Legislature(2003 - 2004)

03/22/2004 09:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 22, 2004                                                                                      
                              9:05 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 53, Side A                                                                                                             
                                                                                                                              
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 Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Con Bunde, Vice-Chair                                                                                                   
                                                                                                                                
Also Attending:  SENATOR GARY STEVENS; SENATOR TOM  WAGONER; SENATOR                                                          
ALAN AUSTERMAN,  Fisheries Policy  Adviser, Office of the  Governor;                                                            
DIANE   BARRANS,   Executive   Director,  Postsecondary    Education                                                            
Commission,  Department of  Education and  Early Development;  LINDA                                                            
HALL, Director,  Division of Insurance, Department  of Community and                                                            
Economic Development                                                                                                            
                                                                                                                                
Attending via  Teleconference: From Anchorage: JOE  DUBLER, Director                                                          
of  Finance,  Alaska  Housing  Finance  Corporation,  Department  of                                                            
Revenue; BRIAN BUTCHER,  Legislative Liaison, Alaska Housing Finance                                                            
Corporation, Department of Revenue                                                                                              
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 273-ASMI BOARD/ SEAFOOD TAXES & ASSESSMENTS                                                                                  
                                                                                                                                
The  Committee  heard  from  the  bill's  sponsor,  and  reported  a                                                            
committee substitute from Committee.                                                                                            
                                                                                                                                
SB 277-STUDENT LOAN PROGRAMS                                                                                                    
                                                                                                                                
The  Committee heard  from  the Department  of Education  and  Early                                                            
Development, adopted  a committee substitute, and  reported the bill                                                            
from Committee.                                                                                                                 
                                                                                                                                
SB 276-ALASKA INSURANCE GUARANTY ASSOCIATION                                                                                    
                                                                                                                                
The Committee  heard from the Department  of Community and  Economic                                                            
Development, adopted  a committee substitute, and  reported the bill                                                            
from Committee.                                                                                                                 
                                                                                                                                
SB 279-AHFC WATER & SEWER BONDS                                                                                                 
                                                                                                                                
The Committee heard from  the Alaska Housing Finance Corporation and                                                            
reported the bill from Committee.                                                                                               
                                                                                                                                
SB 274-HOUSING PROGRAMS                                                                                                         
                                                                                                                                
The bill reported from Committee.                                                                                               
                                                                                                                                
HB 233-INCREASE EDUCATION FUNDING                                                                                               
                                                                                                                                
The bill was scheduled but not heard.                                                                                           
                                                                                                                                
SB 35-APPROPRIATIONS: K-12, UNIVERSITY                                                                                          
                                                                                                                                
The bill was scheduled but not heard.                                                                                           
                                                                                                                                
SB273                                                                                                                           
                                                                                                                                
     SENATE BILL NO. 273                                                                                                        
     "An  Act relating to  the Alaska Seafood  Marketing  Institute,                                                            
     the seafood  marketing assessment,  the seafood marketing  tax,                                                            
     and  the seafood product  tax; and providing  for an  effective                                                            
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  explained that this  bill would reduce the  size of                                                            
the Alaska  Seafood Marketing  Institute (ASMI)  Board of  Directors                                                            
from the  current 25 members  to nine members.  He pointed  out that                                                            
the Finance  Committee  committee substitute,  Version 23-LS1366\E,                                                             
which is before  the Committee, would also authorize  two additional                                                            
Seafood  Marketing assessment  rates.  He stated  that the bill  was                                                            
held  in  Committee  to allow  further  review  by  Members  Senator                                                            
Hoffman and Senator Olson.                                                                                                      
                                                                                                                                
SENATOR GARY  STEVENS, the  bill's sponsor,  informed that  the bill                                                            
would address  two issues, as it would change the  size of the Board                                                            
and  the  ASMI  funding   structure.  He  acknowledged   Senator  B.                                                            
Stevens's  and the  Salmon Task  Force's efforts  in developing  the                                                            
bill.  He  referred  the members  to  the  "Current  Tax  Structure"                                                            
handout [copy on file]  that portrays four funding options pertinent                                                            
to this  legislation.  He noted that  the first  column depicts  the                                                            
current Tax Structure,  which is comprised of 25 members; the Salmon                                                            
Marketing Tax on the fishermen;  the Processors assessed amount; and                                                            
the  Federal Funds  from  Fisheries  amount for  a projected  FY  04                                                            
Budget total of $6,474,284.                                                                                                     
                                                                                                                                
