Legislature(2013 - 2014)SENATE FINANCE 532
03/19/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB80 | |
| HB23 | |
| HB266 || HB267 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 266 | TELECONFERENCED | |
| + | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | SB 80 | TELECONFERENCED | |
| += | HB 23 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
March 19, 2014
9:14 a.m.
9:14:36 AM
CALL TO ORDER
Co-Chair Kelly called the Senate Finance Committee meeting
to order at 9:14 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Christine Marasigan, Staff, Senator Kevin Meyer; Senator
Fred Dyson; Deven Mitchell, Executive Director, Alaska
Municipal Bond Bank Authority, Department of Revenue; Jeff
Ottesen, Director, Division of Program Development,
Department of Transportation and Public Facilities; Judy
Dougherty, Acting Executive Director, Knik Arm Bridge and
Toll Authority; James Armstrong, Staff, Senator Pete Kelly;
SUMMARY
SB 80 OUT-OF-STATE PHYSICIAN LICENSE
CSSSSB 80(FIN) was REPORTED out of committee with
a "do pass" recommendation and with a new zero
fiscal note from the Department of Commerce,
Community and Economic Development.
2d CSHB 23(RLS)
KNIK ARM CROSSING; AHFC
CSHB 266(FIN)
APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 266(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 267(FIN)
APPROP: MENTAL HEALTH BUDGET
CSHB 267(FIN) was HEARD and HELD in committee for
further consideration.
Co-Chair Meyer stated that the operating budget would be
taken up in the evening portion of the meeting.
SENATE BILL NO. 80
"An Act relating to the practice of telemedicine and
relating to licenses for out-of-state physicians or
podiatrists to practice telemedicine in this state
under certain circumstances."
9:15:42 AM
Co-Chair Kelly MOVED to ADOPT the proposed committee
substitute for SB 80, WORK DRAFT 28-LS0615\H Martin 3/18/14
as a working document. There being NO OBJECTION, it was so
ordered.
CHRISTINE MARASIGAN, STAFF, SENATOR KEVIN MEYER, addressed
the new committee substitute (CS) and related that it dealt
with Section 2 of the bill. She noted that there had been
groups seeking exemptions from Section 2 of the
legislation, most notably of which were the Department of
Corrections and the Department of Health and Social
Services. She pointed to page 2 of the CS, specifically
lines 2 through 10; the exemption about controlled
substances specifically stated that the physician must have
an established physician/patient relationship and when
appropriate, a licensed healthcare provider is present with
the patient. Under the legislation, a license healthcare
provider included nurses. She related that the only other
change in the CS was the addition of language that the
emphasis was on resident physicians, meaning that they
practiced and were licensed in Alaska; follow up care
needed to be available to the patient. She related that the
bill also had a zero fiscal note and that it was not
anticipated that the note would change as a result of the
CS.
Co-Chair Meyer observed that the committee liked zero
fiscal notes and inquired if the new CS addressed Senator
Olson's concerns. Senator Olson replied that it did and
other physicians that he had spoken to were much more
comfortable with it as well. He applauded the sponsor for
working with his staff to make sure that the issues of
Rural Alaskan physicians were addressed.
Vice-Chair Fairclough wanted to confirm that the CS
included nurse practitioners. Ms. Marasigan responded in
the affirmative.
9:18:48 AM
Co-Chair Meyer inquired if the sponsor had comments on the
changes in the CS.
SENATOR FRED DYSON, appreciated the work of Co-Chair
Meyer's staffer, Ms. Marasigan, on the bill and stated that
the sponsor had tried to answer everyone's objections. He
addressed Senator Olson and understood that the American
Medical Association might send a letter of endorsement to
the bill, instead of opposing it. He noted that with the
passage of the CS, tribal health centers would be able to
be reimbursed for treating non-Alaskan Natives. He observed
that everyone appreciated that the tribal health centers
served everyone who walked in their doors and offered that
the reimbursement would be helpful.
9:20:14 AM
Co-Chair Kelly MOVED to REPORT CSSSSB 80(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSSSB 80(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new zero fiscal note from
the Department of Commerce, Community and Economic
Development.
9:20:47 AM
AT EASE
9:22:33 AM
RECONVENED
2d CS FOR HOUSE BILL NO. 23(RLS)
"An Act creating the Knik Crossing Development
Corporation as a subsidiary corporation of the Alaska
Housing Finance Corporation and relating to bonds of
the Knik Crossing Development Corporation."
9:23:16 AM
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, related that the CS
before the committee was an acknowledgement to some of the
concern to the public/private structure and the
indeterminate amount of obligation that the state would be
taking on within that structure of the Knik Arm Bridge and
Toll Authority (KABATA) project; the concern covered trying
to quantify and limit the state's exposure. He related that
the concern from his office specifically regarded using the
state's debt capacity and credit for an availability-
payment support structure in which the state would not
receive the true benefit of that credit support structure.
He observed that the bill before the committee had three
basic components of financing, the first of which was the
federal highway funding that would need to be appropriated.
The second financing component was the Transportation
Infrastructure Finance and Innovation Act (TIFIA) loan that
would fund about a third of the project and the third
component was revenue bonds of State of Alaska that would
subject to an appropriation and moral obligation commitment
of the state, as well as a subordinate claim on toll
revenues. He stated that it was anticipated that the
federal government would be willing to take risks on tolls
if the state provided funding for the project. He related
the through federal highway receipts as well as borrowing
based on the state's credit rating Alaska co pledge the
toll receipts to the TIFIA loan rather than having the loan
backed by the state.
Mr. Mitchell continued to explain the bill's financing
components and stated that there was about $300 million in
bonds and that the exact numbers depended on the final cash
flows. He referenced a document in members' packets that
described the general cost of the project (copy on file).
He related that the estimated project cost needed was $894
million and that the remaining authority available for
construction was $18.932 million. He continued that the
budget proposal for the project for FY15 was $55 million
and that approximately $226 million was needed in
additional federal aid, which was expected to be funded
over a 5-year period at about $45 million per year. He
related that there would be $251.495 million in state-
issued bonds, which did not include the cost of issuance or
the reserve fund that would be required for those bonds and
this would make the issuance cost in the $280 million
range; the bill currently provided an upper limit of $300
million. He stated that the bonds would be subject to an
appropriation commitment of the state to pay debt service
out of General Fund receipts, a moral obligation reserve
structure, as well as a subordinated lean on toll revenues;
however, the expectation was that there would not be toll
revenues available to pay the obligation for 7 to 12 years.
