Legislature(2015 - 2016)SENATE FINANCE 532

03/29/2016 01:00 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 207 TEACHERS RETIRE. EMPLOYER CONTRIBUTIONS TELECONFERENCED
Heard & Held
*+ SB 208 ELIMINATE AK PERFORMANCE SCHOLARSHIP TELECONFERENCED
Heard & Held
*+ SB 209 PERS EMPLOYER CONTRIBUTIONS TELECONFERENCED
Heard & Held
*+ SB 210 COMM. REV. SHARING;PROP. TAX EXEMPTIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 29, 2016                                                                                            
                         1:14 p.m.                                                                                              
                                                                                                                                
1:14:13 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 1:14 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Laura Cramer, Staff, Senator Anna MacKinnon; Brett Huber,                                                                       
Staff Senator Pete Kelly; James Armstrong, Staff, Senator                                                                       
Pete Kelly.                                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 207    PERS AND TEACHERS EMPLOYER CONTRIBUTIONS                                                                              
                                                                                                                                
          SB 207 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 208    ELIMINATE AK PERFORMANCE SCHOLARSHIP                                                                                  
                                                                                                                                
          SB 208 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 209    PERS EMPLOYER CONTRIBUTIONS                                                                                           
                                                                                                                                
          SB 209 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 210    COMM. REV. SHARING;PROP. TAX EXEMPTIONS                                                                               
                                                                                                                                
          SB 210 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
1:15:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  shared that there  would be a suite  of bills                                                                   
that acted  in concert  with the  operating budget.  He hoped                                                                   
that  the  bill would  cover  the  reduction portion  of  the                                                                   
budget. He  stated that there  were other bills  that covered                                                                   
reductions  in Medicaid  and crime  costs.  He stressed  that                                                                   
there  should  be  a  focus  on   mitigating  the  impact  on                                                                   
communities.  He  stressed  that  the  communities  would  be                                                                   
given  warning,  band  be  provided time  to  adjust  to  the                                                                   
proposals  within the  bills.  He hoped  that  the pieces  of                                                                   
legislation  would pass,  but he understood  that many  would                                                                   
not pass  through the system.  He remarked that the  input of                                                                   
members of the various communities were extremely valuable.                                                                     
                                                                                                                                
Senator Hoffman  commented on  the community revenue  sharing                                                                   
program.  He  stated  that,  at the  time  of  the  program's                                                                   
creation,  Alaska was  enhanced  by substantial  revenue.  He                                                                   
hoped  that the  legislation  would  examine  the program  to                                                                   
limit its  availability. He  announced that  the name  of the                                                                   
program  would  be  changed  to   the  "Community  Assistance                                                                   
Program."                                                                                                                       
                                                                                                                                
1:20:17 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly stressed  that  many people  affected by  the                                                                   
bills had  a heightened  level of  concern, because  they may                                                                   
not have  all of the information.  He hoped that  there would                                                                   
be a  complete discussion  regarding  the motivations  of the                                                                   
bills.  He stressed  that  there was  a  $4.1 billion  budget                                                                   
deficit,  so there  must  be a  change  in  the structure  of                                                                   
government. He remarked  that the bills attempted  to improve                                                                   
the current structures.                                                                                                         
                                                                                                                                
Co-Chair  MacKinnon  announced  that public  testimony  would                                                                   
not  be taken  during the  current meeting.  She shared  that                                                                   
there  were  various  pieces   of  analysis  that  should  be                                                                   
considered, before  the public could  weigh in on  the bills.                                                                   
She  stated that  there would  be a  notice regarding  public                                                                   
testimony.  She  urged  any  criticism   to  be  followed  by                                                                   
recommendations.                                                                                                                
                                                                                                                                
SENATE BILL NO. 207                                                                                                           
                                                                                                                                
     "An Act  relating to  increasing employer  contributions                                                                   
     to   the  defined   benefit   plan   in  the   teachers'                                                                   
     retirement system."                                                                                                        
                                                                                                                                
1:24:15 PM                                                                                                                    
                                                                                                                                
JAMES ARMSTRONG, STAFF, SENATOR PETE KELLY, introduced the                                                                      
legislation:                                                                                                                    
                                                                                                                                
     Senate   Bill  207   proposes   a  gradual,   multi-year                                                                   
     increase  in  the  employer contribution  rate  for  the                                                                   
     Teachers  Retirement  System   (TRS)  from  the  current                                                                   
     level of  12.56 percent  to 19 percent  for FY  2017, 20                                                                   
     percent in FY  2018, 21 percent in FY 2019,  and a final                                                                   
     increase to 22 percent in FY 2020.                                                                                         
                                                                                                                                