Senator  G.  Stevens  noted  that  this  legislation  would  provide                                                            
processors  three  funding/Board  Member  options: the  first  would                                                            
specify a .5%  assessment of processors, would eliminate  the Salmon                                                            
Marketing  Tax  on fishermen,  and  would  reduce the  Board  member                                                            
numbers to  seven for a  total projected budget  of $7 million;  the                                                            
second would  not approve  the .5% assessment  of processors,  would                                                            
designate nine  Board members, and would continue  the salmon tax on                                                            
fishermen for a projected  total of $6,575,000; and the third option                                                            
would  reduce the  Board  to seven  members  and would  provide  the                                                            
processors the  ability to eliminate the processors  assessment, and                                                            
would be  estimated to  be a total  budget of  $3,575,000. He  noted                                                            
that  the  third option  already  exists  in  regulations,  and,  if                                                            
approved,  would indicate  displeasure  with "the  job that AMSI  is                                                            
doing."  All option totals,  he noted,  include anticipated  federal                                                            
funding of $2 million.                                                                                                          
                                                                                                                                
Senator  G. Stevens  noted that the  numbers on  the handout  differ                                                            
from  the numbers  in the  Department of  Revenue's  March 12,  2004                                                            
fiscal note, as the fiscal  note does not separate the fishermen and                                                            
processors tax assessments.                                                                                                     
                                                                                                                                
Co-Chair Wilken  noted, for the record,  that the packets  contain a                                                            
poem [copy on file] titled the "Twelve Days of ASMI".                                                                           
                                                                                                                                
Co-Chair Green moved to  report the Version "E" committee substitute                                                            
from  Committee with  individual  recommendations  and accompanying                                                             
fiscal notes.                                                                                                                   
                                                                                                                                
There  being  no objections,  CS  SB  273 (FIN)  was  REPORTED  from                                                            
Committee with  zero fiscal note #4, dated March 24,  2004, from the                                                            
Division  of Elections, Office  of the Lt.  Governor and a  new zero                                                            
fiscal note,  dated March 12, 2004  from the Department of  Revenue.                                                            
                                                                                                                                
SB277                                                                                                                           
                                                                                                                                
     CS FOR SENATE BILL NO. 277(HES)                                                                                            
     "An Act relating to the Alaska Commission on Postsecondary                                                                 
     Education; relating to the Alaska Student Loan Corporation;                                                                
     relating  to bonds  of the  corporation; relating  to loan  and                                                            
     grant  programs of  the commission;  relating  to an  exemption                                                            
     from the State Procurement  Code regarding certain contracts of                                                            
     the commission  or corporation; making conforming  changes; and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
[NOTE: This  bill was previously reported  from Committee;  however,                                                            
was returned in order to  allow the Committee to address and clarify                                                            
issues that  arose during the bill's  hearing on the Senate  floor.]                                                            
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken explained  that this  legislation  would allow  the                                                            
Student Loan  Corporation  to issue bonds  and utilize the  proceeds                                                            
for purposes other than  funding student loans. Continuing, he noted                                                            
that  the bill  would  also create  a mechanism  through  which  the                                                            
Corporation could return money to the State.                                                                                    
                                                                                                                                
Co-Chair  Wilken  explained  that  while  the  bill  had  previously                                                            
reported from  Committee, the decision  was made to return  the bill                                                            
to the Committee in order  to "properly" address the three technical                                                            
issues  that were  raised  during the  bill's Senate  Floor  session                                                            
hearing.                                                                                                                        
                                                                                                                                
Co-Chair  Green moved  to adopt  committee substitute,  Version  23-                                                            
GS2003\Q as the working document.                                                                                               
                                                                                                                                
Co-Chair Wilken  objected for purposes of discussion.  He noted that                                                            
the three technical  issues addressed  in this committee  substitute                                                            
are located on pages three, five, and seven.                                                                                    
                                                                                                                                
