Legislature(2003 - 2004)

03/08/2004 09:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 08, 2004                                                                                      
                              9:05 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 33, Side A                                                                                                             
SFC 04 # 33, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:05 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Ben Stevens                                                                                                             
                                                                                                                                
Also Attending:   ZACH WARWICK, Staff  to Senator Therriault;  KEVIN                                                          
SWEENEY,  Legislative  Liaison, Department  of  Education and  Early                                                            
Development;  CHRIS  CHRISTENSEN,  Deputy Administrative   Director,                                                            
Alaska  Court  System;  DAN  FAUSKE,  Chief  Executive  Officer  and                                                            
Director,  Alaska   Housing  Finance  Corporation;  BRIAN   BUTCHER,                                                            
Legislative  Liaison, Alaska Housing  Finance Committee,  Department                                                            
of Revenue;  JOE  DUBLER, Chief  Financial Officer,  Alaska  Housing                                                            
Finance Corporation, Department of Revenue;                                                                                     
                                                                                                                                
Attending  via  Teleconference:    From an  offnet  location:  DAVID                                                          
SCHADE,  Department of  Public  Safety; PAULA  HARRISION,  Director,                                                            
Human Resources  and Labor Relations,  Mat-Su School District;  PAUL                                                            
KAPANSKY,  Mortgage  Operations  Director,  Alaska  Housing  Finance                                                            
Corporation,  Department   of  Revenue;  From  Ketchikan:   JENNIFER                                                            
TAYLOR;                                                                                                                         
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 179-TEACHER CERTIFICATION : FINGERPRINTS                                                                                     
                                                                                                                                
The Committee  heard from the sponsor,  the Department of  Education                                                            
and Early Development,  the Mat-Su School District  and a teacher. A                                                            
committee  substitute   was  adopted  and  the  bill  reported  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 353-REPEAL DAYCARE REQ FOR FBX COURTHOUSE                                                                                    
                                                                                                                                
The  Committee heard  from  the Alaska  Court  System  and the  bill                                                            
reported from Committee.                                                                                                        
                                                                                                                                
SB 279-AHFC WATER & SEWER BONDS                                                                                                 
                                                                                                                                
The Committee heard from  the Alaska Housing Finance Corporation. An                                                            
amendment was adopted and the bill was held in Committee.                                                                       
                                                                                                                                
SB 274-HOUSING PROGRAMS                                                                                                         
                                                                                                                                
The Committee  heard from  the Alaska Housing  Finance Corporation.                                                             
The bill was held in Committee.                                                                                                 
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 179(HES)                                                                                            
     "An  Act relating to  criminal history  records and  background                                                            
     checks; allowing persons  to teach in the public schools for up                                                            
     to five  months without  a teaching  certificate if the  person                                                            
     has applied for a  certificate and the application has not been                                                            
     acted   upon  by  the   Department  of   Education  and   Early                                                            
     Development;   allowing  teacher   certification  for   certain                                                            
     persons  based on a criminal  history background check  without                                                            
     fingerprints; and providing for an effective date."                                                                        
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated this bill, sponsored by Senator  Therriault,                                                            
"amends  the State  law  to meet  the requirements  set  out by  the                                                            
United  States   Department  of  Justice   in  regards  to   federal                                                            
background checks  on Alaskans. Senate Bill 179 addresses  a concern                                                            
expressed  by teachers  whose fingerprints  are not  processed  in a                                                            
timely manner."  He noted a draft  of a committee substitute,  which                                                            
contains  changes  proposed  by the  Senate  Health,  Education  and                                                            
Social Services Committee.                                                                                                      
                                                                                                                                
Co-Chair Green  moved for adoption  of CS SB 179, 23-LS0938\U,  as a                                                            
working document.                                                                                                               
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
ZACH WARWICK, Staff to  Senator Therriault, testified that this bill                                                            
stared as a "tool"  to allow teachers an alternative  in the current                                                            
system of criminal history  background checks necessary to receive a                                                            
teaching certificate.  However, he reported that a  problem arose in                                                            
that a  number of  teachers were  required to  resubmit fingerprint                                                             
samples every  three months due to  illegible samples. He  explained                                                            
that the ridges on the  fingers of many teachers, and many nurses as                                                            
well,  tend to  wear down  after many  years of  handling paper.  He                                                            
stated the affected  teachers are usually those who  had retired and                                                            
were now returning to teaching.                                                                                                 
                                                                                                                                
Mr. Warwick stated  that during FY 03 over 40 teachers  are affected                                                            
by an  inability to collect  legible fingerprints,  are required  to                                                            
resubmit their prints, thus resulting in an "endless process".                                                                  
                                                                                                                                
Mr. Warwick  relayed that he was informed  by the Department  of Law                                                            
and the Department  of Public Safety that the State  was in jeopardy                                                            
of losing  its "ability  to perform federal"  background checks  for                                                            
professions  requiring  clearance. He  reminded that  the State  had                                                            
been granted  "broad based authority"  to perform background  checks                                                            
on  a  number  of  professions,   although  provisions   to  conduct                                                            
fingerprinting  were regulatory rather  than statutory. In  1997, he                                                            
stated that  the federal  government audited  the State's  practices                                                            
and directed the language to be contained in statutes.                                                                          
                                                                                                                                
Mr.  Warwick told  of  a "laundry  list"  of  professions  requiring                                                            
criminal history background  checks that was developed by the Senate                                                            
Health Education  and Social Services  Committee, upon consultation                                                             
between the Department  of Law and the Department  of Public Safety.                                                            
He noted that changes to  the original version of the bill were made                                                            
conceptually   and  that   meanwhile,  Representative   Carl   Gatto                                                            
introduced separate  legislation to address delays  in processing of                                                            
criminal  history  background checks  for  some teachers.  He  noted                                                            
these  delays were  not due to  illegible fingerprints  or  criminal                                                            
histories, but rather because of a backlog in processing.                                                                       
                                                                                                                                
