Legislature(1995 - 1996)
03/08/1996 09:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
8 March 1996
9:15 A.M.
TAPES
SFC-96, #35, Sides 1 & 2
SFC-96, #36, Side 1
CALL TO ORDER
Senator Rick Halford, Co-chair, convened the meeting at
approximately 9:15 A.M.
PRESENT
Co-chairman Halford along with co-chairman Frank, Senators
Phillips, Sharp, Donley and Rieger were present when the
meeting was convened.
Also Attending: Senator Robin Taylor; Tom Williams, aide to
Senator Steve Frank; Juanita Hensley, Chief of Driver
Services, DMV, Department of Public Safety; Nanci A. Jones,
Director, Permanent Fund Dividend Division, Department of
Revenue; Roger Poppe, aide to Representative Pete Kott;
Dugan Petty, Director of General Services, Department of
Administration; Wendy Redmond, Vice-President for University
Relations, University of Alaska; Sherman Ernouf, aide to
Senator Tim Kelly; Dan R. Fauske, CEO/Executive Director of
Alaska Housing Finance Corporation, Department of Revenue;
Jetta Whittaker, Fiscal Analyst, Legislative Finance
Division; and aides to committee members.
SUMMARY INFORMATION
SPONSOR SUBSTITUTE FOR SENATE JOINT RESOLUTION NO. 14
Proposing amendments to the Constitution of the State of
Alaska relating to confirmation of appointments of public
members who serve on a board or commission involved with
managing the assets of the Alaska permanent fund.
Amendment #1 was MOVED by Senator Rieger and ADOPTED.
Senator Phillips MOVED CSSSSJR 14(FIN) and without objection
it was REPORTED OUT with individual recommendations and $2.2
previous fiscal note from the Office of the Governor.
SENATE BILL NO. 89
"An Act relating to the members of the board and staff of
the Alaska Permanent Fund Corporation."
Amendments #1 & 2 were MOVED by Senator Rieger and ADOPTED.
Amendment #3 was MOVED by Senator Donley and ADOPTED.
Senator Rieger MOVED SB 89 and without objection it was
REPORTED OUT with individual recommendations and fiscal note
of $31.5 thousand from the Department of Revenue.
SENATE BILL NO. 226
"An Act relating to biennial registration of motor vehicles;
imposing biennial registration fees on motor vehicles and
authorizing a scheduled biennial municipal tax on motor
vehicles; relating to fees for motor vehicle emissions
control programs; and providing for an effective date."
Testimony was given by Tom Williams, aide to Senator Steve
Frank in support of SB 226. Juanita Hensley, Chief of
Driver Services, DMV, Department of Public Safety also
testified in support of the bill. Amendment #1 was MOVED by
Senator Frank and ADOPTED. He later withdrew amendment #2.
Senator Donley offered a conceptual amendment which was
ADOPTED. Senator Frank MOVED CSSB 226(FIN) and without
objection it was REPORTED OUT with individual
recommendations and fiscal note from the Department of
Public Safety.
SENATE BILL NO. 232
"An Act relating to permanent fund dividend program notice
requirements, to the ineligibility for dividends of
individuals convicted of felonies or incarcerated for
misdemeanors, and to the determination of the number and
identity of certain ineligible individuals; and providing
for an effective date."
Testimony was given by Tom Williams, aide to Senator Steve
Frank in support of SB 232. Nanci A. Jones, Director of the
Permanent Fund Dividend Division, Department of Revenue was
also called to testify. Amendment #1 was MOVED Senator
Frank and ADOPTED. Senator Frank MOVED CSSB 232 (FIN) and
without objection it was REPORTED OUT with individual
recommendations and new fiscal notes in the amount of zero
from the Department of Law; $2.4 from the Department of
Revenue; $8.9 (change in revenues) from Student Loan
Operations, Department of Revenue; $68.7 from the
Department of Corrections; $5.0 from the Department of
Public Safety; zero from the Alaska State Troopers,
Department of Public Safety; and an indeterminate amount
from CDVSA, Department of Public Safety.
SENATE BILL NO. 37
"An Act relating to treatment of permanent fund dividends
for purposes of determining eligibility for certain
benefits; and providing for an effective date."
Co-chairman Halford said that SB 37 would be HELD OVER until
next week's calendar.
