Legislature(2017 - 2018)SENATE FINANCE 532
04/03/2018 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB198 | |
| HB76 | |
| HB128 | |
| SB142 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 286 | TELECONFERENCED | |
| += | SB 142 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 76 | TELECONFERENCED | |
| += | HB 128 | TELECONFERENCED | |
| += | SB 198 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 3, 2018
1:35 p.m.
1:35:21 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 1:35 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
Senator Donny Olson
ALSO PRESENT
Heather Carpenter, Staff, Senator Kelly; Representative Dan
Ortiz, Sponsor; Liz Harpold, Staff, Representative Dan
Ortiz; Sam Rabung, Department of Fish and Game, Juneau;
Julie Decker, Chair, Mariculture Task Force; Mary Hakala,
Staff, Representative Dan Ortiz; Jeff Hetrich, Seward
Shellfish Hatchery; Larry Cotter, CEO, Aleutian Pribolof
Island Community Development Association; Pat Pitney,
Director, Office of Management and Budget, Office of the
Governor.
PRESENT VIA TELECONFERENCE
Britteny Cioni-Haywood, Department of Commerce, Community,
and Economic Development, Anchorage; Tommy Sheridan,
Director Government Affairs, Silver Bay Seafoods,
Anchorage; Tomi Marsh, President, Volunteer Board, Oceans
Alaska, Ketchikan; Markos Scheer, Manager, Premium
Aquatics, Seattle; Trevor Sandy, Alaska Shellfish Growers
Association, Ketchikan; Tamsen Peeples, Alaska Mariculture
Manager Blue Evolution, Kodiak; Jinny Eckert, Professor,
University of Alaska, Juneau.
SUMMARY
SB 142 APPROP: CAPITAL BUDGET
SB 142 was HEARD and HELD in committee for
further consideration.
SB 198 UAA LONG-ACTING CONTRACEPTION STUDY
SB 198 was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal
impact note from the University of Alaska.
CSHB 76(FSH)
MARICULTURE REVOLVING LOAN FUND
CSHB 76(FIN) was HEARD and HELD in committee for
further consideration.
HB 128 SHELLFISH ENHANCE. PROJECTS; HATCHERIES
HB 128 was HEARD and HELD in committee for
further consideration.
CSHB 286286(FIN) am(brf sup maj fld)(efd fld)
APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 286286(FIN) am(brf sup maj fld)(efd fld) was
SCHEDULED but not HEARD.
SENATE BILL NO. 198
"An Act relating to a study of the effectiveness and
cost of providing long-acting reversible contraception
to women with substance abuse disorders."
1:36:50 PM
HEATHER CARPENTER, STAFF, SENATOR KELLY, stated the intent
of the bill. She shared that the bill was specifically an
outcome of the bill sponsor's efforts to eradicate fetal
alcohol spectrum disorder (FASD), and would also address
the population that was affected by neonatal abstinence
syndrome (NAS). She stated that it would be a three-year
study conduced by the University of Alaska Anchorage Center
for Alcohol and Addiction Studies.
Vice-Chair Bishop addressed the fiscal note.
Co-Chair MacKinnon announced that the fiscal note would be
forthcoming.
MOVED to REPORT SB 198 from committee with individual
recommendation and attached fiscal note. There being NO
OBJECTION, it was so ordered.
SB 198 was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal impact note from the
University of Alaska.
1:40:17 PM
AT EASE
1:41:45 PM
RECONVENED
CS FOR HOUSE BILL NO. 76(FSH)
"An Act relating to the mariculture revolving loan
fund and loans and grants from the fund; and providing
for an effective date."
1:42:12 PM
REPRESENTATIVE DAN ORTIZ, SPONSOR, introduced himself.
LIZ HARPOLD, STAFF, REPRESENTATIVE DAN ORTIZ, introduced
herself.
Representative Ortiz explained the bill. He stated that the
bill amends the existing Alaska Mariculture Revolving Fund
to allow for up to 40 percent to be used for loans to
permitted shellfish hatcheries for planning, construction,
and operation. He stated that Alaska shellfish farms did
not currently have a stable supply of seed.
1:44:36 PM
Ms. Harpold discussed the Sectional Analysis (copy on
file):
Section 1. Adds a declaration of policy for the
state's Mariculture Revolving Loan Fund.
Section 2. Amends a spanned statutory citation in AS
6.10.900 to conform with the provision added by
section 1 of the bill.
