Legislature(2019 - 2020)ADAMS 519
03/18/2020 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Consideration of Governor's Appointee for the Alaska Mental Health Trust Authority: Anita Halterman | |
| Consideration of Governor's Appointee for the Alaska Mental Health Trust Authority: Rhonda Boyles | |
| HB268 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 268 | TELECONFERENCED | |
HOUSE BILL NO. 268
"An Act relating to the Alaska Municipal Bond Bank
Authority."
9:23:55 AM
Co-Chair Johnston asked for a brief reintroduction of the
bill.
REPRESENTATIVE BART LEBON, SPONSOR, detailed that HB 268
would remove the project scope limitation on projects with
the University of Alaska and gave them an opportunity
during the current low interest rate environment to
potentially refinance some of their debt. The bill would
also increase the [project participation] cap from $87
million to $500 million [for the university]. In relation
to regional health organizations, HB 268 would remove the
49 percent project participation limitation on the Alaska
Municipal Bond Bank and increased participation to
100 percent, which would save regional health organizations
money in refinancing or placing money through the bond bank
without having to find partners that increased complexity
and expense. The bill would increase the project limit from
$102.5 million to $250 million for a single regional health
organization project. Additionally, HB 268 would increase
the total funding for regional health organizations to
$500 million. He listed individuals available online to
testify.
9:26:19 AM
Co-Chair Johnston requested a fiscal note review.
MYRON DOSCH, CHIEF FINANCIAL OFFICER, UNIVERSITY OF ALASKA
(via teleconference), shared that the University of Alaska
supported the bill and had previously submitted a letter of
support. He spoke to the benefits of the bill if the
university were to use the mechanism to obtain credit
through the bond bank. For example, a $50 million bond over
30 years at interest rates as of March 5 would provide a
benefit of about $50,000 per year or $1.5 million over the
life of the bond.
9:27:55 AM
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE (via teleconference),
reviewed the fiscal note from the Department of Revenue,
OMB Component Number 121. The fiscal note included a "not
to exceed" amount for the activity that could be generated
by the proposed legislation. He explained that the bond
bank had a floor of annual expenditures and expenditures
increased as lending activity took place. He elaborated
that there was a not to exceed amount rather than a budget
the bond bank fully expected to expend during a fiscal
cycle. The authorization for up to $360,000 per year would
be directly related to any additional lending activity
undertaken by the bond bank as a result of making
additional loans to the university or regional health
organizations. He furthered they would be provided for out
of cost of issuance accounts that were funded from the
proceeds of the bond issuance. He elaborated that they
would be incorporated into the interest expense the
borrower would be repaying. Program receipts, not general
fund receipts, would provide for the potential annual
expenditure.
9:29:43 AM
Representative Josephson asked the bill sponsor to provide
a hypothetical scenario relative to a regional health
organization's use of the bill.
Representative LeBon complied. He relayed that a number of
projects were in the design or developmental stage. He used
a hypothetical small regional health organization in
Cordova (one of the locations for a potential project) as
an example. The organization would go through its period of
underwriting and showing justification for the project and
would seek assistance from the Alaska Municipal Bond Bank.
The bond bank would help in showing the repayment ability,
the capacity to perform. The bond bank would work with
stakeholders, potential clients, and potential users in
surrounding communities that would benefit from the
regional health organization. He detailed that it would all
need to come together in a way that justified the project
to a level where bond purchasers were interested in
supporting the project. It would be necessary to show
capacity to repay and establish the need and clientele
base. The idea would be to enable a regional health
organization to have a one-stop shop with the bond bank
instead of going out to find two or three other partners.
Co-Chair Johnston noted that Luke Welles from the Alaska
Native Tribal Health Consortium was available online.
Representative LeBon replied that Mr. Welles could answer
Representative Josephson's question.
Co-Chair Johnston asked if Mr. Welles had anything to add.
