01/26/2001 01:38 PM House FIN

HOUSE BILL NO. 47                                                                                                             
                                                                                                                                
     "An Act  making capital appropriations  and capitalizing                                                                   
     funds; making appropriations  under art. IX, sec. 17(c),                                                                   
     Constitution   of  the   State  of   Alaska,  from   the                                                                   
     constitutional  budget reserve  fund; and providing  for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
Mr.  Teal  discussed  the  capital budget  (page  42  of  the                                                                   
Legislative   Finance  Divisions   Overview).  There   is  an                                                                   
approximately  $1.2 billion  dollar capital  budget in  FY02,                                                                   
which is  comparable to  FY01's. The  capital budget  is down                                                                   
$20  million dollars  in  federal money  and  up $30  million                                                                   
dollars  in general funds.  The state's  capital spending  is                                                                   
comparable to  the amount spent  during the oil  revenue peak                                                                   
in FY85. Most that of the spending  is through the Department                                                                   
of Transportation  and  Public Facilities  $2 million  of the                                                                   
increase. Most  of the change  in spending from FY01  to FY02                                                                   
is outside  of the  Department of  Transportation and  Public                                                                   
Facilities.                                                                                                                     
                                                                                                                                
Representative  Whitaker asked  how FY02  matching funds  are                                                                   
used. Mr. Teal  responded that the match varies  depending on                                                                   
the  program. Representative  Whitaker asked  if the  federal                                                                   
appropriation is  known. Mr. Teal  stressed that  the federal                                                                   
amount is never certain. He explained  that the Department of                                                                   
Transportation  and  Public  Facilities  requests  additional                                                                   
federal  authorization  in case  additional  federal  funding                                                                   
becomes available. Federal funding  to other states, which is                                                                   
not utilized is  reappropriated to states where  projects are                                                                   
ready.                                                                                                                          
                                                                                                                                
Mr. Teal  reiterated that the net  decrease was due  to a $40                                                                   
million  dollar  difference  in  AHFC  bonds.  Representative                                                                   
Croft concluded that  there is not a real decrease  in funded                                                                   
capital projects.  Co-Chair Mulder added that  voters did not                                                                   
approve some of  the bonds authorized. The net  impact on the                                                                   
state's economy was minimal.                                                                                                    
                                                                                                                                
In response to a question by Representative  Hudson, Mr. Teal                                                                   
clarified that state matching  funds for federal projects are                                                                   
not tied to particular projects.                                                                                                
                                                                                                                                
Mr. Teal  noted that  there is less  than $6 million  dollars                                                                   
appropriated  in the language  section; $4.8 million  dollars                                                                   
is appropriated to Power Cost Equalization.                                                                                     
                                                                                                                                
Vice-Chair  Bunde  expressed the  hope  that  the Power  Cost                                                                   
Equalization program will be self-sustaining.  Mr. Teal noted                                                                   
that the  program needs  approximately $15.7 million  dollars                                                                   
per year.  An endowment was created  in FY01. Not all  of the                                                                   
transfers were  made to the  endowment. The endowment  is not                                                                   
large  enough   to  generate   full  funding  for   PCE.  The                                                                   
appropriation  is approximately  $7.8 million dollars  short.                                                                   
The  shortfall will  be covered  by $2.5  million dollars  in                                                                   
AIDEA dividends,  $620  thousand dollars  from sale  of loans                                                                   
and $4.6 million  dollars in general funds.  The general fund                                                                   
requirement  should be  approximately $2  million dollars  in                                                                   
FY03. Mr. Teal  clarified that slow loading  of the endowment                                                                   
caused the shortfall.                                                                                                           
                                                                                                                                
HB  47   was  heard  and   HELD  in  Committee   for  further                                                                   
consideration.