Section 3. Require 40 percent of the money
appropriated to the fund be used for (1) making loans
to state residents and Alaskan organizations and
businesses that operate hatcheries or aquatic farms of
the purpose of producing aquatic plants or shellfish
or conduct shellfish enhancement projects or (2)
making grants to certain nonprofits. Requires the
remaining 60 percent of the funds appropriated to the
fund to be used for other loans from the fund.
Section 4. Authorizes the Department of Commerce,
Community and Economic Development to make loans to an
eligible applicant for the planning, construction, an
operation of a (1) hatcher that artificially
propagates marine aquatic plants or shellfish or (2)
shellfish enhancement project. Permits the department
to make one-time grants for organizational and
planning purposes to certain nonprofit organizations.
Amends spanned statutory citations to conform with the
provision added by sex. 1 of the bill.
Section 5. Limits the amount other department may make
in grants to nonprofits for organizational and
planning purposes.
Section 6. Expands the classes of person eligible for
a loan from the fund to include state residents or
entities organized under state law that (1) hold a
permit to operate a hatchery or aquatic farm for the
purposes of producing aquatic plants or shellfish or
(2) conduct shellfish enhancement projects.
Section 7. Conforms the residency requirements for
fund loan applicants to reflect that entities
organized under state law are also eligible for loans
from the fund.
Section 8. Establishes ne loan terms for loans from
the fund.
Section 9. Provided that a subsequent loan may not be
made to a resident of the state or entity organized
under the laws of thousand state that holds a permit
to 9operate a hatchery or aquatic farm for the purpose
of producing aquatic plants or shellfish or that
conducts shellfish enhancement projects if the
person's outstanding balance exceeds $,000,000.
Section 10. Allows a loan to be made from the fund for
the purchase of boats or vessels determined to be
integral to the operation of a hatcher.
Section 11. Amends a spanned statutory citation in AS
16.10.915(d) to conform with the provision added by
section 1 of the bill.
Section 12. Adds a new subsection to AS 16.10.915.
Prohibits the department from making certain loans
from the fund unless the department determines that
(1) a loan applicant's hatchery or enhancement project
will be managed in a manner reasonably expected to
result in repayment of the loan and (2) conduct
shellfish enhancement projects.
Section 14. Provides authority for certain
associations of limited entry permit holders o levy
and collect an assessment from its members to secure
or repay a loan from the fund. Allows the department
to rely on certain assessments in deciding whether to
make a loan from the fund.
Section 15. Amends a spanned statutory citation in AS
16.10.935 to conform with the provision added by
section 1 of the bill
Section 16. Adds new definitions for AS 16.10890 -
16.10.945.
Section 17. Clarifies that changes made by the bill to
loan terms from the fund do not apply to loans made
before the bill's effective date.
Section 18. Provides the bill with an immediate
effective date.
1:49:58 PM
AT EASE
1:51:35 PM
RECONVENED
Co-Chair MacKinnon queried clarity about how long a person
could defer payments on the loan.
1:53:09 PM
BRITTENY CIONI-HAYWOOD, DEPARTMENT OF COMMERCE, COMMUNITY,
AND ECONOMIC DEVELOPMENT, ANCHORAGE (via teleconference),
replied that it would be six years for a farm, or eleven
years for a hatchery.
Co-Chair MacKinnon queried the reason for deferring payment
of interest and principal for that period of time. Ms.
Cioni-Haywood replied that it took time to develop the
projects, therefore the loan went into the deferral period.
Senator von Imhof wondered whether there was a biological
reason a farm or a hatchery would need so many years of
deferral. She asked whether it was a construction,
permitting, or biological issue related to the significant
delay in payment. Ms. Cioni-Haywood deferred to the
Department of Fish and Game (DFG).
Ms. Cioni-Haywood stated that geoducks had a nine to ten
year grow out, oysters were in the five year range.
1:55:42 PM
AT EASE
1:58:27 PM
RECONVENED
1:58:43 PM
SAM RABUNG, DEPARTMENT OF FISH AND GAME, JUNEAU, stated
that the bill was modeled after the salmon fishery
enhancement revolving loan fund, with a deferral period
based on the biological life cycle of the organisms.
Senator von Imhof remarked that it took approximately 5 or
6 years for a geoduck to become fully mature, and oyster
maturation was slightly longer. She felt that there would
be a large balloon payment on year 7, because there was no
interest paid during that time. She wondered whether the
principal would be amortized over ten or twelve years. Mr.