     The  TRS  was established  as  a  cost sharing  plan  in                                                                   
     which all  employers pay one  uniform rate and  share in                                                                   
     the liabilities  and the  assets of  the plan.  In 2008,                                                                   
     with the  passage of Senate  Bill 125, the  uniform rate                                                                   
     was  established at  12.56  percent, with  the State  of                                                                   
     Alaska  paying  the  difference  in  costs  between  the                                                                   
     uniform   rate  and  the   actuarial  cost,   which  was                                                                   
     determined  by the  Alaska  Retirement Management  Board                                                                   
     and  the actuary  consultants  to the  State of  Alaska.                                                                   
     This allowed  the state to  share in the payment  of the                                                                   
     unfunded liability of the system with the employers.                                                                       
                                                                                                                                
     The  establishment   of  the   12.56  percent   and  the                                                                   
     commitment of  the state to  assist in costs  over 12.56                                                                   
     percent was  made at a time  when oil value  was setting                                                                   
     not  only  record  price, but  generating  record  state                                                                   
     revenue.                                                                                                                   
                                                                                                                                
     From  FY2008 through FY2016,  TRS appropriations  ranged                                                                   
     from  $130  million  to $317  million  annually.  During                                                                   
     those nine  years, a cumulative total of  $1.824 billion                                                                   
     was  appropriated  to  the TRS  unfunded  liability.  In                                                                   
     addition to  the state assistance payments,  in FY 2015,                                                                   
     an  appropriation  was  made  to  the TRS  Fund  in  the                                                                   
     amount  of  $2,000,000,000   in  order  to  improve  the                                                                   
     health   of  the   system   and   reduce  the   unfunded                                                                   
     liability.  In total,  state  unrestricted general  fund                                                                   
     assistance has exceeded $3.8 billion over the past                                                                         
     nine years.                                                                                                                
                                                                                                                                
     SB  207 is  a  conservative  approach to  balancing  the                                                                   
     state's  current fiscal  reality and  its commitment  to                                                                   
     assisting TRS  employers with the cost and  the unfunded                                                                   
     liability of the system.                                                                                                   
                                                                                                                                
1:26:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  shared that, in  2008, there was  an increase                                                                   
in  the Base  Student  Allocation  (BSA)  to cover  the  PERS                                                                   
obligations.  He stated that  the increase was  approximately                                                                   
$80  million per  year,  totaling $220  million  to date.  He                                                                   
shared  that the  legislature  appropriated  $2 billion  into                                                                   
the TRS  unfunded liability. He  queried the  current number.                                                                   
Mr. Armstrong replied that it was $228 million.                                                                                 
                                                                                                                                
Co-Chair Kelly shared  that the $228 million was  for TRS. Je                                                                   
remarked  that  the  money  was   the  district's  obligation                                                                   
carried  by the  state.  He pointed  out  that the  districts                                                                   
would be  obligated to  a much  healthier system,  because of                                                                   
the  recent deposits  into the  unfunded  liability. He  felt                                                                   
that the  state would mitigate  the impact on  the community,                                                                   
because  the  state  would  allocated   money  to  cover  the                                                                   
increased  cost. He shared  that there  was concern  from the                                                                   
districts,  because  they  wanted   time  to  adjust  to  the                                                                   
increases.  The bill gives  the districts  five years,  which                                                                   
was more  than the  request for three  years. He  shared that                                                                   
it was  anticipated that  the districts  would receive  $36.5                                                                   
million  to cover  the costs  of the  increases. He  wondered                                                                   
whether the state  would cover the 10 percent.  Mr. Armstrong                                                                   
replied that he could provide the estimates.                                                                                    
                                                                                                                                
Co-Chair  MacKinnon felt  that  the better  numbers would  be                                                                   
available  with  the Buck  Analysis.  She stressed  that  the                                                                   
state was working  with local communities. She  remarked that                                                                   
the state  had "carried"  an additional  responsibility  in a                                                                   
budget surplus  time. She felt  that the reiterated  that the                                                                   
state  needed to  "bridge"  the  costs to  the  cause of  the                                                                   
costs.                                                                                                                          
                                                                                                                                