He added that the administration did not want to focus on
toll revenues as the commitment of the state and stated
that the committee should recognize that the obligation
would be something that would need to be considered every
year until it was paid off; the expectation was that the
debt on that would be about $20 million to $25 million
based on the size of the final obligation, as well as the
interest rates at that time.
Mr. Mitchell related that the TIFIA loan for the project
was projected at $341.3 million and that the state would
not be backstopping it; the loan would be secured solely by
the expected toll revenues of the bridge. He thought that
the state not needing to secure the TIFIA loans was a big
benefit of the shift in structure and noted that the money
the state would be borrowing would be at the hi-AA credit
levels and at the lowest possible costs. He stated that
there were some projections of interest earnings on the
construction fund that totaled out to $894.4 million.
Mr. Mitchell was unsure if the committee wanted more detail
on some aspect of the plan or if it would like to walk
through some specific details of the bill. He concluded
that he was open to committee questions.
9:29:35 AM
Co-Chair Meyer inquired how difficult the TIFIA loans were
to obtain and what the difference was between them and the
revenue bonds; he thought that both would be backed by the
tolls from the bridge. Mr. Mitchell replied that Alaska did
not currently have any TIFIA loans and that the program was
a federal one that helped develop infrastructure in the
U.S.; there were a finite amount of funds available in the
program and it was administered by the Federal Highway
Administration (FHA). He stated that the Knik Arm Bridge
and Toll Authority (KABATA) staff had supplied a letter of
interest to the TIFIA program several times in the past and
that FHA had to invite an application; the project needed
to be more shovel ready and have the components in place
before it would get an invitation. He reported that the
TIFIA program had structural advantages that could not be
found on the open capital markets; it took a very long
view, could be placed in the back of the amortization
schedule, had a very low interest rate, and was willing to
forgo interest expense in the short-term. He offered that
TIFIA loans were, in a sense, similar to a revenue bond in
that they would be getting the commitment of the toll
receipts of the bridge on a senior-lien basis, which meant
that they had the right, after operations and maintenance
were paid, to receive all revenue until their debt service
or loan repayment was met for that year; however, the
revenue bonds that the state would be issuing would be
secured by a lesser pledge of the toll receipts and there
would not be any tolls flowing to pay those bonds unless
operations and maintenance were met, the TIFIA loans were
met, and there were excess revenues.
Mr. Mitchell related that there were others who could speak
more succinctly to additional details regarding the TIFIA
and pointed out that he had no direct experience with that
program.
Co-Chair Meyer surmised that Mr. Mitchel was saying that if
revenue totals did not cover the repayments, the state
would have to cover with General Funds. Mr. Mitchell
replied that that only applied on the state's revenue bonds
and not TIFIA bonds. He explained that if the toll revenues
were deficient, TIFIA did not get repaid until they were
sufficient. He added that there would be some risk taken by
the federal government with the TIFIA loans.
9:32:56 AM
Senator Dunleavy inquired if the state would get first dibs
on the tolls for its obligation or if the TIFIA program
would have the first crack at the tolls. Mr. Mitchell
responded that the TIFIA program would have the first lien
on tolls and the state would take a subordinate position on
those tolls. He reported that in a normal scenario, it
would not be financeable on its own, which was why there
was a requirement that there be a commitment of Alaska to
backstop the revenue bonds that the state would issue.
Senator Dunleavy surmised that the full faith and credit of
the state would have to back up the state-issued bonds and
that the federal government would be on the hook if the
tolls were not enough to cover the TIFIA repayment; he
assumed that if the tolls were not enough to meet the TIFIA
repayments, then it would also not be enough to cover the
state-issued bonds. Mr. Mitchell responded that the
statement regarding TIFIA was correct, but that Alaska
would not be giving its full faith and credit pledge of the
state, but a lesser pledge called a "subject to
appropriation pledge,"; which was similar to other
obligations that had come before the committee.
9:35:32 AM
Senator Dunleavy inquired what the maximum exposure of the
state would be in the worst case scenario. Mr. Mitchell
replied that the bill authorized $300 million in revenue
bonds and that once the debt was sold, it could not be
taken off the table; the debt was typically sold with a
ten-year call. He stated that in a worst-case scenario,
$300 million in principle, plus the interest over a 20-year
expected issuance on that, would need to be repaid. He
thought that the state could wind up with $400 million to
$450 million in total exposure on the project.
Senator Dunleavy inquired if Mr. Mitchell was more
comfortable with the current bill's approach than that one
that was brought forward the previous year. Mr. Mitchell
replied in the affirmative and related that if you compared
the cost of $450 million to a private-activity bond, which
had been previously considered, you could see that the
state was taking the same risk for a lot more money. He
thought that the bill's current structure reduced the
state's potential exposure by hundreds of millions of
dollars and added that in the previous year's concept, the
state would also be back stopping the TIFIA loan;
previously, the state had also been backstopping an equity
investment by the consortium, which had also been
eliminated in the current structure. He reported that the
current structure of the bill represented a significant
improvement for the state from a financial perspective;
however, there could be other considerations such as if the
project could managed more effectively potentially by a
private consortium instead.
Senator Dunleavy inquired if $450 million was the top
exposure of the state in the bill. Mr. Mitchel responded in
the affirmative.
9:38:32 AM
Senator Hoffman saw that in Section 3 of the bill, the
revenue bonds may not exceed $300 million. He pointed to
page 2 of the bill and thought that additional
appropriations by the legislature should be excluded. Mr.
Mitchell understood that Senator Hoffman was referencing
the 2 different sections of statute that were referenced in
the work draft. He clarified that one section of statute in
the draft were KABATA's statutes and that AS 37.15 created
its own authority; it was contemplated that the authority
to issue revenue bonds by KABATA would no longer be
exercised because there was not a need for them to borrow
money. He was unsure exactly what Senator Hoffman's
question was.
Senator Hoffman replied that his question was why the
language "appropriations approved by the legislature" was
needed in the bill as it was outline in the bond reserve
fund. Mr. Mitchell responded that the language in reference
was what created the basis of the state's commitment and
allowed the obligations to be marketable. Senator Hoffman
inquired if it was limited to the $300 million plus the
interest. Mr. Mitchell responded in the affirmative.
Co-Chair Meyer observed that Mr. Mitchell had stated that
he was not an expert on TIFIA and inquired who was. Mr.
Mitchell replied that the Department of Transportation and
Public Facilities, Jeff Stark, or members of the FHA would
be good people to talk to regarding TIFIA.
9:41:23 AM
Co-Chair Meyer thought that since the federal government
was taking a risk on the TIFIA funding, bonds would not be
issued unless it was felt that KABATA was a pretty good
project. Mr. Mitchell responded that Co-Chair Meyer was
correct and that the state would have to have its
obligation on the table before the bonds would be issued.
