Legislature(2007 - 2008)SENATE FINANCE 532
04/07/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB231 | |
| HB319 | |
| HB419 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 231 | TELECONFERENCED | |
| + | HB 419 | TELECONFERENCED | |
| + | HB 319 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 419(FIN)
"An Act relating to state lease-purchases of equipment
and other personal property; and providing for an
effective date."
Senator Huggins MOVED to ADOPT SCS CSHB 419(FIN), labeled
25-LS1567\O, Cook, 4/3/08.
Senator Dyson OBJECTED. He requested an explanation of the
changes in the new CS.
9:43:48 AM
TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, explained
that the new CS is the bill that was originally introduced
in House Finance. It does not allow any agency to do state
lease purchases.
Senator Dyson WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
Mr. Wright explained that there were concerns about the
usage of the master lease line of credit. One of the items
used for lease purchase was Governor Murkowski's jet. There
have been 29 separate lease purchases. The legislature last
year authorized $16 million for the master lease line of
credit. This was problematic because there was no fund
source for it. There were a number of items that avoided
the appropriation process.
Mr. Wright related that the other concern was that some
payments were not showing up in the detail book. There was
lack of information about the source of funding and who
controlled the dollar amounts. The original intent of the
bill was to stop the master lease line of credit.
Co-Chair Stedman suggested that Mr. Wright provide more
information.
Mr. Wright reiterated that the bill does apply to all lease
purchase agreements. One of the problems was that AS
36.30.085 was too broad and lacked a definition of what a
lease purchase agreement was or how the departments were to
use it. There were only four agencies that were entitled to
use it. A 1987 Attorney General's opinion opened the door
to departmental abuse due to the broadness of the statute.
Mr. Wright reported that one of the goals of the bill is to
have a reporting mechanism regarding lease purchases. Any
agency that enters into a lease purchase contract over
$100,000 must provide written notice within 10 days to the
House and Senate presiding officers and the Finance
Committee chairs. It also requires OMB to compile a list of
every lease purchase item a department enters into. This
information would be used when drafting the operating
budget.
9:49:47 AM
Senator Dyson termed the bill draconian. He asked which
organizations would be included. Mr. Wright said the
organizations could still lease equipment, but they cannot
enter into a lease purchase agreement. Senator Dyson asked
if the problems occur when the leases end up as purchases.
Mr. Wright said that was correct. The biggest objection the
House Finance Committee had was the lack of limitations with
the use of the master lease line of credit.
Senator Dyson summarized that the intent of the bill is to
prevent departments from purchasing equipment through the
subterfuge of a lease purchase and bypassing the budgeting
process. Mr. Wright said that was correct.
Co-Chair Stedman noted that there was language in the
capital budget to deal with this issue. It was decided to
follow the House's lead on this matter.
9:52:56 AM
Senator Thomas asked for clarification of the departments'
responsibility regarding leases. Mr. Wright said that under
the CS there would be no lease purchase agreements. Mr.
Wright clarified that one could not enter into a lease of
personal property. It does not apply to real property.
Co-Chair Stedman asked who controls the dollar amount
available. Mr. Wright reiterated that there is no dollar
amount listed under the master lease line of credit. Co-
Chair Stedman inquired how the payments show up in the
budgets that are presented. Mr. Wright said that was one of
the questions that the House Finance Committee had. Some
agencies do report in the detail books and some don't. Co-
Chair Stedman thought that would create concern. Mr. Wright
agreed.
9:55:04 AM
Senator Dyson requested an example about how the building
improvements were abused. Mr. Wright did not know if that
had happened. He gave an example of a purchase for
carpeting for the State Office Building.
Senator Dyson noted that the agencies may be using the
process to subvert the capital projects process. He gave an
example. He agreed with the intent of the bill, but
emphasized that the legislature must be responsible in
providing needed equipment.
9:57:57 AM
Co-Chair Stedman said when looking back at this year's
capital budget, the Administration reduced departmental
requests by $1 billion before the Committee received it.
The Senate Finance Committee reduced the legislators'
requests by about $1.1 billion.
9:58:14 AM
JIM LYNCH, ASSOCIATE VICE PRESIDENT OF FINANCE, UNIVERSITY
OF ALASKA, voiced concern about the lack of a floor when
reporting to the Office of Management and Budget. He spoke
in favor of the accountability aspect of the bill and
against removing the ability to lease purchase.
10:01:53 AM
REMOND HENDERSON, DEPUTY DIRECTOR, DIVISION OF GENERAL
SERVICES, DEPARTMENT OF ADMINISTRATION, commented that if
the CS prohibits the leasing of equipment or other personal
property when necessary, the Department of Administration
objects to the bill. He spoke in favor of the bill version
which was amended in the House and contains reporting
requirements.
Co-Chair Stedman noted two zero fiscal notes.
HB 419 was heard and HELD in Committee for further
consideration.
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