Legislature(2017 - 2018)ADAMS ROOM 519
04/10/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB385 | |
| HB316 | |
| SB97 | |
| SB107 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 397 | TELECONFERENCED | |
| + | HB 385 | TELECONFERENCED | |
| += | SB 97 | TELECONFERENCED | |
| += | HB 216 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 107 | TELECONFERENCED | |
| += | HB 316 | TELECONFERENCED | |
| += | HB 306 | TELECONFERENCED | |
SENATE BILL NO. 107
"An Act relating to the Alaska capital income fund."
3:14:35 PM
Co-Chair Foster indicated the committee heard SB 107 by the
Senate Finance Committee on May 2, 2017. He invited Senator
McKinnon to speak to the bill.
SENATOR ANNA MACKINNON, SPONSOR, had discussed with the
House co-chairmen the use of the capital income fund. The
fund did not sweep into the general fund. Typically,
capital budget chairmen swept projects that had already
been utilized for other capital projects around the state.
It was money that remained after the allotted time and was
still sitting unused. The legislature had two choices for
those funds. First, the legislature could place it back
into the general fund and spend it like GF dollars.
Instead, what SB 107 proposed to do was dedicate the Alaska
capital income fund to deferred maintenance. In other
words, the money that was being rolled into the fund from
lapsing projects would be designated for a higher use and
prioritized deferred maintenance spending to extend the
life of state assets. She read from the prepared sponsor
statement:
The State of Alaska maintains over 2,200 facilities
which span over 14 entities, including the University
of Alaska and the Court system. These facilities total
19 million square feet of space and have a combined
replacement value of $8.6 billion.
The State's current outstanding deferred maintenance
backlog totals over $1.84 billion, which peaked in
FY2012 at $2.3 billion. With current funding levels
and no consistent funding source, the deferred
maintenance backlog is expected to trend up, causing
our facilities to fall into disrepair.
The Alaska capital income fund was created in 2006 and
receives an annual deposit of the earnings from the
Amerada Hess Settlement invested by the Permanent
Fund.
Senate Bill 107 envisions using these funds, which
cannot be used for dividends, to provide reliable
annual funding for preventative and deferred
maintenance. It is important we set up this mechanism
to continue to preserve our investment in these
facilities as the infrastructure ages and cost for
repairs and replacement increases.
Co-Chair Seaton commented that part of the capital income
fund money came from the Amerada Hess fund. He asked if the
money had already been appropriated. He was trying to
determine whether the swept money would be designated
general funds. He asked about keeping track of
reappropriated funds. He was concerned with the duplication
of funds. Co-Chair MacKinnon did not know the answer and
deferred to Mr. Carpenter.
3:18:29 PM
ROB CARPENTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
replied that the bill was structured to take the revenue
stream from the Amerada Hess Settlement, about $28 million
per year, to the Alaska capital income fund for deferred
maintenance projects. Historically, the funds were used in
the budget for deferred maintenance and all capital
projects. However, when the legislature started to consider
using the earnings reserve account as general fund revenue,
it was discovered that the Alaska capital income fund was
not a designated fund source. The money went to the
unrestricted general fund. The amendment would make it a
designated fund source. Furthermore, to the question of
about putting reapropriations inside the fund, there would
not be a problem with funds being mixed because the
reappropriations had been counted in prior sessions in
prior fiscal years.
Co-Chair Seaton indicated that the legislature received
reports on duplicated funds and regular undesignated
general funds. He was trying to figure out how to account
for spending each of the funds that were mixed. He asked if
it would be difficult to tract how duplicated and non-
duplicated funds were spent from an accounting aspect.
Mr. Carpenter responded that to-date the state had not
reappropriated funding to the capital income fund.
Currently, the state would operate with the Amerada Hess
funds. Conceptually, if the state were to send
reappropriations into the capital income fund and then
spend from it, he did not think there would be a problem
with duplication only in regard to how the state counted
the general fund revenue. The state always equated
designated general fund revenues to the designated general
fund expenditures. They were always equal, therefore, there
would not be a duplication.
Co-Chair Seaton suggested that if the legislature put
reapporpriations into the capital income fund, they had
already been appropriated. Mr. Carpenter responded,
"Correct." Co-Chair Seaton wondered, if they were spent,
whether the state would be reappropriating them again. He
wanted to make sure things were accounted for if the state
mixed duplicated and non-duplicated funds. He was fine with
the bill but wanted to make the committee aware of mixing
two types of fund sources. He wanted to raise the issue.
Representative Guttenberg understood that part of the
Amerada Hess Settlement was the agreement that the funds
could not be used for dividends. The projected lapse of
time for that specification to change was 15 to 20 years.
He believed that theoretically the funds could be used for
dividends in the future.
Mr. Carpenter thought Representative Guttenberg was correct
that the settlement timeline had passed and that the funds
could be redirected for any use. He noted that in prior
versions of Percent of Market Value (POMV) bills there was
a provision getting rid of the capital income fund and
rolling the funds into the Permanent Fund. However, there
was nothing precluding the legislature from keeping the
capital income fund and the Amerada Hess Settlement monies
set aside.
3:24:20 PM
Vice-Chair Gara understood the Amerada Hess portion of the
capital income fund. He wondered if the legislature had
placed funds in the capital income fund in addition to the
Amerada Hess funds. He wondered if the bill being discussed
would govern whatever other funds were in the capital
income fund.
Mr. Carpenter believed in the past the legislature had put
other money in the capital income fund. He could not recall
the time or amount. The bill specifically spoke to the
revenue shrink from the Amerada Hess going into the capital
income fund. It did not indicate that the legislature could
not appropriate additional money in the fund. It could
create a burden in terms of counting the funds.
Vice-Chair Gara thought it governed the whole capital
income fund. He did not see anything in the bill talking
about only the Amerada Hess income stream. Mr. Carpenter
responded that unless the legislature appropriated money
into the fund it would only be the amount flowing into the
fund which was about $28 million.
Vice-Chair Gara did not need to know if there was
additional money in the fund. He forgot his question.
3:26:20 PM
Co-Chair Foster OPENED public testimony.
3:26:44 PM
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster directed Vice-Chair Gara to review the
fiscal note.
Vice-Chair Gara read the zero fiscal note for SB 107. The
fiscal note assumed that there were no additional funds
inside the capital income fund. It stated that the funds
from the Amerada Hess settlement would now become
designated general funds as opposed to undesignated general
funds. It relabeled the $28 million income stream.
Co-Chair Seaton MOVED to report SB 107 out of Committee
with individual recommendations and the accompanying fiscal
note.
There being NO OBJECTION, it was so ordered.
SB 107 was REPORTED out of committee with a "do pass"
recommendation and with a new zero fiscal note by the House
Finance Committee.
Co-Chair Foster reviewed the agenda for the meeting at 5:00
PM.
Representative Wilson had heard from a superintendent
earlier in the day who was also a principal and an
elementary teacher. He was short a special needs teacher.
She wondered where the retired teacher bill was in the
legislative process. Co-Chair Foster indicated that both
bills were in the House Finance Committee and he would
determine when the bills would be heard. Representative
Pruitt clarified that the Senate had its version in Senate
Finance and the House version was in House Finance.
Representative Wilson relayed she had heard there were
teacher openings because of positions being difficult to
fill and that some of those positions could be filled with
retirees. She thanked Co-Chair Foster for the update.
Co-Chair Foster indicated there were no further comments
from members.