This amendment  also deletes  "in the principal  amount of  at least                                                            
$240,000,000"  following  "state  debt"  on page  10,  line 25.  The                                                            
amended language reads as follows.                                                                                              
                                                                                                                                
          Sec. 15. Sections 1,3,4,6-10, and 13 of this Act take                                                                 
     effect on the date  that the director of elections certifies to                                                            
     the  revisor  of statutes  that  a majority  of  the  qualified                                                            
     voters  of the  state  who vote  on the  question  at the  2002                                                            
     general   election  affirmatively   voted   to  authorize   the                                                            
     contracting of state  debt for the purpose of financing capital                                                            
     improvements   and  major  maintenance  for  schools  in  rural                                                            
     educational attendance areas or municipal school districts.                                                                
                                                                                                                                
This amendment also gives  authorization to the bill drafter to make                                                            
conforming changes as necessary.                                                                                                
                                                                                                                                
Senator Leman moved for adoption.                                                                                               
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Senator  Austerman  asked, "Is  there  a way  to get  to the  number                                                            
Senator Hoffman is talking about?"                                                                                              
                                                                                                                                
Co-Chair Kelly  suggested the Senate Rules Committee  could insert a                                                            
definitive amount  into the language of the bill.  He opined that he                                                            
does not support inclusion of a specific dollar amount.                                                                         
                                                                                                                                
Senator  Wilken   referenced  Section   6(a)(12)  and  asked   if  a                                                            
definition  exists specifying what  the review entails. He  asserted                                                            
that a  review could  vary from  "passing across  one's desk"  to an                                                            
actual analysis following guidelines.                                                                                           
                                                                                                                                
Senator Halford  replied regulatory  authority would determine  "the                                                            
ultimate  decision" with  regards  to the 60  percent reimbursement                                                             
program.  However, he stressed  the intention  is a "lower  level of                                                            
authority" than  required for the 70 percent reimbursement  program.                                                            
He  indicated the  proposed  project  should be  "closely  education                                                            
related"  and contain a "standard  of need",  although it would  not                                                            
require  a formula for  the number  of students or  the size  of the                                                            
facility.                                                                                                                       
                                                                                                                                
Senator  Wilken  surmised  there  would  be no  method  to  identify                                                            
whether a school  district is taking  advantage of the bond  program                                                            
using the 60 percent reimbursement program.                                                                                     
                                                                                                                                
Senator Halford  agreed a level of review is necessary  to avoid the                                                            
program becoming  "engulfed" by abuse. However, he  understood there                                                            
is "basic authority"  within the Department  of Education  and Early                                                            
Development to address this issue.                                                                                              
                                                                                                                                
Senator  Wilken asked if  the Department  determined an application                                                             
for  a project  receiving  60  percent reimbursement   is "over  and                                                            
above" what  is "proper for whatever  reasons," whether there  would                                                            
be a method to deny reimbursement.                                                                                              
                                                                                                                                
Senator  Halford  responded  it  would  depend  upon  the  level  of                                                            
egregiousness.  He  pointed out  the  Department could  present  the                                                            
application  to  the Legislature   and the  Legislature  could  take                                                            
action to deny reimbursement.  He emphasized there would be adequate                                                            
time to address the matter if it arose.                                                                                         
                                                                                                                                
Senator  Austerman  asked for  a definition  of  "education  related                                                            
facilities"  as listed  in  the bill  title on  page 1,  line 2.  He                                                            
wanted to know  if this is limited  to K-12, or whether a  community                                                            
college could be interpreted to qualify.                                                                                        
                                                                                                                                
Senator Halford understood such a definition exists.                                                                            
                                                                                                                                
Senator  Halford then  explained  for Co-Chair  Kelly  that a  local                                                            
election to approve  school projects could not occur  in the current                                                            
calendar year because the  authority to issue the bonds would not be                                                            
granted until the general election in November 2002.                                                                            
                                                                                                                                
Co-Chair Kelly calculated  the actual timeframe of the program would                                                            
be approximately two and one-half years rather than three years.                                                                
                                                                                                                                
Senator Hoffman  reiterated the need to anticipate  the projects and                                                            
their costs  in order to appropriate  funds for planning  and design                                                            
of both rural and urban  schools in advance. He emphasized the short                                                            
construction  season and the  limited time  that shipments  could be                                                            
made to many rural  communities. He suggested further  discussion on                                                            
this matter.                                                                                                                    
                                                                                                                                
Senator  Hoffman  also  asked  whether  this  legislation  could  be                                                            
amended to "accommodate" the Wendler Middle School in Anchorage.                                                                
                                                                                                                                
Senator Halford  answered that the intent is to include  the Wendler                                                            
school project  with the statewide general obligation  bond package.                                                            
                                                                                                                                
Senator  Hoffman  agreed  this  is  one  option  and  requested  the                                                            
Administration  testify as to whether  other options are  available.                                                            
                                                                                                                                
Senator Halford  informed this is the only option  identified by the                                                            
Anchorage  School District;  although, he  qualified there  could be                                                            
other options.                                                                                                                  
                                                                                                                                
Senator Austerman clarified  this issue must receive statewide voter                                                            
approval  before local  elections  to approve  specific bond  issues                                                            
could be  held. He  assumed that  before a bond  proposal is  placed                                                            
before voters,  a project  must be designed  and planned. He  shared                                                            
Senator Hoffman's concerns about the limited timeframe.                                                                         
                                                                                                                                
Co-Chair   Donley   asked  when   the   State's  first   bond   debt                                                            
reimbursement payment would come due.                                                                                           
                                                                                                                                