Mr.  Warwick stated  that  the Senate  Health Education  and  Social                                                            
Services Committee  proposed extending  the application period  from                                                            
three to five  months; however, the  Division of Legal and  Research                                                            
Services advised  that such a change to this bill  would violate the                                                            
single  subject rule  pertaining  to  legislation.  In addition,  he                                                            
stated that  the Department of Education  and Early Development  had                                                            
concerns  that teachers  would submit  applications  later and  time                                                            
would not be allowed for processing delays.                                                                                     
                                                                                                                                
Mr. Warwick  told of efforts  to address  these concerns. He  stated                                                            
that the committee  substitute retains  the three month application                                                             
period and grants the Department  of Education and Early Development                                                            
the ability  to issue  a 60-day  conditional  waiver to accommodate                                                             
processing  delays. He noted  these changes  comply with the  single                                                            
subject rule.                                                                                                                   
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
committee substitute  and the committee substitute  was ADOPTED as a                                                            
working draft.                                                                                                                  
                                                                                                                                
Co-Chair  Green  referenced  Section  7  on pages  3  and  4 of  the                                                            
committee  substitute, which  would add a  new article and  statute:                                                            
Article  1A.  National  Criminal   History  Record  Check.,  and  AS                                                            
12.62.400. National  criminal history record checks  for employment,                                                            
licensing, and  other noncriminal justice purposes.  She asked about                                                            
any questions  or  concerns regarding  criminal  history  background                                                            
checks for handgun ownership permits.                                                                                           
                                                                                                                                
Mr.  Warwick  answered  that  no questions  or  concerns  have  been                                                            
expressed to the sponsor.                                                                                                       
                                                                                                                                
Co-Chair Green clarified  this committee substitute would not change                                                            
the  current  system  relating   to  issuance  of  permits  for  the                                                            
ownership of handguns.                                                                                                          
                                                                                                                                
Mr.  Warwick  understood  that  the  provisions  of  Section  7  are                                                            
currently authorized in regulations.                                                                                            
                                                                                                                                
DAVID   SCHADE,   Department   of  Public   Safety   testified   via                                                            
teleconference from an  offnet location that he and other Department                                                            
staff were available to respond to questions.                                                                                   
                                                                                                                                
PAULA  HARRISION, Director,  Human  Resources and  Labor  Relations,                                                            
Mat-Su School  District testified via teleconference  from an offnet                                                            
location  in support  of this committee  substitute  and efforts  to                                                            
"keep this  bill alive"  until the regulations  are made  statutory.                                                            
She offered to share experiences of the school district.                                                                        
                                                                                                                                
JENNIFER  TAYLOR, testified  via teleconference  from Ketchikan  and                                                            
read her written testimony into the record as follows                                                                           
                                                                                                                                
     I have been  certified as an Alaskan teacher  since 1981. Every                                                            
     subsequent   five  years  it  has  been  necessary   to  repeat                                                            
     fingerprint  processing  (rolling) numerous  times at the  only                                                            
     locally  available  agency, the  Craig Police  Department.  The                                                            
     ridges normally  required for finger print identification,  are                                                            
     not  well enough  defined  on  my fingers  to suit  the  Alaska                                                            
     Department  of Education  and Early  Development requirements.                                                             
     Home  remedies  such as  soaking my  hands in  lotion and  corn                                                            
     starch,  avoiding  all housework,  and splitting  of  firewood,                                                            
     merely leave  my home dirty and my children cold,  and still do                                                            
     not promote  better-defined prints. I had 8 finger  print cards                                                            
     rolled  for  me,  on  three  occasions,  by  the  Craig  Police                                                            
     Department  in the past seven  months. Chief See took  the time                                                            
     to  write  a  department  letter  to  the  Dept.  of  Education                                                            
     explaining   that  my  particular  fingerprints   would  likely                                                            
     consistently  be  illegible  because my  ridges  were not  well                                                            
     enough  defined.  He was  upset  with me  that  his letter  was                                                            
     essentially  ignored.  This  is  not  theoretically  a  medical                                                            
     condition, nor a disability,  though apparently it is permanent                                                            
     and has not been cured  by replacing our wood stove with a toyo                                                            
     stove.                                                                                                                     
                                                                                                                                
     My concern  is that the language  in Section 10 allows  for the                                                            
     inclusion  of public  safety  and police  officers trained  and                                                            
     familiar  with fingerprint processing (rolling)  as experts, in                                                            
     addition  to medical  doctors for the  purposes of determining                                                             
     that  cases  such  as  my  own,  where  prints  are  repeatedly                                                            
     illegible,  be included as "a  permanent skin condition".  Such                                                            
     is  especially  important  considering the  lack  of access  in                                                            
     rural Alaska  to other than public safety officers  as agencies                                                            
     to  obtain  prints.  My  Alaskan  teaching  certification  fees                                                            
     already  cost me  seven times  that of  my Washington  teaching                                                            
     certificate, and without  health insurance, I cannot afford the                                                            
     added  expense of  a medical  office visit  to explain my  non-                                                            
     medical skin "condition".                                                                                                  
                                                                                                                                
     Thank you for your consideration                                                                                           
                                                                                                                                
Co-Chair  Wilken referenced  Section 7 and  the list of professions                                                             
requiring criminal history  record checks and asked whether day care                                                            
providers are included.                                                                                                         
                                                                                                                                
Mr.  Warwick  surmised   that  subparagraph  (5)  includes   daycare                                                            
providers. The language reads as follows.                                                                                       
                                                                                                                                
                (5) a position involving supervisory or disciplinary                                                            
     power  over  a minor  or  dependent  adult for  which  criminal                                                            
     justice information  may be released under AS  12.62.160(b)(9);                                                            
                                                                                                                                
KEVIN  SWEENEY, Legislative  Liaison,  Department  of Education  and                                                            
Early Development,  testified to the Department's  efforts to change                                                            
the  regulatory  provisions  to  statutory.  However,  he  requested                                                            
clarification of language in the committee substitute.                                                                          
                                                                                                                                
Mr. Sweeney referenced  AS 14.20.020(j)(1) in Section  10 on page 6,                                                            
lines 10 and 11, which reads as follows                                                                                         
                                                                                                                                
                (1) person cannot submit legible fingerprint cards                                                              
     due  to a  permanent  disability  that precludes  the  person's                                                            
     ability to submit fingerprints; or                                                                                         
                                                                                                                                
