Legislature(1993 - 1994)
03/23/1994 08:06 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 23, 1994
8:06 a.m.
TAPES
SFC-94, #49, Side 1 (000-end)
SFC-94, #49, Side 2 (end-000)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 8:06 a.m.
PRESENT
In addition to Co-chair Pearce, Senators Rieger, Sharp and
Kerttula were present. Co-chair Frank, Senators Jacko and
Kelly joined the meeting after it was in progress.
ALSO ATTENDING: Senator Fred Zharoff, sponsor of SB 92;
Represen-tative Jerry Mackie; Duane Guiley, Director, School
Finance, Department of Education; Nancy Bear Usera,
Commissioner, Department of Administration; Connie Sipe,
Executive Director, Older Alaskans Commission, Department of
Administration; Reed Stoops, Alaska Air Carriers
Association; and Mike Greany, Director, Legislative Finance
Division; aides to committee members and other members of
the legislature.
SUMMARY INFORMATION
CSSB 92(CRA): An Act relating to an advisory vote during
regional educational attendance area school
board elections; and providing for an
effective date.
Senator Zharoff, sponsor of SB 92, spoke in
support of the bill. CSSB 92(CRA) was
REPORTED out of committee with a "do pass,"
with a zero fiscal note for the Department of
Education, and a fiscal note for the Office
of Governor in the amount of $0.7.
CSSB 248(STA): An Act relating to services for and
protection of vulnerable adults; and
providing for an effective date.
Nancy Bear Usera, Commissioner, Department of
Administration, spoke in support of SB 248.
Senator Rieger MOVED amendment 1. Co-chair
Pearce OBJECTED for discussion purposes. Ms.
Usera said the department was neutral on
amendment 1. No further objections being
heard, amendment 1 was ADOPTED for
incorporation into a Senate Finance
Substitute for the bill. CSSB 248(FIN) was
REPORTED OUT of committee with a "do pass,"
with zero fiscal notes for the Department of
Public Safety and Department of
Administration (Pioneer Homes), and fiscal
notes for the Department of Administration-
$559.6, and the Department of Health & Social
Services-Adult Services-$(364.5), Northern-
$(68.0), and South Central-$(127.1).
CSSB 250(STA): An Act relating to the Older Alaskans
Commission and staff of the commission;
changing the name of the Older Alaskans
Commission to the Alaska Commission on Aging
and extending the termination date of the
commission; relating to the Alaska Pioneers'
Homes Advisory Board; relating to services
and programs for older Alaskans; and
providing for an effective date.
Nancy Bear Usera, Commissioner, Department of
Administration, spoke in support of SB 250.
Connie Sipe, Executive Director, Older
Alaskans Commission, Department of
Administration, spoke to questions regarding
grants and matching monies for pilot
projects. Senator Kelly MOVED amendment 1,
page 7, line 1, removing the words "program
or" and adding the word "pilot." No
objections being heard, amendment 1 was
ADOPTED for incorporation into a Senate
Finance Substitute for the bill. CSSB
250(FIN) was REPORTED OUT of committee with a
"do pass," and a zero fiscal note for the
Department of Administration.
CSSB 256(TRA): An Act relating to the tax on transfers and
consumption of aviation fuel; and providing
for an effective date.
Senator Sharp spoke in support of SB 256.
Discussion was had by Co-chair Pearce,
Senators Rieger, Kelly, and Sharp, regarding
rural landing fees and fuel taxes. Co-chair
Pearce announced that CSSB 256(TRA) would be
HELD in committee until more information was
obtained comparing jet fuel prices in Alaska
with the lower 48 states. (The bill was
heard again on Friday, March 25, 1994.)
CSSB 312(HES): An Act relating to school construction grants
and to interscholastic school activities; and
providing for an effective date.