He thought that the state had not been invited to apply for
TIFIA funds previously because it did not have skin in the
game and that authorizing the work draft's revenue
structure would show the state's obligation, which would
allow TIFIA to move forward; it was expected that with the
new revenue structure, the state would be invited to apply
for TIFIA funding.
Vice-Chair Fairclough inquired if the bonds would be sold
in a 10-year increment. She thought that there would be a
lost opportunity for interest and the cost of that
borrowing capacity and noted that there was another bill
coming out of the Senate Finance Committee addressing that;
she requested an explanation of that legislation. Mr.
Mitchell replied that 10 years was simply the date at which
the bonds could be paid off and that typically tax-exempt
municipal bonds had a 10-year call provision. This allowed
the investors to know that the state was locked in for 10
years. He added that more typically, bonds were priced
along the yield curve and there would be a maturity in each
one of the years between the present and final maturity; an
increasing yield curve would be taken advantage of by
paying off a bond that matured. He recalled selling some
geo-debt the previous week that had priced at an interest
rate of .01 which was 10 basis points in a year. He
surmised that 25 years down the yield curve, maybe the
interest would be at 3.5 and that the state would take
advantage of it; if there were opportunities to adjust
that, the state would consider those.
9:43:59 AM
Vice-Chair Fairclough noted that the committee had been
increasingly focused on debt and what that meant regarding
the state's borrowing ability and the interest rate that
would be received at the market. She wanted to see an
actual cash-flow scenario. She expressed concern that the
state would go out and borrow $300 million, have it sit in
the bank, and pay interest on it. She added even though the
state would be recouping money by drawing interest earnings
on the construction bond fund in the amount of $1 million,
it would still be a net loss; it would be nice to see what
the correlating interest cost to the state was for
borrowing the money. She wanted to see the scenarios
regarding when the cash was needed so that the state was
not borrowing too early if it was going to proceed with the
project. Mr. Mitchell responded that he had misunderstood
the question originally and that Vice-Chair Fairclough had
a very valid point that the state would not want to borrow
the money for too long of a period. He recalled that the
state had had borrowed long in the past and had been forced
to invest short because it needed the ability to spend the
money in the near-term; this could result in the state
paying 3.5 percent and having to reinvest at 30 basis
points. He concluded that the state would try to avoid
borrowing long.
Vice-Chair Fairclough inquired if there was a section in
the CS that stated that Alaska would not issue bonds until
the TIFIA portion of the funding had been approved. Mr.
Mitchell replied that before TIFIA would lend the state
$300-plus million, Alaska would need to have all of the
project's components in place.
Vice-Chair Fairclough observed that the only uncertainty in
the spreadsheet was the need for additional federal aid in
the amount of $226 million.
9:46:57 AM
Senator Bishop inquired if Mr. Mitchell had stated that the
debt service on the $300 million would be $20 million to
$25 million per year. Mr. Mitchell replied in the
affirmative.
Senator Hoffman noted that his question was similar to
Vice-Chair Fairclough's and referenced the target for
bonding capacity at 8 percent. He discussed SB 138, the
Susitna-Watana project, and the KABATA project and
requested a sheet that showed where the state would be if
it had indebted itself on all 3 of those projects.
Senator Hoffman pointed to Section 3 of the bill and
pointed out that it discussed the requirement of the State
Bond Committee to evaluate whether the toll revenues were
able make the principal payments on the interest in the
bonds; he wondered if it would be an off-ramp for the state
if the toll revenues were not adequate. Mr. Mitchell
responded that the provisions in Title 19 were related to
the authorization for KABATA to issue bonds. He added that
there was a check-off for revenue bonds that KABATA might
consider issuing; however, since the State Bond Committee
would be the issuer of the $300 million and there was no
short-term expectation that tolls would be sufficient to
pay for the debt service, the check-off did not exist for
the $300 million.
9:49:32 AM
Senator Dunleavy inquired who would be responsible for cost
overruns under the proposal. Mr. Mitchell responded that
the Department of Transportation and Public Facilities
(DOT) would be better suited to answer the question.
Co-Chair Meyer noted that DOT would be presenting next.
Senator Olson offered that Mr. Mitchell had credibility
because he was at arms-length with the process and noted
that his job was not necessarily dependent on whether the
project went forward as opposed to those who almost had a
conflict of interest on the issue. He offered that the
project was there, but that the Division of Legislative
Audit had indicated that the financial estimates were
questionable. He understood that this was a new proposal
with new estimates, but noted that the state's revenues and
savings were projected to go down; additionally he assumed
that this, along with taking on new debt for the project,
would result in the state's credit rating dropping as well.
He thought maybe Mr. Mitchell had a more objective view
because he was a finance expert and could to help eliminate
the fears of people, like himself, who saw KABATA as
another white elephant. He inquired if his viewpoint on the
project was wrong and if so, how it was wrong. Mr. Mitchell
replied that the new plan defined the commitment of the
state in a much more concise fashion and that with it, the
state knew it would pay maybe $450 million in debt service
for the project in the future; however, from a policy
perspective, it was someone else's job, specifically the
legislature's, whether the state wanted to spend that
amount on the project. He added that people in his office
supported it.
Senator Olson clarified that when he saw the downslope of
oil production, he saw the downslope of the state's
savings. He inquired if it was true that the state's bond
rating would also be going to down from AAA. Mr. Mitchell
responded that it would be a challenge to keep the rating
from dropping in the future. Senator Olson interpreted that
it was true.
Senator Olson noted that Mr. Mitchell had stated that the
debt service on the $300 million would be $20 million to
$25 million and inquired if that was per year. Mr. Mitchell
responded that it was per year. Senator Olson inquired if
the state would be paying that amount every year for 7 to
12 years. Mr. Mitchell responded that the state would be
paying $20 million to $25 million every year for 20 or 25
years.
Senator Olson surmised that the state would be paying a far
larger amount than the $300 million bond package. Mr.
Mitchell estimated that the state would be paying back up
to $450 million.
Senator Olson commented that as you looked at the
insolvency of the state and the issues it was facing, the
financial numbers of the project caught his attention.
Co-Chair Meyer thought that Senator Olson made some good
points and that the committee needed to find a balance. He
noted the school debt, potential heavy-debt on the gasline,
and the $250 million power plant. He added that the
committee would have to balance schools, pipelines, power
plants, and dams with bridges and offered that they were
all important aspects of government.