Mr. Sweeney  asked the  sponsor's  intent as to  how the  Department                                                            
would verify  that a teacher's  fingerprints  could not be  read. He                                                            
noted  the Department  would be  unable to make  such verifications                                                             
"from afar".                                                                                                                    
                                                                                                                                
Mr. Warwick  expressed intent  that the  official agency  conducting                                                            
fingerprinting  would verify whether  a person was unable  to submit                                                            
legible fingerprint cards due to a permanent disability.                                                                        
                                                                                                                                
Mr. Sweeney  also clarified  that a person  with missing fingers  or                                                            
hands  could  be  determined  by  a  physician  to  be  a  permanent                                                            
disability.                                                                                                                     
                                                                                                                                
Mr. Warwick agreed this  would be considered a permanent disability.                                                            
                                                                                                                                
Mr. Sweeney  next referenced new language  inserted to AS  14.20.010                                                            
in  Section  8 on  page  5,  lines  1 through  7  of  the  committee                                                            
substitute, which reads as follows.                                                                                             
                                                                                                                                
     A person who has made  application for a certificate under this                                                            
     section  may  teach for  an  additional  60 days  beyond  three                                                            
     months  without  a  certificate  if  the  department  grants  a                                                            
     written  extension.  An extension  may  be granted  under  this                                                            
     section for  not more than 60 days to the person  solely due to                                                            
     delay   in  the  department's   receipt  of  criminal   justice                                                            
     information  under  AS 12.62  or  a national  criminal  history                                                            
     record check under AS 12.62.400.                                                                                           
                                                                                                                                
Mr. Sweeney requested clarification  that such an extension would be                                                            
granted  only  if the  delay  is the  result  of  a backlog  of  the                                                            
criminal history  record check process, rather than  failure for the                                                            
teacher  to submit fingerprints.  He shared  that many applications                                                             
are received "at  the last minute" of the current  90 day period and                                                            
do  not provide  adequate  time  for processing.  He  expressed  the                                                            
Department's  concern with  avoiding a situation  in which  a person                                                            
with  a  sexual deviant  criminal  history  is  dealing  with  young                                                            
children.                                                                                                                       
                                                                                                                                
Co-Chair Green offered  motion to report CS SB 179, 23-LS0938\U from                                                            
Committee with individual  recommendations and two new fiscal notes.                                                            
                                                                                                                                
AT EASE 9:22 AM / 9:27 AM                                                                                                       
                                                                                                                                
There was no objection  and CS SB 179 (FIN) REPORTED  from Committee                                                            
with two zero fiscal notes dated 3/8/04 from the Department of                                                                  
Public Safety, and the Department of Education and Early                                                                        
Development.                                                                                                                    
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 353                                                                                                        
     "An  Act relating  to repealing  a requirement  for a  day-care                                                            
     facility  in the  Fairbanks courthouse;  and  providing for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill in the Senate Finance                                                                  
Committee.                                                                                                                      
                                                                                                                                
CHRIS CHRISTENSEN, Deputy Administrative Director, Alaska Court                                                                 
System, gave the following testimony.                                                                                           
                                                                                                                                
     SB 353 was introduced at the request of the Supreme Court.                                                                 
                                                                                                                                
     Back  in 1986,  Senator  Don Bennett  of  Fairbanks  introduced                                                            
     legislation  giving the Supreme  Court the authority  to lease-                                                            
     purchase  a  new  court  facility   in Fairbanks.   The  amount                                                            
     authorized was $29,900,000.  It was understood at the time that                                                            
     construction  of a  new Fairbanks  courthouse  would not  begin                                                            
     immediately,  but would  instead follow  construction of  a new                                                            
     courthouse in Anchorage                                                                                                    
                                                                                                                                
     During the committee  process, language was added that required                                                            
     the  project to include  a private  licensed day-care  facility                                                            
     rented to a provider at market rate.                                                                                       
                                                                                                                                
     In 1997, following  completion of the Anchorage courthouse, the                                                            
     legislature    reauthorized    the   Fairbanks    project    by                                                            
     appropriating  planning and design funds. Construction  finally                                                            
     began  in 1999,  and the Rabinowitz  Courthouse  opened to  the                                                            
     public   in   August  2001,   15   years  after   its   initial                                                            
     authorization.                                                                                                             
                                                                                                                                
     During  the  planning  process   for the  courthouse,   several                                                            
     approaches  to  providing  a day-care  facility  were  studied,                                                            
     taking  into account  the  need to  ensure the  reliable,  safe                                                            
     operation  of  such  a  facility and  state  ownership  of  the                                                            
     building.  It was  decided to  set aside $350,000  of the  bond                                                            
     proceeds  for a stand-alone day-care facility  in the immediate                                                            
     vicinity  of the courthouse.  A request for proposals  would be                                                            
     issued in  which respondents could offer a property  within two                                                            
     blocks of  the courthouse for the court system  to purchase and                                                            
     renovate. This facility  would then be leased to the respondent                                                            
     for  the operation  of day-care  services.  Standards for  that                                                            
     operation would be set out in the RFP.                                                                                     
                                                                                                                                
     Since   provision  of   daycare  services   is  not  a   normal                                                            
     procurement  activity for the  court system, research  was done                                                            
     with  other government  agencies (Department  of Education  and                                                            
     Early  Development  and Fairbanks  North  Star  Borough) and  a                                                            
     consultant  was hired to develop  an RFP to solicit  proposals.                                                            
     The  consultant  performed  extensive   research  to  determine                                                            
     whether properties  and providers were available  for response,                                                            
     and  to determine  what  criteria should  be  used to  evaluate                                                            
     proposals. A meeting  was held with potential providers in mid-                                                            
     2003 to discuss  the process and solicit interest.  Using input                                                            
     gathered at that meeting, the RFP was finalized and issued.                                                                
                                                                                                                                
     While  several suitable  properties were  available within  two                                                            
     blocks of the courthouse,  only one proposal was received. This                                                            
     proposal  was non-responsive,  in  that if  offered to  provide                                                            
     day-care services  in a facility five blocks away. This outcome                                                            
     was  undoubtedly influenced  by two things.  First, there  is a                                                            
     private day-care facility  already located within two blocks of                                                            
     the courthouse. Second,  the consultant we hired surveyed court                                                            
     employees  and  persons who  had served  as  jurors, and  found                                                            
     little or no demand for daycare services.                                                                                  
                                                                                                                                