Rabung deferred to the Department of Commerce, Community
and Economic Development. He asserted that it was probably
amortized into the annual payment.
2:00:36 PM
Senator Stevens wondered whether seaweed production was in
the Department of Fish and Game purview. Mr. Rabung replied
in the affirmative.
Senator Stevens queried the success of other states'
seaweed production. He felt that other states had been
successful. Mr. Rabung replied that it was a growth
industry, with success on both coasts. He felt that the
time was right for seaweed production.
Vice-Chair Bishop queried the process of an oyster
hatchery. Mr. Rabung replied that adult oysters would be
collected from a farm site, and taken to a hatchery to
induce to spawn with temperature manipulation. The larvae
would set and grow as juveniles. The spat would then be
distributed to nurseries and farms for further grow out to
market size. The process took approximately three years.
Vice-Chair Bishop wondered whether the hatchery was shore
based, or whether the hatchery needed to lease land from
the state. Mr. Rabung replied that either was possible.
Vice-Chair Bishop asked where the stock was sourced. Mr.
Rabung replied that oysters did not reproduce or occur
naturally in the state, so they were all sourced through
approved sources on the west coast out of state. He stated
that oysters were a farmed product.
Co-Chair MacKinnon wondered why oysters were not considered
an invasive species. Mr. Rabung replied that oysters could
not reproduce in Alaska, because of the cold temperature.
Senator von Imhof wondered whether the shellfish hatcheries
included crab and shrimp. Mr. Rabung replied in the
affirmative. He stated that there were no hatcheries,
because those organisms did not fair well in Alaska while
in captivity.
2:04:21 PM
AT EASE
2:05:07 PM
RECONVENED
Co-Chair MacKinnon stated that there were multiple
questions regarding the mariculture loan fund. She wanted
an accounting and short history of the fund. There was a
desire to know the number of current loans and the deferral
rate. She queried the remaining balance to loan against,
and other financial specifics of the revolving loan fund.
Co-Chair MacKinnon OPENED public testimony.
Co-Chair MacKinnon queried comments on the legislation. Ms.
Cioni-Haywood stated that she could answer the questions
related to balloon payments. She stated that on the initial
period there was no payments or interest that would accrue.
She shared that the payments would start after that initial
period.
Co-Chair MacKinnon surmised that the first six years saw no
interest, because the state loaned money principal and
received no money in return. Ms. Cioni-Haywood agreed. She
explained that the payments began after the initial period
for farmers or after the initial period for hatcheries
within the changes in the bill.
Co-Chair MacKinnon wondered whether that was similar to the
salmon enhancement or the other funds. Ms. Cioni-Haywood
replied in the affirmative. She explained that it was
similar to the Fisheries Enhancement Revolving Load Fund.
Co-Chair MacKinnon asked whether it was similar conditions
to the farming operations in the ocean. Ms. Cioni-Haywood
replied that she may not understand the question. She
announced that the fisheries enhancement would be through
the regional aquaculture associations through the hatchery
system.
2:10:02 PM
Co-Chair MacKinnon looked at page 5, Section 10, line 3,
which said that a loan under 16.10.910 attempted to add
hatcheries to be able to purchase a boat under the hatchery
program. Ms. Cioni-Haywood replied that it allowed the
hatcheries to purchase a boat, if that boat would be used
for the hatchery business. She stated that the farmers
could already purchase a vessel under the current loan
fund.
Co-Chair MacKinnon looked at line 5, which said that it may
not be deferred for a period more than six years of the
loan. She noted that another statute outlined eight years.
She wondered whether there was different efforts for
farming and hatcheries, and if so, she queried the reason
for that distinction. Ms. Cioni-Haywood agreed that there
was a difference between farmers and hatchers. She
understood that the language taken for the hatcheries was
based on the fisheries enhancement statutes that outlined
the fisheries enhancement revolving loan fund. She stated
that those statutes had it at ten years. She furthered that
the farmers would be six years.
Co-Chair MacKinnon queried additional comments on the
overall structure of the bill. She asked whether the
administration was supportive of the bill. Ms. Cioni-
Haywood replied that the administration was supportive of
the bill, and she had no additional comments on the
structure of the bill.
2:12:17 PM
JULIE DECKER, CHAIR, MARICULTURE TASK FORCE, shared that in
2016, Governor Walker created the Mariculture Task Force
with eleven members from broad backgrounds. She shared that
one of the top five priorities in the plan was this bill.