Senator  Halford  answered that  the  first appropriation  could  be                                                            
necessary in FY 04. He  noted the majority of the payments would not                                                            
begin until FY 05.                                                                                                              
                                                                                                                                
Co-Chair Donley  commented, "It's going to be an interesting  year."                                                            
                                                                                                                                
Senator Austerman asked  if July 2006 is the deadline for local bond                                                            
passage.                                                                                                                        
                                                                                                                                
Senator Halford affirmed this is for the authorization portion.                                                                 
                                                                                                                                
Co-Chair Donley  appreciated the conversation on Section  6 (12). He                                                            
commented this  is "really a difficult question as  far as trying to                                                            
free  up  school  districts  that  wish to  help  pay  for  projects                                                            
themselves from some of  the unfairness of the current Department of                                                            
Education   and  Early   Development   list   [prioritizing   school                                                            
construction projects]  and their regulations, but  at the same time                                                            
keeping  some  reasonability   for  what  gets  developed  into  the                                                            
system."                                                                                                                        
                                                                                                                                
Co-Chair  Donley  was  concerned  with  AS 14.07.020(a)(11),   which                                                            
allows the  Department of Education  and Early Development  to adopt                                                            
regulations  in   "whatever  way  they  see  fit  to   regulate  the                                                            
expenditure of  money in this area." He expressed,  "I have not been                                                            
happy with  the regulations the bureaucrats  over there have  cooked                                                            
up over the  years. I mean they're  famous for their one  regulation                                                            
that did  not count students  in portable  units as un-housed.  That                                                            
was one of the  most unfair single regulations I've  ever seen in my                                                            
time here,  Mr. Chairman, and that  came out of the same  Department                                                            
that now has full authority  to adopt new regulations to cover that.                                                            
I'm concerned  about what kind of an effect that will  have and what                                                            
kind of new regulations  will sprout out of the minds  of the people                                                            
at Department  of Education over that because they  have not shown a                                                            
propensity  for  fairness,  in my  opinion,  when  it came  to  this                                                            
program in the  past. We had to overrule that regulation  by statute                                                            
last time."                                                                                                                     
                                                                                                                                
Co-Chair Kelly  understood and noted  the matter could be  addressed                                                            
when the Senate Rules Committee hears this bill.                                                                                
                                                                                                                                
Senator  Hoffman  agreed  the  Department  of  Education  and  Early                                                            
Development regulatory  interpretation of the provision  relating to                                                            
students  housed in  portable facilities  was unfair  to the  entire                                                            
State.                                                                                                                          
                                                                                                                                
Senator Austerman  offered a motion to move SB 2002  with individual                                                            
recommendations from Committee.                                                                                                 
                                                                                                                                
There was no  objection and CS SB  2002 (FIN) MOVED from  Committee.                                                            
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 2004                                                                                                       
     "An Act  relating to the issuance  of general obligation  bonds                                                            
     for  the purpose of  paying the cost  of design, construction,                                                             
     and  major maintenance  of educational  and museum facilities;                                                             
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Kelly informed  that the language in this bill is identical                                                            
to  earlier   legislation   that  was   passed  by   the  House   of                                                            
Representatives  during the  regular legislative  session. He  noted                                                            
the Committee  would also receive separate legislation,  which would                                                            
contain  language adopted  by  the House  Finance  Committee and  is                                                            
identical  to that adopted  by the Senate  Finance Committee  in the                                                            
aforementioned  earlier  legislation  from the  regular legislative                                                             
session.                                                                                                                        
                                                                                                                                
Senator Green  offered a motion to move SB 2004 from  Committee with                                                            
individual recommendations.                                                                                                     
                                                                                                                                
Without objection SB 2004 MOVED from Committee.                                                                                 
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 2009                                                                                                       
     "An Act establishing the Alaska Veterans Advisory Council; and                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Kelly  asked if the language  in this bill is identical  to                                                            
previous  legislation  passed  by  the  Senate  during  the  regular                                                            
legislative session.                                                                                                            
                                                                                                                                
CAROL   CARROLL,   Director,   Administrative   Services   Division,                                                            
Department of Military  and Veterans Affairs, affirmed and noted the                                                            
earlier  legislation  did not  receive  a hearing  in  the House  of                                                            
Representatives.                                                                                                                
                                                                                                                                
Co-Chair Kelly asked about the effective date.                                                                                  
                                                                                                                                
Ms. Carroll  replied  SB 2009 contains  language  pertaining to  the                                                            
effective date and the  transition of the council into statute, both                                                            
of which were earlier adopted by the Senate Finance Committee.                                                                  
                                                                                                                                
Senator  Green offered  a motion to  move SB  2009, with  individual                                                            
recommendations and accompanying fiscal note from Committee.                                                                    
                                                                                                                                
There was no objection  and SB 2009 with accompanying  $3,500 fiscal                                                            
note #1 from the  Department of Military and Veterans  Affairs MOVED                                                            
from Committee.                                                                                                                 
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 2003                                                                                                       
     "An Act making appropriations; and providing for an effective                                                              
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly noted  Senator Halford's  intent  to adopt a  "naked                                                            
appropriations bill" to  have available if necessary. Co-Chair Kelly                                                            
pointed out this bill contains a title only.                                                                                    
                                                                                                                                
Senator  Hoffman  moved  the  Naked  Appropriation,  SB  2003,  from                                                            
Committee with individual recommendations.                                                                                      
                                                                                                                                
Without objection SB 2003 MOVED from Committee.                                                                                 
                                                                                                                                
AT EASE 10:43 AM                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
The meeting  adjourned with the Senate  Sine Die adjournment  of the                                                            
Second Special Session at 5:32 PM on May 21, 2002.                                                                              

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