Amendment 3 pending from a prior Senate
Finance meeting was withdrawn. Senator
Rieger MOVED amendments 4 and 5. Discussion
was had between Senators Rieger, Kerttula,
Sharp, Co-chairs Frank, Pearce, and Duane
Guiley, Director, School Finance, Department
of Education, regarding reimbursement to
schools for school construction debt,
portable and temporary housing, and interest
rate ramifications on bonds. Amendment 5 was
amended on page 4, line 2, after "bond
sells..." and before the words "...premium to
par value", the words "an original issue"
were added. In answer to information
requested by Senator Jacko, Mr. Guiley
provided Attachment A, dated April 15, 1994.
Discussion followed. CSSB 312(FIN) was HELD
in committee until March 24, 1994.
CS FOR SENATE BILL NO. 312(HES):
An Act relating to school construction grants and to
interscholastic school activities; and providing for an
effective date.
CO-CHAIR PEARCE announced that SB 312 was before the
committee. She said amendments 4 and 5 were proposed by
Senator Rieger. She also noted that an April 1991 report
from the Department listed portable units used in Alaska
(see Attachment A, copy on file in the committee minute
book). At that time, 16 of the 54 school districts reported
having portable units in use. Anchorage had 98, 50 of which
were over 20 years old. Matsu had 54. Fairbanks had 28, 17
of which were over 20 years. Kenai had 22, Craig and
Unalaska, only one. Her objection to bringing in so many
portable units was that it overpopulated a school, and the
children did not have access to adequate library facilities,
restrooms, etc. Schools would still be eligible for bonding
even if portables met the per student square footage
requirement. She asked Senator Rieger to move amendment 4.
Senator Rieger MOVED amendment 4. He went on to explain the
amendment. He called attention to the language "materially
substandard," and said he would be comfortable with or
without this in the amendment. Some examples of "materially
substandard" could be an uncovered walkway from the
portables to the rest of the school, inadequate plumbing, or
inadequate heating. Senator Kerttula agreed that the
department would need some leeway in judging this area.
DUANE GUILEY, Director, School Finance, Department of
Education, said that the amendments proposed were in-line
with the bond reimbursement and grant review committee who
had discussed the future. It also was in line with a
request from the Department of Education Anchorage caucus
suggesting that in all situations regarding portables, the
population of students enrolled at the facility should not
exceed 110 percent of the design capacity of the core area
of the building.
Senator Kerttula voiced his opinion that, with a rare
exception, all new construction paid for by the state would
be rural or in the bush because there were no existing
basements in churches to house students. When a large
number of students begin to be housed in portables, the
Department of Education (DOE) should look at the reasons.
He felt there had been a rapid shift in population in some
districts and too large a percentage of students were being
housed in portables. He wanted to solve and prioritize the
problem.
Co-chair Pearce reminded the committee that there was a
motion on the floor to ADOPT amendment 4. No objection
being heard, amendment 4 was ADOPTED for incorporation into
CSSB 312(FIN).
Senator Rieger said there had been concern about bonds
issued that sold at a premium. He said amendment 5 would
put a penalty on payback. He believed that there should be
some kind of general dis-incentive for a district to issue
bonds at premium.
Senator Rieger MOVED amendment 5.
Mr. Guiley understood the amendment to say that bonds might
be available at 115 percent as compared to par, and would
require the department to reduce the eligible reimbursement
to the District by 200 percent of that 15 percent increase
over par which would be a 30 percent reduction in the 70
percent reimbursement rate. That would provide a penalty
for selling the bonds over par keeping in mind that the
state reimbursed 70 percent of the principle amount as well
as 70 percent of the interest amount. If the interest
amount was higher than necessary, the district would be
making themselves eligible for a greater level of
reimbursement by the state. That would deter this from
happening.
Senator Rieger confirmed that the new higher debt service
was what would be reduced by the additional 30 percent. Mr.
Guiley said that was correct under the current statutory
definition of cost of school construction.
In answer to Senator Sharp, Mr. Guiley said he read the
amendment to mean it would apply to all of the eligible
reimbursement which would include the reimbursement of the
principle amount as well. Everyone was amused when Senator
Sharp said he felt that was a little severe.
Senator Rieger MOVED an amendment to amendment 5 changing
the wording on page 4, line 2, to read "by which a bond
sells at an original issue premium to par value". No
objection being heard, it was ADOPTED.