Mr.  Armstrong  noted  that the  mitigating  funds  would  be                                                                   
appropriated  using the  adjusted  average daily  membership,                                                                   
which increased  local need, and allowed for  the communities                                                                   
to fund to the education cap.                                                                                                   
                                                                                                                                
                                                                                                                                
Co-Chair  MacKinnon noted  the  cash infusion  to  TRS of  $2                                                                   
billion,  as  an  effort  to   make  the  system  whole.  She                                                                   
remarked  that   there  was   an  additional  proposed   cash                                                                   
infusion to help communities shoulder the burden                                                                                
                                                                                                                                
Vice-Chair Micciche felt that there should be a discussion                                                                      
about assignment of responsibility.                                                                                             
                                                                                                                                
Co-Chair    MacKinnon   felt    that   the   Department    of                                                                   
Administration (DOA) could provide that information.                                                                            
                                                                                                                                
SB 207 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 208                                                                                                           
                                                                                                                                
     "An Act  eliminating the Alaska education  grant program                                                                   
     and  the  Alaska performance  scholarship  program;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
1:33:12 PM                                                                                                                    
                                                                                                                                
BRETT HUBER, STAFF SENATOR PETE KELLY, introduced the bill:                                                                     
                                                                                                                                
     Senate Bill  208 sunsets the direct State  aid for post-                                                                   
     secondary scholarships  and grants provided  through the                                                                   
     Alaska  performance scholarship  (APS)  program and  the                                                                   
     Alaska education  grant (AEG) program.  This legislation                                                                   
     proposes  a  wind  down  period  to  allow  current  APS                                                                   
     participants,   and   high   school   seniors   in   the                                                                   
     preparatory  process  for  this application  period,  to                                                                   
     finish  their course  of study.  The APS  will close  to                                                                   
     new  entrants following  the  application deadline  this                                                                   
     July and the  program will be repealed in  July of 2022.                                                                   
     Although  students  must  qualify  annually  for  grants                                                                   
     under the  AEG program, the  sunset coincides  with that                                                                   
     of the APS in this legislation.                                                                                            
                                                                                                                                
     These  state  scholarship  programs  were adopted  at  a                                                                   
     time when oil  value was setting not only  record price,                                                                   
     but record  state revenue. Under SB 208  the State would                                                                   
     still  continue to  fund the  APS the  program, and  the                                                                   
     corresponding   AEGs  during   the   wind  down   phase,                                                                   
     providing an  orderly closure of these programs  as well                                                                   
     as a glide path for the transition.                                                                                        
                                                                                                                                
Co-Chair MacKinnon  requested a  history of the  program. Mr.                                                                   
Huber  replied   that  in  2010,   SB  221  was   passed.  It                                                                   
established the  original direct state-funded  post-secondary                                                                   
scholarship   program,   "The    Alaska   Merit   Scholarship                                                                   
Program."  A task  force was  established  to examine  higher                                                                   
education,  and the appropriate  funding  for the future.  He                                                                   
furthered  that in  2012, HB  104 passed,  which renamed  the                                                                   
program  to   "The  Alaska   Performance  Scholarship",   and                                                                   
created the  direct state-funded  grant program,  "The Alaska                                                                   
Education   Grant."  The   bill  also   created  the   Higher                                                                   
Education  Fund,  which  was  capitalized  to  fund  the  two                                                                   
programs.  It  provided a  formula  of  7 percent  of  market                                                                   
value and  a split  of two-thirds  and one-third between  the                                                                   
performance  scholarships and  the education grant  programs.                                                                   
There were  other needs  based and  performance based  grants                                                                   
and  scholarships  that  had  existed  since  the  1970s.  He                                                                   
remarked  that,  in  2009, there  was  a  multi-year  capital                                                                   
budget  appropriation   of  $2.5   million  as   the  funding                                                                   
mechanism that ran through 2012.                                                                                                
                                                                                                                                
Co-Chair MacKinnon requested a Sectional Analysis.                                                                              
                                                                                                                                
Co-Chair  Kelly remarked  that there  was a  hope to have  an                                                                   
overall savings,  in combination with the passage  of current                                                                   
bills, of hundreds of millions of dollars.                                                                                      
                                                                                                                                
1:39:04 PM                                                                                                                    
                                                                                                                                
Mr. Huber discussed the Sectional Analysis (copy on file):                                                                      
                                                                                                                                
     Section  1:  Removes  references  to statutes  that  are                                                                   
     repealed in later sections of the act.                                                                                     
                                                                                                                                
