Legislature(2005 - 2006)

2005-03-29 Senate Journal

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2005-03-29                     Senate Journal                      Page 0707
SB 153                                                                                            
SENATE BILL NO. 153 BY THE SENATE RULES COMMITTEE                                                   
BY REQUEST OF THE GOVERNOR, entitled:                                                               
              "An Act relating to international airports revenue                                   
          bonds; and providing for an effective date."                                              
was read the first time and referred to the Transportation and Finance                              
The following fiscal information was published today:                                               
 Fiscal Note No. 1, Department of Revenue                                                           
Governor's transmittal letter dated March 24:                                                       
Dear President Stevens:                                                                             
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am                          
transmitting a bill relating to international airports revenue bonds.                               
The bill would amend AS 37.15.410 to increase the cumulative                                        
authorization for international airports revenue bonds from the current                             
$524,500,000 to $812,500,000.  This increase will allow the sale of up                              
to $288,000,000 in new international airports revenue bonds to support                              
capital improvement programs for fiscal years 2006 through 2009 at                                  
the Ted Stevens Anchorage International Airport and Fairbanks                                       
International Airport, which together comprise the Alaska                                           
International Airports System (AIAS).  AS 37.15.410 states the                                      
cumulative amount of bonds authorized since the creation of the                                     
international airports revenue bonding program, including those                                     
already fully retired, and does not reflect the dollar amount of bonds                              
outstanding at any given time.                                                                      
Funding for operations and capital improvements of the AIAS is                                      
obtained from charges for the use of airport facilities, primarily paid                             
by commercial airlines.  The AIAS and the airlines that are signatories                             
to the International Airports System Operating Agreement have agreed                                
to a capital improvement program approved by the signatory airline                                  
ratepayers through a voting procedure under the Operating Agreement.                                

2005-03-29                     Senate Journal                      Page 0708
With full support of the airlines, revenue bond funding allows the cost                             
of long-term airport projects to be spread over longer periods of time,                             
such as the useful life of the projects.  Annual debt service will be paid                          
through airline rates and fees -- and in some cases, federal grant                                  
proceeds or passenger facility charges.                                                             
Additional bond authorization under AS 37.15.410 was granted in                                     
2001 and again in 2003, to implement the AIAS capital improvement                                   
program through fiscal year 2005.  Additional bond authorization is                                 
now required to finance the continuation of the capital improvement                                 
program.  AS 37.15.410 has, to date, authorized the state to issue up to                            
$524,500,000 of revenue bonds to support airport projects.  This                                    
authority, cumulative since the inception of AS 37.15.410, has been                                 
exhausted, with outstanding bond principal standing at approximately                                
$427,000,000 as of June 30, 2004.  The increase in this bill is required                            
to allow the sale of additional bonds.                                                              
The authority sought in this bill would increase the bond authorization                             
limit to finance capital improvements at both the Ted Stevens                                       
Anchorage International Airport and Fairbanks International Airport                                 
through fiscal year 2009.  By including the full authorization in this                              
bill, the state could sell bonds in a single offering or in multiple                                
offerings, as best maximizes the efficiency and reduces the cost of                                 
bond issuance, while providing financing as required to meet project                                
At Anchorage, these bond proceeds would provide some or all of the                                  
state share for federal airport improvement program projects such as                                
airfield pavement maintenance, equipment, noise abatement program                                   
implementation, master planning, advanced project/parking design                                    
study, and aircraft rescue and fire fighting building rehabilitation.                               
Anchorage bond projects not primarily supported by federal money                                    
include such projects as information technology improvements,                                       
terminal rehabilitation, general aviation parking and taxiway                                       
relocation, and homeland security renovation.  Bond proceeds also                                   
would fund the lion's share of the Anchorage South Terminal                                         
Concourse A and B remodel project.                                                                  

2005-03-29                     Senate Journal                      Page 0709
At Fairbanks, these bond proceeds would provide the state share for                                 
primary runway reconstruction, including pavement replacement,                                      
associated airfield lighting reconstruction, and relocation of the heavy                            
aircraft cargo apron to meet airport design criteria and to permit                                  
development of underutilized land.  Bond proceeds also would replace                                
worn out airport operations, safety, and maintenance equipment.                                     
Finally, the bond proceeds would provide the bulk of the funding                                    
necessary for a terminal area development project at Fairbanks.  This                               
project would upgrade and replace Fairbanks terminal facilities to                                  
resolve seismic and code deficiencies, as well as to accommodate                                    
future growth in passenger numbers.                                                                 
The AIAS is an increasingly vital and growing part of our economic                                  
engine.  The AIAS and the state's major air carriers propose to                                     
continue developing our world-class international airports through the                              
implementation of the International Airports Operating Agreement,                                   
supported by the issuance of the additional revenue bonds that would                                
be authorized by this bill.  In order to assure timely project                                      
development, I urge your prompt and favorable action on this measure.                               
Sincerely yours,                                                                                    
Frank H. Murkowski