9:55:01 AM
Vice-Chair Fairclough commented on the state's bond rating
being tied to the decline in oil and offered that what
would happen to the rating was dependent on how the state
chose to respond to the decline, as well as what it had
done to meet its obligation. She thought that Commissioner
Rodell had indicated that if the state was making its
payments and met its obligations within a five-year window,
it would maintain its AAA rating; however, the raters were
watching the $12 billion pension obligation. She thought
that raters would be looking at what the state put towards
paying off the pension liability, how it affected the
operating budget, and how that ratio of debt played into
things. She thought that Alaska had a wonderful opportunity
that revenue continued to benefit and that it also had $50
billion in the bank from the Permanent Fund, which helped
with the credit rating. She thought that school debt needed
to be considered and that sometimes the best thing to do
was to pay off debts and future obligations in order to
position Alaska well until more oil was brought on line.
She offered that the Senate had positioned the state well
to make sure that the debt could be carried by Alaska; the
debt on gas pipeline would not be huge until the state had
contracted with a buyer and it would not borrow money that
it could not pay back. She wanted it on the record that the
Senate Finance Committee had been looking very seriously at
debt and that Senator Olson's concerns regarding debt
management were shared by the committee.
9:57:17 AM
Senator Dunleavy noted that $450 million, from Mr.
Mitchell's perspective, was the maximum exposure of the
state for the project. He assumed, however, that if the
tolls were able to pay TIFIA loans, they would also be able
to help pay down the state debt. Mr. Mitchell replied that
that Senator Dunleavy was correct. Senator Dunleavy
inquired if $450 million was the maximum, worst-case
exposure for the state on the project, from Mr. Mitchell's
perspective. Mr. Mitchell responded in the affirmative.
Senator Olson wondered where money would come from for
potential cost overruns and if the tolls were unable to pay
debt down; furthermore, he was a little pessimistic about
the ability of the project to secure TIFIA loans based on
applications to that program in the past. He wondered what
the backup plans were if the state started running out of
money when it was looking at other projects, such as the
liquid natural gas pipeline, that benefitted all Alaskans.
Mr. Mitchell responded that bonds would not be issued
unless the total anticipated funding need of the project
was already in hand, which he thought might address Senator
Olson's first concern. He stated that DOT could answer the
question of cost overruns better, but that the same options
would be available to fund cost overruns, whether they were
federal highway receipts, additional state leveraging, or
additional TIFIA loans.
Senator Olson commented that a good example of a project
that had gone over budget was the Goose Creek Prison and
stated that it had gone millions and millions of dollars
over cost and that as a result, he was hesitant to commit
to another project that had started off with questionable
cost numbers. He offered that the project was questionable
in the amount of toll revenues that would be generated, the
cost to conduct phase I and II, and how the project
participants had conducted themselves over the last six
months with people in Government Hill.
Co-Chair Meyer noted that being the first to testify was
touch, but added that Mr. Mitchell had done an excellent
job of keeping the state's credit rating as high as it
could be.
10:02:07 AM
JEFF OTTESEN, DIRECTOR, DIVISION OF PROGRAM DEVELOPMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
referenced a 1 page document in members' packets with
orange bars (copy on file) and the column labeled "federal
formula funds," which represented the amount of funds
needed in the one-third/one-third/one-third financing
arrangement for the project. He reported that the total was
$295 million in federal receipts, which did not include
match funds and that the $18.9 million at the top of the
column was the remaining ear-mark funds available to the
project; the $18.9 million was already in the bank and
would not be subtractive of other projects across the
state. He added that the number of federal receipts going
forward between the present and 2020 was closer to $276
million. He spoke to the impact of the KABATA financing
plan on the other project's around the state and related
that the projects financing scheme was based on national
highway system funding, which was now called the National
Highway Performance Program (NHPP). He noted that funding
from the Surface Transportation Program (STP) and other
smaller categories of federal funding were not an issue. He
relayed that funding from STP covered went towards
essentially everything that was not in the national highway
system; community roads and other state highways were not
impacted at all by the financing scheme. He stated that the
project was in the budget for $50 million in federal
funding in FY15, which was about 10.3 percent of the
overall funding per year or 17 percent of the state's
national highway funding. He stated that from 2016 through
2020, the amount of federal funding dropped to about $45
million per year, which would drop the total percentage of
federal funds for the project to 9.3 percent and the
national highway funding to about 15 percent.
Mr. Ottesen continued to discuss federal funding and
related that when he looked at the current portfolio of
national highway system projects that were progressing
through the necessary steps to become eligible for
construction funding, there was about a 12-year list of
projects that were actively being worked on; if you added
the KATBATA project, it became a 13-year list. He reported
that the bridge was a relatively small add on the list to
the total amount of underway projects. He stated that the
average project that was being worked on would be given the
go in about its the 6th or 7th year and that KABATA project
essentially added a half of a year to the average weight of
funding. He stated that some projects progressed more
quickly than others and the question was which type of
projects the state would give the priority to and not slow
down, as well as which types would be waiting a longer
period of time to accommodate the KABATA project. He stated
that factors to consider when making priorities were things
like public safety, traffic volume, and project readiness.
He stated that prioritized projects would be things like
the widening of the Parks Highway through Wasilla; that
project involved a highway-safety corridor where there was
a very bad congestion problem. He reported that DOT was
also widening the Seward Highway near midtown in Anchorage
and that it would also not be slowed down as a result of
the KABATA project. He gave additional examples of projects
that would not be slowed as a result of the KABATA project.
Mr. Ottesen discussed the projects that would be slowed
down to make room for the KABATA project and reported that
there were a series of projects within the national highway
system program that were started when Alaska thought that
the big pipeline would be going through Canada; the
logistics routes to bring that pipe into the state, as well
as the roads and bridges along the route down the
Richardson Highway to Delta and further east were not as
high priority as they were in the past. He reported that
there were also projects being conducted on the Haines
Highway that were considered lower priority. He stated that
DOT would not be cancelling these lower-priority projects,
but would be moving them out in time typically for one or
two years. He offered that in reality, the impact of the
KABATA project would be even less than he had just
indicated and related that every year, a certain number of
DOT's projects did not make the finish line; the success
rate of DOT's projects was about 70 percent, meaning that
30 percent had to be delayed. The causes for delay were
typically due to a lack of approval, the inability to
obtain a right-of-way parcel in time, and too high of a
workload. He stated that other states usually had about a
60 percent success rate and that delays were normal and
were part of the complexity of the federal process.
Mr. Ottesen continued to discuss federal funding and
related that the dollars that were scheduled for a certain
year for projects that did not happen had to be used
somewhere else or the funding would be lost. He explained
that DOT needed manage the program well; if a project did
not happen because the department took on too many other
ones or it exceeded the expected costs, and the department
did not have shovel ready viable substitute, the federal
funding would be lost. He relayed that DOT did not lose
funding in that the manner and that it was built in to the
department to not allow federal dollars to leave the state.
