05/04/2001 07:17 PM Senate FIN

                                                                                                                                
     SENATE BILL NO. 186                                                                                                        
     "An Act establishing a limit on the general obligation debt                                                                
     that may be authorized and issued by home rule and general law                                                             
     municipalities; and providing for an effective date."                                                                      
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.  [It was  indicated  on record  that this  was the  third                                                            
hearing;  however it  was scheduled  but  not actually  heard at  an                                                            
earlier meeting.]                                                                                                               
                                                                                                                                
Co-Chair  Donley stated that  the proposed  committee substitute  is                                                            
intended to address concerns raised at the previous hearing.                                                                    
                                                                                                                                
Co-Chair Donley moved to  adopt CS SB 186, 22-LS0851\F, as a working                                                            
draft.                                                                                                                          
                                                                                                                                
Without objection the committee substitute was ADOPTED.                                                                         
                                                                                                                                
Co-Chair Donley detailed  three changes in the committee substitute.                                                            
The first change, he said,  begins with Section 2 and provides for a                                                            
"slow phasing  in" of the ten-year  cap restricting the North  Slope                                                            
Borough from  issuing bonds  imposed on the  local share of  oil and                                                            
gas property tax.  He explained this stipulation reduces  the amount                                                            
of bonding authority to one mil per year for ten years.                                                                         
                                                                                                                                
Co-Chair Donley detailed  the second change, which occurs in Section                                                            
15 (b) and allows  additional debt to be incurred  by a municipality                                                            
that  would otherwise  be  restrained under  the  provisions in  the                                                            
bill.  He asserted  this  is an  "extraordinarily  generous"  yearly                                                            
allocation  of debt since  the statewide average  is lower  than the                                                            
amount allowed in these provisions.                                                                                             
                                                                                                                                
Co-Chair  Donley then  told of the  final change  to allow  existing                                                            
bonds  to be refinanced  so  long as the  debt does  not extend  the                                                            
length of the  original loan. He explained this enables  the borough                                                            
to realize  savings when  lower interest  rates are available.  This                                                            
language is contained in Section 16 of the committee substitute.                                                                
                                                                                                                                
Senator  Ward inquired  about the  North Slope  Borough's  permanent                                                            
fund and its relationship to the bonding limits.                                                                                
                                                                                                                                
Co-Chair Donley  suggested that the  phasing down of the  20-mil oil                                                            
and gas property tax availability  would have a limiting effect upon                                                            
issuance of new debt also.                                                                                                      
                                                                                                                                
Co-Chair  Kelly requested  further explanation  about the change  to                                                            
Section 15.                                                                                                                     
                                                                                                                                
Co-Chair  Donley  reminded of  concerns  expressed  at the  previous                                                            
hearing from former  Attorney General Avrum Gross  that the bill had                                                            
no provision for  additional debt or flexibility for  existing debt.                                                            
Co-Chair Donley stated  the committee substitute provides "a limited                                                            
amount" of additional debt  on an annual basis that would not exceed                                                            
$1000 per capita.                                                                                                               
                                                                                                                                
Co-Chair Kelly commented this would be "a tremendous amount".                                                                   
                                                                                                                                
Co-Chair Donley  agreed citing that the average community  in Alaska                                                            
has less  then $3000  total debt  per capita  incurred over  several                                                            
years.  He reiterated  this  is  a "very  generous  allocation"  for                                                            
additional  debt.  He noted  that  there would  be a  "buy-down"  of                                                            
existing debt over a period of time.                                                                                            
                                                                                                                                
Senator  Olson  acquiesced  this  committee  substitute  "offers  an                                                            
approach  to  try to  fix some  of  the difficulties   that were  so                                                            
glaring." However,  he stressed, "We're dealing with  a very serious                                                            
bill here,"  and asserted  that this legislation  is not the  proper                                                            
method to address  such an important  issue. He criticized  the lack                                                            
of public notice  allowing for input, referring to  the time between                                                            
placement of the bill on  the agenda, and the actual hearings within                                                            
24 hours of each other.  He suggested that any legislation affecting                                                            
the bonding  authority for many other  Alaskan communities,  such as                                                            
Anchorage,  Fairbanks  and the  Mat-Su Borough,  there  would be  an                                                            
opportunity for  "weeks and weeks" of public hearings  on the issue.                                                            
He  emphasized  there  is no  authority  to  provide  for  emergency                                                            
situations  such as the loss of a  school building or health  clinic                                                            
to  fire. He  asserted  the  expedition of  this  bill demonstrated                                                             
"extreme short-sidedness  for us to try to pass legislation out of a                                                            
distinguished committee such as this."                                                                                          
                                                                                                                                
Senator Olson requested 24 hours to review the legislation.                                                                     
                                                                                                                                
Co-Chair  Kelly responded  that the committee  substitute  addresses                                                            
the concerns  raised by Senator  Olson in  that it allows the  North                                                            
Slope Borough  to bond up to $1000 per capita per  year, which would                                                            
accommodate emergencies.                                                                                                        
                                                                                                                                
Senator Olson  calculated  8,000 residents  in the Borough  at $1000                                                            
per resident and stressed, "I've got to build two schools."                                                                     
                                                                                                                                
Co-Chair Donley  stated this provision allows bonding  of $8 million                                                            
per year, which he remarked is a "very very significant amount"                                                                 
                                                                                                                                
Senator Olson  repeated his  request for  additional time to  review                                                            
the legislation.                                                                                                                
                                                                                                                                
Co-Chair Kelly  stated he would accommodate the request  and ordered                                                            
the bill HELD in Committee.                                                                                                     
                                                                                                                                
AT EASE 7:55 PM / 8:15 PM                                                                                                       
[Note:  Audio  recorder   continued  recording  during   this  time,                                                            
although receiving equipment  was turned off, resulting in a section                                                            
of tape with no sound. No portion of the meeting was omitted.]