Legislature(2005 - 2006)HOUSE FINANCE 519

04/27/2005 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation hearing: TELECONFERENCED
Mental Health Trust Authority
+ HB 257 STATE PROCUREMENT ELECTRONIC TOOLS TELECONFERENCED
Moved CSHB 257(JUD) Out of Committee
+ HB 243 REG. COST CHARGES: UTILITIES/PIPELINES TELECONFERENCED
Heard & Held
+ SB 103 OIL & GAS: REG. OF UNDERGROUND INJECTION TELECONFERENCED
Scheduled But Not Heard
+ HB 218 PRIVATE HATCHERY COST RECOVERY FISHERIES TELECONFERENCED
Heard & Held
+ HB 279 OUTDOOR ADVERTISING; ENCROACHMENTS TELECONFERENCED
Moved CSHB 279(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 67 CLAIMS AGAINST HEALTH CARE PROVIDERS TELECONFERENCED
Moved HCS CSSB 67(FIN) Out of Committee
+= HB 13 SCHOOL CONSTRUCTION BOND REIMBURSEMENT TELECONFERENCED
Moved CSHB 13(FIN) Out of Committee
+= HB 53 CHILDREN IN NEED OF AID/REVIEW PANELS TELECONFERENCED
Moved CSSSHB 53(FIN) Out of Committee
HOUSE BILL NO. 13                                                                                                             
                                                                                                                                
     "An  Act relating  to reimbursement  of municipal  bonds                                                                   
     for school construction;  and providing for an effective                                                                   
     date."                                                                                                                     
                                                                                                                                
Representative  Croft WITHDREW  Amendment 1,  which had  been                                                                   
moved during .                                                                                                                  
                                                                                                                                
Representative Croft MOVED to ADOPT Amendment 2:                                                                                
                                                                                                                                
     Page 9, after line 16:                                                                                                     
     Add new section to read:                                                                                                   
                                                                                                                                
     "  Sec. The uncodified  law  of the State  of Alaska  is                                                                 
     amended by adding a new section to read:                                                                                   
     CONTINGENT  EFFECT. Section  3  of this  Act shall  only                                                                   
     apply if  all school districts  receive funding  that is                                                                   
     at least the  equivalent of the funding  they would have                                                                   
     received under  a base student  allocation of  $4919 per                                                                   
     student, in  2005 inflation-adjusted dollars,  under the                                                                   
     formula  of  state aid  to  public school  districts  in                                                                   
     effect  as   of  April  1,  2004.  Inflation   shall  be                                                                   
     calculated  under  this  section  as  reflected  by  the                                                                   
     United  States  Department  of  Labor's  Consumer  Price                                                                   
     Index for Anchorage, Alaska."                                                                                              
                                                                                                                                
Representative Croft noted the  amendment would hold harmless                                                                   
the major urban  areas: Anchorage and Fairbanks.  He asserted                                                                   
that  these  areas  need  to   be  provided  for  during  the                                                                   
transition period.  The amendment would ensure  that everyone                                                                   
would receive some increase.                                                                                                    
                                                                                                                                
Co-Chair Meyer WITHDREW his OBJECTION to adopt Amendment 2.                                                                     
There being further OBJECTION, Amendment 2 was adopted.                                                                         
                                                                                                                                
2:10:03 PM                                                                                                                    
                                                                                                                                
Representative Joule MOVED to ADOPT Amendment 3:                                                                                
                                                                                                                                
     Page 1, line 1, following "to":                                                                                          
     Insert "the school construction grant fund and to"                                                                       
                                                                                                                                