DIANE   BARRANS,   Executive   Director,  Postsecondary    Education                                                            
Commission, Department  of Education and Early Development explained                                                            
that  the  Version  "Q"  committee  substitute  contains   technical                                                            
corrections   and   clarifications.   The  first   correction,   she                                                            
communicated, would alter  the repealer language in Section 31, page                                                            
twelve,  line  29,   that  corresponds  to  the  grant   program  AS                                                            
14.43.500,  that was eliminated. She  clarified that this  technical                                                            
correction  would replace references  to the eliminated Statute,  AS                                                            
14.43.500, with AS 14.43.420  on page three, lines five and sixteen;                                                            
on page ten, lines  ten, twelve, fourteen and 31;  on page 11, lines                                                            
27 and  29; and  on page  12, lines three  and 29.  This, she  noted                                                            
would clarify that that grant provision is terminated.                                                                          
                                                                                                                                
Ms.  Barrans  noted  that the  other  two  changes  correct  Statute                                                            
references  relating   to  the  Administrative  Lien   Authority  by                                                            
eliminating  language  referring to  AS 14.43.149  in  Sec. 9,  Sec.                                                            
14.42.151 on page  five and in Sec. 9, Sec 14.43.154  on page seven.                                                            
She noted  that the  Commission  agrees with  the Legislative  Legal                                                            
Division's  opinion that  retaining  the AS 14.43.149  reference  in                                                            
those sections would have been "confusing."                                                                                     
                                                                                                                                
Co-Chair Wilken  removed his objection, and Version  "Q" was adopted                                                            
as the working document.                                                                                                        
                                                                                                                                
Co-Chair Green moved to  report the Version "Q" committee substitute                                                            
from  Committee with  individual  recommendations  and accompanying                                                             
fiscal notes.                                                                                                                   
                                                                                                                                
Senator Hoffman asked whether  this legislation would jeopardize the                                                            
continuation of the Student Loan Program.                                                                                       
                                                                                                                                
Ms. Barrans responded that it would not.                                                                                        
                                                                                                                                
There  being  no  objection,  CS  SB  277(FIN)   was  REPORTED  from                                                            
Committee  with  $120,000  fiscal note  #5  from the  Department  of                                                            
Education  and  Early Development;  zero  fiscal  note  #2 from  the                                                            
Department  of Community and Economic  Development; and zero  fiscal                                                            
note #1 from the Department of Administration.                                                                                  
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 276(L&C)                                                                                            
     "An Act relating to  the Alaska Insurance Guaranty Association;                                                            
     relating  to the powers  of the Alaska  Industrial Development                                                             
     and Export Authority  concerning the association; and providing                                                            
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  that this  legislation  would increase  the                                                            
Alaska Insurance  Guaranty  Association's ability  to pay  Workman's                                                            
Compensation claims. He  noted that the legislation had been held in                                                            
Committee  to address  funding issues,  and he reminded  that  CS SB                                                            
276(L&C)  version  of the  bill  specifies  that earnings  from  the                                                            
Alaska Permanent Fund would be a funding source.                                                                                
                                                                                                                                
Co-Chair  Green moved  to adopt  committee substitute,  Version  23-                                                            
GS2105\Q as the working document.                                                                                               
                                                                                                                                
Co-Chair Wilken  objected for further clarification.  He stated that                                                            
the  spreadsheet  titled  "Alaska  Insurance  Guaranty  Association                                                             
Worker's   Compensation  Account,   Cash  Flow   Projection   as  of                                                            
12/31/2003,"  provided by the Department  of Community and  Economic                                                            
Development,  further  explains  the bill's  funding  mechanism.  In                                                            
addition,  he  noted  that  the  Version  "Q" committee   substitute                                                            
eliminates  language specifying  that the  Earnings Reserve  Account                                                            
would be the funding source for the program.                                                                                    
                                                                                                                                
LINDA  HALL,   Director,  Division   of  Insurance,  Department   of                                                            
Community  and Economic  Development,  noted  that  the Version  "Q"                                                            
committee substitute  "is identical" to the L&C version  of the bill                                                            
"with  the exception  that it does  removes  self-insurers from  the                                                            
assessment process." This  change, she continued, would result in an                                                            
assessment  process that  would increase  the  assessments in  those                                                            
accounts   that  have   "an  insolvency"   such   as  the   Workers'                                                            
Compensation (WC)  account. She noted that the aforementioned  chart                                                            
reflects  cash flow  projections based  on the  current two  percent                                                            
assessment  and the projections were  the assessment levy  increased                                                            
to four percent.  She specified that  the WA account assessments  as                                                            
well as the other accounts  within the Guaranty Fund are depicted on                                                            
the spreadsheet.                                                                                                                
                                                                                                                                