SENATE JOINT RESOLUTION NO. 32
Proposing amendments to the Constitution of the State of
Alaska relating to the constitutional defense council.
Senator Robin Taylor testified in support of SJR 32.
Senator Phillips MOVED SJR 32 and without objection it was
REPORTED OUT with $2.2 fiscal note from the Office of the
Governor.
HOUSE BILL NO. 419
"An Act relating to the disposal of firearms and ammunition
by the state or a municipality."
Roger Poppe, aide to Representative Pete Kott testified in
support of HB 419. Mr. Dugan Petty, Director of General
Services, Department of Administration said that they felt
the bill was unnecessary. Senator Phillips MOVED CSHB
419(STA) and without objection it was REPORTED OUT with
previous fiscal notes of $10.4 (revenue) Department of
Administration; zero from the Department of Public Safety.
SENATE BILL NO. 163
"An Act approving the University of Alaska's plans to enter
into long-term obligations to borrow money from the Alaska
Housing Finance Corporation for the acquisition of student
housing facilities; and providing for an effective date."
Testimony was given by Wendy Redmond, Vice President for
University Relations, University of Alaska; Sherman Ernouf,
aide to Senator Tim Kelly; and Dan R. Fauske, CEO/Executive
Director of Alaska Housing Finance Corporation, Department
of Revenue. Co-chairman Halford HELD SB 163 for further
hearing.
SENATE BILL NO. 278
"An Act relating to the authority of the Department of
Natural Resources to allow credits against fees at state
historical parks."
Co-chairman Halford HELD SB 278 for further hearing.
Senator Phillips introduced Members of the Legislative
Assembly, Yukon Territory. Co-chairman Halford welcomed
John Devries, Speaker of the Legislative Assembly; David
Millar, Deputy Speaker of the Legislative Assembly, Lois
Marie Moorcroft and David Sloan, MLA, opposition; and Esau
Schafer from Old Crow.
SPONSOR SUBSTITUTE FOR SENATE JOINT RESOLUTION NO. 14
Proposing amendments to the Constitution of the State
of Alaska relating to confirmation of appointments of
public members who serve on a board or commission
involved with managing the assets of the Alaska permanent
fund.
Co-chairman Halford said this was a constitutional amendment
proposal that has gone from a generic version to a permanent
fund only version. Senator Donley proposed an amendment
that adds public corporations and then allows for that
definition to be essentially provided by statute to be
drafted as a CS. Senator Rieger objected and referred to
the language on line 15 of the amendment. The way the
statutory definition is drafted it could be construed to
pick and choose what parts of this amendment are to be
applicable to the corporation, contort the process, give
power to the board to appoint an executive director that is
not subject to the approval of the governor or some other
combination. The intent was to decide which corporations
are in and which are out and if they are in it is an all or
nothing deal. It is suggested that the phrase "all or part
of" be deleted so that it just reads "...the applicability
of this section..." and the word "limit" be changed to
"exclude" so that it reads "...the Legislature by law may
exclude the applicability of this section...". The
presumption is that if it is a corporation that manages
assets it is in but a statutory definition may be created to
carve corporations out.
Senator Donley asked if the interplay between the
Legislature and the executive branch regarding corporations
might be modified under this rather than just a question
whether to confirm or not? Senator Rieger said the way it
is written it is the applicability of all or part of this
section. It is not all or part of the corporation subject
to this section. The section has a lot of provisions in it.
It is not only the confirmation, which this is aimed at, but
it talks about whether their removal is provided for by law,
whether they are citizens of the United States, whether the
confirmation occurs in joint session or could we have
confirmation in separate sessions. The way it is drafted
one could pick and choose what parts of the section could be
applied, corporation by corporation. That goes beyond what
the amendment was trying to do.
Senator Donley explained that with regards to public
corporations the Legislature has the authority to set up the
parameters of them by statute because they are created by
statute. All the others terms and conditions, such as
should the governor be allowed to approve the executive
officer be removed or do the board members serve at the will
of the governor, all that can be set out in statute because
they are not constitutional creatures to begin with.
Senator Rieger said the actual constitutional provisions
regarding confirmation by the Legislature could be modified
by statute.
Co-chairman Halford said he did not think that was not an
intended consequence. Senator Rieger and Senator Donley
agreed that it was a reasonable suggestion to deal with that
particular amendment.