     The courthouse  construction project will be  completed by July                                                            
     1. At  that time, the $350,000  set aside for day-care  will be                                                            
     all that  remains of the bond proceeds. There  are two possible                                                            
     methods of  dealing with these funds. First,  the trust account                                                            
     containing  the bond proceeds could be kept open  and the court                                                            
     system  could periodically  reissue  and RFP,  in an effort  to                                                            
     find a suitable  property and a day-care provider.  However, as                                                            
     long as a  private day-care facility is already  located in the                                                            
     immediate  vicinity   of  the  courthouse  and  demand  is  not                                                            
     demonstrated  to  exist,  it  is unlikely  that  the  RFP  will                                                            
     receive a responsive  bid. Moreover, there is no guarantee that                                                            
     a successful bidder  would remain in the State facility once it                                                            
     was  purchased. If it  did not, heating  and maintenance  money                                                            
     for the empty structure  would become the responsibility of the                                                            
     State.                                                                                                                     
                                                                                                                                
     Alternatively,  as proposed  by SB 353,  the legislature  could                                                            
     repeal the requirement  that a day-care facility be included in                                                            
     the  project. This option  would allow  $350,000 from  the bond                                                            
     proceeds  to be transferred  from the  construction account  to                                                            
     the bond redemption  account held by the State's trustee. These                                                            
     funds  would then be  available to offset  $350,000 in  general                                                            
     fund spending  from the State's  Debt Retirement Fund.  Because                                                            
     the  private  sector  is  already  providing  day-care  in  the                                                            
     immediate  vicinity of  the courthouse,  this option would  not                                                            
     disadvantage the public.                                                                                                   
                                                                                                                                
Co-Chair  Green offered  a motion  to report SB  353 from  Committee                                                            
with individual recommendations and a new fiscal note.                                                                          
                                                                                                                                
Without objection  SB 353 MOVED from Committee with  new fiscal note                                                            
from the Department of Revenue for $350,000 dated 3/1/04.                                                                       
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 279(STA)                                                                                            
     "An Act  authorizing and relating  to the issuance of  bonds by                                                            
     the  Alaska  Housing Finance  Corporation  for  safe and  clean                                                            
     water  and hygienic sewage disposal  facility capital  projects                                                            
     and other capital  projects; providing for the repayment of the                                                            
     bonds  and bond  costs; relating  to the dividend  paid  to the                                                            
     state by the Alaska  Housing Finance Corporation; and providing                                                            
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  this bill "authorizes Alaska Housing Finance                                                            
to  issue bonds  for  $25  million  in capital  projects.  The  bond                                                            
proceeds will  fund Village Safe Water projects and  other projects.                                                            
The  debt service  payment  will  be deducted  from  Alaska  Housing                                                            
Finance annual State dividend."                                                                                                 
                                                                                                                                
DAN FAUSKE,  Chief Executive  Officer and  Director, Alaska  Housing                                                            
Finance Corporation  (AHFC), Department  of Revenue, read  testimony                                                            
into the record as follows.                                                                                                     
                                                                                                                                
     Senate Bill  279 will provide $25 million for  village safe and                                                            
     clean water and hygienic  sewage disposal facility projects and                                                            
     other  capital projects. The  Village Safe Water projects  that                                                            
     will  be  funded with  bond  proceeds  have  historically  been                                                            
     funded  through  cash  appropriations  annual dividend  to  the                                                            
     State.  Estimated  debt service  on the  $25  million of  bonds                                                            
     based  on current interest  rates is  approximately $3  million                                                            
     per  year  for  ten years.  These  debt  service  payments  per                                                            
     Sections  2 and  4 of  the bill  would be  deducted from  AHFCs                                                            
     annual dividend provided for by AS 18.56.089(c).                                                                           
                                                                                                                                
     Preliminary  indications from  rating analysis that  there will                                                            
     be no negative impact  upon the Corporation's ratings from this                                                            
     proposed  issuance. Those indications are given  based upon the                                                            
     passage  of this bill  and SB 274, which  replaces the  Housing                                                            
     Assistance  Loan Fund  [HALF],  the Rural  Revolving Loan  Fund                                                            
     with  the  housing  assistance   loan  program.  That  bill  is                                                            
     scheduled  next  [and are]  hand  in hand  in order  for us  to                                                            
     accomplish what we're trying to do.                                                                                        
                                                                                                                                
Co-Chair Wilken  noted that an additional  $40 million is  necessary                                                            
to fully fund the proposed  FY 05 capital budget. He informed that a                                                            
proposed  amendment would  authorize  the AHFC to  sell $20  million                                                            
more in  bonds than the current  version of  the bill to be  used to                                                            
offset the $40 million deficit to the capital budget.                                                                           
                                                                                                                                
Senator  Hoffman noted  the witness'  indication  that SB 274  would                                                            
replace  the HALF program  and asked  if the  program would  operate                                                            
differently.                                                                                                                    
                                                                                                                                
Mr. Fauske answered that  the programs would continue to function in                                                            
the same manner  and that the proposed change is to  the "accounting                                                            
measure for  the Corporation to attempt  to fix a liquidity  problem                                                            
that  has been  generated  because  that  fund  technically  doesn't                                                            
revolve anymore." He clarified  the legislation would impose changes                                                            
as to "who would  qualify", but assured that "the  technicalities of                                                            
the program will remain absolutely the same."                                                                                   
                                                                                                                                
Co-Chair Wilken  announced that because  this legislation  coincides                                                            
with changes  proposed in  SB 274, the Committee  should receive  an                                                            
overview of the latter bill.                                                                                                    
                                                                                                                                
Co-Chair Wilken ordered  SB 279 HELD in Committee until later in the                                                            
meeting.                                                                                                                        
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 274                                                                                                        
     "An  Act relating to  the housing assistance  loan fund  in the                                                            
     Alaska  Housing  Finance  Corporation;   creating  the  housing                                                            
     assistance  loan program; repealing  loans for teacher  housing                                                            
     and  providing  for  loans  for  multi-family  housing;  making                                                            
     conforming  amendments; and providing  for an effective  date."                                                            
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated this bill  "replaces the Housing  Assistance                                                            
Loan Fund with a new Housing Assistance Loan Program."                                                                          
                                                                                                                                