She felt that the bill was a component in moving the
industry forward. She stated that the goal of the task
force was to grow a $100 million in 20 years. She noted
that the original focus was for a $1 billion industry in 30
years. She shared that work with economic advisor groups
encouraged the reduction of the timeline with a realistic
goal. She stated that the goal was focused on six species:
pacific oysters, which was the only nonnative species in
the state, because they did not reproduce; geoduck; sea
cucumbers; blue mussels; and several species of seaweed.
She remarked that there was a plan to develop the industry.
She clarified that mariculture did not mean finfish
farming, because it was not legal in the state. She shared
that it included aquatic farming.
Vice-Chair Bishop recalled that there was one time when the
shellfish industry had $30 million revenue to the state. He
wondered whether there was a problem in obtaining tidelands
or leases from the Department of Natural Resources (DNR) to
expand the business. Ms. Decker replied that it was one of
the hurdles, because there was a public process. She
remarked that there was a balance of potential for public
use versus a private use of the area was always
challenging. She hoped some of the applications for farms
would be permitted.
2:20:11 PM
Senator Stevens requested comment on the seaweed industry.
Ms. Decker replied that seaweed was a large worldwide
industry at $6 billion to $10 billion. She remarked that
the seaweed industry was barely in Alaska. She stressed
that it worked well with the existing seafood industry,
because it was planted in the fall and harvested in the
spring. She remarked that there were many excess fishing
vessels and process at capacity those time periods. She
felt that it would be a nice fit for Alaska.
Co-Chair MacKinnon asked about sea otters. Ms. Decker
encouraged people to purchase sea otter products. She
stated that sea otters were a serious challenge in the
mariculture industry. She felt that it would require some
federal partnership and impetus.
Co-Chair MacKinnon stressed that a business to survive in
Alaskan waters might be destroyed, because it was difficult
to control the predators that may destroy the crops. Ms.
Decker replied that oysters were contained in cages, so
that was positive for otter predation. She added that
otters did not eat seaweed.
2:23:36 PM
TOMMY SHERIDAN, DIRECTOR GOVERNMENT AFFAIRS, SILVER BAY
SEAFOODS, ANCHORAGE (via teleconference), spoke in support
of the legislation. He stated that altering the mariculture
revolving loan fund to make it accessible hatchery
operators would help to provide better security for the
state's mariculture industry.
Senator Stevens noted that there was a letter that asserted
that development of shellfish and seaweed could help to
mitigate ocean acidification. He requested more information
on that issue. Mr. Sheridan stated that his experience in
the issue was limited. He noted that there were large scale
experiments with kelp that might potentially offset the
impacts of ocean acidification.
2:27:22 PM
TOMI MARSH, PRESIDENT, VOLUNTEER BOARD, OCEANS ALASKA,
KETCHIKAN (via teleconference), supported the legislation.
She stated that bill would allow for shellfish and seaweed
hatcheries to access loan funds for operation cost of seed.
She stated that it would also allow the mariculture
industry to grow, because industry growth required a
consistent and healthy seed source. She shared that the
bill would put shellfish and seaweed hatcheries on a path
to financial stability.
2:28:56 PM
MARKOS SCHEER, MANAGER, PREMIUM AQUATICS, SEATTLE (via
teleconference), spoke in support of the bill. He
anticipated that the first phase of his operation would
employ as many as 50 people year round. He felt that it
would be a significant impact to the economy, and asserted
that the bill was a vital part of that development.
2:31:56 PM
TREVOR SANDY, ALASKA SHELLFISH GROWERS ASSOCIATION,
KETCHIKAN (via teleconference), spoke in support of the
bill. He shared his personal experiences about why the bill
was personally important. He stated that he became
interested in farming, because of the potential for growth
in the industry.
2:35:50 PM
TAMSEN PEEPLES, ALASKA MARICULTURE MANAGER BLUE EVOLUTION,
KODIAK (via teleconference), spoke in support of the bill.
She stated that she had built and designed hatcheries. She
shared that one of those hatcheries was able to produce
over 70,000 seeded line with kelp seedlings, and worked
below half capacity in the last season. She shared that the
design and installation of the hatcheries was the first
major hurdle in investment in the state. She shared that a
major challenge was the cost of shipping and installing
large materials. She remarked that the ability to work in
cooperation with the National Oceanic and Atmospheric
Administration (NOAA) lab was helpful in fulfilling the
project. She supported responsible mariculture in the
state.