Senator Rieger MOVED the two changes as an amendment to
amendment #1 and without objection and the amendment to
amendment #1 was ADOPTED. Co-chairman Halford said there
being no objection to the original amendment it was
therefore ADOPTED and that it would be drafted as CSSSSJR
14(FIN). As do most constitutional amendments there is a
required $2.2 fiscal note to put them on the ballot and that
is the only fiscal note to go with the resolution. Senator
Phillips MOVED CSSSSJR 14(FIN) and without objection it was
REPORTED OUT with individual recommendations and a $2.2
fiscal note from the Office of the Governor.
SENATE BILL NO. 89
"An Act relating to the members of the board and staff
of the Alaska Permanent Fund Corporation."
Senator Rieger referred to amendments number 1 and 2 and
addressed questions that came up in the last meeting.
Amendment number 1 will make it clear that all employees
including the executive director serves at the pleasure of
the board except that there can be employment contracts
entered into as long as they do not exceed two years'
duration. Senator Rieger MOVED amendment number 1 and with
no objections it was incorporated as CSSB 89(FIN) and
ADOPTED.
With reference to amendment number 2 Senator Rieger said it
was the result of previous discussion on removal for cause.
This amendment would make it clear that the governor shall
appoint a board member solely on the financial best interest
of the fund and shall remove a board member only for cause.
There being no objections to amendment number 2 it was
ADOPTED.
Discussion proceeded between Senators Rieger and Donley with
regards to amendment number 3. Senator Donley asked if
there was an exception that already provided for this
amendment, some sort of common law. He felt that it was
exclusionary in not allowing that to be addressed unless
someone on the committee knew if there was some sort of
common law provision that would allow it without being in
the statute. Senator Donley MOVED amendment number 2 as
directed by Senator Rieger and without objection it was
ADOPTED.
Senator Rieger MOVED SB 89 out of committee and there being
no objections it was REPORTED OUT with individual
recommendations and accompanying fiscal note of $31.5 from
the Department of Revenue.
SENATE BILL NO. 226
"An Act relating to biennial registration of motor
vehicles; imposing biennial registration fees on motor
vehicles and authorizing a scheduled biennial municipal
tax on motor vehicles; relating to fees for motor vehicle
emissions control programs; and providing for an effective
date."
Tom Williams, aide to Senator Steve Frank gave testimony in
support of SB 226. Senator Frank noted that amendment
number 1 had the effect of bringing the IM program and the
biennial program into existence at the same time by delaying
the IM program by six months. It was requested by the
Department but has taken extra time to implement the
biennial IM from last year's SB 28. Mr. Williams said that
this amendment arose out of a request from the Department of
Environmental Conservation and with the agreement of the
Department of Public Safety, Division of Motor Vehicles. As
explained in the attached letters to the amendment they
believe that public confusion will be reduced and it will be
less expensive if there is a simultaneous implementation of
biennial registration with the biennial emissions testing.
The amendment tightens the title and delays the
implementation until 1 January 1997, making them concurrent.
It also amends SB 28, last year's IM testing bill, to insure
that they have the authority to stagger the implementation
according to the current language in SB 226 allowing the
biennial registration to be staggered as far as the
implementation. Co-chairman Halford asked about the effect
of the delay of the fiscal note. Mr. Williams said that the
Department had been requested to update their fiscal note to
reflect the increase in revenues as a result of the
accelerated collections. The accelerated collections will
be moved up by six months. There will be roughly a $9.8
million one time windfall in present value terms to the
State of Alaska. Mr. Williams said that there would be a
revised fiscal note showing the time difference should the
amendment be approved. Co-chairman Halford asked about the
statement in the amendment packet on $150,000 for delay of
SB 28. Mr. Williams said that the $150,000 dealt with the
software changes that were required by the various IM
stations and that was funded by DEC. There is no additional
cost from DEC as a result of this amendment. Those costs
are being incurred right now under SB 28 and they had
indicated there would be some additional costs if it was not
made consistent. However, no new fiscal note was submitted
on the original bill hearing.