Mr. Fauske read testimony explaining this legislation into the                                                                  
record as follows.                                                                                                              
                                                                                                                                
     Senate  Bill  274  will make  two  changes  to the  rural  loan                                                            
     program.  It will  replace the  Housing  Assistance Loan  Fund,                                                            
     known as the HALF,  with a Housing Assistance Loan Program, and                                                            
     it will  replace the  Rural Teacher  Housing Loan Program  with                                                            
     the Rural Multi-Family Loan Program.                                                                                       
                                                                                                                                
     Changing  the Housing  Assistance Loan  Fund (the HALF)  from a                                                            
     fund  to  a program  is  necessary  as a  result  of  liquidity                                                            
     concerns  of the Corporation.  The current revolving  nature of                                                            
     the  fund limits the  fund to being used  only to purchase  new                                                            
     loans  under this program. For  fiscal year 2003, over  a third                                                            
     of  the Corporation's  net income  was in this  fund. With  the                                                            
     Corporation  paying a  dividend of $103  million to the  State,                                                            
     the  funds paid to the  State have continued  to come  entirely                                                            
     out of  our working capital because  of the restriction  of the                                                            
     rural loan fund. This  has resulted in the liquid assets of the                                                            
     Corporation declining at an accelerated rate.                                                                              
                                                                                                                                
     In  addition, the  revolving  fund hasn't  really revolved  for                                                            
     several years. The  new loans made in the program have exceeded                                                            
     the cash  available in the fund causing the Corporation  to use                                                            
     its   working  capital   to   purchase  and   hold  loans   for                                                            
     reimbursement from the fund.                                                                                               
                                                                                                                                
     This legislation will  allow the program to operate in the same                                                            
     way  our other loan  programs do. Other  than this change,  the                                                            
     program will continue to operate in the same way.                                                                          
                                                                                                                                
     Now,  the next  is the  Rural  Multi-Family  Loan Program.  The                                                            
     other  change SB 274 will make  is to change the Rural  Teacher                                                            
     Loan  Program  to  the Rural  Multi-Family  Loan  Program.  The                                                            
     passage of  SB 181 in 2002 changed our rural  multi-family non-                                                            
     owner  occupied  loan  program  into  the  Rural  Teacher  Loan                                                            
     Program. This change  required anyone using the program to fill                                                            
     their  duplex, four-plex,  or any other  multi-family  building                                                            
     with at  least one teacher in  every unit. As a result  of this                                                            
     restriction,  in  the year  and  a half  that the  program  has                                                            
     existed,  there has not  been a single  loan made. Before  this                                                            
     change,  the multi-family  program  made  up to  two and  three                                                            
     percent of our rural business.                                                                                             
                                                                                                                                
     This bill will change the program back into a rural multi-                                                                 
     family program available  to anyone including teachers. It will                                                            
     also  allow an  owner  to occupy  one of  the unit  if they  so                                                            
     chose.                                                                                                                     
                                                                                                                                
     The changes that SB 274 will make will be good not only for                                                                
     the Corporation but for Alaskans, especially in our rural                                                                  
     areas and around the state.                                                                                                
                                                                                                                                
Co-Chair  Wilken  asked the  link  between  SB 279  and  SB 274.  He                                                            
understood that SB 279 authorizes the sale of bonds.                                                                            
                                                                                                                                
Mr.  Fauske  responded  that the  changes  proposed  in SB  274  are                                                            
necessary  to "generate the  liquidity to pay  for 279." He  relayed                                                            
that the Corporation  had proposed  to the Murkowski Administration                                                             
the concept of purchasing  $40 million State assets to generate cash                                                            
flow for the State.  He stated that this did not occur  although the                                                            
need for cash  remained and the Corporation suggested  selling debt,                                                            
taking  advantage  of  low interest  rates  and  "running  the  debt                                                            
service out  of the capital  budget." He  updated that the  decision                                                            
was made to sell  $20 million in bonds as reflected  in the proposed                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator Bunde  recalled the need for  teacher housing was  addressed                                                            
three years  prior and expressed concern  of repealing a  program so                                                            
recently  established. He asked  if there was  no longer a  need for                                                            
teacher housing.                                                                                                                
                                                                                                                                
Mr.  Fauske  replied   these  changes  would  continue   to  provide                                                            
opportunities  for teacher  housing. He explained  that the  current                                                            
provisions  exclude this  program  from individuals  constructing  a                                                            
multi family  housing unit, residing  in one unit and renting  other                                                            
units  to teachers,  if the  owner is not  a teacher.  He said  this                                                            
practice  is common  in rural  communities.  He furthered  that  the                                                            
Corporation  also   has  to  "reassert  on  an  annual   basis,  the                                                            
qualifications";  explaining that as teacher tenants  moved out of a                                                            
unit, and  non-teachers moved  in, the interest  rates on the  loans                                                            
must be reassessed  and increased.  He stated this is a hardship  on                                                            
lending  institutions.  He predicted  the proposed  changes to  this                                                            
program  would be  successful  in conjunction  with  other  existing                                                            
programs in creating housing for teachers.                                                                                      
                                                                                                                                
Senator Bunde  recalled the current program requires  that a teacher                                                            
occupy one unit of a multi-family unit complex.                                                                                 
                                                                                                                                
Mr. Fauske  corrected that  current requirements  stipulate  that at                                                            
least  one teacher  must occupy  every  unit. This  legislation,  he                                                            
explained would eliminate that requirement.                                                                                     
                                                                                                                                
Senator Bunde  asked if different interest rates would  be available                                                            
for  the proposed  changed  program  as are  available  for  teacher                                                            
housing.                                                                                                                        
                                                                                                                                
Mr. Fauske affirmed  and described the separate program  that offers                                                            
interest rates  at one percent below  the taxable rate on  the first                                                            
$250,000 of a loan.                                                                                                             
                                                                                                                                