Ms. Hall pointed  out that the Auto  Fund Assessment would  increase                                                            
.19 percent  in  calendar year  2004. She  exampled  that on a  $600                                                            
automobile premium, this  would translate to a $1.24 increase, which                                                            
she declared, "is not a  huge amount of money." She stated that this                                                            
low percentage  increase was possible  because there the  Fund had a                                                            
positive cash balance at the beginning of calendar year 2004.                                                                   
                                                                                                                                
Ms. Hall commented  that for the full  calendar year 2005,  the four                                                            
percent  assessment rate  on the WC  account would  equate to  a .47                                                            
percent increase.  She also  noted that for  the full calendar  year                                                            
2005, a $600 automobile  premium with the .19 percent increase would                                                            
equate  to  an additional  $3.06.  She  voiced  that  these  minimum                                                            
increases  would  assist  the  Association  in getting  out  of  its                                                            
deficit situation.                                                                                                              
                                                                                                                                
Ms. Hall  noted that  the WC rate  would reduce  to 3.37 percent  in                                                            
calendar year  2006, and to 2.48 percent in calendar  year 2007, and                                                            
the Other Funds  assessments would be eliminated beginning  in 2006.                                                            
                                                                                                                                
Senator  Bunde asked  whether  the assessment  rate  increase  would                                                            
apply to other insurance premiums such as homeowners insurance.                                                                 
                                                                                                                                
Ms. Hall affirmed that it would.                                                                                                
                                                                                                                                
Senator  Bunde   asked  whether  the   Division  of  Insurance   has                                                            
calculated  the cost to each Alaskan  were the excess earnings  from                                                            
the Permanent  Fund  reserve  account used  to fund  the program  as                                                            
specified in the L&C version of the bill.                                                                                       
                                                                                                                                
Co-Chair  Wilken noted  that  the cost  might be  approximately  two                                                            
dollars.                                                                                                                        
                                                                                                                                
Co-Chair Green  asked for clarification that while  the four percent                                                            
assessment  would apply to the WC  fund, the .19 percent  assessment                                                            
would be applicable to all other funds.                                                                                         
                                                                                                                                
Ms. Hall concurred.                                                                                                             
                                                                                                                                
Co-Chair Green  asked whether the  funding mechanism being  proposed                                                            
would have minimal impact on the public and other entities.                                                                     
                                                                                                                                
Ms. Hall responded that  this legislation would affect "the broadest                                                            
base"  of the insured  marketplace  and would,  she continued,  have                                                            
"minimal  impact on the  paying public while  raising a substantial                                                             
amount of  money," even with  the elimination  of the assessment  on                                                            
the  self-insured   entities.  She   noted  that  the  .19   percent                                                            
assessment on  such things as automobile, homeowner,  and commercial                                                            
property is  small because they present  a much larger premium  base                                                            
that  the WC  base.  This larger  base,  she noted,  generates  more                                                            
money, "by  far," than the  four percent  assessment increase  on WC                                                            
premiums.                                                                                                                       
                                                                                                                                
Senator  Bunde  surmised,  therefore,  that  the  people  who  would                                                            
directly benefit from this  legislation would be in the minority and                                                            
the people  who would have no direct  benefit from it would  pay the                                                            
majority of the assessments.                                                                                                    
                                                                                                                                
Ms.  Hall  stated  that the  people  who  would  benefit  from  this                                                            
legislation are those "who  pay the smaller amounts of premium." She                                                            
noted that  currently, the amount  assessed from the WC base,  which                                                            
is less  than half  the size  of the  other premium  bases, is  $4.3                                                            
million.                                                                                                                        
                                                                                                                                
Co-Chair  Green asked  whether  this  legislation would  enable  the                                                            
Division  to be better  situated  "to respond,  react, and  predict"                                                            
future claims  in order to  prevent a reoccurrence  of this  sort of                                                            
financial situation.                                                                                                            
                                                                                                                                
Ms. Hall  voiced optimism  that this legislation  would address  the                                                            
situation.  She  also  noted  that  separate  legislation  is  being                                                            
brought  forward that proposes  to require  deposits from  insurance                                                            
companies "to  provide an additional pocket of money"  with which to                                                            
address  insolvency issues.  She noted  that the  magnitude of  this                                                            
insolvency   "has   depleted   the   resources   of   the   Guaranty                                                            
Association."                                                                                                                   
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
There being  no further objection,  Version  "Q" was ADOPTED  as the                                                            
working document.                                                                                                               
                                                                                                                                
