Legislature(1995 - 1996)

02/28/1995 03:35 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               SENATE STATE AFFAIRS COMMITTEE                                
                        February 28, 1995                                      
                           3:35 p.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Bert Sharp, Chairman                                                  
 Senator Randy Phillips, Vice-Chairman                                         
 Senator Loren Leman                                                           
 Senator Dave Donley                                                           
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Jim Duncan                                                            
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 SENATE BILL NO. 92                                                            
 "An Act requiring that, in addition to its operating budget, all              
 activities of the Alaska Housing Finance Corporation are subject to           
 the Executive Budget Act."                                                    
                                                                               
 SSTA - 2/28/95                                                                
                                                                               
 SB  72 (VOLUNTEERS AND EMPLOYEES OF NONPROFITS) was scheduled, but            
 not taken up on this date.                                                    
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 92 - No previous senate committee action.                                  
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Representative Terry Martin, Chairman                                         
 Legislative Budget & Audit Committee                                          
 State Capitol, Juneau, Alaska, 99801-1182¶465-3783                            
   POSITION STATEMENT: prime sponsor of SB 92/HB 189                           
                                                                               
 Randy Welker, Auditor                                                         
 Legislative Audit Division                                                    
 P.O. Box 113300, Juneau, AK 99811-3300¶465-3830                               
   POSITION STATEMENT: testified on SB 92                                      
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 95-7, SIDE A                                                             
                                                                               
 Number 001                                                                    
 SSTA - 2/28/95                                                                
           SB  92 AHFC SUBJECT TO EXEC. BUDGET ACT                           
                                                                               
 CHAIRMAN SHARP calls the Senate State Affairs Committee to order at           
 3:35 p.m. and brings up SB 92 as the first order of business before           
 the committee.  The chairman calls the first witness.                         
                                                                               
 Number 030                                                                    
                                                                               
 REPRESENTATIVE MARTIN, Chairman of the Legislative Budget & Audit             
 Committee, prime sponsor of SB 92 and companion bill, HB 189,                 
 relays information to the committee contained in the sponsor                  
 statement.  Representative Martin stresses the importance of having           
 all AHFC programs and activities under the review procedures of the           
 Executive Budget Act (AS 37.07).                                              
                                                                               
 Number 070                                                                    
                                                                               
 CHAIRMAN SHARP remarks, regarding the legislature retrieving some             
 of the equity that has been invested in AHFC, that if the                     
 legislature were to receive just 5% of the money it has invested in           
 AHFC from 1980-1984, that amount would equal $800,000,000.  If one            
 were to use real market rates in calculating that amount, it would            
 probably be in excess of a billion dollars.  The equity in AHFC is            
 an asset of the state, not the AHFC.                                          
                                                                               
 Number 095                                                                    
                                                                               
 REPRESENTATIVE MARTIN mentions there is a loop-hole that should be            
 closed regarding the bonding authority of AHFC: AHFC is a public              
 corporation backed by the funds of the State of Alaska.                       
                                                                               
 Number 115                                                                    
                                                                               
 SENATOR LEMAN notes that an article he read yesterday stated just             
 discussing potential withdrawal of money from AHFC damages the              
 corporation's bond rating.                                                    
                                                                               
 Number 120                                                                    
                                                                               
 CHAIRMAN SHARP comments AHFC claims it went out of the subsidized-            
 loan business several years ago, but he would dispute that.  The              
 chairman thinks the 5% low-income loan program the corporation                
 offered recently was a highly subsidized program.                             
                                                                               
 Number 130                                                                    
                                                                               
 REPRESENTATIVE MARTIN thinks SB 92 will show how money has been               
 invested, and that investment in housing can be looked at as a                
 renewable resource.                                                           
                                                                               