     Section  2:  Amends AS  14.43.810  (a) to  limit  Alaska                                                                   
     performance   scholarships  to   Alaska  residents   who                                                                   
     graduate from high school in or before July 15, 2016.                                                                      
                                                                                                                                
     Section 3:  Provides that, to be eligible  for an Alaska                                                                   
     performance  scholarship  a student  must  apply to  the                                                                   
     commission on or before July 15, 2016.                                                                                     
                                                                                                                                
     Section  4: Prohibits  the Department  of Education  and                                                                   
     Early   Development    from   extending    a   student's                                                                   
     eligibility  for  Alaska  performance  scholarship  past                                                                   
     July 15, 2022.                                                                                                             
                                                                                                                                
     Section  5: Amends  AS  14.45.130(a),  which relates  to                                                                   
     the  duties of religious  or private  schools to  remove                                                                   
     references to the Alaska performance scholarship.                                                                          
                                                                                                                                
     Section  6: Amends AS  37.14.750 (a), which  establishes                                                                   
     thee  Alaska   higher  education  investment   fund,  to                                                                   
     remove   references  to   the  Alaska  education   grant                                                                   
     program   and   the   Alaska   performance   scholarship                                                                   
     program.                                                                                                                   
                                                                                                                                
     Section  7:  Repeals  AS  14. 03.  113,  which  requires                                                                   
     school   districts  to   determine  whether   graduating                                                                   
     students   are    eligible   for   Alaska    performance                                                                   
     scholarships, on July 2016.                                                                                                
                                                                                                                                
     Section  8: Repeals sections  that establish  the Alaska                                                                   
     Advantage  education  grant  program  and  the  Alaska's                                                                   
     performance scholarship program on July 16, 2022.                                                                          
                                                                                                                                
     Section  9:  Provides  that  the  Alaska  Commission  of                                                                   
     Postsecondary   Education  may   not  award   an  Alaska                                                                   
     performance  scholarship to  a new  applicant who  first                                                                   
     applies for a scholarship after July 15, 2016.                                                                             
                                                                                                                                
     Section  10:  Allows  the Department  of  Education  and                                                                   
     Early   Development,  the   Department   of  Labor   and                                                                   
     Workforce  Development,  and  the Alaska  Commission  on                                                                   
     Postsecondary  Education to adopt regulations  necessary                                                                   
     to  implement  the act.  The  regulations  may not  take                                                                   
     effect  before  the  effective  date of  the  law  being                                                                   
     implemented.                                                                                                               
                                                                                                                                
     Section 11:  Makes sections 2- 4 of the  act retroactive                                                                   
     to July 15, 2016.                                                                                                          
                                                                                                                                
     Section 12: Provides  that sections 1, 5, and  6, of the                                                                   
     act take effect July 16, 2022.                                                                                             
                                                                                                                                
     Section 13:  Provides that  sections 2 -  4, and 7  - 10                                                                   
     of the act take effect immediately.                                                                                        
                                                                                                                                
Co-Chair MacKinnon queried a resource for additional                                                                            
information.                                                                                                                    
                                                                                                                                
1:43:37 PM                                                                                                                    
                                                                                                                                
Senator  Dunleavy requested  numbers  from  the inception  of                                                                   
the program and the completion rate.                                                                                            
                                                                                                                                
Vice-Chair  Micciche requested  a full  set of numbers  since                                                                   
the inception  of the program;  and the results  and benefits                                                                   
to Alaskans.                                                                                                                    
                                                                                                                                
Mr.   Huber   looked   at  the   document   titled,   "Alaska                                                                   
Performance  Scholarship and Education  Grant History"  (copy                                                                   
on file). The  document provided numbers on  awards, dollars,                                                                   
recipients, etc.  He noted  that the Postsecondary  Education                                                                   
Commission  also  had  a  website;  and  provided  an  annual                                                                   
report to  the legislature of  the participation  and results                                                                   
in the program.                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon  stated that the commission  at university                                                                   
would comment on the program.                                                                                                   
                                                                                                                                
Vice-Chair  Micciche  remarked that  he  wanted  to know  how                                                                   
many students  were kept  in the  state through the  program.                                                                   
Mr. Huber remarked that there was information available.                                                                        
                                                                                                                                
Senator  Bishop commented  that there  was a program  through                                                                   
the PickClickGive that captured all students.                                                                                   
                                                                                                                                