Co-Chair MacKinnon CLOSED public testimony.
Vice-Chair Bishop addressed the fiscal notes.
CSHB 76(FSH) was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 128
"An Act relating to management of enhanced stocks of
shellfish; authorizing certain nonprofit organizations
to engage in shellfish enhancement projects; relating
to application fees for salmon hatchery permits; and
providing for an effective date."
2:40:23 PM
REPRESENTATIVE DAN ORTIZ, SPONSOR introduced himself.
2:40:31 PM
MARY HAKALA, STAFF, REPRESENTATIVE DAN ORTIZ, introduced
the bill.
Representative Ortiz read from a prepared statement:
Madam Chair, Members of Senate Finance Committee,
thank you for hearing HB 128 dealing with Shellfish
Enhancement Projects.
I'd like to thank Senator Stevens for his work on SB
89, the Senate companion to this bill.
With over 30,000 miles of coastline, pristine waters,
talented entrepreneurs, and marketing infrastructure,
Alaska has tremendous untapped potential to grow
mariculture in the State.
Very briefly, HB128 allows non-profits to apply for,
and pursue enhancement or restoration projects
involving shellfish, with species ranging from red and
blue king crab, sea cucumber, abalone, geoduck, razor
clams, and more.
HB128 creates the regulatory framework needed for
management of shellfish enhancement projects.
The bill allows research to continue on a larger scale
that can make a difference in rehabilitation and
restoration efforts.
HB 128 sets out stringent safety standards to ensure
sustainability and health of existing wild stocks.
Shellfish produced under an enhancement permit become
a common property resource available for common use
- when returned to the wild.
The bill provides for cost recovery and designated
harvest areas under guidelines established by the
Department.
Administrative procedures parallel those for salmon
enhancement projects, providing efficiencies that
minimize administrative costs to the state.
In summary, HB128 establishes a sound, sustainable
approach to developing the State's shellfish resources
and mariculture industry.
2:42:38 PM
AT EASE
2:43:11 PM
RECONVENED
2:44:19 PM
JULIE DECKER, CHAIR, MARICULTURE TASK FORCE, stated that
the bill was one of the top priorities necessary to move
the industry forward. She felt that it would allow a
framework to continue to make progress with the shellfish
enhancement programs, including the king crab project. She
stated that the people involved in that project was waiting
for the legislation, because the industry was not
interested in further investment until there was a path
forward to address the issue on a large scale.
2:45:04 PM
SAM RABUNG, DEPARTMENT OF FISH and GAME, expressed support
of the bill. The legislation was modeled after the
Department of Fish and Game (DFG) after the existing salmon
fishery enhancement statutes that had been in place since
the mid-1970s.
2:45:54 PM
JINNY ECKERT, PROFESSOR, UNIVERSITY OF ALASKA, JUNEAU (via
teleconference), stated that she was a shellfish expert,
and was currently teaching a course in aquaculture. She
spoke in support of the bill, and was available to answer
questions. She spoke to the need of rehabilitation of kind
crab in Alaska. She stressed that many king crab stocks in
the Gulf of Alaska crashed in the 1980x, ad had not
recovered since that time. She remarked that most of the
fisheries closed, and overfishing had likely caused the
decline.
2:48:58 PM
JEFF HETRICH, SEWARD SHELLFISH HATCHERY, announced the dire
status of the shellfish stocks in Alaska. He stated that
there was no king crab fishery in almost forty years. He
shared that private shellfish hatcheries spent the prior 15
years developing a technology to raise the animals. He
shared that he raised sea cucumbers; blue and red king
crab; clams; and scallops. He remarked that there was work
to stock the animals with experimental research permits.
Co-Chair MacKinnon stated that Senator Stevens had asked
that the advancement of the bill be held until the House
members could bring their bills before the committee.
2:51:56 PM
LARRY COTTER, CEO, ALEUTIAN PRIBOLOF ISLAND COMMUNITY
DEVELOPMENT ASSOCIATION, echoed the comments of the
previous testifiers. He felt that both bills were important
to provide the opportunity to move forward with the
development of a new future for Alaska that he felt would
be very meaningful.
2:54:40 PM
Ms. Hakala discussed the Sectional Analysis (copy on file):
Sec 1.