 Number 150                                                                    
                                                                               
 RANDY WELKER, Legislative Auditor, states SB 92 is the result of              
 frustration experienced by the Legislative Budget & Audit Committee           
 in the past with AHFC.  Mr. Welker mentions the 5% loan program as            
 one example.  Another example is the AHFC's attempt to construct an           
 office building for their administrative use outside the Executive            
 Budget Act process.  SB 92 is an attempt to bring the corporation             
 back under the legislature's control and oversight.                           
                                                                               
 Number 189                                                                    
                                                                               
 SENATOR RANDY PHILLIPS asks Mr. Welker if there is any reason the             
 Alaska Industrial Development & Export Authority (AIDEA), the                 
 Alaska Railroad Corporation (ARRC), and the Alaska Science &                  
 Technology Foundation (ASTF) should not be addressed by SB 92.                
                                                                               
 Number 195                                                                    
                                                                               
 MR. WELKER responds none of those entities are identical to AHFC,             
 so it would be hard to address them all in one bill.  Mr. Welker              
 informs the committee that Senator Frank has introduced a bill                
 which would address the University of Alaska endowment income.                
                                                                               
 Number 220                                                                    
                                                                               
 SENATOR RANDY PHILLIPS asked Mr. Welker about the default provision           
 in the bond issue in November.                                                
                                                                               
 MR. WELKER replied a clause in the letters of credit for the                  
 default provision stated, "should the legislature appropriate any             
 assets away from AHFC, that agreement would be considered in                  
 default."  Mr. Welker states that bond issue was short term                   
 financing.                                                                    
                                                                               
 Number 250                                                                    
                                                                               
 SENATOR RANDY PHILLIPS expressed fear that AHFC would be able to do           
 that long-term, and wants to know if that problem can be addressed            
 through SB 92.                                                                
                                                                               
 MR. WELKER thinks that might diminish AHFC's ability...it is his              
 understanding that provision was not initiated by AHFC, but was a             
 requirement of the financier.  He thinks AHFC is well aware of                
 several legislators' dissatisfaction with that clause.  Mr. Welker            
 thinks that clause may impact the timing of appropriation of funds            
 from AHFC, but he does not believe it would preclude transfer of              
 funds in FY 96.                                                               
                                                                               
 Number 267                                                                    
                                                                               
 CHAIRMAN SHARP asks if there is any indication AHFC would coach               
 lenders to include that clause in order to thwart the intent of the           
 legislature.                                                                  
 Number 273                                                                    
                                                                               
 MR. WELKER states he had the same concern, but the best he could              
 tell was that the clause was initiated from the bank.  There was              
 indication that certain staff members at AHFC were not pleased to             
 see the clause in the letters of credit, and did not think it was             
 necessary.  He is satisfied the clause was not prompted or                    
 initiated by AHFC, but of course there is never any absolute                  
 assurance of that.                                                            
                                                                               
 Number 285                                                                    
                                                                               
 SENATOR RANDY PHILLIPS makes a motion to discharge SB 92 from the             
 Senate State Affairs Committee with individual recommendations.               
                                                                               
 Number 288                                                                    
                                                                               
 SENATOR DONLEY asks if the committee should consider amending SB 92           
 to make sure it covers some other....                                         
                                                                               
 Number 290                                                                    
                                                                               
 SENATOR RANDY PHILLIPS responds he is satisfied with Mr. Welker's             
 explanation.  SB 92 could always be amended in the Senate Finance             
 Committee.                                                                    
                                                                               
 SENATOR DONLEY states he would be supportive of the amendments                
 Senator Phillips suggested.                                                   
                                                                               
 Number 300                                                                    
                                                                               
 CHAIRMAN SHARP adds his support, also.  The chairman asks staff to            
 work on possible amendments to SB 92 to include other agencies.               
                                                                               
 Number 303                                                                    
                                                                               
 CHAIRMAN SHARP, hearing no objection or further discussion, orders            
 SB 92 released from committee with individual recommendations.                
                                                                               
 Number 315                                                                    
                                                                               
 CHAIRMAN SHARP adjourns the Senate State Affairs Committee meeting            
 at 3:55 p.m.                                                                  
                                                                               

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