     Page 1, following line 4:                                                                                                  
     Insert new bill sections to read:                                                                                          
     "* Section 1. AS 14.11.008(a) is amended to read:                                                                      
          (a) In order to receive a grant under this chapter                                                                    
     or an appropriation under  AS 37.05.560, a district must                                                                   
               (1) be                                                                                                       
                    (A) a rural educational attendance area;                                                                
                    (B) a municipal school district and, as                                                                 
          of June 30 of the previous fiscal year, have a                                                                    
          population of less than 1,000; or                                                                                 
                    (C) a municipal school district that                                                                    
          operates schools on a military reservation; and                                                                   
               (2) provide a percentage share of the project                                                                
     cost, as determined under  (b) or (c) of this section; a                                                               
     [. A] district shall provide  the required participating                                                                   
     share  within  three  years  after  the  date  that  the                                                                   
     appropriation  bill funding the  grant is passed  by the                                                                   
     legislature.                                                                                                               
     * Sec. 2.  AS 14.11.008(a) is repealed  and reenacted to                                                                 
     read:                                                                                                                      
          (a) In order to receive a grant under this chapter                                                                    
     or an appropriation under  AS 37.05.560, a district must                                                                   
     provide  a  percentage share  of  the project  cost,  as                                                                   
     determined under (b) or  (c) of this section. A district                                                                   
     shall  provide the required  participating share  within                                                                   
     three years  after the date that the  appropriation bill                                                                   
     funding the grant is passed by the legislature.                                                                            
     *  Sec.  3. AS 14.11.008  is  amended  by adding  a  new                                                                 
     subsection to read:                                                                                                        
          (g) Grant funds provided to a municipal school                                                                        
     district  under (a)(1)(C)  of this  section may  only be                                                                   
     used  for  the costs  of  school construction  or  major                                                                   
     maintenance   for  a  school   located  on   a  military                                                                   
     reservation.                                                                                                               
  * Sec. 4. AS 14.11.011(a) is amended to read:                                                                               
          (a) A municipality that is a school district or a                                                                     
     regional  educational  attendance  area  eligible  under                                                               
     AS 14.11.008(a)  may submit a request to  the department                                                               
     for a grant under this chapter.                                                                                            
     * Sec. 5.  AS 14.11.011(a) is repealed  and reenacted to                                                                 
     read:                                                                                                                      
          (a) A municipality that is a school district or a                                                                     
     regional  educational  attendance   area  may  submit  a                                                                   
     request  to  the  department  for  a  grant  under  this                                                                   
     chapter."                                                                                                                  
                                                                                                                                
     Page 1, line 5:                                                                                                            
     Delete "Section 1"                                                                                                       
     Insert "Sec. 6"                                                                                                        
                                                                                                                              
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 9, line 17:                                                                                                           
     Delete all material.                                                                                                       
     Insert new bill sections to read:                                                                                          
  "* Sec. 9. AS 14.11.008(g) is repealed.                                                                                   
       * Sec. 10.  The uncodified law of the  State of Alaska                                                                 
     is amended by adding a new section to read:                                                                                
     CONTINGENT  EFFECT. Sections  1 -  7 and  9 of this  Act                                                                   
     take effect only if, at the  first regular session or at                                                                   
     a  special  session,  the   Twenty-Fourth  Alaska  State                                                                   
     Legislature passes a bill  appropriating an amount equal                                                                   
     to or more than $100,000,000  to the school construction                                                                   
     grant fund  under AS 14.11.008  - 14.11.011,  as amended                                                                   
     by secs. 1, 3, and 4 of this  Act, and that bill becomes                                                                   
     law not later than October 1, 2005.                                                                                        
   * Sec. 11. If, under sec. 10 of this Act, secs. 1, 3, 4,                                                                   
   6, and 7 of this Act take effect, they take effect                                                                           
   July 1, 2005.                                                                                                                
   * Sec. 12. If, under sec. 10 of this Act, secs. 2, 5,                                                                      
   and 9 of this Act take effect, they take effect July 1,                                                                      
   2006.                                                                                                                        
   * Sec. 13. Section 8 of this Act takes effect July 1,                                                                      
   2005.                                                                                                                        
   * Sec. 14. Section 10 of this Act takes effect                                                                             
   immediately under AS 01.10.070(c)."                                                                                          
                                                                                                                                
Co-Chair Meyer OBJECTED.                                                                                                        
                                                                                                                                
Amendment  3 would  restore contingency  language adopted  by                                                                   
the  House  HES   Committee,  which  was  removed   from  the                                                                   
committee Substitute adopted on April 26, 2005.                                                                                 
                                                                                                                                
Representative  Hawker  asked  for more  information  on  the                                                                   
contingent effect.                                                                                                              
                                                                                                                                
2:11:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CARL GATTO,  sponsor, noted  that he  was not                                                                   
present  in the  House Education  and  Social Services  (HES)                                                                   
Committee when the amendments were made.                                                                                        
                                                                                                                                