Provides the Alaska Board of Fisheries authority to
direct the department to manage production of enhanced
shellfish stocks, beyond brood stock needs, for cost
recovery harvest.
Sec. 2
Increases the permit application fee for new private
nonprofit salmon hatcheries from $100 to $1,000.
Sec. 3
Adds a new Chapter 12 to Title 16, "Shellfish Stock
Enhancement Projects". Provides direction to the
commissioner of the Department of Fish and Game on
issuance of permits for private nonprofit shellfish
fishery enhancement projects and establishes a $1,000
permit application fee. This section directs the
commissioner to consult with technical experts in the
relevant areas before permit issuance. This section
provides for a hearing prior to issuance of a permit
and describes certain permit terms including cost
recovery fisheries, harvest, sale, and release of
enhancement project-produced shellfish, and selection
of brood stock sources. This section describes
reporting requirements and terms for modification or
revocation of a permit. It specifies that shellfish
produced under an approved enhancement project are a
common property resource, with provision for special
harvest areas by permit holders.
Sec. 4
Provides Commercial Fisheries Entry Commission
authority to issue special harvest area entry permits
to holders of private nonprofit shellfish
rehabilitation, or enhancement project permits.
Sec. 5
Defines legal fishing gear for special harvest area
entry permit holders.
Sec. 6
Exempts shellfish raised in a private nonprofit
shellfish project from the farmed fish definition.
Sec 7 and 8
Establish state corporate income tax exemption for a
nonprofit corporation holding a shellfish fishery
enhancement permit.
Sec. 9
Exempts shellfish harvested under a special harvest
area entry permit from seafood development taxes.
Sec. 10
Establishes an effective date for the salmon hatchery
permit application fee described in sec. 2.
Sec. 11
Authorizes the Department of Fish and Game to adopt
implementing regulations.
Sec. 12
Establishes an immediate effective date for sec. 11
pursuant to AS 01.10.070(c).
Sec. 13
Establishes an effective date for sec. 8 concomitant
with sec. 2, Chapter 55, SLA 2013.
Co-Chair MacKinnon stated that the committee would consider
the updated fiscal note at a later date.
Co-Chair MacKinnon CLOSED public testimony.
HB 128 was HEARD and HELD in committee for further
consideration.
2:58:38 PM
AT EASE
3:05:54 PM
RECONVENED
SENATE BILL NO. 142
"An Act making appropriations, including capital
appropriations, supplemental appropriations,
reappropriations, and other appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
3:06:44 PM
PAT PITNEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, discussed the presentation, "State
of Alaska FY2019 Capital Budget and Economic Recovery Act
Overview" (copy on file). She addressed slide 2, "FY2019
Capital Budget":
Two Separate Capital Appropriation Bills
?Base Capital Budget (SB142/HB284)-
?Lean compared to previous years
?Provides for leverage of available federal
funds and certain DGF supported energy
projects
?Certain technology efficiencies
?Alaska Economic Recovery Act (SB140/HB282)-
?Supported by a payroll tax
?Shovel ready/deferred maintenance projects
designed to get work started today
?Many smaller projects directed to
communities throughout the state (urban and
rural)
Ms. Pitney looked at slide 3, "Capital Budget Trend":
?The capital budget has been reduced 93 percent or
$1.8 billion from FY2013 to FY2018.
?Important needs such a deferred maintenance have been
unaddressed
?Less support to communities
?Impacting employment
3:10:12 PM
Ms. Pitney highlighted slide 4, "Base Capital Budget
(SB142/HB284)":
Base Capital Budget
The Governor's FY2019 capital budget prioritizes
annual federal match programs, housing, energy,
maintenance, and information technology.
Vice-Chair Bishop wanted a later conversation about
redirection of the money.
