02/04/2000 01:38 PM House FIN

HOUSE BILL NO. 203                                                                                                            
                                                                                                                                
     "An  Act   relating  to   loans  from  the   agriculture                                                                   
     revolving  loan fund and  to contracts  for the  sale of                                                                   
     state agriculture  land; and providing for  an effective                                                                   
     date."                                                                                                                     
                                                                                                                                
Members were  provided with a proposed  committee substitute,                                                                   
work   draft  #1-LS0871\S,   which   incorporated   committee                                                                   
substitute,  work   draft  #1-LS0871\M,  Cook,   1/21/00  and                                                                   
Amendment  2 by  Representative  J.  Davies,  adopted by  the                                                                   
Committee on 02/01/00 (copy on file).                                                                                           
                                                                                                                                
Representative  J.   Davies  MOVED  to  ADOPT   the  proposed                                                                   
committee substitute, work draft  #1-LS0871\S. There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
MIKE TIBBLES,  STAFF, REPRESENTATIVE THERRIAULT  reviewed the                                                                   
committee substitute.  He explained  that Amendment  2, which                                                                   
was  previously  adopted by  the  committee,  dealt with  the                                                                   
ability of the Agricultural Revolving  Loan Fund Board to set                                                                   
guidelines   defining   "disaster"    or   "emergency".   The                                                                   
Department  of Law  explained that  the Board  does not  have                                                                   
regulatory authority. The authority  currently rests with the                                                                   
department. The  amendment was  amended in the  new committee                                                                   
substitute  on page 3,  line 17.  The following language  was                                                                   
added: "based upon regulations adopted by the department."                                                                      
                                                                                                                                
Mr. Tibbles noted that references  to "rate" were modified by                                                                   
"fixed". This  would assure an  equality of comparisons.  The                                                                   
following  language was  added: "a fixed  rate comparable  to                                                                   
that charged  by other  agricultural lending institutions  in                                                                   
the state for similar loans".                                                                                                   
                                                                                                                                
Section 2 is  new. Reference to short term  loans was omitted                                                                   
from  the original  draft.  References  to "8  percent"  were                                                                   
replaced   with  "comparable   to  that   charged  by   other                                                                   
agricultural lending institutions".                                                                                             
                                                                                                                                
Representative  J.   Davies  questioned  if  the   intent  of                                                                   
modifying  "rate" with  "fixed" is to  prevent variable  rate                                                                   
loans. Co-Chair Therriault affirmed  that it is the intent of                                                                   
the  legislation   to  prevent   variable  rate   loans.  The                                                                   
department does not currently,  or intent to, handle variable                                                                   
rate loans.                                                                                                                     
                                                                                                                                
CAROL  CARROLL,  DIRECTOR,  DIVISION   OF  SUPPORT  SERVICES,                                                                   
DEPARTMENT OF  NATURAL RESOURCES provided information  on the                                                                   
legislation.  She  noted  that the  department  supports  the                                                                   
amendment and does not have staff  to do variable rate loans.                                                                   
                                                                                                                                
Mr.  Tibbles   observed  that   "notwithstanding  any   other                                                                   
provision of  law that  relates to loan  terms" was  added on                                                                   
page 3, line 17.  This would override  any previous provision                                                                   
that precluded a loan from being restructured.                                                                                  
                                                                                                                                
Co-Chair Therriault discussed  the fiscal note. He noted that                                                                   
the expected cost has been reduced.                                                                                             
                                                                                                                                
Vice  Chair  Bunde observed  that  the  loan program  is  not                                                                   
expected to break  even. He questioned the cost  to the state                                                                   
over the  next five  years. Co-Chair  Therriault pointed  out                                                                   
that  it is  difficult to  provide  an exact  number for  the                                                                   
fiscal  note. He  observed that  a  more competitive  program                                                                   
could  generate   more  business.  The  division   relies  on                                                                   
proceeds from the loan fund for their funding.                                                                                  
                                                                                                                                
Representative Foster  MOVED to report CSHB 203  (FIN) out of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB  203  (FIN)  was REPORTED  out  of  Committee  with  "no                                                                   
recommendation"  and   a  new  fiscal  impact   note  by  the                                                                   
Department of Natural Resources.