Co-Chair Wilken  referenced an Associated Builders  and Contractors,                                                            
Inc. letter,  dated  March 1, 2004  and addressed  to Senator  Bunde                                                            
[copy on  file] that  spoke to  their concern  regarding a  previous                                                            
change in  the WC rate that  had occurred  midyear, in July,  to the                                                            
dismay  of those  in  the construction  industry.  This  timing,  he                                                            
continued had  negatively impacted  the industry because  previously                                                            
bid  projects  had not  factored  in  the new  rate.  Therefore,  he                                                            
requested  confirmation  that the  rate increases  proposed in  this                                                            
legislation would not occur midyear.                                                                                            
                                                                                                                                
Ms. Hall  clarified  that the increases  in  question pertained  "to                                                            
increases in benefits  which had an immediate affect  on rates." She                                                            
agreed that, "it  was very unfortunate that that occurred  midterm."                                                            
Continuing,  she  clarified  that  Guaranty   Fund  assessments  are                                                            
annually  assessed at  the renewal  of a policy  and therefore,  she                                                            
stressed, would  not be done midterm.  She qualified that  while the                                                            
Department historically  implements rate increases on January first,                                                            
they  would not  apply to  an individual  policy  until that  policy                                                            
renews. She  stressed that  this would be  the procedure with  these                                                            
assessments.                                                                                                                    
                                                                                                                                
Co-Chair Wilken  surmised therefore, that there would  be no midyear                                                            
surprises.                                                                                                                      
                                                                                                                                
Co-Chair  Green  moved  to  report  the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
Senator  Bunde objected.  He  expressed  that to  assess  businesses                                                            
further  at this  time would  be unfortunate,  and  he specifically                                                             
stated that it  would be unfortunate to assess people  who buy other                                                            
types of insurance  policies. He preferred that this  legislation be                                                            
financed  via other avenues  such as by the  excess earnings  of the                                                            
Permanent  Fund, as  that would  not, he opined,  negatively  impact                                                            
Alaskans.                                                                                                                       
                                                                                                                                
Senator  Olson  echoed  Senator  Bunde's  concern.  He  stated  that                                                            
numerous  businesses  have  contacted  him to  voice  opposition  to                                                            
increases  in their  WC assessment  "due  to the  downturn in  their                                                            
funding sources  ranging from the  State to the business  climate in                                                            
rural Alaska now."  He shared the desire that other  funding sources                                                            
be identified.                                                                                                                  
                                                                                                                                
Co-Chair Green  voiced concern about  the fact that other  premiums,                                                            
such  as automobile  and  homeowner  premiums  would  be  increased.                                                            
Therefore,  she asked  Ms. Hall  to explain  how  the Guaranty  Fund                                                            
functions overall,  and how this legislation,  as a solution  to the                                                            
situation, "is not off  the mark in solving this temporary problem."                                                            
                                                                                                                                
Ms. Hall stated  that "the concept of the Guaranty  Fund in Alaska",                                                            
as in  every other  state, "is to  provide a  safety net to  protect                                                            
policy holders and claimants  in the case of a solvent insurer." She                                                            
stressed  therefore, that  the theory  is to institute  a series  of                                                            
assessments,  which would  provide funds in  case of an insolvency.                                                             
She noted that  similar to Alaska's current two percent  assessment,                                                            
the majority  of states  have limitations  on their assessment,  She                                                            
shared that,  whereas Alaska's Fund  is comprised of three  accounts                                                            
with varying rates  of assessment percentages, 18  other states have                                                            
a single account  within their guaranty association.  She noted that                                                            
Alaska,  being  a  small  State  with   a small   premium  base,  is                                                            
challenged  in its  endeavor to  develop a Guaranty  Association  to                                                            
address emergencies  "with the small amount of premiums  that it has                                                            
to deal with."                                                                                                                  
                                                                                                                                
Ms. Hall  specified that  the WC account,  the Auto Account  and the                                                            
Other  Account   comprise  the  three   accounts  of  the   Guaranty                                                            
Association.  She stated  that the  Other Account  encompasses  such                                                            
things   as  homeowners,   commercial   property,   and   commercial                                                            
liability. She  stated that currently, there is a  one half of a one                                                            
percent assessment  on such  things as homeowners  and boat  owners,                                                            
due,  "primarily"  to  the  insolvency   of a  medical  malpractice                                                             
insurer. She declared that  assessing entities to provide sufficient                                                            
funds for the  situation relating  to this legislation is  basically                                                            
the  same  as  assessing  a  homeowner  for  a medical  malpractice                                                             
insurer.                                                                                                                        
                                                                                                                                