Co-Chair  Kelly  queried  more information  for  the  state's                                                                   
ability to provide an education to the gifted students.                                                                         
                                                                                                                                
SB  208  was   HEARD  and  HELD  in  committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 209                                                                                                           
                                                                                                                                
     "An Act relating to increasing employer contributions                                                                      
     to the defined benefit plan in the Public Employees'                                                                       
     Retirement System of Alaska."                                                                                              
                                                                                                                                
1:48:51 PM                                                                                                                    
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR  ANNA MACKINNON, introduced  SB
209:                                                                                                                            
                                                                                                                                
     Senate   Bill  209   proposes   a  gradual,   multi-year                                                                   
     increase  in  the  employer contribution  rate  for  the                                                                   
     Public  Employees  Retirement  System  (PERS)  from  the                                                                   
     current  level of  22  percent to  24.5  percent for  FY                                                                   
     2017, 25.5  percent in FY  2018, and 26.5 percent  in FY                                                                   
     2019.                                                                                                                      
                                                                                                                                
     In  2008,  with the  passage  of  Senate Bill  125,  the                                                                   
     uniform  rate was  established at  22 percent, with  the                                                                   
     State of Alaska  paying the difference in  costs between                                                                   
     the  uniform  rate and  the  actuarial cost,  which  was                                                                   
     determined  by the  Alaska  Retirement Management  Board                                                                   
     and  the actuary  consultants  to the  State of  Alaska.                                                                   
     This  made the  PERS a cost  sharing  plan in which  all                                                                   
     employers  pay  one  uniform   rate  and  share  in  the                                                                   
     liabilities  and the  assets of the  plan. This  allowed                                                                   
     the  state  to share  in  the  payment of  the  unfunded                                                                   
     liability of the system with the employers.                                                                                
                                                                                                                                
     The establishment  of the 22 percent and  the commitment                                                                   
     of  the state  to assist  in costs over  22 percent  was                                                                   
     made  at a  time when  oil  value was  setting not  only                                                                   
    record price, but generating record state revenue.                                                                          
                                                                                                                                
     From FY2008  through FY2016, PERS appropriations  ranged                                                                   
     from  $108  million  to $312  million  annually.  During                                                                   
     those nine  years, a cumulative total of  $1.708 billion                                                                   
     was  appropriated  to the  PERS unfunded  liability.  In                                                                   
     addition to  the state assistance payments,  in FY 2015,                                                                   
     an  appropriation  was made  to  the  PERS Fund  in  the                                                                   
     amount  of  $1,000,000,000   in  order  to  improve  the                                                                   
     health   of  the   system   and   reduce  the   unfunded                                                                   
     liability.  In total,  state  unrestricted general  fund                                                                   
     assistance  has  exceeded  $2.7 billion  over  the  past                                                                   
     nine years.                                                                                                                
                                                                                                                                
     Senate   Bill  209   is  a   conservative  approach   to                                                                   
     balancing  the state's  current fiscal  reality and  its                                                                   
     commitment  to assisting  PERS employers  with the  cost                                                                   
     and the unfunded liability of the system.                                                                                  
                                                                                                                                
     This  legislation  provides a  level  of stability  that                                                                   
     will assist  the State of  Alaska and PERS  employers in                                                                   
     fulfilling  the  obligation   to  a  healthy  retirement                                                                   
     system for its members.                                                                                                    
                                                                                                                                
Co-Chair MacKinnon felt the sectional analysis was covered                                                                      
in the bill introduction.                                                                                                       
                                                                                                                                
1:49:37 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  recalled  that  the  initiation  of  the  22                                                                   
percent was at  a period of time when the  unfunded liability                                                                   
obligation  was approximately  $4 billion.  He remarked  that                                                                   
the stock  market fell  in 2008,  which changed  it to  a $15                                                                   
billion unfunded liability.                                                                                                     
                                                                                                                                
Co-Chair  MacKinnon   queried  the  desired   information  to                                                                   
evaluate the bill.                                                                                                              
                                                                                                                                
Vice-Chair  Micciche requested  the  history  of the  state's                                                                   
contributions   to   municipalities   He   also   wanted   to                                                                   
understand the true rate.                                                                                                       
                                                                                                                                
Co-Chair  MacKinnon explained  that the  state covered  above                                                                   
the 22 percent, so municipalities covered the 22 percent.                                                                       
                                                                                                                                
Vice-Chair  Micciche wondered  what happened  to the  defined                                                                   
contribution   plan   piece.   He   wondered   if   the   new                                                                   
contribution would be higher than 24.5 percent.                                                                                 
                                                                                                                                