Juanita Hensley, Chief Driver Services, Division of Motor
Vehicles was invited to join the committee. She advised
that the Department supported this bill along with the
amendments. An updated fiscal note will be provided as soon
as the committee substitute is adopted. She said a draft
fiscal note was prepared and is in the packet for the
original bill but when the committee adopted a CS they had
no idea what the impacts would be on the Department and a
new fiscal note could not be prepared. She said she would
get a fiscal note to the committee as soon as possible when
she knew what the final version was. Co-chairman Halford
said the committee would act on the amendment first and if
after they acted and she could get the fiscal note back to
them they could still move the bill today. Senator Frank
MOVED amendment number 1. Senator Donley objected saying
that some limits should be set consistent with the
philosophy of the bill on the costs that were being charged
for IM. Currently the municipalities of Anchorage and
Fairbanks were charging $10 for the annual certificates.
They will want to go to $20 for the biennial certificates.
Under this bill $2 is discounted for those who register
their motor vehicles biennially. He said he would be much
more inclined to support this bill if a cap of $18 could be
set for the municipalities to charge so they do not double
their fees. Without that it is kind of difficult to go
along with delaying the IM provisions again. People were
disappointed it took as long as it did. Senator Frank
indicated he and Senator Donley had been discussing this
matter and that he shared this concern. However, his
reluctance in putting in the statute a specific amount is
because these issues should be hashed out locally by the
administration and assemblies who will have to administer
the programs. The administration of the municipality will
have to have public hearings and defend it's request to
increase the fees. It will be a dynamic public process to
decide how much to be spent and how much will be justified.
Perhaps some legislative intent could be sent along.
Co-chairman Halford asked about a general statement of the
bill and that it could state that the fee could not exceed
the cost of implementing the program. This is not intended
to be a revenue generator. Senators Frank and Donley
concurred. Senator Frank said perhaps a conceptual
amendment could be prepared. Senator Rieger commented on
the choice recommended by DEC to delay the old SB 28 to the
time of implementation of SB 226. Is there a reason to hold
this off until January 1? They should both come into being
at the same time October 1 or September 1. How much time
would it take for adoption and getting all this together?
Juanita Hensley explained that DEC implementations will not
be ready by July. The Division has already made the
changes available and would have been able to do a voluntary
biennial registration. Coordinating the two is very
important because it will benefit the public. Registration
renewal mail-outs would have to be ready to go in August to
be ready for 1 October.
Senator Rieger said he understood DEC would be implementing
SB 28 on 1 July and now they would actually be getting an
extra three months. How would it be harder for them to be
getting something ready for three months later? Juanita
Hensley said that she could not speak for DEC. She
testified as to the fiscal note numbers that she would be
submitting. The first year would, if it had an effective
date of 1 January, show a revenue of approximately $2.5
million and FY 98 would be $5.85 million. FY 99 through FY
02 shows a loss of revenue of $580,000. for each year.
There would be no operational costs for FY 97 because the
existing funds that were appropriated in SB 28 would be
used. FY 98 through the following years would show a
reduction of operating costs to the Division of $64,000 and
that would be in the mailing of the registrations.
Co-chairman Halford said the question before the committee
was the adoption of the amendment. The remaining questions
are the delay of one versus acceleration of the other and
Senator Donley's question on recovery of cost. Senator
Frank said that it was better to take the January 1 deadline
and not argue about how long implementation would take and
then have the bill not get passed.
Senator Halford said that without objection Senator Frank's
amendment #1 would be ADOPTED.
Senator Donley offered the following conceptual amendment:
"That the State and local governments could not charge more
for the inspection fee than the programs actually cost".
Co-chairman Halford noted "...than the cost of the
administration of the program". The debate would be the
direct costs or the direct and indirect costs. Juanita
Hensley re-iterated that this was a cost that DEC had and
DMV did not get involved. Co-chairman Halford did not feel
that it was unreasonable to have it be a revenue generator.
Co-chairman Halford said that there being no objection to
Senator Donley's conceptual amendment it would be drafted as
part of the Finance CS and essentially is intended to treat
municipal and State governments the same way.
Senator Phillips MOVED amendment number 2. He said that a
few years ago a revision to Title 28 was passed
inadvertently charging individuals more money than they
should have been charged and there were a lot of complaints
and this should correct the matter. Co-chairman Halford
said that the amendment was not changing the numbers, rather
it was changing the words. Juanita Hensley said DMV was not
in opposition to the amendment. She did say that there
would be a portion of public complaints. Some discussion
between members regarding public complaints to their
respective offices but in general they agreed that
complaints have died off to some extent. Senator Phillips
WITHDREW amendment number 2.
