Legislature(2023 - 2024)SENATE FINANCE 532
05/11/2023 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB125 | |
| SB89 | |
| SB125 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 125 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 48 | TELECONFERENCED | |
| += | SB 89 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
May 11, 2023
9:03 a.m.
9:03:26 AM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 9:03 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Ken Alper, Staff, Senator Donny Olson; Senator Gary
Stevens, Sponsor; Tim Lamkin, Staff, Senator Gary Stevens;
Stuart Cohen, Self, Juneau.
PRESENT VIA TELECONFERENCE
Akis Gialopsos, Deputy Executive Director, Alaska Housing
Finance Corporation; Curtis Thayer, Executive Director,
Alaska Energy Authority.
SUMMARY
SB 89 AGE FOR TOBACCO/NICOTINE/E-CIG; TAX E-CIG
CSSB 89(FIN) was REPORTED out of committee with
three "do pass" recommendations, two "no
recommendation" recommendations, and one "amend
recommendation and with one new zero fiscal note
from the Judiciary, one new fiscal impact note
from the Department of Revenue, and six
previously published zero fiscal notes: FN1
(CED), FN2 (ADM), FN3(ADM), FN4(DOH), FN6(DPS),
and FN7 (LAW).
SB 125 AK HOUSING FINANCE CORP: SUSTAIN ENERGY
SB 25 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson recognized former Representative Chuck
Degnan from Unalakleet in the gallery.
SENATE BILL NO. 125
"An Act relating to subsidiary corporations of the
Alaska Housing Finance Corporation; and establishing
the Alaska energy independence fund."
9:04:16 AM
Co-Chair Olson relayed that it was the first hearing for SB
125.
9:04:41 AM
AT EASE
9:20:18 AM
RECONVENED
SENATE BILL NO. 89
"An Act relating to tobacco, tobacco products,
electronic smoking products, nicotine, and products
containing nicotine; raising the minimum age to
purchase, sell, exchange, or possess tobacco, a
product containing nicotine, or an electronic smoking
product; relating to the taxation of electronic
smoking products and vapor products; and providing for
an effective date."
9:20:24 AM
Co-Chair Olson informed the committee that due to technical
difficulties SB 89 would be taken up before SB 125.
9:20:43 AM
Senator Kiehl MOVED to ADOPT proposed committee substitute
for SB 89, Work Draft 33-LS0247\R (Nauman, 5/10/23).
Co-Chair Olson OBJECTED for discussion.
9:21:08 AM
KEN ALPER, STAFF, SENATOR DONNY OLSON, confirmed that all
members had the summary of changes for the committee
substitute as well as the most current version of the bill.
Mr. Alper referenced a summary of changes document (copy on
file):
CS for Senate Bill 89: Age for Tobacco / E-Cigarette Tax
Changes from Labor & Commerce Committee Version ("U" to
Change #1: Page 1, line 4. Adds reference in the title
to the tobacco use and cessation fund.
Change #2: Page 3, lines 24 to 26. Requires a
mandatory court appearance with a parent or guardian
for minors (under 18) caught possessing tobacco or e-
cig products.
Change #3: Deletes former Section 5, the internet
sales ban for cigarettes and Other Tobacco Products
(OTP) to private individuals.
Change #4: Page 4, line 12. Increases the age for
online sales of e-cig products to persons aged 21 and
over. It also maintains online sales of e-cig products
to private individuals, provided there is an age
verification process, and the tax is paid.
Change #5: Page 6, lines 6 to 15. Adds new Section 11,
moving the Tobacco Use Education and Cessation Fund
(AS 37.05.580) to a separate fund within the state
treasury, instead of being a special account within
the general fund.
Change #6: Page 8, lines 7 to 12. Adds new Section 16,
relating to the Tobacco Use Education and Cessation
Fund, reflecting three revenue sources going into the
fund:
(1) 20% of the annual payment under the Tobacco
Master Settlement Agreement;
(2) 8.9% of the general portion of the cigarette
tax; and
(3) the proceeds from the new tax on electronic
smoking products (ESPs).