At the request of Senator Sharp, Mr. Guiley turned the
committee's attention to page 3, Section 3 (o). He read
that section to mean that the total reimbursement to the
district would be reduced by that fraction. Under current
statutes, districts were eligible to receive 70 percent
reimbursement of principle and associated financing costs.
He would read this to mean the department would calculate
the fraction. For example, a 30 percent reduction to the 70
percent reimbursement would result in a 21 percent reduction
of the 70 percent, if he was reading it correctly. As
stated earlier, the reimbursement amount of the principle
would remain unchanged. The state's obligation on the
interest for bonds that carry a higher interest rate than
market value would place a greater obligation on the state
at the point to which there would be a break even.
Discussion continued by Senators Rieger, Kerttula and Sharp
regarding reimbursement, school districts and bonding.
Co-chair Pearce reminded the committee that there was a
motion on the floor to ADOPT amendment 5. No objection
being heard, amendment 5 was ADOPTED for incorporation into
CSSB 312(FIN).
In answer to Senator Rieger, Mr. Guiley said, to his
knowledge, none of the old programs (2, 5, 7 year old bonds)
had been sold with no material premium at all.
Co-chair Pearce commented that amendment 3 had been pending
and it was replaced with amendment 4 (which was adopted).
Co-chair Pearce asked if Mr. Guiley had the answer to a
question raised by Senator Jacko. Senator Jacko had wanted
to know the dollar amount expended for local capital
improvement projects by districts throughout the state. Mr.
Guiley said he researched the most recent school district
audits to determine how many dollars were recorded in school
district audits for local cash expenditures of capital
projects in fiscal year 1993. Based upon that analysis,
there was a recording of $9,908,651 of local school
construction projects not currently being reimbursed by the
state through either a bond reimbursement or grant process.
That was an estimate of what existed on the actual school
district audits in one year of the three year suggestion for
cash reimbursement process. The list included all 54 school
districts under current statute. The ARA school districts
would not be eligible for such reimbursement. He took three
specific school districts and looked at three fiscal years.
Of those three districts, the total was $1,061,863. He said
he provided brief descriptions of the projects.
Mr. Guiley went on to say that the old cash reimbursement
program ended with projects that had to be approved prior to
July 1, 1990. Therefore, there was a potential of double
payment for projects incurred during the time period of
April 30, 1990 through June 30, 1990. The issues he brought
forth previously related to the two year lag process whereby
expenses incurred by the district in 1990 under current
programs would have been eligible for reimbursement in 1992.
That fiscal year was currently closed out. Based on the
wording under current statute, excluding the proposed
amendment, the only expenses eligible for reimbursement
would be those incurred in FY93 prior to April 1993. This
would exclude any capital projects that were recorded on the
city or borough books. He had requested the information but
did not have access to those books.
Co-chair Pearce asked if $10M in unreimbursed cash
expenditures was a good estimate for 1993. Mr. Guiley said
that was a conservative number in that the cities and
boroughs were not required to actually record capital
projects related to schools on the school audit. They were
allowed to record them on their own audit because under
state statute, they had responsibility for the buildings.
This number would be understated by the amount of projects
recorded in city and borough audits, and overstated in
relation to the projects incurred by the REAAs.
In answer to Senator Jacko, Mr. Guiley said that he had
included all projects of all dollar amounts recorded in
local capital projects.
Discussion was had by Co-chairs Pearce, Frank and Mr. Guiley
regarding projects in his report and different cities and
boroughs relating to school districts.
In answer to Co-chair Frank, Mr. Guiley said that this
legislation could have an immediate impact on the general
fund. Co-chair Frank remarked that more information was
needed.
Co-chair Pearce agreed with Senator Rieger to HOLD CSSB
312(FIN) for at least another day.
CS FOR SENATE BILL NO. 248(STA):
An Act relating to services for and protection of
vulnerable adults; and providing for an effective date.
Co-chair Pearce announced that SB 248 would be taken up
next. She invited Nancy Bear Usera, Commissioner,
Department of Administration, to join the members at the
table.
