Legislature(1997 - 1998)
05/01/1997 09:10 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
1 May 1997
9:10 a.m.
TAPES
SFC-97, #135, Side 1 (000 - 590)
Side 2 (590 - 137)
CALL TO ORDER
Senator Bert Sharp, Co-chairman, convened the meeting at
approximately 9:10 a.m.
PRESENT
In addition to Co-chairman Sharp, Senators Phillips, Parnell
and Adams were present when the meeting convened. Senators
Torgerson, Pearce and Donley arrived shortly thereafter.
ALSO ATTENDING: Senator Gary Wilken; James Baldwin,
Assistant Attorney General, Governmental Affairs Section,
Civil Division, Department of Law; Randy Welker, Legislative
Auditor, Division of Legislative Audit; Diane Barrans,
Executive Director, Post Secondary Education, Department of
Education; Cliff Stone, staff to Representative Alan
Austerman; Paul Fuhs, Alaska ARDOR Association; aides to
committee members and other legislators.
via teleconference: John Binkley, board member, Alaska
Railroad Corporation, Fairbanks; Bill Hupperich, associate
general counsel, AKRR, Anchorage
SUMMARY INFORMATION
CS FOR SENATE BILL NO. 42(STA)
"An Act relating to the fiscal operations of the Alaska
Railroad Corporation; and providing for an effective
date."
Senator Randy Phillips spoke on behalf of the bill. He
noted that work draft (O-LS0182\K, Utermohle, 4/26/97) had
previously been adopted for working purposes. He moved
amendment #1, page 1, line 2, and without objection it was
adopted. He further moved amendment #2, page 2, line 21;
page 3, line 12 and without objection it was adopted.
James Baldwin, Assistant Attorney General was invited to
join the committee. Senator Parnell said there were
problems with debt service and said he had asked for an
opinion from house counsel for the Alaska Railroad. Mr.
Baldwin said he had spoken with AKRR counsel. He explained
the debt service and that it could be under operating
expenses of the railroad. The railroad felt there was a
cost to what was happening. He said subsection (6), page 4
explained the inclusion of the debt service. It was
suggested that an amendment be made on page 4, line 10 to
insert: "...but only for expenditures to satisfy debt
service of the corporation...". Senator Parnell moved this
as amendment #3 and without objection it was adopted.
John Binkley, Board Member, Alaska Railroad testified before
the committee via teleconference from Fairbanks. Co-chair
Sharp explained amendments #1, #2 and #3. In response, Mr.
Binkley felt the amendments complimented the bill. Senator
Phillips said as far as he was concerned matters concerning
the bill were now taken care of by the amendments but that
Alaska Railroad would always testify against the bill
anyway. Mr. Binkley said that debt issue aside, there were
structural problems with the bill. The railroad operated as
a business entity but was under a constraint to operate
efficiently. It would cause problems to have their business
year end the same as the fiscal year. That would mean
ending in the peak of the season when they are doing 70% of
their business. A closeout in December would be better
because it would not hinder
business operations at that time. It was extremely
burdensome to make changes during peak time and the
corporation always tried to make decisions based on sound
principles. He did note for the committee that up until
now there had been dozens of lawsuits against the
corporation but the State had never been made a party.
Under the bill liability would transfer from the Alaska
Railroad to the State and they would have to assume the
railroad liability. Because AKRR had it's own board the
operation has run more like a private business. It should
not become another State entity.
Mr. Randy Welker, Legislative Auditor, was invited to join
the committee. He said under the Executive Budget Act there
should be no concern for AKRR. The proposed budget
appropriated everything to AKRR. Senator Phillips posed the
liability question. Mr. Welker said he would have to defer
to the involved attorneys.
Mr. Baldwin commented on general liability. He said it
would be a possibility the State would be held liable in any
suits. However, he felt it would be up to the Court to
consider how separate the corporation is from the State.
Bill Hupperich, associate general counsel, AKRR testified
before the committee via teleconference from Anchorage. He
said he concurred with Mr. Binkley's testimony. He said
under this bill the railroad would lose status as an
enterprise and no longer be separate from the State.
