HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 8, 1993 3:00 p.m. MEMBERS PRESENT Rep. Bill Hudson, Chairman Rep. Joe Green, Vice Chair Rep. Brian Porter Rep. Jerry Mackie MEMBERS ABSENT Rep. Bill Williams Rep. Joe Sitton Rep. Eldon Mulder COMMITTEE CALENDAR *HB 252: "An Act amending the Commercial Fishing Loan Act to authorize refinancing of existing loans made under that Act." PASSED FROM COMMITTEE HB 50: "An Act authorizing the Anchorage to Kenai Peninsula and the Healy to Fairbanks power transmission interties and approving the design and construction costs of the interties; and providing for an effective date." HEARD AND HELD HB 51: "An Act making a special appropriation for design and construction of power transmission interties between Anchorage and the Kenai Peninsula and between Healy and Fairbanks; and providing for an effective date." HEARD AND HELD HB 220: "An Act relating to the economic development grant program; and providing for an effective date." POSTPONED (* First public hearing.) WITNESS REGISTER REP. CARL MOSES Alaska State Legislature State Capitol Juneau, Alaska 99801-1182 465-4451 Position Statement: Prime Sponsor of HB 252 MARTIN RICHARDS, Director Division of Investments Department of Commerce and Economic Development P.O. Box 34159 Juneau, Alaska 99803-4159 465-2510 Position Statement: Presented Departments position and and answered questions on HB 252 BRUCE SCHACTLER Area K Seiners Association P.O. Box 2399 Kodiak, Alaska 99615 486-4686 Position Statement: Supported HB 252 JERRY MCCUNE United Fishermen of Alaska 211 Fourth Street, Suite 112 Juneau, Alaska 99801 586-2820 Position Statement: Supported HB 252 PREVIOUS ACTION BILL: HB 252 SHORT TITLE: REFINANCING COMMERCIAL FISHING LOANS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MOSES,Davidson,Olberg TITLE: "An Act amending the Commercial Fishing Loan Act to authorize refinancing of existing loans made under that Act." JRN-DATE JRN-PG ACTION 03/24/93 761 (H) READ THE FIRST TIME/REFERRAL(S) 03/24/93 761 (H) LABOR & COMMERCE, RESOURCES, FINANCE 03/26/93 808 (H) COSPONSOR(S): DAVIDSON, OLBERG 04/08/93 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 252 SHORT TITLE: REFINANCING COMMERCIAL FISHING LOANS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MOSES,Davidson,Olberg TITLE: "An Act amending the Commercial Fishing Loan Act to authorize refinancing of existing loans made under that Act." JRN-DATE JRN-PG ACTION 03/24/93 761 (H) READ THE FIRST TIME/REFERRAL(S) 03/24/93 761 (H) LABOR & COMMERCE, RESOURCES, FINANCE 03/26/93 808 (H) COSPONSOR(S): DAVIDSON, OLBERG 04/08/93 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 50 SHORT TITLE: AUTHORIZING POWER TRANSMISSION INTERTIES BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) NAVARRE,Carney,Brice,Sitton, Menard,Davies TITLE: "An Act authorizing the Anchorage to Kenai Peninsula and the Healy to Fairbanks power transmission interties and approving the design and construction costs of the interties; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/14/93 58 (H) READ THE FIRST TIME/REFERRAL(S) 01/14/93 59 (H) LABOR & COMMERCE, FINANCE 02/11/93 (H) L&C AT 03:00 PM CAPITOL 17 02/11/93 (H) MINUTE(L&C) 02/15/93 350 (H) COSPONSOR(S): GREEN 04/08/93 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 51 SHORT TITLE: APPROP: POWER TRANSMISSION INTERTIES BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) NAVARRE,Carney,Brice,Sitton, Menard,Davies TITLE: "An Act making a special appropriation for design and construction of power transmission interties between Anchorage and the Kenai Peninsula and between Healy and Fairbanks; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/14/93 59 (H) READ THE FIRST TIME/REFERRAL(S) 01/14/93 59 (H) LABOR & COMMERCE, FINANCE 02/11/93 (H) L&C AT 03:00 PM CAPITOL 17 02/11/93 (H) MINUTE(L&C) 02/15/93 351 (H) COSPONSOR(S): GREEN 04/08/93 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 220 SHORT TITLE: ECONOMIC DEVELOPMENT GRANT FUND BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MOSES TITLE: "An Act relating to the economic development grant program; and providing for an effective date." JRN-DATE JRN-PG ACTION 