Senator Rieger still felt that amendment number 2 should be
adopted. Co-chairman Halford said that there was no
substantive effect of what was being done. Senator Frank
felt that the amendment would only cause more confusion and
strongly objects to amendment number 2. He said the fees
were being changed from $35 for one year to $68 for two
years. Co-chairman Halford asked for a vote on amendment
number 2 as drawn by Senator Phillips and offered by Senator
Rieger and it was voted to be WITHDRAWN.
Co-chairman Halford said that a fiscal note of the bill as
amended had been explained to the committee and that it
would show in operating zero for 1997; $64,000 for 1998;
$64,000 for 1999; $2.5 million; $5.8 million and then
$580,000 going forward on the gain/loss side. As long as it
is understood exactly what it was going to be it can be
assumed the committee is adopting that fiscal note with the
bill. Juanita Hensley advised that the information was
correct and that the fiscal note would be made available
today. Co-chairman Halford said it could go with the bill
to be read across on the floor today.
Senator Frank MOVED CSSB 226 (FIN) and without objections it
was REPORTED OUT of committee with individual
recommendations and the explained fiscal note.
CS FOR SENATE BILL NO. 232(FIN)
"An Act relating to permanent fund dividend program
notice requirements, to the ineligibility for dividends
of individuals convicted of felonies or incarcerated for
misdemeanors, and to the determination of the number
and identity of certain ineligible individuals."
Tom Williams testified on behalf of CSSB 232(FIN) and said
the Department of Administration initially proposed an
amendment to allow monies to be directed to child support.
There was a constitutional problem; an equal protection
problem as opposed to a dedicated funds problem. That
amendment should not be considered as agreed by Senator
Frank's office and the Department. The next amendment
addressed additional concerns by the Department of Law which
defined when the conviction would be considered for
implementation. The amendment also addressed concern as to
whether multiple convictions out of a single criminal
episode would count in determining ineligibility. This
amendment said that each criminal episode should be treated
as a single conviction, regardless of the number of
convictions. Those amendments were requested by the
Department of Administration. The other concern expressed
by the Department of Administration had to do with whether
or not by expanding the agencies funding would be provided;
that the Legislature would re-direct current funding to
those other agencies. The intent of this legislation is to
add additional funding for other agencies.
Co-chairman Halford said a blank CS had been adopted.
Senator Frank MOVED amendment number 1 and without objection
it was ADOPTED.
Nanci A. Jones, Director, Permanent Fund Dividend Division,
Department of Revenue invited to join the committee. She
said the Division was satisfied with the bill in its present
status along with its amendment.
Senator Frank MOVED CSSB 232(FIN) and with no objections the
bill was REPORTED OUT with individual recommendations and
fiscal notes in the amount of zero from the
Department of Law; $2.4 from the Department of Revenue; $8.9
(change in revenues) from Student Loan Operations,
Department of Revenue; $68.7 from the Department of
Corrections; $5.0 from the Department of Public Safety; zero
from the Alaska State Troopers, Department of Public Safety;
and an indeterminate amount from CDVSA, Department of Public
Safety.
SENATE BILL NO. 37
"An Act relating to treatment of permanent fund
dividends for purposes of determining eligibility for
certain benefits; and providing for an effective date."
Co-chairman Halford HELD the matter in committee until next
week. Senator Phillips said that there were a number of
matters that needed further discussion regarding the fiscal
notes.
SENATE JOINT RESOLUTION NO. 32
Proposing amendments to the Constitution of the State
of Alaska relating to the constitutional defense council.