Co-Chair MacKinnon  hoped to  hear from  Buck on the  actuary                                                                   
analysis.                                                                                                                       
                                                                                                                                
Ms.  Cramer  stated   that  the  system  allowed   for  every                                                                   
employee  to  be covered.  She  remarked  that there  was  no                                                                   
differentiation  between  the  two  plans.  She  stated  that                                                                   
there would be a more thorough discussion.                                                                                      
                                                                                                                                
Co-Chair  MacKinnon explained  that  if  an average  employee                                                                   
made $100,000  under tier 1 with  a cash call of  36 percent,                                                                   
the  state would  contribute $36,000.  A  new employee  under                                                                   
the defined  contribution, the state may  contribute $12,000,                                                                   
creating a disadvantage.  The system looked at  the employees                                                                   
as  a whole,  so all  employees were  treated equitably  when                                                                   
applying  for a job.  She remarked  that it  would be  unfair                                                                   
for a new employee to outpace an older employee.                                                                                
                                                                                                                                
Vice-Chair  Micciche   wanted  to   clarify  the   burden  to                                                                   
municipalities and the state.                                                                                                   
                                                                                                                                
Senator Hoffman queried  the annual costs over  the course of                                                                   
the five-year increment.                                                                                                        
                                                                                                                                
Senator Dunleavy wanted to examine the time of inception.                                                                       
                                                                                                                                
1:56:12 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  shared  that  there was  a  new  general                                                                   
accounting  rule,  so  the  municipalities  were  working  on                                                                   
keeping up with the debt.                                                                                                       
                                                                                                                                
Co-Chair Kelly felt  that there was not a  connection between                                                                   
the APS and  the bill. He felt  that the money would  be used                                                                   
as a  "shock absorber" to  the communities  in SB 207  and SB
208.                                                                                                                            
                                                                                                                                
Co-Chair  MacKinnon  stated  that  SB  207 and  SB  208  were                                                                   
linked  in an  effort to  use  a one-time  funding source  to                                                                   
TRS.                                                                                                                            
                                                                                                                                
Vice-Chair  Micciche   stressed  that   he  wanted   to  best                                                                   
research  the municipalities  who were  in the  most need  of                                                                   
relief.                                                                                                                         
                                                                                                                                
Co-Chair  MacKinnon stressed  that  SB 209  and  SB 210  were                                                                   
interrelated    in    order    to   share    the    financial                                                                   
responsibility.                                                                                                                 
                                                                                                                                
SB  209  was   HEARD  and  HELD  in  committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 210                                                                                                           
                                                                                                                                
     "An  Act  relating  to  the  community  revenue  sharing                                                                   
     program;  changing  the name  of the  community  revenue                                                                   
     sharing  program to  the  community assistance  program;                                                                   
     and  relating to  the municipal  property tax  exemption                                                                   
     on the  residence of a  senior, a disabled  veteran, and                                                                   
     a widow or widower of a senior or disabled veteran."                                                                       
                                                                                                                                
2:00:20 PM                                                                                                                    
                                                                                                                                
LAURA  CRAMER, STAFF,  SENATOR ANNA  MACKINNON, explained  SB
210:                                                                                                                            
                                                                                                                                
     With a $3.7  billion shortfall for Fiscal  Year 2016 and                                                                   
     a  projected shortfall  of  $4 billion  for Fiscal  Year                                                                   
     2017, the  legislature is  examining programs  that were                                                                   
     created  to  provide  assistance   to  communities  when                                                                   
     Alaska  was experiencing  surplus  revenues  due to  the                                                                   
     high  price of  oil. In  2008,  the legislature  created                                                                   
     the   Community    Revenue   Sharing    program,   which                                                                   
     distributes  funds to communities  to be spent  at their                                                                   
     discretion.  The  program   was  established  under  the                                                                   
     principle that  when oil revenues were high,  the wealth                                                                   
     would be shared with local communities.                                                                                    
                                                                                                                                
     Senate  Bill  210  proposes   changes  to  the  program,                                                                   
     allowing   for  communities   to  continue  to   receive                                                                   
     assistance,  while  establishing  a structure  to  phase                                                                   
     out the program as originally intended when created.                                                                       
                                                                                                                                