COMMISSIONER NANCY BEAR USERA said the bill had been heard
in two committees and was strongly supported by the senior's
community. She saw it was an excellent step toward a
central focal point for delivery of senior services in the
state. The fiscal notes were transfers or a net zero
impact. The bill defined elder abuse, response needed and
responsibilities for various senior programs, and did a
better job of protecting seniors in a vulnerable position.
She strongly supported the passage of SB 248.
In answer to Senator Kelly, Commissioner Usera said that the
Department of Administration had housed a majority of the
senior's programs. Through an administrative order, a new
Division of Senior Services was created which merged the
Division of Pioneer Benefits and the Older Alaskans'
Commission. An accompanying bill, SB 250, contained the
organizational framework for the Division of Senior
Services. It transferred all the major senior services into
one division. In the past, Department of Health & Social
Services dealt with vulnerable adults as they would with
vulnerable children. Upon analysis, the needs of children
were very different from adults. The determination was made
that a better job of serving this constituency would be done
if it was put in a like framework. The common thread being
seniors rather than vulnerability. Consequently, the
Division of Senior Services would be under the Department of
Administration because it was the right thing to do.
Senator Rieger MOVED amendment 1. Co-chair Pearce OBJECTED
for discussion purposes. Senator Rieger said he read this
bill in HESS and the language that referred to the state,
police officer or VPO taking immediate action to protect,
etc. reminded him of the Busby decision in Anchorage.
Because of that, he requested amendment 1 be drafted.
Commissioner Usera said that she did not have strong
feelings one way or the other but had supported the language
in the bill prior to HESS removing it.
End SFC-94 #49, Side 1
Begin SFC-94 #49, Side 2
Co-chair Pearce called for a show of hands and amendment 1
was ADOPTED unanimously.
Senator Rieger MOVED for passage of CSSB 248(FIN) from
committee with individual recommendations. No objection
being heard, it was REPORTED OUT of committee with a "do
pass," zero fiscal notes from the Department of Public
Safety and Department of Administration (Pioneer Homes), and
fiscal notes for the Department of Administration-$559.6,
and the Department of Health & Social Services-Adult
Services-$(364.5), Northern-$(68.0), and South Central-
$(127.1). Co-chair Pearce, and Senators Rieger, Sharp and
Kerttula signed "do pass." Senator Kelly signed "no
recommendation."
CS FOR SENATE BILL NO. 250(STA):
An Act relating to the Older Alaskans Commission and
staff of the commission; changing the name of the Older
Alaskans Commission to the Alaska Commission on Aging
and extending the termination date of the commission;
relating to the Alaska Pioneers' Homes Advisory Board;
relating to services and programs for older Alaskans;
and providing for an effective date.
Co-chair Pearce announced that SB 250 would be heard next
and asked Commissioner Usera to remain at the table.
Commissioner Usera said that SB 250 was the administrative
piece that went along with the senior's initiative that had
been put forward this session. In order to have a division
that effectively and efficiently housed the programs, it was
felt that some realignment of the old divisions should be
done which were served by two advisory boards, the Older
Alaskans Commission and Pioneer Home Advisory Board. This
bill maintained both of those commissions separately but
housed them in the same division aligning them more closely.
The chairperson of one board was now a member of the other
board. Secondly, it changed the name of the Older Alaskans
Commission to the Alaska Commission on Aging which was more
consistent with the national model. This was important
since a large number of matching federal funds were received
for the administration of these programs.
She went on to say that one change made in the State Affairs
Committee was that instead of the Governor appointing
chairpersons of the Board, seniors would appoint them. She
said that the administration had no problem with that.
Senator Kelly asked for an explanation of Section 16 on page
6, line 19. Ms. Usera said it was a technical amendment to
do with the grant process and whether the match could be in-
kind versus cash. Senator Kelly asked for more of an
explanation.
Ms. Usera went on to say that this section allowed the
Commission the flexibility to reduce or waive the local
match requirements for grantees when waiver was in the
public interest. Currently, the non-profits that received
some grants had to have match requirements and because of
the nature of some of the local senior service programs,
they do not necessarily have a cash match but labor match.