Change #7: Page 10, lines 17-20. Requires an online
vender with 200 or more transactions in the state to
register with DOR, and collect and remit the tax.
Change #8: Page 11, lines 2 to 3. Further clarifies
that marijuana and hemp products are exempted from the
tax under this bill if those products do not also
contain nicotine.
Change #9: Page 12, line 30 to page 13, line 3. The
new tax revenues are deposited into the Tobacco Use
Education and Cessation Fund, and may be used by the
tobacco control program managed by the Department of
Health for efforts to prevent tobacco and ESP use in
schools.
Change #10: Page 15, line 7. Lowers the maximum
nicotine concentration of ESPs from 60 to 50mg/ml.
9:25:02 AM
SENATOR GARY STEVENS, SPONSOR, asserted that the bill
protected children from becoming addicted to nicotine. He
appreciated the work that had been done on the legislation
and approved of the changes in the CS.
9:25:35 AM
Senator Wilson asked whether there was a timeline for the
state to move to a T-21 in order to receive federal funds
or settlements.
9:25:58 AM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, informed that the
timeframe had passed in December 2022, which meant that the
state could lose out on federal funds if the bill did not
pass.
Senator Wilson wondered if there should be a quick T-21
bill to ensure that the state did not lose federal funding
opportunities.
Mr. Lamkin thought that Senator Wilson's idea would be a
policy decision. He argued that taxing the products was the
single best way to keep people from smoking.
9:27:16 AM
Co-Chair Olson WITHDREW his objection. There being NO
further OBJECTION, it was so ordered. The CS for SB 89 was
ADOPTED.
9:27:27 AM
Senator Kiehl MOVED to report CSSB 89(FIN) out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
CSSB 89(FIN) was REPORTED out of committee with three "do
pass" recommendations, two no recommendation
recommendations, and one amend recommendation and with
one new zero fiscal note from the Judiciary, one new fiscal
impact note from the Department of Revenue, and six
previously published zero fiscal notes: FN1 (CED), FN2
(ADM), FN3(ADM), FN4(DOH), FN6(DPS), and FN7 (LAW).
9:27:42 AM
AT EASE
9:32:23 AM
RECONVENED
SENATE BILL NO. 125
"An Act relating to subsidiary corporations of the
Alaska Housing Finance Corporation; and establishing
the Alaska energy independence fund."
9:32:28 AM
Co-Chair Olson reiterated that it was the first hearing for
SB 125.
9:32:48 AM
AKIS GIALOPSOS, DEPUTY EXECUTIVE DIRECTOR, ALASKA HOUSING
FINANCE CORPORATION (via teleconference), introduced his
fellow presenter.
9:33:20 AM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY
(via teleconference), introduced himself for the record.
Mr. Gialopsos addressed a PowerPoint presentation entitled
Senate Bill 125: Alaska's Energy Independence Fund," (copy
on file). He showed slide 2, which introduced himself and
Mr. Thayer.
9:34:10 AM
Mr. Gialopsos advanced to slide 3, "PRESENTATION OUTLINE":
• Senate Bill 125 overview & implementation
• Policy objectives
• Role of Alaska Housing Finance Corporation
• Role of Alaska Energy Authority
9:35:00 AM
Mr. Gialopsos showed slide 4, "SENATE BILL 125: OVERVIEW":
Senate Bill 125 (and House Bill 154) proposes two
actions for the
Legislature's consideration:
1. Empowers AHFC to work with AEA on developing
sustainable energy development through several tools,
including establishing non-profit subsidiary
corporations.
2. Establishes the Alaska Energy Independence Fund
(AEIF) with the intent to be managed by AHFC's non-
profit subsidiary corporation. The fund is capitalized
with General Funds initially and federal receipt
authority.