He explained that the KABATA project becomes a natural
place to send the dollars that got delayed by the natural
slippage of other projects; as a result of that, there was
a possibility to fund to the project with very little
impact to ongoing projects. He furthered that if there was
delay in a project for natural reason, the KABATA project
would not have caused it, but it and the state would
benefit from it by having a place to send funding.
10:10:09 AM
Mr. Otteson continued to discuss federal funding and stated
that in addition to projects being delayed, every year, the
state received additional funding. He recalled his
discussion with the Senate Finance Committee several weeks
prior and reiterated that in the last quarter of the year,
over $100 million had become available to DOT due to
project closeouts. He explained that it had been federally
mandated that the department had to close out projects fast
before the next fiscal year and that as a result, the $100
million suddenly became available for use elsewhere; these
kinds of events made KABATA a natural recipient of funding
without impacting the rest of the state.
Senator Bishop pointed to Mr. Ottesen's remarks about
ongoing projects along the route of the proposed big
pipeline through Canada. He pointed out that the committee
had just passed SB 138 and that there was a new pipeline
and route. He stated that the route for the new pipeline
went through Willow but that it had not determined a way
across the Knik Arm. He requested DOT to cordinate with
KABATA regarding the new producers' alignment and related
that he did not want to see SB 138's pipeline or the KABATA
project add costs to one another. Mr. Ottesen reported DOT
had a full-time staffer working on the multiple pipeline
issues and that although he had not spoken to the staffer
recently, he was sure that they were coordinating. He
stated that a bridge on the Dalton Highway had become
structurally deficient the previous summer and that funding
had been assigned to that project to start redesigning the
bridge for reconstruction within less than a month; DOT was
paying attention to that route and knew how important it
was. He stated that the good news was that DOT had had its
attention on the commerce corridor of the Parks Highway and
Dalton Highway long before SB 138's pipeline proposal; the
bridges and segments of the pipeline route were getting
better. Her added that last summer alone, the department
had funded 13 pairs of passing lanes on the Parks Highway.
He concluded that a lot of attention was being paid on what
was essentially the proposed pipeline construction and
logistics route.
10:12:52 AM
Vice-Chair Fairclough inquired if DOT would be managing the
KABATA project. Mr. Ottesen replied in the negative and
that the underlined statute that enabled KABATA had really
put it in charge; however, DOT had a responsibility in the
project because from the viewpoint of FHA, the department
was the recipient of the federal funding that went into the
project. He concluded that DOT had an obligation to make
sure that federal rules were being followed and did have a
role to play in the project.
Vice-Chair Fairclough assumed that DOT was taking a 12
percent or lower percentage cut of the federal funding to
pay for administrative fees that it was incurring on the
KABATA project. Mr. Otteson responded that DOT's current
administrative overhead number was about 5 percent and
thought that the department had negotiated a lower
percentage because of the large size of the project; the
administrative fee was what was paying for the accounting
system, the people that worked in it and other similar
steps.
Vice-Chair Fairclough inquired if the Knik Arm Bridge would
be financed with an approximate structure of 33 percent
tolls, 33 percent state dollars, and 33 percent federal
funding. Mt. Ottesen replied that was the correct
approximate percentage ratio, but that TIFIA represented a
little more than 33 percent. He reported that TIFIA's share
of the funding was about $351 million and thought that the
state share was $300 million. He concluded that counting
the the money that was already on the shelf in the form of
ear-marked funds, the federal share was just under $300
million.
Vice-Chair Fairclough had wanted to alleviate her concerns
her concern that the spread sheet (copy on file) dated
March 1, 2014 stated that there was an additional $226
million. She had been trying to understand the comment that
the federal aided represented about a third of the total
project cost, but noted that there were expected tolls that
would go towards paying the TIFIA debt back. She had
understood that the state was proposing to borrow up to
$300 million, which it would make incremental payments on
over time, depending how much was needed at a particular
time. She had heard that the payments would be between $20
million and $25 million, but noted, however, that the
amount of the payment was based on borrowing all $300
million at once; the state's obligations would increase
over time as the those obligations increased. She also
understood that as the federal government continued to
support the national highway system, the state would have
additional federal funding available that was not
calculated in the financing scheme of the project. She
thought that the proposal would not result in displacing
other projects; additionally, the state would be trying to
pick up anything that was left on the table and would be
prioritizing projects in the out-years. She observed that
the non-prioritized projects would be delayed for a year or
two and that projects that were in the queue would not be
displaced. She concluded that the financing plan for the
project called for a third of funding coming from the
public, a third from the federal government, and third from
the state. She inquired if her understanding of the
proposal was correct. Mr. Ottesen responded in the
affirmative.
10:16:50 AM
Co-Chair Meyer noted that about a third of the financing
for the project were expected federal-toll receipts and
inquired if the cost estimates included the roads that
would need to be built in Government Hill or Point
Mackenzie.
JUDY DOUGHERTY, ACTING EXECUTIVE DIRECTOR, KNIK ARM BRIDGE
AND TOLL AUTHORITY (KABATA), replied that the project's
limits extended from the Government Hill area out to Port
Mackenzie; the project proposal that was before the
committee was within those limits and the funding request
did not include funding for roadway projects outside those
limits. Co-Chair Meyer noted that it was something that the
committee would want to address as it proceeding with the
legislation because there were concerns in Anchorage
whether the existing roads would be able to handle the
increased traffic from the Valley.
Co-Chair Kelly queried what the best-guess estimate was for
the cost of building the additional roads. Ms. Dougherty
inquired if Co-Chair Kelly was referencing potential
additional roads outside of the project. Co-Chair Kelly
responded in the affirmative. Ms. Dougherty replied that
she did not have that information.
Co-Chair Meyer reiterated that the estimates were something
that the committee would want see. Ms. Dougherty responded
that the project limits were confined by the FHA and were
the ones that had complied with the National Environmental
Policy Act (NEPA) and included the entire scope of KABATA's
permitting activities. She concluded that KATABA was not
able to conduct projects outside of those limits. Co-Chair
Meyer interjected that the committee understood that, but
observed that Ms. Dougherty was at the table presenting
with DOT's director of program development who could help
with those roads.
Mr. Ottesen added that the success of the project would be
that it would carry a lot of traffic, which in turn would
stress the existing road networks in Anchorage as it
entered the city; however, the higher traffic would
generate more revenue. He continued that when that revenue
was in excess of the need to pay firstly the TIFIA bonds
and secondly the state's portion, there would be a time
where there was excess revenue available for projects. He
stated that the construct of the project was that these
dollars had to be spent on highway projects that were
eligible under Title 23 rules, subject to appropriation of
the legislature.