Co-Chair Wilken  clarified this legislation  maintains the  $250,000                                                            
limitation instituted in the HALF program three years prior.                                                                    
                                                                                                                                
Co-Chair Wilken  asked about the replacement of regions  established                                                            
in AS 18.56 with "small communities" on page 4, line 26.                                                                        
                                                                                                                                
BRIAN  BUTCHER,   Legislative   Liaison,   Alaska  Housing   Finance                                                            
Committee, Department of Revenue, deferred to Mr. Kapansky.                                                                     
                                                                                                                                
PAUL KAPANSKY, Mortgage  Operations Director, Alaska Housing Finance                                                            
Corporation,  Department of  Revenue, testified  via teleconference                                                             
from an offnet  location that this  language unified the  definition                                                            
of the  population served  by the  rural program.  He defined  small                                                            
community  as having  a  population of  6,500  or fewer  and is  not                                                            
connected by road or rail to Anchorage or Fairbanks.                                                                            
                                                                                                                                
Co-Chair Wilken asked the regions established in AS 18.56.                                                                      
                                                                                                                                
Mr.  Kapansky   was  unsure   and  stated   he  would  provide   the                                                            
information.                                                                                                                    
                                                                                                                                
Co-Chair Wilken  next referenced Section 8 on page  5, line 7, which                                                            
repeals AS 18.56.420(b)  and 15.56.570 and asked what  these statues                                                            
pertain to and the effect of their repeal.                                                                                      
                                                                                                                                
Mr. Fauske  replied that  AS 18.56.420(b) relates  to the HALF  fund                                                            
and that 15.56.570 relates to the Rural Teacher Housing Program.                                                                
                                                                                                                                
Mr. Kapansky affirmed.                                                                                                          
                                                                                                                                
Co-Chair  Wilken understood  that AS  18.56.420 relates  to how  the                                                            
Legislature  uses the funds  of the HALF  program to administer  the                                                            
program.                                                                                                                        
                                                                                                                                
JOE  DUBLER,  Chief   Financial  Officer,  Alaska  Housing   Finance                                                            
Corporation, Department  of Revenue, explained that  AS 18.56.420(b)                                                            
allowed  the Legislature  to  appropriate  funds for  the hiring  of                                                            
personnel to  administer the revolving  fund. He noted that  because                                                            
this legislation  would change the fund into "just  another mortgage                                                            
program"  within  the  Corporation,  it  would  be  subject  to  the                                                            
separate  statutes governing  the  entire corporation  in which  the                                                            
Legislature appropriates funds for operation.                                                                                   
                                                                                                                                
Co-Chair  Wilken  asked  for further  explanation  of  the  regional                                                            
allocation referenced in AS 15.56.570.                                                                                          
                                                                                                                                
Mr. Kapansky responded  that in the past, the Corporation  allocated                                                            
funds  from  the  revolving  loan  fund  according  to  regions.  He                                                            
surmised  this   occurred  because   the  Corporation  had   limited                                                            
resources.  However, he  stated that  since the  Corporation  merged                                                            
with  the rural  loan program  in  1992, additional  resources  were                                                            
available  for the  program  and the  regional allocations  were  no                                                            
longer necessary.                                                                                                               
                                                                                                                                
Co-Chair  Wilken  clarified  that  the  language  change  to  "small                                                            
communities"  in Section 6 of the  bill allows for the repeal  of AS                                                            
15.56.570.                                                                                                                      
                                                                                                                                
Mr. Kapansky affirmed.                                                                                                          
                                                                                                                                
Senator B. Stevens  referenced Sec. 18.56.580(b)(2)  in Section 7 on                                                            
page 5, lines 5 and 6, which reads as follows.                                                                                  
                                                                                                                                
                (2) "multi-family housing" means a multi-family                                                                 
     residence containing two or more dwelling units that may be                                                                
     nonowner-occupied or owner-occupied.                                                                                       
                                                                                                                                
Senator  B. Stevens  asked about  programs available  for  nonowner-                                                            
occupied housing and the definition of nonowner-occupied.                                                                       
                                                                                                                                
Mr. Fauske deferred to Mr. Kapansky.                                                                                            
                                                                                                                                
Mr. Kapansky  told of the history  of the program, prior  to passage                                                            
of SB 181,  in which owners could  not occupy units of multi-family                                                             
housing.  Currently,   he  was  unaware   of  any  program   of  the                                                            
Corporation  that allows  nonowner occupancy.  He defined  "nonowner                                                            
occupied"  as housing at  which the borrower  does not live  and all                                                            
the units are leased or rented.                                                                                                 
                                                                                                                                
Senator B.  Stevens asked the criteria  required of the borrower  of                                                            
nonowner  occupied housing,  whether the borrower  must be  a Native                                                            
corporation, a  school district or similar entity.  He surmised this                                                            
legislation  would extend the program  to anyone, and exampled  that                                                            
he could borrow money and  build rental units in a community of less                                                            
than 6,500. He asked how broad this provision would be.                                                                         
                                                                                                                                
Mr. Kapansky defined  those eligible, as "anyone or  any entity that                                                            
can enter  into a  legal contract  and qualify  otherwise, can  be a                                                            
borrower under the rural loan program."                                                                                         
                                                                                                                                
Co-Chair  Wilken   furthered  that  those  eligible   could  "enjoy"                                                            
discounted interest rate for the first $250,000 of the loan.                                                                    
                                                                                                                                
Mr. Kapansky affirmed.                                                                                                          
                                                                                                                                
Mr. Fauske noted  that legislation adopted the previous  session, SB                                                            
25,  extended  a no  down payment  requirement  to  Rural  Education                                                            
Attendance Areas (REAA) and school districts.                                                                                   
                                                                                                                                
Senator B. Stevens  understood, but questioned the  extension of the                                                            
proposed  program to  any applicants  as broadening  the intent  and                                                            
would  allow  any  party to  become  property  owners  of  nonowner-                                                            
occupied housing in small communities.                                                                                          
                                                                                                                                
Co-Chair  Wilken clarified  Senator  B. Stevens's  concern with  the                                                            
inclusion of a nonowner-occupied provision in this legislation.                                                                 
                                                                                                                                