Ms.  Hall,  in addressing  Senator  Olson's  comments,  also  voiced                                                            
concern regarding  the increases in  business WC premiums.  However,                                                            
she noted  that  the proposed  increase  is small  in comparison  to                                                            
previous   adjustments.   In   addition,   she   stated   that   the                                                            
aforementioned  companion bill would propose measures  to reduce the                                                            
WC premiums  as she  agreed that  small businesses  are being  over-                                                            
burdened with an average assessment of 22 percent.                                                                              
                                                                                                                                
Co-Chair Wilken voiced agreement.                                                                                               
                                                                                                                                
Senator Olson  questioned whether  the State is addressing  measures                                                            
to  get  self-insured  employers   to contribute   to  the  Guaranty                                                            
Association as, he declared,  currently the WC "burden" is placed on                                                            
small businesses.                                                                                                               
                                                                                                                                
Ms. Hall  clarified that  the Guaranty Fund  does not protect  self-                                                            
insured  employers,  and, therefore,  she  continued,  were they  to                                                            
become insolvent,  their  employees would  receive no benefits  from                                                            
the Fund.  She noted that  the 24 self- insurers  in the State  must                                                            
provide  financial guarantees  and meet  other eligibility  criteria                                                            
established by the Division  of Workers' Compensation in order to be                                                            
self-insured. She noted  that the original proposal did include them                                                            
in  the  assessment  base; however,  she  continued,  "there  was  a                                                            
substantial  amount   of  sentiment  that  because   they  were  not                                                            
protected by that that they should not be forced to contribute."                                                                
                                                                                                                                
Senator Olson  understood  that the Guaranty  Fund does not  protect                                                            
the self-insured  employers. However, he asked whether  inclusion of                                                            
them in an assessment might still be a consideration.                                                                           
                                                                                                                                
Ms. Hall responded no.                                                                                                          
                                                                                                                                
Co-Chair  Green interjected  that the Division  of Insurance  is not                                                            
responsible  for nor does not oversee  joint insurance arrangements                                                             
or self-insurers.                                                                                                               
                                                                                                                                
Ms. Hall  communicated that  while the Division  of Insurance  could                                                            
conduct financial  examinations and  suspend an "admitted  insurance                                                            
company's"  certificate to operate,  it has no oversight  ability in                                                            
regards to joint  insurance arrangements or self-insurers  even were                                                            
the Division  to receive  financial information  that they  were "in                                                            
distress."                                                                                                                      
                                                                                                                                
A  roll call  was  taken  on the  motion  to  report the  bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
IN FAVOR: Senator  Dyson, Senator  Hoffman, Senator B. Stevens,  Co-                                                            
Chair Green, and Co-Chair Wilken                                                                                                
                                                                                                                                
OPPOSED: Senator Bunde and Senator Olson                                                                                        
                                                                                                                                
The motion PASSED (5-2)                                                                                                         
                                                                                                                                
The motion to report the bill from Committee PASSED.                                                                            
                                                                                                                                
CS SB  276 (FIN)  was REPORTED  from  Committee with  a zero  fiscal                                                            
note, dated  March 23, 2004 from the  Department of Administration,                                                             
and two zero fiscal notes,  dated March 24, 2004 from the Department                                                            
of Community and Economic Development.                                                                                          
                                                                                                                                
                                                                                                                                
     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 second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken explained  that this legislation would authorize the                                                            
Alaska Housing  Finance Corporation to issue bonds  in the amount of                                                            
$25 million to  fund capital projects; primarily village  safe water                                                            
projects.  He  noted   that  an  amendment  to  increase   the  bond                                                            
authorization  by $20 million was  adopted during the first  hearing                                                            
of the bill.  He stated that the bill  is accompanied by  Department                                                            
of Revenue fiscal note dated March 9, 2004.                                                                                     
                                                                                                                                
Co-Chair Wilken asked for  a further explanation of the new March 9,                                                            
2004 Department of Revenue  fiscal note as it is double the original                                                            
fiscal  note,  rather  than  being increased  "pro  rata"  with  the                                                            
adoption  of the amendment  that increased  the bond authority  from                                                            
$25 million to $45 million.                                                                                                     
                                                                                                                                