Senator Robin Taylor testified on behalf of SJR 32. He said
that the reason the bill was before the committee was
because it would require a vote of the people. The fiscal
note attached is because of the extra paragraph or two that
would be needed to place it on the ballot. The bill is a
simple concept but a significant change in our
constitutional make up. The constitutional defense council
created by this legislation would have the option, should
any governor in the future, fail to defend the constitution
of the State of Alaska or fail to prosecute actions to
defend the sovereignty and constitution of this State. The
council could initiate such action and would have standing
before the Courts. The committee is well aware that the
Legislature has in the past attempted to both initiate
action or continue with actions previously filed by the
State of Alaska and upon dismissal by the Governor when we
attempted to intervene we were told that we did not have
standing sufficient to be before the Court and were
dismissed on those grounds. One recent example is the
"Babbitt" case. Because of the dismissal of that case,
federal agencies, both interior and agriculture, are in the
process of developing regulations under the subsistence law
of Section 8 in ANILCA which law would, if those regulations
are carried out and enforced, the entire fishing industry of
the State of Alaska this summer will be regulated under
subsistence laws. That is the direct result of the
dismissal of that suit. Our forefathers never contemplated
electing a Governor into office who would fail to defend the
constitution of the State of Alaska, and in so doing,
forfeit the rights of the people of Alaska and the rights
under our constitution. By creating this council there will
be an independent body made up of members appointed by the
Senate President, the Speaker of the House, by the Governor
and from the public at large who will make an objective
determination as to whether or not litigation needs to be
pursued and will have the authority and right to pursue that
litigation in defense of our constitution. It should not be
seen as a threat to any administration because it would be
assumed that the administration, an executive branch of this
State, would be carrying forward those defenses and
prosecutions that were necessary to defend our constitution.
It should be only seen as supplementary to, and supportive
of that administration. However, should any administration
in the future fail to defend the constitution they would
have the right to intervene. Their funding would be through
the legislative branch and that is the basis upon which they
would receive their authority.
Senator Rieger said the primary concern has been where only
the executive branch has been able to bring actions at the
federal level. What is added by adding state constitutional
law? Senator Taylor said this would limit the council to
bringing those actions that would affect State
constitutional law as opposed to merely going off and
litigating any question involving federal constitutional law
that would be of interest to them. They are allowed to
litigate in the State courts, the Federal courts and before
administrative agencies. There was a recent dismissal of an
appeal before an administrative agency that two extensive
hearings were held on and we still have no idea what the
future ramifications of that decision may be. Senator
Rieger and Senator Taylor discussed a hypothetical
settlement question and what one would be looking at if
there are State or Federal constitutional issues involved
that are being compromised by the settlement. Senator
Taylor said a most recent and controversial example would be
Governor Hickel's settlement of the Exxon Valdez situation
and the manner in which the funds became appropriated
without passing through the legislative process. The dollar
amount would not have been subject to the review of the
council. It would have been wise at the time to have a
group like this available to say only the Legislature
appropriates money, not the executive branch through a
settlement.
Senator Phillips and Senator Taylor further discussed if it
was necessary to put in how many people make a quorum and
what number does it take to have a vote. Senator Taylor
said the drafters advised that this was covered by Robert's
Rules of Order, just as all panels and groups are. Senator
Phillips felt this was vague. Senator Taylor said he would
provide a legal opinion incorporated in the record, on the
floor, in consideration of the amendment, stating the excess
verbage was not necessary.
Senator Phillips MOVED SJR 32 and without objection the bill
was REPORTED OUT with individual recommendations and
accompanying fiscal note of $2.2 from the Office of the
Governor.
HOUSE BILL NO. 419
"An Act relating to the disposal of firearms and
ammunition by the state or a municipality."
Mr. Roger Poppe, aide to Representative Pete Kott was
invited to join the committee and testified on behalf of HB
419. Up until a year ago the Governor and the
administration took all guns which were surplused or
obtained through criminal behaviour and sold them at public
auction. Last October, due to a change in the Governor's
policy, in that he felt handguns were inappropriate to be
sold at public auction, destroyed some fifty of them at a
cost of $12,000. Consequently, there were some lawsuits
filed and then this bill along with companion bill SB 219
were filed to try and stop this practice. As a result of
the bill filing it appears the Governor amended his
procedures and is no longer destroying the guns and so the
bill's position and the Governor's position are more
similar, but there is still an important difference. The
basic difference is that now under both the bill's and the
Governor's policy the guns would be sold to a federally
licensed firearm dealer and the only real difference
remaining is that he would prefer to see those sold to law
enforcement agencies and personnel, whereas this bill would
have the guns sold to the public. It would go back to the
auctioneer/sale procedure. The advantage of taking this
approach is by going through a federally licensed dealer the
public safety issue is maintained because there is a
background check they would have to make on the person
purchasing the weapon to make sure it was not sold to a
felon and used for a possible crime. The other public
safety feature is that the department maintains the right to
still destroy any guns that are deemed unsafe because of
mechanical problems. By passing this bill the revenue
stream would be maintained for selling the guns to the
public and the public would get access to them instead of
just law enforcement agencies. The CS eliminated
municipalities from the bill because there was some concern
that it was a local issue and so municipalities remain able
to dispose of all their guns at sale or auction.