                                                                                                                                
SFC 04 # 33, Side B 09:55 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator B.  Stevens remarked that  under the proposed provisions  he                                                            
could build  units in  a village,  such as St.  Paul and become  the                                                            
landlord utilizing  an AHFC loan.  He wanted this understood  in the                                                            
discussion on this bill.                                                                                                        
                                                                                                                                
Mr. Butcher explained  that prior to passage of SB  181 in 2002, the                                                            
program was specifically a rural nonowner-occupied loan program.                                                                
                                                                                                                                
Senator Hoffman  noted that  the lower interest  rate could  only be                                                            
garnered  for  the  first  $250,000  of the  loan,  which  could  be                                                            
translated into two units of a six-unit housing facility.                                                                       
                                                                                                                                
Mr. Fauske affirmed.                                                                                                            
                                                                                                                                
Senator Hoffman commented  that although this proposal might seem to                                                            
be extending  the program  significantly, only  a limited number  of                                                            
borrowers  could   take  advantage  of  it.  He  spoke   of  housing                                                            
difficulties  and the benefits  of encouraging  investment  in rural                                                            
communities.                                                                                                                    
                                                                                                                                
Mr. Dubler clarified  that AHFC has nonowner-occupied  loan programs                                                            
for housing located in  urban areas and that this program would only                                                            
apply  to rural  areas.  He  emphasized  this  program is  the  only                                                            
funding source  that has typically  been available for rural  multi-                                                            
family housing,  and since  enactment of SB  181 no loans have  been                                                            
issued.                                                                                                                         
                                                                                                                                
Senator B.  Stevens wanted to clarify  this proposal would  not only                                                            
allow  for  construction,  but  also would  provide  loans  for  the                                                            
purchase or refinance of  existing multi-family housing. He stressed                                                            
this would  provide State funding  for nonowner- occupied  ventures.                                                            
He did not oppose this, provided it was fully understood.                                                                       
                                                                                                                                
Senator  Bunde  asked  if  currently  these  loans  are  limited  to                                                            
nonowner-occupied housing, unless the borrower is a teacher.                                                                    
                                                                                                                                
Mr. Butcher explained that both owner-occupied and nonowner-                                                                    
occupied are allowed.                                                                                                           
                                                                                                                                
Senator Bunde  asked if the intent is to amend the  program to allow                                                            
owner occupancy.                                                                                                                
                                                                                                                                
Mr. Butcher replied  that the original program applied  to nonowner-                                                            
occupied housing; the changes  implemented in 2002 limited occupancy                                                            
to teachers,  whether owner-occupied  or nonowner-occupied;  and the                                                            
proposed  change  would  retain  the  owner  and  nonowner-occupied                                                             
provision although eliminate the teacher occupancy requirement.                                                                 
                                                                                                                                
Senator  Bunde ascertained  this change  could  result in  increased                                                            
participation in the program.                                                                                                   
                                                                                                                                
Mr. Fauske affirmed.                                                                                                            
                                                                                                                                
Co-Chair  Wilken  added  that  the $250,000  limit  was  imposed  in                                                            
conjunction with the changes made in 2002.                                                                                      
                                                                                                                                
Senator Olson asked if  the reason no applications were received for                                                            
the existing  program  was because  only a limited  number of  rural                                                            
residents had adequate  collateral on loans for multifamily housing.                                                            
                                                                                                                                
                                                                                                                                
Mr. Fauske  replied that no loans  were made under this program,  in                                                            
part because some who would  have participated were excluded because                                                            
they were not  a teacher. He stated the program placed  restrictions                                                            
on lenders  for interest rate compliance  and therefore lenders  did                                                            
not promote the program.                                                                                                        
                                                                                                                                
Senator  Olson  asked  if  the  proposed  changes   would  therefore                                                            
encourage investors  to construct  multi-family residences  in rural                                                            
Alaska.                                                                                                                         
                                                                                                                                
Mr. Fauske answered it could.                                                                                                   
                                                                                                                                
Senator Bunde  expressed concern with removing the  teacher occupied                                                            
requirement, since  the original legislation was intended  to "apply                                                            
some gentle  pressure" to borrowers  that to participate,  they must                                                            
assist  in meeting  a need.  He could  understand that  it would  be                                                            
burdensome to  require every unit be teacher occupied  and suggested                                                            
a requirement that at least  one unit must be occupied by a teacher.                                                            
                                                                                                                                
Co-Chair  Wilken asked if  the current provisions  stipulate  that a                                                            
teacher must occupy one unit.                                                                                                   
                                                                                                                                
Mr. Fauske  corrected that  at least one  teacher must occupy  every                                                            
unit.                                                                                                                           
                                                                                                                                
Mr. Fauske  predicted  that the  goal of providing  teacher  housing                                                            
would be reached.  He noted the current program offering  loans with                                                            
no down payment to school  districts and REAAs is expanding. He also                                                            
told of $4.1 million  for the teacher housing loan  program included                                                            
in the proposed  FY 05 capital budget. He further  described efforts                                                            
of the  Corporations  underwriters to  ensure the  success of  these                                                            
programs.                                                                                                                       
                                                                                                                                
Mr. Fauske pointed out  the difficulties in operating a multi-family                                                            
housing facility  in which every unit  must be occupied by  at least                                                            
one teacher.  He informed  that many  teachers remain  in the  rural                                                            
community  only nine months  of the year and  the owner must  either                                                            
find temporary occupants or absorb the lost rental revenue.                                                                     
                                                                                                                                
Co-Chair  Wilken  recalled  discussion  prompted  by a  Division  of                                                            
Legislative Audit report  of three to four years ago about abuses in                                                            
the HALF system.  He noted the problems  were repaired and  that now                                                            
those  repairs are  being adjusted.  He asked  whether the  proposed                                                            
changes  could result  in a  return to  the situation  in which  the                                                            
abused first existed.                                                                                                           
                                                                                                                                
Mr. Fauske  assured the proposed changes  would not. He opined  that                                                            
some of the identified  abuses were the result of misunderstandings.                                                            
He exampled  a loan to a  doctor in Dillingham.  He stated  that the                                                            
limit of the reduced interest  rates to the first $250,000 of a loan                                                            
would address the Committee's concern.                                                                                          
                                                                                                                                