JOE   DUBLER,   Director  of   Finance,   Alaska   Housing   Finance                                                            
Corporation,  Department of  Revenue, testified  via teleconference                                                             
from Anchorage  to explain that the  fiscal note, dated February  9,                                                            
2004  was based  on interest  rates  that were  in  effect when  the                                                            
program was being developed.  Continuing he expressed that while the                                                            
current  interest  rate  is approximately  3.34  percent,  this  new                                                            
fiscal  note is  "conservatively"  calculated using  an approximate                                                             
five percent interest  rate in order to more accurately  reflect the                                                            
ceiling level of anticipated debt service.                                                                                      
                                                                                                                                
Senator  Bunde asked  whether this  legislation  addresses  concerns                                                            
that were raised in a Legislative  Budget and Audit report [copy not                                                            
provided] regarding  the proper use of funds for village  safe water                                                            
and wastewater programs.                                                                                                        
                                                                                                                                
Senator Dyson  responded that these  [unspecified] issues  have been                                                            
addressed.  He continued that assurance  has been provided  that the                                                            
issue in question  was "an anomaly and proper steps  are being taken                                                            
that it would never happen again."                                                                                              
                                                                                                                                
Co-Chair Wilken noted that,  "this is more than a one year process."                                                            
Continuing,  he asked for further  information as to how  AHFC would                                                            
monitor issues raised in the audit.                                                                                             
                                                                                                                                
BRIAN  BUTCHER,   Legislative   Liaison,   Alaska  Housing   Finance                                                            
Corporation,  Department of  Revenue, testified  via teleconference                                                             
from Anchorage and explained  that the decision as to where the bond                                                            
proceeds as well  as decisions regarding the AHFC  dividend would be                                                            
addressed  by  the Office  of  Management  and  Budget as  they  are                                                            
responsible  for the oversight  of the projects  in that "they  make                                                            
the decision as to where our money is spent."                                                                                   
                                                                                                                                
Co-Chair Green  moved to report SB  279, Version "D" from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There being no objection, the bill was REPORTED from Committee.                                                                 
                                                                                                                                
[NOTE:  The  action  of  reporting  this  bill  from  Committee  was                                                            
readdressed following the action on SB 274.]                                                                                    
                                                                                                                                
                                                                                                                                
     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 second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  that  this bill  would  replace  the  AHFC                                                            
Housing  Assistance  Loan  Fund with  the  Housing  Assistance  Loan                                                            
Program and would repeal  the Rural Teacher Housing Loan Program and                                                            
replace it with the Rural Multi-Family Loan Program.                                                                            
                                                                                                                                
Co-Chair  Green   moved  to  report  SB  274  from  Committee   with                                                            
individual recommendations and accompanying zero fiscal note.                                                                   
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
AT EASE 9:44 AM / 9:45 AM                                                                                                       
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
There  being  no  further  objection,   SB  274  was  REPORTED  from                                                            
Committee with  zero fiscal note #1 from the Department  of Revenue.                                                            
                                                                                                                                
AT EASE 9:46 AM / 9:46 AM                                                                                                       
                                                                                                                                
                                                                                                                                
     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."                                                                                                    
                                                                                                                                
                                                                                                                                
[NOTE: In order  to correct this meeting's earlier  Committee action                                                            
on this bill, it was again brought before the Committee.]                                                                       
                                                                                                                                
Co-Chair  Wilken  asked that  the  motion to  report  the bill  from                                                            
Committee  be  rescinded,  as an  amendment  that had  been  adopted                                                            
should have been reflected in the motion.                                                                                       
                                                                                                                                
Co-Chair Green  offered a motion to RECIND her motion  to REPORT the                                                            
bill from Committee.                                                                                                            
                                                                                                                                
There  being  no objection,  the  motion  to  report the  bill  from                                                            
Committee was RESCINDED.                                                                                                        
                                                                                                                                
Co-Chair Green moved to  report the Version "D" committee substitute                                                            
for   SB  279,   as  amended,   from   Committee   with   individual                                                            
recommendations and accompanying fiscal notes.                                                                                  
                                                                                                                                
There  being  no  objection,  CS SB  279  (FIN)  was  REPORTED  from                                                            
Committee  with a new zero  fiscal note, dated  March 9, 2004,  from                                                            
the Department of Revenue.                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 09:48 AM.                                                                         
                                                                                                                                
                                                                                                                                

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