9:36:32 AM
Mr. Gialopsos spoke to slide 5, "SENATE BILL 125: PROPOSED
POLICY IMPLEMENTATION PROCESS":
1. Legislation creating the Alaska Energy Independence
Fund & empowering AHFC to create a non-profit
subsidiary passes and is enacted
2. The AHFC Board of Directors, in consultation with
legal counsel, creates a non-profit subsidiary
corporation to manage the AEIF. That creation includes
bylaws and initial regulations by AHFC for the non-
profit subsidiary
3. The created non-profit subsidiary acquires relevant
staff, and works with the Alaska Energy Authority and
AHFC on crafting the sustainable energy development
programs articulated in Senate Bill 125
4. The created non-profit subsidiary pursues federal
funding opportunities and establishes relationships
with financial institutions to begin capital
aggregation
Mr. Gialopsos summarized that the end result of the
subsidiary and the fund being implemented would be the
establishment of a green bank; a lending institution that
would aid in sustainable development programs that faced
capital restraints.
9:39:32 AM
Co-Chair Stedman wondered why the proposed project would
not be under the Alaska Energy Authority.
Mr. Gialopsos answered that AHFC had a unique history in
being able to create subsidiary corporations. He considered
that AHFC had the ability to create the corporate
architecture necessary to derive a special purpose vehicle.
9:41:53 AM
Mr. Thayer asked Co-Chair Stedman to repeat the question.
Co-Chair Stedman asked about the concept behind putting the
proposed program under AHFC instead of AEA.
Mr. Thayer relayed that AHFC had been the best economical
choice for housing the program.
9:43:35 AM
Senator Wilson followed up on Co-Chair Stedman's question.
He thought AEA had similar programs, and queried whether
the program would be redundant. He wondered about the level
of expertise of the staff running the programs.
Mr. Thayer said that he could not hear the questions due to
technical difficulties.
9:44:49 AM
AT EASE
9:47:04 AM
RECONVENED
Co-Chair Olson informed the committee that because of
technical difficulties the meeting would stand at recess.
9:47:25 AM
RECESSED
10:42:26 AM
RECONVENED
Co-Chair Olson explained that the technical issues had been
dealt with and the hearing on SB 125 would continue where
it left off on slide 5.
10:43:26 AM
Mr. Gialopsos addressed an earlier question from Co-Chair
Stedman related to the implementation of the bill and
housing a subsidiary corporation as a green bank within
AHFC. He noted that the answer was two-fold. He recounted
that the AHFC had a history of dealing with developing
financial instrumentation and collaborating with
institutional investors to ensure that capital could be
delivered appropriately to serve Alaskans. He explained
that additionally, AHFC had a history of collaborating with
AEA to stand up subsidiary corporations that would allow
for the requisite structure of corporate governance. He
noted that a green bank, while not taking direct deposits,
would be involved in implementing and regulating financial
instrumentation, which would result in a degree of
liability.
10:45:06 AM
Mr. Gialopsos advanced to slide 6, "POLICY OBJECTIVES":
Creating and capitalizing Alaska Energy Independence
Fund may help Alaska compete for federal funding
opportunities to improve the energy profile for homes
and businesses:
U.S. Environmental Protection Agency's
Greenhouse Gas Reduction Fund grant opportunity
from a pool of $27 billion in available funding
(no Notice of Funding Opportunity yet;
application period estimated summer 2023)
• Waivers from the Department of Energy for loan
guarantees if funded through a State Energy
Finance Institute (e.g. AEIF)
• Stacked with energy tax credits for businesses
Mr. Gialopsos recounted the passage of the Infrastructure
Investment and Jobs Act (IIJA) and the Inflation Reduction
Act, which had allowed for multifaceted forms of funding to
come through federal funding agencies to pursue several
goals. He pointed out that Alaska used the funds for
infrastructure and energy development. He noted that Alaska
was the only state in the union, besides Hawaii, that did
not have a connection to the rest of the united states. He
said that by being able to pursue federal funding through
the Greenhouse Gas Reduction Fund the AHFC, with
conjunction with AEA, would make it competitive to import
capital and develop meaningful financial products to assist
with the cost of energy in the state. He said that the
stacked credits were limited to 2032.