10:19:37 AM
Co-Chair Meyer thought that Mayor Sullivan would want
funding for additional roads due to the increased traffic
from the bridge. Ms. Dougherty replied that she had spoken
to Mayor Sullivan and that he was a strong supporter of the
project. She related that one of the things that the
Municipality of Anchorage had expressed was that once
traffic started ramping up, there should be an effort to
bring forward the Ingra-Gambell connection, which was part
of the KABATA project, at the earliest possible date in
order to help alleviate increased traffic issues.
Co-Chair Meyer stated that the committee would have more
discussion once Senator Dunleavy returned and noted that he
was not sure what it was like on the Valley side of the
bridge.
Senator Hoffman pointed to the audit report and discussed
the previous year's proposal and page 19. He was trying to
reconcile why, even though the funding scheme had changed,
there was a drastic difference between the construction
costs of the two proposals. He stated that on page 19, it
showed the total project cost of the previous proposal at
$1.6 billion and had the current year's proposal at $900
million; he noted that there was a $700 million difference
between the two estimates. He acknowledge that a big reason
for the difference was probably the financing scheme, but
that the construction and right-of-way costs on the
previous proposal were about $1.25 billion; the current
proposal did not come close that amount.
Senator Hoffman addressed some of Co-Chair Meyer's issues
from the other side of the bridge and remarked that were
proposed Port Mackenzie road upgrades in the amount of $15
million.
Senator Hoffman inquired what had changed with the new
proposal to reduce the costs so drastically. Ms. Dougherty
responded that the numbers in the audit were taken from the
TIFIA letter of interest and that under that program, the
recipient was allowed to borrow based on the total project
costs from the very beginning of the project which included
pre-construction development, all of the costs that had
been expended to date, as well as the commerce grant that
was given to the Mat-Su Borough to do work on the other
side of the inlet; all this was included in the 33 percent
participation from TIFIA. She concluded that $1.6 billion
included all of the above costs, as well as costs that were
estimated for capacity improvements and roadway expansion
within the project limits; it included the Ingra-Gambell
connection and the widening to four lanes. She stated that
the approximately $900 million that Senator Hoffman was
referencing was just for phase 1 of the project and would
pay for the initial construction on a four-lane foundation
, two-lane roadway; it was also the amount from this point
forward and did not include anything that had already been
spent. She pointed out that the actual cost estimate for
the project was $782 million and that $894 million included
the capacity for things like cost overruns. She recalled
that cost overruns had been discussed earlier in the
meeting and pointed out that FHA required a project to
assess the potential risk for cost overruns; additionally,
there needed to be a financial plan that demonstrated how
potential overruns would be paid for.
10:23:56 AM
Senator Olson queried if Ms. Dougherty was inferring that
some of the project numbers were inflated regarding TIFIA.
Ms. Dougherty responded that FHA required that a project
show that it had the necessary resources to see the project
all the way through and address unknowns. Senator Olson
surmised that Mr. Dougherty agreed that the numbers were
somewhat inflated and that there need to be some funding
for cost overruns. Ms. Dougherty responded in the
affirmative.
Co-Chair Meyer confirmed that Ms. Dougherty was
representing KABATA. Ms. Daugherty replied that she was the
Acting Executive Director of KABATA.
Co-Chair Meyer inquired what the chances were of securing
TIFIA loans for the project and observed that he did not
know how easily obtained they were. Ms. Dougherty stated
that KABATA had a letter of interest in for TIFIA loans for
a number of years and thought that people were aware of the
criticism that it had been turned down for loans; however,
she would like to discuss what TIFIA's purpose was, which
was to provide financing for large infrastructure projects
in which it was expected that the traffic and toll revenue
would not be enough to secure full funding. TIFIA's goal
was to encourage non-federal participation in these types
of infrastructure projects, which is what would happen with
the state bond contribution; KABATA felt very comfortable
that it would be able to secure TIFIA funding. She did not
think that the Department of Revenue would bring forward a
financing plan that included TIFIA unless there was a
relative assuredly that the federal funds would be
received.
10:26:11 AM
Mr. Ottesen added that MAP-21, which funded the Federal
Highway Program, was nearing its end. He reported that
there were currently proposals from Congress and the
White House for the next version of the Highway
authorization. He stated that virtually all of the
proposals he had seen either enlarged TIFIA or create a new
federal infrastructure bank that would work much like TIFIA
to finance projects and help jump start them. He offered
that the concept behind TIFIA was catching on and that it
appeared as though this type of federal funding would
increase in the future.
Senator Olson inquired what TIFIA stood for. Ms. Dougherty
reported that it stood for the Transportation
Infrastructure Finance and Innovation Act.
Senator Olson noted that there was also a federal
infrastructure program called Transportation Investment
Generating Economic Recovery (TIGER). He observed that
KABATA had applied to TIGER and TIFIA a number of times. He
offered that part of the governor's public policy was not
to put his full faith and trust in federal funding coming
to Alaska to do projects. He related that expanding
Medicaid was a good example of a program where Alaska was
counting on federal money that it hoped would be there and
that he agreed with the governor to a certain extent. He
thought that the state was getting itself in a financial
straight jacket that would not allowed it to have certain
projects. He pointed out that in 2010, there were 39
applications to TIFIA and TIGER and that only 4 had been
approved; additionally, in the current year, none of the 4
letters of interest had been approved. He recalled that in
2013, only 6 out of the 34 letters of interest that were
submitted had been approved, which only represented a 17
percent success rate. He asserted there was less than 1
chance in 5 that the KABATA project would secure TIFIA
funding and disagreed with Ms. Dougherty regarding being
very comfortable in securing TIFIA funding.
Senator Olson inquired how his thinking was wrong regarding
the project's poor chances of receiving TIFIA funds. Ms.
Dougherty replied that KABATA shared Senator Olson's
frustration to a degree and reported that when TIFIA was
first getting started, there were delays in getting the
structure in place to submit a letter of interest. She
stated that the TIFIA office looked at project readiness
and that many of the applying projects had not completed
its NEPA document and were not as mature as the KABATA
project. She felt confident that KABATA would secure TIFIA
funding and that on the off that chance that it did not, a
finance plan that satisfied the FHA would still be needed.
She related that nothing would be obligated until KATABA
had a financial plan that the federal government approved.
She explained that there was no risk in trying to secure
the low-interest funds and pointed out that you did not
have to pay TIFIA back for up to five years after a project
opened and tolls were collected. She stated that TIFIA
payments had a recognition that it would take time to build
up revenues on a startup facility.