Ms. Pitney addressed slide 5, "Base Capital Budget":
?Federal Match
?Transportation Match -$70.1 million leverages
$700.0 million in federal
?Village Safe Water and Sewer Projects -$12.1
million leverages $52.3 million federal
?Housing
?Status quo housing project appropriations
including teacher, health professional and
trooper housing, cold climate research and grants
through HUD
?Energy
?Renewable Energy Projects $11.0 million
?Rural Power Systems Upgrades -$11.0 million
?Maintenance
?AMHS Vessel Certification -$13.5 million
?Public Building Fund Deferred Maintenance -$5.0
million
?Information Technology
?Various state-wide software upgrades, continued
IRIS implementation, Automated Park fee
collections
?High Priority Investments
?Enhanced "9-1-1" -$8.5 million
?AKLNG legal and financial due diligence -$1.5
million
3:16:12 PM
Ms. Pitney discussed slide 6, "Alaska Economic Recovery Act
(SB140/HB282)":
Alaska Economic Recovery Act
?$800.0 million over 3 years ($280.0 million in
FY2019)
?$1.4 billion in economic impact with federal, local,
and private funds
?Housing, state and school deferred maintenance, and
energy projects
?Many smaller projects to ensure work is started
today, not after years of environmental studies
?School maintenance impacts 60+ communities, both
rural and urban
?Does not grow government, takes care of current
liabilities
?Funded by a 1.5 percent wage tax, capped at 2 times
the PFD amount
?Receipts designated for high-value capital projects
?Sunsets in 2.5 years
?Creating jobs and getting the economy working is the
number one priority. Reassess in 2022
Ms. Pitney highlighted slide 7, "Construction Industry
Employment":
?According to ISER, $100.0 million in reductions to
the capital budget results in 506 direct and 425
indirect job losses. (Recall that that $1.8 billion
has been cut from FY2013)
?Ensuring that Alaska has a trained construction
workforce will ensure future development opportunities
employ as many Alaskans as possible (additional North
Slope exploration, AKLNG, etc.)
?Employment figures have a direct link to spending
elsewhere in the budget (Public Assistance, Medicaid,
etc.)
?For each percentage point of job loss, the
traditional Medicaid population grows at an annualized
rate of 4.04 percent
Ms. Pitney addressed slide 8, "Deferred Maintenance":
?The state owns over 2,200 facilities though only
about 200 over 10,000 square feet.
?19 million square feet of space
?Replacement value of $8.6 B
?Various types of facilities
?Classrooms
?Airport/maintenance shops
?Offices
?Laboratories
?Parks
?Pioneer Homes
?Correctional Facilities
?Road maintenance
Ms. Pitney looked at slide 9, "Deferred Maintenance":
?DM appropriations of $100.0 M annually for 5 years
(FY11-15) has brought the back-log down
?Lean funding since FY2015 is causing the backlog to
grow again
?Without a consistent level of funding, entities
cannot effectively execute planned renewal
?Current level of funding only prioritizes life/safety
concerns
?Failure of building systems is much more costly than
addressing the problem early through deferred
maintenance
3:20:33 PM
Ms. Pitney highlighted slide 10, "Alaska Economic Recovery
Multi-Year Plan." She noted that the projects began with
the K-12 Major Maintenance Grant program. She noted that AS
14.10 had schools send in their highest deferred
maintenance projects, with a required local match in most
cases. She stated that there was a prioritized list
throughout the state.
Ms. Pitney looked at slide 11, "K-12 Major Maintenance
Grant Fund":
?Projects ranked according to AS 14.10
?Participating share ranges from 5 percent to 35
percent based upon taxable property over Average Daily
Membership
?Both municipal School Districts and REAAs
Ms. Pitney discussed slide 12, "University Deferred
Maintenance." She highlighted the deferred maintenance of
the University of Alaska campuses.
Ms. Pitney addressed slide 13, "State Deferred
Maintenance." She stated that the size of the projects
directed the money to local contractors.
Ms. Pitney looked at slide 14, "Other Items":
Alaska Economic Recovery Act
?Municipal Harbor Projects
?Sitka: Crescent Harbor
?Whittier: Small Boat Harbor
?Sitka: Eliason Harbor
?Ketchikan: Bar Harbor North Harbor
?Bulk Fuel Upgrades
?Statewide Impact
?Weatherization
?State-wide impact
?Senior Citizen Housing Development
?Anchorage Port
?Required Municipal Match
?Anchorage: South Float
?Whale Pass: Small Boat Harbor
?Juneau: Douglas Harbor
?Juneau: Harris Harbor
3:25:20 PM
Co-Chair MacKinnon stated that the seismic would be
discussed at a later meeting.
Co-Chair MacKinnon discussed committee business.
SB 142 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 286(FIN) am(brf sup maj fld)(efd fld)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; and making supplemental
appropriations."
CSHB 286286(FIN) am(brf sup maj fld)(efd fld) was SCHEDULED
but not HEARD.
Co-Chair MacKinnon discussed the following day's agenda.
ADJOURNMENT
3:27:28 PM
The meeting was adjourned at 3:27 p.m.