Co-chairman Halford said that the effect of the bill is that
you can buy the exact same weapon at K-Mart, Wal-Mart or any
other Fred Meyer store and the State will not be destroying
them to make a political statement at the cost of the people
of the State. Mr. Poppe concurred.
Senator Phillips said that we have been selling the weapons
since 1959 and there has not been a crime, felony or
misdemeanor charged back to that weapon in the State's
history.
Mr. Dugan Petty, Director, General Services, Department of
Administration was invited to join the committee. He said
that Commissioners Boyer and Otte had set out a policy
governing disposal of firearms. If the bill is passed it
would present an opportunity to untangle multiple and
confusing statutes regarding the disposal of seized or
forfeited firearms. It is also Commissioners Boyer and Otte
policy to make available to certified gun safety programs
firearms for the use in gun safety training. This bill
would prevent that provision as well. It is the position of
the administration that the bill is unnecessary.
Senator Phillips MOVED CSHB 419(STA) and without objection
the bill was REPORTED OUT with individual recommendations
and fiscal notes of $10.04 (revenue) Department of
Administration; zero from the Department of Public Safety.
SENATE BILL NO. 163
"An Act approving the University of Alaska's plans to
enter into long-term obligations to borrow money from
the Alaska Housing Finance Corporation for the
acquisition of student housing facilities; and providing
for an effective date."
Wendy Redmond, Vice-President for University Relations,
University of Alaska was invited to join the committee. She
said the sponsor had a CS for this bill.
Sherman Ernouf, aide to Senator Tim Kelly was invited to
join the committee. He said that University of Alaska at
Anchorage had a student population of 16,000 credit
students, which represents 64% of the total University of
Alaska system-wide enrollment. UAA only has 384 beds,
allowing them to provide housing to 2.6% of their students.
By way of contrast the Fairbanks campus provides housing for
38.9% of their students and the Juneau campus 16.6%. Every
fall, hundreds of Alaskans, both urban and rural are denied
campus accommodations at UAA due to insufficient space.
This gap is growing every year. This bill would allow the
University of Alaska to construct a new 600 bed dormitory on
the campus of UAA, using a long-term loan of $33 million
provided from AHFC. According to studies, resident students
do better in colleges and they achieve more academically. A
whole host of things develop better such as; social skills
and development of leadership opportunities. In a recent
survey conducted at UAA, 26% of the student body indicated
their desire to live on campus. Lack of housing for single
students, Alaska Natives, married students, athletes and
international students is inadvertently forcing Alaskans to
attend out of state institutions. This bill would provide a
mechanism for UAA to get the housing they desperately need.
Senator Frank referred to page 2 of the bill and noted the
annual debt services $2.7 million over 25 years which the
University of Alaska will pay $1.7 million and asked who
picked up the balance.
Wendy Redmond answered that this would be financed with
subsidized loans from AHFC. They will be paying
approximately $1 million per year on the interest rate
subsidy for the bonds. Senator Frank asked if they would be
able to use arbitrage funds or something that did not use
their equity.
Mr. Dan R. Fauske, CEO/Executive Director, Alaska Housing
Finance Corporation, Department of Revenue was invited to
join the committee. He indicated that under the current
scenario it would be monies out of next year's capital
budget to pay for that cash subsidy. He was waiting on a
response on bond counsel and tax counsel as to some
potential uses and at this time was unclear if it would
qualify under the arbitrage limits of IRS. Senator Frank
asked if it were legal under the IRS code would that be
their preference. Mr. Fauske said that at present they did
a straight bond sale calculation, factored in the subsidy
that was required to make the cash flow work for the
university and then utilized what was known as existing cash
in the succeeding years.
Co-chairman Halford said if it could go in to the arbitrage
use then it probably had more potential support than if it
competed with other non-arbitrage qualified capital budget
items. Senator Rieger agreed.
Mr. Fauske said that there is an assisted and an unassisted
portion of this debt. The unassisted portion is at 3% and
it is about $3.253 million they will pay full interest rate
on. Senator Rieger asked if the arbitrage funds could be
blended in with other totally different projects. Mr.