03/12/93 619 (H) READ THE FIRST TIME/REFERRAL(S) 03/12/93 619 (H) CRA, LABOR & COMMERCE, FINANCE 03/25/93 (H) CRA AT 01:00 PM CAPITOL 124 03/25/93 (H) MINUTE(CRA) 03/26/93 789 (H) CRA RPT CS(CRA) 6DP 1NR 03/26/93 790 (H) DP: SANDERS, BUNDE, WILLIS, WILLIAMS 03/26/93 790 (H) DP: TOOHEY, OLBERG 03/26/93 790 (H) NR: DAVIES 03/26/93 790 (H) -ZERO FISCAL NOTE (DCED) 3/26/93 03/26/93 790 (H) REFERRED TO LABOR & COMMERCE 04/08/93 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 93-36, SIDE A Number 001 CHAIRMAN HUDSON convened the meeting at 3:14 p.m., April 8, 1993. HB 252 REFINANCING COMMERCIAL FISHING LOANS Number 049 REP. CARL MOSES, PRIME SPONSOR of HB 252, read the following sponsor statement: "I have introduced HB 252 to give the Department of Commerce the authority to refinance existing commercial fishing loans. Most of the 1,200 commercial fisherman who now have state loans are paying 10.5% in interest rates. Regulations provide for new fixed rate loans at 2% above the bank prime rate. Since the current bank prime rate is 6%, current commercial fishing loans are now at 8% rates. However, the Department of Commerce has no mechanism to allow for current loans to be refinanced to take advantage of the lower interest rates that are currently available. "Commercial fishermen have been faced these past few years with low prices and unpredictable fish returns. Following the disastrous 1991 salmon season, the Department of Commerce approved loan extensions for nearly half of the existing loans. More than 3000 fishermen are reportedly in arrears this year to the Internal Revenue Service for back taxes. The commercial fishing industry is obviously in bad shape. Allowing fishermen to refinance their loans and reduce their monthly payments is one obvious way the legislature can help the industry out. Although there is a cost for such a refinancing program, there is sufficient cash flow in the revolving loan fund to accommodate it. Additionally, fishermen would have an easier time making their payments if their loans were at lower interest rates." Number 100 MARTIN RICHARDS, DIRECTOR, DIVISION OF INVESTMENTS, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified in support of HB 252. Mr. Richard stated that current statutes do not allow for refinancing and went on to describe the mechanics of the loan program. Mr. Richards pointed out that HB 252 would mean approximately $1.6 million less each year in interest payments coming into the fund. Number 286 BRUCE SCHACTLER, representing AREA K SEINERS ASSOCIATION, testified from Kodiak in support of HB 252. Mr. Schactler stated that many fishermen borrowed money based on the steady markets of the 80's, and so much has changed since, that HB 252 would be paramount to fishermen's economic survival. MR. SCHACTLER pointed out that the fund may gain less money in interest if HB 252 passes. But without the ability to refinance, many fishermen may have to default, which would be very expensive to the state. Number 360 JERRY MCCUNE, representing UNITED FISHERMEN OF ALASKA, testified in support of HB 252. Mr. McCune echoed the above testimony with regards to the great need for this legislation. REP. MACKIE moved for passage of HB 252 with individual recommendations and a fiscal note. HB 50 AUTHORIZING POWER TRANSMISSION INTERTIES HB 51 APPROP: POWER TRANSMISSION INTERTIES CHAIRMAN HUDSON announced his intention to use HB 50 and HB 51 as the vehicle for a new committee substitute (CS) on interties. Number 397 CHAIRMAN HUDSON asked the committee to move the CS's to come before the committee and then hold them over until Tuesday, April 13, for a hearing. Number 456 REP. MACKIE stated that he had a problem with spending millions for upgrading interties and at the same time this organization has cut the Power Cost Equalization for the rural areas. CHAIRMAN HUDSON answered that Rep. Mackie's point was understood and that was something he hoped would be addressed when these bills were brought up. Number 480 REP. PORTER moved to adopt CSHB 50(L&C) and CSHB 51(L&C) in lieu of the original bill. No objections were heard, so ordered. CHAIRMAN HUDSON adjourned the meeting at 3:50 p.m.