     Additionally,  the legislature  has heard concerns  from                                                                   
     communities   throughout   Alaska   about   the   burden                                                                   
     unfunded  mandates, enacted  by the legislature,  places                                                                   
     on  local governments.  At low oil  prices, the  burdens                                                                   
     on  communities  are  enhanced  and  even  limits  local                                                                   
     decision  making. Under SB  210, discretion  is returned                                                                   
     to the local  communities to enact certain  property tax                                                                   
     exemptions.  This would allow  communities to  structure                                                                   
     their tax exemptions  to serve their residents  and meet                                                                   
     the  needs  of the  communities  to the  maximum  extent                                                                   
     possible.                                                                                                                  
                                                                                                                                
     Senate Bill  210, helps  communities transition  to more                                                                   
     local  control, while continuing  to receive  assistance                                                                   
     from  the state  as they  become less  reliant on  state                                                                   
     resources to support local government.                                                                                     
                                                                                                                                
Co-Chair MacKinnon requested a sectional analysis.                                                                              
                                                                                                                                
Ms. Cramer discussed the Sectional Analysis (copy on file):                                                                     
                                                                                                                                
     Section  1:  Updates  AS   28.10.181(d)  reflecting  the                                                                   
     repeal of  AS 29.45.030(i)  and inserts reference  to AS                                                                   
     29.45.050(x)   where   the   definition   of   "disabled                                                                   
     veteran"   is  now   located   as  a   result  of   this                                                                   
     legislation                                                                                                                
                                                                                                                                
     Section  2: Updates the  program name change  "community                                                                   
     assistance" in AS 29.20.640(b)                                                                                             
                                                                                                                                
     Section  3: Updates the  program name change  "community                                                                   
     assistance" in AS 29.45.020                                                                                                
                                                                                                                                
     Section  4:  Updates  AS   29.46.030(h)  reflecting  the                                                                   
     repeal to 29.46.030(e) - (h) and (j)                                                                                       
     Section   5:   Moves   repealed    language   under   AS                                                                   
     29.45.030(k) to this section                                                                                               
                                                                                                                                
     Section  6:  Updates  AS   29.45.040(f)  reflecting  the                                                                   
     repeal of  AS 29.45.030(i) reference to  AS 29.45.050(x)                                                                   
     where  the  definition  of  "disabled  veteran"  is  now                                                                   
     located as a result of this legislation                                                                                    
                                                                                                                                
     Section   7:   Amends   AS   29.45.050(i)   allowing   a                                                                   
     municipality  to  exempt  real  property  from  taxation                                                                   
     making  it  optional  under  state  statute  and  places                                                                   
    widow or widower as a qualifier under this section                                                                          
                                                                                                                                
     Section  8: Adds  the definition  of "disabled  veteran"                                                                   
     and "widow or widower" to AS 29.45.050(x)                                                                                  
                                                                                                                                
     Section   9:   Moves   repealed    language   under   AS                                                                   
     29.45.030(e) and AS 29.45.030(i) to this section                                                                           
                                                                                                                                
     Section 10:  Updates the program name  change "community                                                                   
     assistance" in AS 29.45.660(b)                                                                                             
                                                                                                                                
     Section 11:  Updates the program name  change "community                                                                   
     assistance" in AS 29.60.810 (A)                                                                                            
                                                                                                                                
     Section 12:  Updates the program name  change "community                                                                   
     assistance"  in  AS 29.60.850  and  reduces the  minimum                                                                   
     balance to $15,000,000                                                                                                     
                                                                                                                                
     Section 13:  Updates the program name  change "community                                                                   
     assistance"  in AS 29.60.855,  changes the  basic amount                                                                   
     to $384,000,  and directs  the department to  reduce the                                                                   
     basic amount  pro rata if the fund balance  is less than                                                                   
     $15,000,000                                                                                                                
                                                                                                                                
     Section 14:  Updates the program name  change "community                                                                   
     assistance" in AS 29.60.860(a)                                                                                             
                                                                                                                                
     Section 15:  Updates the program name  change "community                                                                   
     assistance" in AS 29.60.860(b)                                                                                             
                                                                                                                                
     Section 16:  Updates the program name  change "community                                                                   
     assistance" in AS 29.60.865                                                                                                
                                                                                                                                
     Section  17: Adds  the community  assistance program  to                                                                   
     the definition  of "state  money" in AS  29.71.040(h)(2)                                                                   
     - Procurement Preference                                                                                                   
                                                                                                                                
     Section 18:  Updates the program name  change "community                                                                   
     assistance" in AS 36.10.090(b)                                                                                             
                                                                                                                                