Senator Olson  surmised that the number  of rural residents  able to                                                            
participate  would  become  fewer  due  to  less  funding  to  rural                                                            
communities, such  as revenue sharing and longevity  bonus payments,                                                            
as well  as the  State's  fiscal problems.  He expressed  that  this                                                            
"pessimistic financial  attitude" has affected businesses  and asked                                                            
whether AHFC shared this observation.                                                                                           
                                                                                                                                
Mr.  Fauske replied  that  the combination  of housing  programs  to                                                            
assist teachers  and nurses  have "created  an opportunity  for more                                                            
optimism instead of pessimism."  He explained that education funding                                                            
is allocated  to rural  communities,  some of which  is used  to pay                                                            
salaries and  miscellaneous expenses.  He stated that if  AHFC could                                                            
leverage  some of those funds  to ensure  housing is developed,  the                                                            
overall economy  would benefit. He admitted that funding  reductions                                                            
in other areas  would have impacts, although these  efforts would be                                                            
helpful.  He  also  noted the  changes  in  this  legislation  would                                                            
promote  investment  from  funding  sources   other  than  education                                                            
funding.                                                                                                                        
                                                                                                                                
Senator Olson commented  that as a businessman from rural Alaska, he                                                            
has "reined in" his optimism because of the "dismal" forecast.                                                                  
                                                                                                                                
Co-Chair  Wilken opined  that money  is always  available for  "good                                                            
mortgages" based on sound lending principles.                                                                                   
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 279(STA)                                                                                            
     "An Act  authorizing and relating  to the issuance of  bonds by                                                            
     the  Alaska  Housing Finance  Corporation  for  safe and  clean                                                            
     water  and hygienic sewage disposal  facility capital  projects                                                            
     and other capital  projects; providing for the repayment of the                                                            
     bonds  and bond  costs; relating  to the dividend  paid  to the                                                            
     state by the Alaska  Housing Finance Corporation; and providing                                                            
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
The Committee heard this bill earlier in this meeting.                                                                          
                                                                                                                                
Mr. Fauske reread a portion of his earlier statement.                                                                           
                                                                                                                                
Co-Chair Wilken  noted a list of proposed  projects attached  to the                                                            
sponsor statement [copy on file].                                                                                               
                                                                                                                                
Amendment  #1: This  amendment would  increase the  amount of  bonds                                                            
that would be issued to  finance capital projects other than village                                                            
safe water projects from $5,181,700 to $25,181,700.                                                                             
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Mr. Fauske  explained this  amendment would  increase the amount  of                                                            
bond proceeds  available for  capital projects  from $25 million  to                                                            
$45 million.  He relayed  that the decision  was made to not  pursue                                                            
the  purchase  of  $40 million  in  State-owned  buildings  and  the                                                            
Corporation  was asked  if more than  $25 million  in bond  proceeds                                                            
could be provided.                                                                                                              
                                                                                                                                
Mr.  Fauske stated  that after  consultation  with  the bond  rating                                                            
agencies, the  Corporation determined  the proposed amount  could be                                                            
achieved   without   resulting   in  a   negative   affect  on   the                                                            
Corporation's  bond rating.  He noted  that Standard  and Poors  and                                                            
Moody approved the proposal  immediately, although Fitch deliberated                                                            
for  a  week   before  approving   the  proposed  amount   with  the                                                            
stipulation that  it be no higher. He attributed the  approvals with                                                            
the "faith" the  rating agencies have with AHFC and  the Legislature                                                            
because  "agreements in  the past  have been honored  and the  debts                                                            
have been paid."                                                                                                                
                                                                                                                                
Mr. Fauske  furthered  that the  Corporation  is also "comfortable"                                                             
with the proposed amount.                                                                                                       
                                                                                                                                
Co-Chair Wilken  reiterated that the  proposed FY 05 capital  budget                                                            
requires  an additional  $40  million to  fully implement  and  this                                                            
proposal would provide $20 of that amount.                                                                                      
                                                                                                                                
Senator Hoffman clarified  that funding for the FY 05 capital budget                                                            
would be $20 million less  than the amount needed for the Governor's                                                            
proposed expenditures.                                                                                                          
                                                                                                                                
Co-Chair Wilken affirmed.                                                                                                       
                                                                                                                                
There was no objection and the amendment was ADOPTED.                                                                           
                                                                                                                                
Senator  Bunde  asked  if  AHFC  was  aware  of the  aforementioned                                                             
Division  of   Legislative  Audit   report  and  questions   of  the                                                            
Legislature  regarding efficient use  of bond proceeds and  the role                                                            
of AHFC in determining how those proceeds are spent.                                                                            
                                                                                                                                
Co-Chair Wilken directed  AHFC to become familiar with the audit. He                                                            
commented  that mismanagement  of funds  had occurred  and that  the                                                            
Corporation would be pressured to better manage monies.                                                                         
                                                                                                                                
Co-Chair  Wilken  asked whether  an  updated  fiscal note  would  be                                                            
required to reflect the adoption of the amendment.                                                                              
                                                                                                                                
Mr. Butcher  affirmed  and listed  amount  of fiscal  note would  be                                                            
approximately $6 million.                                                                                                       
                                                                                                                                
Co-Chair Wilken  indicated the bills would be held  to await receipt                                                            
of updated fiscal notes.                                                                                                        
                                                                                                                                
Senator Bunde  opined that  if the AHFC was  unable to manage  money                                                            
satisfactory,  the Legislature should  limit the amount of  funds it                                                            
manages.                                                                                                                        
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
Senator Dyson  spoke to budget subcommittee discussion  in which the                                                            
need to modify department's  missions and measures statutes has been                                                            
identified. He  noted that although Department staff  may agree with                                                            
the  subcommittees  as  to specific  changes,  the  departments  are                                                            
unable  to implement  changes without  approval from  the Office  of                                                            
Management  and  Budget.  He  did  not  anticipate  difficulties  in                                                            
receiving  this  approval,  but  suggested  the  Committee  consider                                                            
legislation  to implement amended  missions and measures  statements                                                            
in the event  the Murkowski Administration  does not readily  accept                                                            
the proposed changes.                                                                                                           
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 10:19 AM                                                                          

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