Senator Phillips said the railroad could be handled the same
as AHFC and AIDEA. He noted they were doing just fine under
the State. Mr. Hupperich explained the different tax
exemptions and said the railroad could not issue more than
$10 million debt per year if under the State.
Senator Phillips moved CSSB 42(FIN) with individual
recommendations and accompanying fiscal notes and without
objection it was reported out.
(The committee took a brief at ease.)
SENATE BILL NO. 189
"An Act relating to eligibility for and default,
collection, and repayment of student loans; relating to
nonrenewal of certain occupational licenses for default on
a student loan; and providing for an effective date."
Co-chair Sharp called the meeting back to order and
introduced SB 189. Senator Gary Wilken, sponsor of the bill
was invited to join the committee. He referred briefly to
the sectional analysis and sponsor statement.
Senator Pearce said Alaska had a successful student loan
program but they were very unsuccessful in their collection
and management. She said specifically that Post Secondary
had not been able to figure out the direct deposit system.
Senator Wilken said the Commission was aware of this problem
and they were trying to correct it.
Diane Barrans, Executive Director, Post Secondary Education
was invited to join the committee. She described the
Commission's position on SB 189. The current loss of $2.7
million was a significant decrease over last year. Co-chair
Sharp indicated that money had been expended for computer
update and wanted to know the present status of this. Ms.
Barrans said the new computers were brought on line in
November and that it was a successful conversion. Co-chair
Sharp asked the amount of new loans that entered into
default status. Ms. Barrans explained the default system.
She said that between FY '95 and FY '96 there was $18
million in default. Senator Pearce asked if a co-signature
on the loan would help correct the default situation and how
would the Commission consider this suggestion. Ms. Barrans
said it would be agreeable to the Commission but noted the
average age of borrowers was 28 years of age.
Senator Pearce said there was still some problems with the
direct deposit system. The debit was being made but the
credit was not being entered to the student's account. Ms.
Barrans acknowledged this problem but said they were trying
to work this out through the Department of Revenue. Senator
Pearce noted the problem lay therein and suggested the
Commission should be working through private enterprise.
Ms. Barrans also felt that the Commission must relay more
precisely to borrower's how the system worked. This was a
timing issue and not a software problem. Senator Pearce
suggested perhaps automatic debit could be set up to meet
the proper time frame of the borrower.
Senator Phillips moved amendment #1 and asked the
Commission's comments regarding full-time students outside
paying back half-time loan used in-state. Ms. Barrans
indicated that had been an oversight and amendment #1 would
correct this. Without objection amendment #1 was adopted.
Senator Torgerson asked about doctors and attorneys being
left out of the bill. Ms. Barrans said attorneys were not
included but doctors were. Senator Torgerson referred to
page 4 and page 7 line 7. Ms. Barrans at this point noted a
technical amendment should be made on page 14, line 24; the
section should correctly read "20".
Senator Torgerson moved amendment #3, page 9, line 21 to
read all language necessary to include attorneys. He moved
to remove the motion pending clarification of amendment #2
and without objection his motion was removed.
Senator Phillips advised the committee that amendment #2 as
proposed by Ms. Barrans had not been moved. He therefore
moved amendment #2, page 14, line 24 and without objection
it was adopted.
Senator Torgerson then moved his amendment #3, page 9, line
21 and without objection it was adopted. He moved CSSB 189
with individual recommendations and accompanying fiscal
notes and without objection it was reported out.
HOUSE BILL NO. 35
"An Act extending the termination date of the Alaska
regional economic assistance program; and providing for an
effective date."
Co-chair Sharp introduced HB 35. Cliff Stone, staff to
Representative Alan Austerman was invited to join the
committee. He explained the sunset date on behalf of the
sponsor.
Paul Fuhs, Alaska ARDOR Association was invited to join the
committee. He referred to the ARDOR annual report. They
had expected an LB&A audit. He said this was an outreach
program for AIDEA and that $620,000 had been included in the
House and Senate budget.
Senator Torgerson moved HB 35 with individual
recommendations and updated fiscal note of 1 May 1997.
Without objection it was reported out.
ADJOURNMENT
Co-chair Sharp adjourned the meeting until 9:00 a.m.
tomorrow.
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