10:30:56 AM
Senator Olson inquired why the Municipality of Anchorage
was not offering bonds to help further the KABATA project
if Mayor Sullivan was so in favor of it. Ms. Dougherty
could not speak for the Municipality of Anchorage.
Senator Olson stated that it appeared that there was a lack
of confidence that the project would be able to operate in
the black.
Co-Chair Meyer noted the he and Vice-Chair Fairclough had
both been on the Anchorage Assembly and that the city would
not typically offer a bond for the project until the
funding was in place and it ready to move forward.
Vice-Chair Fairclough added that there were major state-
highway corridors that ran through Anchorage that
Municipality of Anchorage was not responsible for. She was
unsure if Ingra-Gambell was a state right-of-way or not.
10:32:12 AM
Mr. Ottesen replied that Ingra-Gamble were both state
highways. He stated that communities putting their own
financing into transportation projects was relatively rare
and that Mat-Su probably did this the most. He related the
difference between the old financial scheme for KABATA and
the current proposal and stated that the old scheme relied
100 percent on the payment for bonds coming from traffic;
it was viewed as somewhat suspect because of its reliance
on traffic. He stated that the current scheme focused on
just the TIFIA portion being reliant on traffic, which was
only a third of the financing; the new plan had cut its
expectation of traffic by two-thirds compared to the
previous proposal. He reported that Juneau Douglas Bridge
had about 9,500 cars per day crossing it and that it took
about 10,000 cars per day to pay back the TIFIA bond funds.
He related that it was reasonable to assume that traffic on
the Knik Arm Bridge would reach levels at least as large in
volume as that on the Juneau Douglas Bridge rather quickly
because the population centers on either side of the Knik
Arm Bridge were much larger.
Co-Chair Meyer noted that if the bridge was not built,
something would have to be done to the Glenn Highway. Mr.
Ottesen replied in the affirmative and added that DOT would
have to improve capacity one way or another. He observed
that the state had never before had a project that was
funded by the users and added that the tolls would also be
funding the maintenance and operation of the project;
additionally, as the tolls were paid off and surplus
revenue was being generated, they would help fund the
general highway program of the entire state.
10:34:31 AM
Co-Chair Meyer did not know what the costs would be expand
the Glenn Highway to accommodate additional traffic and
thought that a comparison of costs between the KATABA
project and expanding the Glenn Highway would be
interesting. Mr. Ottesen responded that the latest estimate
he had heard for work on the Glenn Highway was about $600
million just to add the pair of lanes all the way out to
the Parks-Glenn Y.
Senator Olson recalled that Mr. Ottesen had stated that the
Mat-Su Borough had been very active in bonding for projects
and inquired why it was not bonding for the KABATA project
even though it directly affected them. Mr. Ottesen replied
that Mat-Su was essentially bonding local roads and that he
did know of any instance of an Alaskan community
participating in a national highway system route.
Senator Olson inquired how the KABATA project was involved
with STP funding. Mr. Ottesen replied that he was unsure of
the question.
Senator Olson inquired if most roads have had some type of
STIP consideration. Mr. Ottesen replied in the affirmative.
Senator Olson queried if the STP was involved in the KABATA
project. Mr. Ottesen responded that the KABATA project
would have to be on the STIP because of the federal ear
marks it had received to date; it was considered a federal
project and would have to be on the STP. He stated that the
type of funding that was shown on the STP could be bonds,
TIFIA funding, or federal aid.
Senator Olson surmised that other projects would be put on
hold as a result of the KABATA project and wondered what
types of projects would be delayed and for how long. Mr.
Ottesen stated that the typical project would have to wait
1 or 2 years as compared to the current backlog. DOT
already had a 12-year list of projects and the average wait
would be 6 years on that list without the project. He
stated that the KABATA project would add about another
year's worth of funding demand on its funding stream and
added that projects in which the need for them was no
longer as evident would be the types that would be delayed;
the gas pipeline was a perfect example of that. He
explained that Alaska was no longer building a route along
that older proposition and projects that like this could be
delayed with little impact to the traveling public.
10:38:00 AM
Senator Olson asserted that the sentiment within the Senate
in general was that projects that were underway should not
be slowed because doing so would cost a lot more in the
long run. He offered that projects that were already
started would be delayed as a result of the KABATA project
and that the end costs of those projects would go up
millions if not tens of millions of dollars. He assumed
that Mr. Ottesen agreed with this and inquired why a
public-policy entity like the legislature would be in favor
slowing projects and increasing overall costs. Mr. Ottesen
responded that the state was essentially in the same
dilemma with the KABATA project and that Alaska had started
that project too and had spent over $100 million on it. He
furthered that something would have to be delayed and a
choice would have to be made to prioritize projects that
were the most important to the overall benefit of the
state.
Senator Olson noted that as you looked at the financial
numbers, the same people were providing them as the
previous year. He wondered how these same people could be
trusted this year when their numbers had been found suspect
by a legislative audit the previous year. Mr. Ottesen
stated that there were differences in cost estimated that
could depend how costs were considered, but that the key
number to focus was that the project only needed one-third
of the traffic to be successful and pay of its bond to
TIFIA than it needed under the old scheme. He added that
under the old scheme, the entire project would be financed
by bonds at a higher interest rate.
Co-Chair Meyer noted that in his mind, the state would
either have to spend $600 million expanding the Glenn
Highway or $300 million if you did not count the bond
payments; the bridge would also provide another way in and
out of Anchorage. He stated that a concern about the Glenn
Highway was that an accident blocked off the only route in
and out of Anchorage and that the bridge offered an
alternative route.
Senator Olson understood that the expansion of the Glenn
Highway was already being planned regardless of the Knik
Arm Bridge. Co-Chair Meyer was not sure if both projects
would be conducted and requested an explanation.
10:41:32 AM
Mr. Ottesen responded that the Glenn Highway would need to
be expanded in the future, but that drawing traffic off it
from KABATA would buy time for the future expansion. He
added that it would be good to have an alternative route in
and out of anchorage for times of emergency or breakdowns.
He recalled four to six hour waits after traffic fatalities
on the Glenn Highway.
Co-Chair Meyer noted that the alternate route out of
Anchorage and being able to avoid long delays were concerns
of his, Vice-Chair Fairclough's, and Senator Dunleavy's
constituents and residents of South-Central Alaska.
Senator Dunleavy inquired what the potential economic
benefits of the project would be related to other
transportation projects that were dealing federal receipts.
