Legislature(1995 - 1996)
03/15/1995 09:07 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 92
"An Act requiring that, in addition to its operating
budget, all activities of the Alaska Housing Finance
Corporation are subject to the Executive Budget Act."
Co-chair Halford announced that by the request of the
Legislative Budget and Audit Committee, SB 92 is submitted.
Senator Phillips explained that Senators Sharp, Frank,
Rieger and himself served on the LB&A Committee and that the
Alaska Housing Finance Corp. and Alaska Railroad were left
out of their bill last year. This bill adds AHFC.
Discussion was had on the Alaska Railroad, and it was
decided to create a new bill.
Co-chair Halford asked Dan Fauske, CEO/Executive Director,
Alaska Housing Finance Corp to join the committee. Mr.
Fauske testified to the committee (testimony attached).
Co-chair Frank thanked Mr. Fauske for his comments.
Historically, the programs were not included in the original
legislation. The legislature has had confidence in AHFC's
ability to handle political and arbitrary decisions. He
stressed that he meant not just Mr. Fauske, but the
institution which includes the bond counsel and professional
contractors, and staff. Senator Frank does not view the
inclusion of AHFC in the budget act as being overly
burdensome, it is hoped that it will improve the
relationship between the agency and the legislature. He
added, in addition to the items Mr. Fauske mentioned, the
relationship between AHFC and the legislature has been
strained over the years. He added that there has not been a
vehicle for discussion. The legislature spends a lot of
time communicating with other state agencies. An
understanding is developed through the budget process of
their programs. Over time, communication is improved. Co-
chair Frank emphasized that the agency may view it as a
threat, but, it is an opportunity to improve the working
relationship between the agency and the legislature. The
legislature will not want to take action that will be
contrary to the purposes of the statutes, programs, and
purposes of AHFC. The legislature does want to understand
what goes on and wants to have an improved opportunity to
work with the agency to make sure that the purposes are
carried out. He stressed that it is not the legislature's
purpose to cut any agency out. He noted that if the
legislature does not receive cooperation, then the view may
be that decisions are more rash. Co-chair Frank stated that
he supports bringing this legislation into the budget
process and improve the relationship between the agency and
the legislature. Otherwise, he said, there would be many,
he included, who would not be interested in supporting a
capital or operating budget for this agency.
Senator Rieger questioned Mr. Fauske's testimony. He asked
if he opposed the inclusion into the executive budget act
suggesting that it would hinder AHFC's operation. Mr. Fauske
responded that he is not beyond being scrutinized, but his
review in the short time he has been there is that currently
there was $790,000,000. in loans and activity which occurred
through that agency. Currently, the amount this year is
$385,000,000. He stated his confusion, wanting to know if
it is capped. He asked, does the agency stop at some point
denying itself access to the market for refinancing and
lowering people's mortgages. This has been a very
successful program. He asked, how does the agency improve
on past performance? He stressed he welcomed the review and
indicated that next to the permanent fund this is Alaska's
most important asset. He noted that he wants to be
perceived in some capacity of success, mainly being opened
to the process which takes place allowing people to
participate. Again, his concern is, how does this become
structured so that there isn't a stoppage at a critical
point in the market?
Co-chair Frank indicated that it was not the legislature's
intent to stifle the agency. He suggested it could be
handled with general authority which is not dollar specific,
or through the LB&A process, requesting additional increases
from the established dollar maximum. The legislature is
interested in finding a way to make it work and not to
thwart the programs of AHFC. This legislation is not meant
to be negative, it is meant to be supportive.
Mr. Fauske stated that he needed to receive clarity from the
committee on a potential problem. In the past, programs
have gone into various districts without the representatives
even aware it was coming in. He indicated he was stating a
criticism of the agency, that it has not been forthcoming in
dealing with Representatives or Senators of certain areas.
Co-chair Frank responded that there was no truth to that and
it has a lot to do with activities outside the budget
process. In the budget process the legislators are tuned
into what state government is doing. If a legislator is
sitting on the Finance Committee, there is a definite
understanding of everything. If a legislator is not
presiding on the Finance Committee, then there will be
requests from the constituency for information, which does
heighten the awareness for those programs.
Senator Phillips asked if Mr. Fauske was speaking to the 5%
money? If it was passed by AHFC, and implemented to the
public, are you saying that legislators did not receive the
information before, or know about the program before it hit
the streets?
Mr. Fauske responded that he was not speaking of the 5%,
which could be another example. Specifically, he was
speaking to major HUD funded projects for senior centers,
and others that have come into various regions.
Senator Phillips and the committee spoke to the 5% funds.
Senator Rieger stated that making the agency subject to the
executive budget act, may not totally eliminate
misunderstandings. AHFC statutes have provisions for
establishing programs by regulation.
Mr. Fauske assured the committee that it is his intent to
open up the communication. That is not to say that all
problems are solved, but the agency is striving hard not to
repeat past mistakes.
Senator Rieger asked if Mr. Fauske would oppose legislation
resplitting the AHFC from ASHA? Mr. Fauske responded that
historically, and as an individual who worked for the
institution on the North Slope, efforts to develop a housing
program did not materialize. Dealing with ASHA was
impossible. Regulations were a problem. There were three
and four generations living in one house. Conventional
banking loans were not available. In essence nothing was
working. It took 4 years to finally turn it around. He
stressed that if it means going back to that, he opposes it.
He stated there are a great many people in this state who do
not have the same access as some of the urban areas or
technically advanced rural areas, and literally are shut off
from the entire process. ASHA, in those days, went through
appropriations from the state, the regulations were so
heavy, the agency could never get around anything. ASHA was
in poor standing with HUD at the time, and that was one of
the reasons why it was important to create this
comprehensive unit that functioned better. He felt that
this has been accomplished when he talks to staff and
outside agencies. He stated that he would oppose it unless
there were assurances that it would not result in those
circumstances again.
Discussion was had regarding communication and travel during
the out of session months.
Co-chair Frank MOVED for passage of SB 92 with individual
recommendations. No objection having been raised, SB 92 was
REPORTED OUT of committee with a zero fiscal note from the
Department of Revenue. Co-chairs Halford and Frank, along
with Senators Rieger, Phillips, Donley and Sharp signed the
committee report with a "do pass" recommendation. Senator
Zharoff signed "no recommendation".
Co-chair Halford announced that SB 6 would be revisited
Friday, March 17th.
ADJOURNMENT
The meeting was adjourned at approximately 10:50 a.m.
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