     Section  19: Adds  the community  assistance program  to                                                                   
     AS 36.10.125(c) - employment preferences                                                                                   
                                                                                                                                
     Section  20: Adds  the community  assistance program  to                                                                   
     the definition  of "state  money" in AS  36.15.050(h)(3)                                                                   
     - Alaska Product Preference                                                                                                
                                                                                                                                
     Section  21: Adds  the community  assistance program  to                                                                   
     AS  44.33.020(a)   (20)  requiring  the   Department  of                                                                   
     Commerce,   Community   and  Economic   Development   to                                                                   
     administer the program                                                                                                     
                                                                                                                                
     Section 22:  Updates the program name  change "community                                                                   
     assistance" in AS 46.07.080(2)(iii)                                                                                        
                                                                                                                                
     Section  23:  Repeals AS  29.45.0303(a)(6),  29.45.030¼                                                                  
     29.45.030(f),     29.45.030(g),    29.45.030(i),     and                                                                   
     29.45.030(k)                                                                                                               
                                                                                                                                
2:06:42 PM                                                                                                                    
                                                                                                                                
Co-Chair   MacKinnon   queried   recommendations   from   the                                                                   
committee.                                                                                                                      
                                                                                                                                
Co-Chair  MacKinnon  stressed  that the  state  was  in a  $4                                                                   
billion deficit.                                                                                                                
                                                                                                                                
Co-Chair  Kelly  shared a  history  of the  state's  unfunded                                                                   
liability.                                                                                                                      
                                                                                                                                
Co-Chair  MacKinnon   stressed  that   the  suite   of  bills                                                                   
attempted  to  address  the holes  in  Alaska's  budget.  She                                                                   
remarked  that the  bills would  provide  an opportunity  for                                                                   
communities   to  understand   the   state's  problems.   She                                                                   
stressed  that the committee  was attempting  to address  the                                                                   
long-term fiscal  problem, and  the state could  not continue                                                                   
to address  the major  issue with  budget. She remarked  that                                                                   
the funds  were not  available to continue  to invest  in the                                                                   
same way as it had in the past.                                                                                                 
                                                                                                                                
SB  210  was   HEARD  and  HELD  in  committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
2:13:19 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:13 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 207 Sponsor Statement - LHead.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208 Sectional Analysis 032616.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Sponsor Statement 032816.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
PERS Sponsor Statement.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 209 - Sectional Analysis PERS.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 209 Public Testimony Roberts.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 210 Public Testimony - Roberts.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 Public Testimony - Somerville.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 208 Public Testimony Packet 1.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 - SB 209 ASD Opposition.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 207 Public Testimony Opposition Bronson.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 Public Testimony Opposition Homzas.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 Public Testimony Opposition Spalding.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 SB 208 Public Testimony Lelake.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Krieter.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Bekeris.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 Sb 208 Public Testimony Opposition Stahl.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207 SB 208 Public Testimony Opposition Richotte.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207 Sb 208 Public Testimony Opposition Meyn.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Story.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 SB 208 Public Testimony Opposition Rector.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Stephens.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Kief.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207, 208, 209 Public Testimony Opposition Bernard.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 SB 208 Public Testimony Opposition Pausback.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Leiter.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Dauenhauer.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Support Pulczinski.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 210 Public Testimony Opposition Sullivan.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 Public Testimony - Somerville.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 Sponsor Statement.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 - Sectional Analysis.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 209 AML Questionnaire.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 207 SB 209 Public Testimony Support Hodges.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 208 Public Testimony Opposition LeNorman.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Dean.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 Sb 208 Public Testimony Opposition Gardey.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207 SB 208 Public Testimony Opposition Wilkas.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207, 208, 209, 210 Public Testimony Opposition Geroge.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 210 Public Testimony Opposition Pierce.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 207 SB 209 Cordova School District Opposition.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 207 SB 208 SB 209 SB 210 3 31 16 PERS TRS CAP Backup Documents.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207, SB 208, SB 209
SB 208
SB 209
SB 210
SB 207 - Actuarial Analysis.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 DOA-TRS-040316.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 SB 208 Public Testimony Opposition LaRue.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 209 - Actuarial Analysis.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 207 SB 209 Cordova School District Opposition.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 209 DOA-PERS 040316.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 209 Public Testimony Opposition Massie.pdf SFIN 3/29/2016 1:00:00 PM
SB 209