Mr. Ottesen replied that the project would first pay for
part of its own cost via user fees, would then pay for the
state bonds, would pay for its own operating costs, and
eventually it would contributing dollars to the over
transportation needs statewide subject to legislature's
appropriation. He did not know of another project that had
ever had the set of benefits that the KABATA project had.
Senator Dunleavy wondered if KABATA would still continue
with a plan for federal aid even if TIFIA funding was not
approved. Ms. Dougherty replied that it if TIFIA was not
approved there would still have federal aid through the
highway program and KABATA would have to work with the
Department of Revenue and same financial team on a plan b,
which would have to then be approved by the FHA before it
could continue to a project. Senator Dunleavy inquired if
KABATA would have to come back to the legislature at that
for approval to move forward with the new plan. Ms.
Dougherty imagined that it would depend on what the new
plan consisted of.
Senator Dunleavy stated that his understanding was that Ms.
Dougherty and Mr. Ottesen were feeling pretty good that the
new project proposal was a viable plan. Ms. Dougherty
replied in the affirmative. Mr. Ottesen also responded in
the affirmative and felt that it was a very sound plan with
tremendous benefits to the state.
Senator Dunleavy noted that there was a question whether
the Glenn Highway was already slated for expansion even if
the Knik Arm Bridge was constructed and requested
clarification. Mr. Ottesen replied that widening the Glenn
Highway was not an active project with the exception of the
Geo-Bonded project that was funded in 2012 at Artillery
Road and the Eagle River off ramp, which was only funded
currently in the outbound direction. He concluded that it
was not currently in the queue of preconstruction.
10:46:45 AM
Senator Dunleavy inquired what the estimate was for how
much traffic would be routed through the Knik Arm Bridge
and off the Glenn Highway. Ms. Dougherty replied that
KABATA did not have direct siphon off numbers and explained
that it would not be a direct percentage that would be
pulled off. She stated that it was anticipated that there
would be increased activity at Port Mackenzie and
additional activity that moved over to the Mat-Su; she
added that the over-flow from Anchorage was what the
initial traffic on the bridge would consist of.
2d CSHB 23(RLS) was HEARD and HELD in committee for further
consideration.
10:48:58 AM
RECESSED
5:12:33 PM
RECONVENED
CS FOR HOUSE BILL NO. 266(FIN)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, and making
reappropriations; and providing for an effective
date."
CS FOR HOUSE BILL NO. 267(FIN)
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
Co-Chair Meyer handed the gavel to Co-Chair Kelly.
5:13:11 PM
Co-Chair Meyer MOVED to ADOPT the committee substitute for
Senate CS HB 266 (FIN), work draft 28-GH2671\G (Wallace,
3/19/14). There being NO OBJECTION, it was so ordered.
JAMES ARMSTRONG, STAFF, SENATOR PETE KELLY, referred to
four Statewide Reports that were prepared by the
Legislative Finance Division (copies on file). He stated
that for all funds, the governor's proposal had $12.195
billion in total spending. The CS had $9.148 billion in
total spending. The difference between the governor's
proposal and the CS was $3.47 billion. He stressed that $3
billion for PERS was not contained in the CS. He looked at
the general fund (GF), including designated general funds
(DGF) and undesignated general funds (UGF). He reported
that the governor's proposal had $5.878 billion; and the CS
proposed $5.818 billion. The CS contained a reduction of
nearly $60 million. He announced that one of the reports
contained the day-to-day operations of the formula and non-
programs contained within the budget using a comparison
using UGF. He stated that the comparison did not take into
account the $1.5 billion from statewide operations.
Co-Chair Kelly wondered if the $1.5 billion was DGF. Mr.
Armstrong replied that the $1.5 billion was DGF and
statewide operations.
Mr. Armstrong shared that, with the $1.5 billion removed,
the subcommittee reports contained $33.641 million below
the governor's proposal. The fourth report examined the
agency day-to-day operations, and removed the non-formula
portion of the budget. Under that analysis, the governor's
proposal was $2.270 billion; and the current version spent
$2.243 billion. Therefore, the CS was a reduction of
$26.343 million. He announced that the current version
removed K-12 formula education and Medicaid formula
funding. The subcommittee work represented a 1.1 percent
decrement to agency operations against the governor's FY 15
budget request. He announced that the governor also
provided decrements to the budget. He stated that comparing
the Senate CS to the management plan of FY 14, there was a
$53.991 million or approximately 2.2 percent reduction in
day-to-day operation of state government.
5:19:10 PM
AT EASE
5:20:52 PM
RECONVENED
Co-Chair Meyer MOVED to ADOPT the committee substitute for
Senate CS HB 267 (FIN), work draft 28-GH2673\Y (Wallace,
3/19/14). There being NO OBJECTION, it was so ordered.
Mr. Armstrong shared that there were some language changes
in HB 266. He stated that there were some negotiated
contract settlements with the University of Alaska, but
were not included in the CS. He shared that those issues
would be dealt with at a later date. The infusion of $3
billion was also not included in the CS. He stated that
there was intent language that was added by the other body
into the language section, but he had not had adequate time
to review that language. He announced that items related to
crime victims' rights, recidivism reduction, and the Alaska
Seafood Marketing Institute (ASMI) program funding would be
addressed in the Conference Committee. He reported that the
fuel trigger section, which contained $30 million as
proposed by the governor, was reduced by $3 million. This
represented a $9 million reduction, and a 25 percent
reduction in the program from the FY 14 budget. There were
numerous technical and financial changes, and stated that
language comparisons could be found on the Legislative
Finance website. He announced that the deadline for
amendment submission was Friday, March 21, 2014 at 4:00pm
to Co-Chair Kelly's office.
Co-Chair Kelly encouraged the committee members to discuss
the individual items that were included in the budget.
Mr. Armstrong announced that his was his mother's birthday.
CSHB 267(FIN) was HEARD and HELD in committee for further
consideration.
CSHB 266(FIN) was HEARD and HELD in committee for further
consideration
ADJOURNMENT
5:24:59 PM
The meeting was adjourned at 5:25 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS for SS SB80 work draft version H.pdf |
SFIN 3/19/2014 9:00:00 AM |
SB 80 |
| SB 80_Premera Letter.pdf |
SFIN 3/19/2014 9:00:00 AM |
SB 80 |
| HB23 Maps Comparing KABATA, AMATS and HDR Numbers.pdf |
SFIN 3/19/2014 9:00:00 AM |
HB 23 |
| HB23-2035-Traffic-Estimates-from-Wasilla_Bypass-project.pdf |
SFIN 3/19/2014 9:00:00 AM |
HB 23 |
| HB23 Letters of Support Package.pdf |
SFIN 3/19/2014 9:00:00 AM |
HB 23 |