10:48:18 AM
Senator Bishop asked if AHFC had enough people on staff,
and whether going after grant funds would be a joint
venture between AHFC and AEA.
Mr. Gialopsos relayed that the subsidiary corporation had a
request of 2 initial PCNs. The positions would be a Project
Coordinator and an assistant who would work directly with
AHFC, AEA, and the governor's office to make sure the state
had the resources to pursue the federal funds.
10:50:16 AM
Senator Bishop pointed out the timeline of the federal
funds and stressed that time was of the essence for
capturing the federal funds.
10:50:42 AM
Senator Wilson considered slide 6 and considered funding
that might be needed to achieve the proposed policy.
Mr. Gialopsos relayed that AHFC believed that the venture
could be competitively placed to interact and achieve a
significant portion of the funds. He said that there were
quantifiable aspects to the funding, particularly a $6
million tranche that was specifically directed to community
development that Alaska had a very good chance of being
awarded, which if achieved would help the subsidiary
achieve one-quarter of the federal authority.
10:52:41 AM
Mr. Gialopsos reviewed slide 7, "ROLE OF AHFC":
AHFC has a 50-year tradition of meeting needs of
Alaskans.
• Standing up programs to help Alaskans in need
• Emergency Rental Assistance and Homeowner
Assistance
• Home Energy Rebate
• Standing up subsidiaries to meet policy needs of
Alaskans
• Alaska Corporation on Affordable Housing
• Alaska Gasline Development Corporation
(originally a subsidiary of AHFC)
Mr. Gialopsos referred to an earlier question about why the
project would be housed under AHFC and whether it would
create redundancies. He stressed that AHFC had a half
century of work meeting Alaskans needs. He referenced
Senator Bishop's question about time sensitivity and
mentioned the successful energy efficiency projects
implemented by the agency. He expounded on the successes of
AHFC in the realms of rental and housing assistance and
energy efficiency. He discussed the various subsidiaries
housed within AHFC.
10:56:51 AM
Mr. Gialopsos showed slide 8, "ABOUT AEA," which offered an
overview of AEA. He said that AEA was designed to manage
the Power Cost Equalization program. The slide listed the
various work done by AEA in the state. He concluded that
that AEA had a significant bench of technical expertise for
identifying sustainable projects.
10:58:53 AM
Senator Wilson wanted to understand the purpose of the
proposed new loan program. He queried the size of the loans
and how the loans differed from funds available from other
programs.
Mr. Gialopsos agreed to provide the response to Senator
Wilson's question in writing.
11:00:07 AM
STUART COHEN, SELF, JUNEAU, spoke in support of the bill.
He thought that a successful and well administered green
bank program would protect public money and have a real
work impact. He shared that he was working with a heat pump
program in Juneau that would provide loans for residents.
The loans allowed for financing of heat pumps; the income
from the program helped finance the program. He said to
offer the loans, a source of low-cost capital was needed.
SB 125 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson discussed housekeeping.
ADJOURNMENT
11:02:58 AM
The meeting was adjourned at 11:02 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 125 SFIN.AHFC-AEA-SENATE-BILL-125 5.11.23.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 Public Testimony Packet 1.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 Testimony DelValle.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 public Testimony McCabe.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 Testimony Hinterberger.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 Support Decker.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 Please support SB125 Masteller.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 125 Sectional Analysis 04.06.23.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB125 Transmittal Letter 04.04.23.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |
| SB 89 Summary of Changes 5-11-23.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 89 |
| SB 89 work draft R version.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 89 |
| SB 125 230512-SFIN-LETTER.pdf |
SFIN 5/11/2023 9:00:00 AM |
SB 125 |