It provided flexibility to the non-profit group. She said
this section provided regulator authority to establish
regulations which would define when a waiver of the match
could happen and under what circumstances.
Co-chair Pearce pointed out that this was a portion of the
original Governor's bill. Ms. Usera said the genesis of the
bill was a review by a task force on senior services that
was established with both the Older Alaskans Commission and
the administrative representatives of a number of senior's
programs. This was their recommendation.
At that time, Connie Sipe, Executive Director, Older
Alaskans Commission, Department of Administration, arrived
and Co-chair Pearce posed the question to her regarding the
waiver for grants.
CONNIE SIPE explained that in some circumstances where
start-up grants for certain organizations, such as the World
Delivery of In-Home Respite Care, did not reside in the same
location where they were setting up and arranging for
respite care, were not able to raise a total match the first
year. Many of the organizations receiving the grant may ask
the client for contributions, much of which may be in-kind
such as rent, but found it hard in the start-up year to come
up with the 10 percent match even with client contributions.
She noted, in contrast, the grants for home care services
for people with developmental disabilities had no match
requirement. The 10 percent match had become a barrier in
starting up some home care providers especially in rural
areas. The Department of Law had recommended handling this
in regulations rather than in statute.
Senator Kelly maintained that it should be defined in
statute. Ms. Sipe said the statutes already define a "pilot
project" and she would support an amendment to that effect
for SB 250.
Senator Kelly MOVED amendment 1 changing the words "program
or" to the word "pilot" on page 7, line 1. No objection
being heard, it was ADOPTED for incorporation into CSSB
250(FIN).
In answer to Senator Sharp regarding the length of pilot
projects, Ms. Sipe explained that the pilot project grant
section had been used rarely in the past. The regulations
said that the Commission made the determination of the
length of time but, at present, were on a 2-year grant
cycle. The pilot project language talked about the fact
that to get approved as a pilot project there had to be an
estimated projected cost of operations for the next 3
succeeding years but did not say that it would be in a pilot
project status that long. That was part of the planning for
approval. Senator Sharp felt, with this incentive, the
pilot project might become more popular. He wanted the
record to read that a pilot project should have a maximum of
three years.
In answer to Senator Rieger regarding AS 47.65.040 (a), Ms.
Sipe agreed that (a) contradicted (b). She said that (b)
set a percentage and then (a) capped it at 10 percent. Most
cities and towns larger than Petersburg would have
percentages larger than 10 percent if the percentage formula
was used in Section (b) but then (a) capped it. This
statute was first adopted in 1980. She pointed out that
grant matches of 20 or 30 percent would be difficult for
groups to meet. She said the 10 percent was significant
enough. Community mental health centers had 25 percent
match requirements but were allowed to charge fees. The
federal programs only allowed the organizations to ask for
suggested donations for nutrition, transportation, and
support services which limited how much cash could be
generated from client fees. The more intensive client
services like adult day care could ask for fees since they
were supported with state funds rather than federal. She
felt the 10 percent match was reasonable but it was an old
statute.
Senator Rieger asked if Section (b) should be repealed. Ms.
Sipe said that Section (b) could be repealed but not Section
(c). Senator Rieger left it up to Co-chair Pearce on
whether to take any action on this issue. Co-chair Pearce
said she would let it go.
Senator Kerttula MOVED for passage of CSSB 250(FIN) from
committee with individual recommendations. No objection
being heard, it was REPORTED OUT with a "do pass," and a
zero fiscal note for the Department of Administration. Co-
chair Pearce, Senators Rieger, Kelly, Kerttula and Sharp
signed "do pass."
CS FOR SENATE BILL NO. 92(CRA):
An Act relating to an advisory vote during regional
educational attendance area school board elections; and
providing for an effective date.
Co-chair Pearce asked the committee to turn their attention
to SB 92. She invited Senator Zharoff to join the members
at the table.