LUKE WELLES, CHAIRMAN, ALASKA NATIVE TRIBAL HEALTH
CONSORTIUM, (via teleconference), replied that
Representative LeBon had provided a good answer. He
explained that the bill offered another financing option
for the projects. He elaborated there were five upcoming
joint venture projects that represented about $700 million
in potential construction over the next few years. The
Indian Health Service would cover the cost of operating,
maintenance, and staffing after the projects were built. It
was incumbent on the regional health organizations to fund
the capital infrastructure, which would open up new
incoming revenues along with opening up new healthcare
facilities in rural Alaska.
Co-Chair Johnston asked Mr. Welles to put his name on the
record.
Mr. Welles complied.
9:32:38 AM
AT EASE
9:34:29 AM
RECONVENED
Co-Chair Foster MOVED to REPORT CSHB 268(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
Representative Carpenter OBJECTED. He understood that
adding tools to the toolbox is a good thing and that the
bond bank staff would make good decisions on how to finance
things. However, the bill was asking the committee to
accept an increased risk to the state. Under the current
circumstances, where the future was unknown, he did not
believe it would be prudent to increase the state's risk.
He highlighted that no one knew how long the current
financial crisis would last. He reasoned that if the
discussion had taken place ten years earlier when the state
was flush with oil money it may have been a wiser decision.
He did not support increasing risk to the state under the
current circumstances.
Representative LeBon understood and appreciated the
concerns expressed by Representative Carpenter. He saw two
immediate benefits of the bill including the opportunity to
potentially refinance university debt at a significantly
lower rate. He pointed out that the debt already existed.
He elaborated that it would be up to the university to seek
out the opportunity on a case-by-case basis. He informed
the committee that the university held nearly $300 million
in debt. He explained that the bill provided an important
potential savings on existing debt. He addressed the
regional health organization component and highlighted it
was in the state constitution "that we take care of
ourselves."
Representative LeBon believed they should take full
advantage if the regional health organization concept could
be used to deliver primary healthcare services in rural
Alaska at a cost savings while providing for improved
services. The bill would allow the organizations to access
the bond bank for 100 percent of the project instead of
seeking out a partner that could ask for a higher interest
rate on debt. He explained that when forcing an
organization to split the financing among several entities,
there was not always parity in the debt pricing. He
expounded that the bond bank may be cheaper than another
financial institution. He did not want to hamper
organizations. He noted that an organization may find a
partner that matched the rate, which was great. He
concluded that the bill provided an option.
9:37:46 AM
Co-Chair Johnston shared that she may have been less
interested in the bill ten years earlier. She was
interested in the bill under the existing circumstances and
wanted to see it move forward from committee. She believed
all of the tools were needed in the coming year. She would
prefer to have the tools with a fiscally responsible
organization that would assess risk and take advantage of
any forthcoming financing and any stimulus package. She
noted that currently "our" federal rate was cut to zero.
She considered that she may have been a "no" vote ten years
earlier, but she supported the legislation at present.
9:38:48 AM
A roll call vote was taken on the motion to report the bill
from committee.
IN FAVOR: Josephson, LeBon, Merrick, Ortiz, Johnston,
Foster
OPPOSED: Carpenter, Tilton
Representative Sullivan-Leonard, Representative Wool, and
Representative Knopp were absent from the vote.
The MOTION PASSED (6/2).
There being NO further OBJECTION, CSHB 268(FIN) was
REPORTED out of committee with four "do pass"
recommendations and four "no recommendation"
recommendations and with one new indeterminate note from
the University of Alaska and one new fiscal impact note
from the Department of Revenue.
9:39:29 AM
Co-Chair Johnston shared that everything [with the
schedule] would be very fluid. She asked for patience and
relayed that the agenda would be changed as needed. She
felt it was incumbent upon the committee to continue to do
its work. She reviewed the schedule for the following
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Anita Halterman Resume_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |
| Anita Halterman Board Application_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |
| Rhonda Boyles Board Application_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |
| Rhonda Boyles Resume_Redacted.pdf |
HFIN 3/18/2020 9:00:00 AM |
AMHTA Appointee |