Fauske said there were two different arbitrage funds you
might need to use to get the total blended rate within the
excess cap that is established by the IRS. The excess must
be determined and the rate of the coupons determines what
interest rates would be charged on use of arbitrage funds.
Co-chairman Halford said that the arbitrage determination is
based on the project and could apply to the whole project.
If it is eligible for use of arbitrage earnings it may be to
our advantage to take the entire income stream out of the
arbitrage earnings and thereby release the other dollars
within or outside of the university system for unrestricted
capital use. Mr. Fauske asked if he meant to fund the
entire project out of arbitrage. Co-chairman Halford said
if the whole project is qualified for use of arbitrage then
it is qualified as a project next is to look at the whole
package of expenditure of arbitrage earnings. Senator
Rieger asked how the split was arrived at, the amount that
was to be arbitraged or assisted and the amount that goes to
the unassisted. Mr. Fauske said that it was based on cash
flow information the university supplied as to what they
felt they could afford on their projected future finances.
Senator Sharp said he didn't know what size capacity of
dormitory this amount of money would build. At a capacity
of 500 it would come out to $5,000 per year per occupant to
support that building counting debt service, maintenance and
operation. That would only pay for the university's
portion, not the portion being paid by AHFC subsidized.
Wendy Redmond indicated that this project was a 550 bed
facility and included a full food service facility. Senator
Sharp voiced concern of obligating AHFC for 25 years of
payments on the subsidized amount and would the economics of
$34 million plus furnishings and operating costs on the debt
service inflate an additional operating cost to the
university. The total university operating cost plus the
university's debt, less the amount of anticipated revenue
from student occupancy would appear to not cover the total
cost of the structure. The money would have to come from
someplace else. Wendy Redmond said the dorm receipts are
expected to be $1.5 million per year. That will be covering
the student occupancy during the year as well as use of the
facility during the summer for tours and groups and projects
they bring in, similar to what they do in Fairbanks. In
addition the campus is committed to generating an additional
$4 million of revenue. $3 million will be financed over a
twenty-five year period. Hopefully that can be bought out
sooner. There is also anticipation in selling a condominium
facility and putting the money into the project. Mr. Fauske
said that if you look at the numbers there is a gap between
construction costs. There is a capitalized interest period
of about three years during the construction phase. There
is no revenue coming in because it is being built. The debt
structure or bond sale would be designed with bonds to cover
that cost. During that time interest is paid on the bonds
and interest is earned on the money that was sold. Senator
Sharp asked what the projected operating and maintenance
cost would be on this structure. The total revenue
anticipated is $1.5 million and that does not cover the cost
of the debt service the university will pay at $1.751
million. Somewhere the university budget will have to go
up. Senator Frank asked if he meant heat, lights,
maintenance and janitorial service and Senator Sharp
concurred. Wendy Redmond said those costs were covered by
the rental receipts from the facility, the students and the
summer usage and those would cover the university's
obligation for the debt repayment under the AHFC subsidized
portion plus pay the costs to maintain and operate the
facility. The board of regents will no longer approve a
project that does not provide all those costs up front. She
said she would bring a complete break down for the
committee. Senator Sharp indicated that it would cost a
student in the dorm approximately $6,000 for a nine month
period. This would not cover a maintenance operating cost
of this building. Wendy Redmond said that the board's
intention is not to create two residential campuses in the
State. Fairbanks is the residential campus and we intend to
maintain 35% to 50% of the full time students with housing.
In Anchorage we are currently at 6%. This will bring us up
to 12%-13% of the total full time students and a little less
than 5% of their total student body. However, there are
students coming in from all over the State because we have
programs in the Health/Sciences, social work, and vocational
programs that are offered only in Anchorage. It is
particularly difficult for young college students to try and
find housing.
Co-chairman Halford HELD the bill in committee and would
like an answer on the arbitrage question.
Senator Frank asked that how much interest rate has to be
paid, and explanation of the $1 million in cash, what about
the other $3 million and why you have them separated, and
level payment term all be explained at the next meeting.
Wendy Redmond answered about the $3 million at this time and
the reason it was separate was because the Chancellor felt
he had commitments from the local communities and
corporations to raise $3 million to support housing in
Anchorage. Senator Frank said it appeared to be a debt
service. Wendy Redmond said that they would finance the $3
million from a separate stream of cash flow.
ADJOURNMENT
The meeting was adjourned at approximately 10:50 A.M.
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