SENATOR ZHAROFF, sponsor of SB 92, said the bill allowed the
Division of Elections to include on an REAA ballot an
advisory question if it was adopted by the regional school
board in the area. At present, statutes allowed the
Division of Elections to deal with the school board, and
there was an instance when one REAA had wanted a question on
the ballot and there was no method to achieve that. He said
both the Department of Education and Division of Elections
supported this version of SB 92.
Senator Kerttula MOVED for passage of CSSB 92(CRA) from
committee with individual recommendations. No objection
being heard, it was REPORTED OUT with a "do pass," a zero
fiscal note for the Department of Education, and a fiscal
note for the Office of the Governor in the amount of $0.7.
Co-chairs Pearce and Frank, Senators Kelly, Rieger,
Kerttula, and Sharp signed "do pass."
CS FOR SENATE BILL NO. 256(TRA):
An Act relating to the tax on transfers and consumption
of aviation fuel; and providing for an effective date.
Co-chair Pearce announced that SB 256 was before the
committee.
Senator Sharp said the bill was introduced by the
Transportation Committee and it addressed the statement in
last year's operations budget where the situation was noted
that rural landing fees in rural airports should not be
considered. They were difficult and expensive to collect.
This bill was another option to landing fees for rural
airports. Some organizations did support it. Without this
bill, rural landing fees would have to be reinstated. He
said SB 256 would sunset in the year 2000. It prohibited
charging rural landing fees while this tax was in effect.
Co-chair Pearce commented that Northern Air Cargo supported
the bill. An unidentified man in the audience also said
that Alaska Air Carriers supported the bill.
Senator Sharp said he thought Alaska Airlines supported the
bill.
REED STOOP, Alaska Air Carriers Association, said he
believed that Alaska Airlines would be beneficiaries under
this bill. They would pay less in fuel taxes than they
would in landing fees if landing fees were the alternative.
There had been some mixed correspondence but Kim Daniels,
Alaska Airlines, had told him that they did not object to
the bill.
Mr. Stoop said his organization was very appreciative of
Commissioner Campbell's efforts last year to suspend the
landing fee program which none of the carriers liked. Most
agreed with the Commissioner when he made the decision not
to reinstate the landing fees. At that time, the air
carries agreed that they would not object to a fuel tax
increase that would raise an equivalent amount of money.
They felt it would be a fair tax and a better alternative.
If the money was not raised, the department would be forced
to make cuts to its operation in rural airports and that
would hurt the air carriers.
Co-chair Pearce felt that all members of ATA that opposed
the bill in some way had to benefit from having the feeder
lines going into Anchorage and going back out to provide
other passenger and cargo service throughout the state
because so many towns and villages were not on the road
system and relied on air travel. She agreed that lack of
upkeep at rural airports would cut down on service for these
carriers.
Mr. Stoop agreed with Co-chair Pearce's statement. He said
that an earlier recommendation by Commissioner Turpin to
raise the tax 2 to 2.5 cents was unacceptable and would have
raised 3 or four times what was being collected in rural
landing fees. He said SB 256 was a more modest contribution
of $1.5M and he knew the Department of Transportation's
budget cuts were beginning to effect the rural airport
maintenance support.
Co-chair Pearce asked for a jet fuel comparison between
Alaska's large cities like Anchorage and Fairbanks, and
other major airports in the lower 48. An unidentified man
in the audience said that it was his understanding that fuel
costs were more reasonable in Alaska than in the lower 48.
Senator Sharp said he would have that information for the
committee in a few days.
Discussion was had between Senator Kelly and Co-chair Pearce
regarding the new Albuquerque airport and how it was
financed. Co-chair Pearce noted that it was an old military
base and some funding was paid for or such things as fencing
had already been installed by the federal government.
Senator Rieger asked why the year 2000 had been chosen as
the sunset date. Senator Sharp said he did not know
anything special about the year 2000 but the Transportation
Committee had wanted a sunset in the bill.
Co-chair Pearce announced that SB 256 would be HELD in
committee until Senator Sharp requested that it back before
the committee.
Discussion followed by Co-chair Pearce, Senators Sharp and
Kelly regarding the report regarding jet fuel costs in other
states.
ADJOURNMENT
The meeting was adjourned at approximately 9:40 a.m.
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