CODY RICE, STAFF,  REPRESENTATIVE CARL GATTO,  explained that                                                                   
the  amendment  was offered  by  Representative  Cissna.  The                                                                   
amendment  would  make  reauthorization   of  the  bond  debt                                                                   
contingent  on a direct  appropriation of  a minimum  of $100                                                                   
million appropriation for areas  without the ability to issue                                                                   
debt: Regional Education Attendance  Area's (REAA) and school                                                                   
districts under 5,000.                                                                                                          
                                                                                                                                
2:13:09 PM                                                                                                                    
                                                                                                                                
Representative  Joule  referred  to  Kasayulie  v.  State  of                                                                 
Alaska, which  questioned if  rural areas  of the  state were                                                                 
able to  get construction projects  done at the same  rate as                                                                   
urban schools. He  noted that the amendment would  be in that                                                                   
spirit.                                                                                                                         
                                                                                                                                
Representative  Hawker related  his  reluctance to  authorize                                                                   
additional funding and stressed  the need to hold the line on                                                                   
the budget.  He felt that  areas with bonding  capacity would                                                                   
be  held hostage  to a  commitment  on another  appropriation                                                                   
bill. He noted  that there is a school construction  bill. He                                                                   
stated that he  would support the amendment if  there were an                                                                   
identifiable  fund  source and  questioned  if  SB 155  would                                                                   
satisfy the $100 million requirement [for rural support].                                                                       
                                                                                                                                
2:15:38 PM                                                                                                                    
                                                                                                                                
Representative Joule  did not know  if SB 155 would  meet the                                                                   
requirements.  He  noted that  SB  155  goes down  the  major                                                                   
maintenance   list,   but  does   not   address  new   school                                                                   
construction.  House   Bill  13  would  address   new  school                                                                   
construction.                                                                                                                   
                                                                                                                                
Representative  Hawker felt  that  SB 155  would satisfy  the                                                                   
intent [of  the amendment]. Representative Joule  pointed out                                                                   
that there is no certainty about SB 155.                                                                                        
                                                                                                                                
Representative Croft referred  to Representative Hawker's use                                                                   
of  the  word  "hostage"  and  the  battle  between  the  two                                                                   
concepts rural vs. urban.                                                                                                       
                                                                                                                                
2:19:52 PM                                                                                                                    
                                                                                                                                
Representative Gatto  spoke in opposition to  Amendment 3. He                                                                   
felt  that HB 13  should stand  alone and  stressed that  the                                                                   
intent is to put new schools  in places where there are none.                                                                   
He  spoke against  tacking on  other  construction lists.  He                                                                   
reiterated that there are areas  that need schools. He argued                                                                   
against  adoption  of the  amendment  and recommended  it  be                                                                   
placed in separate legislation.                                                                                                 
                                                                                                                                
2:22:22 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer   noted  that  the  bill  came   forth  as  a                                                                   
continuation of a match.                                                                                                        
                                                                                                                                
Representative   Hawker  defended   his  use   of  the   term                                                                   
"hostage".  He pointed  out  that there  is  $141 million  in                                                                   
projects on  the major  maintenance list.  He noted  that the                                                                   
issue should be addressed and spoke against Amendment 3.                                                                        
                                                                                                                                
2:24:00 PM                                                                                                                    
                                                                                                                                
Representative  Croft maintained  that  statewide need  would                                                                   
not  be met  without  the  amendment.  He stressed  that  the                                                                   
problems  of  school  construction  is not  that  simple.  He                                                                   
asserted that  rural Alaska only  gets schools built  if they                                                                   
get  together  with  urban  projects  and  pointed  out  that                                                                   
Alaskans  had voted  for similar  language. He  felt that  it                                                                   
would  be   inappropriate  to   proceed  with  urban   school                                                                   
construction  without provisions  for rural construction.  He                                                                   
maintained  that  the  legislation,  without  the  amendment,                                                                   
would  be a  "slap in  the face"  of the  Kasayulie case.  He                                                                   
spoke  in favor  of  adopting Amendment  3  because it  would                                                                   
provide some new construction in rural Alaska.                                                                                  
                                                                                                                                
2:27:31 PM                                                                                                                    
                                                                                                                                
Representative  Gatto   referred  to  the  70/30   split.  He                                                                   
acknowledged  that  the  only  communities  that  only  urban                                                                   
communities  have applied,  but stressed  that any  community                                                                   
could apply. He  felt that the legislation would  satisfy the                                                                   
requirements.                                                                                                                   
                                                                                                                                
Mr. Rice  addressed a  legal opinion  regarding Kasayulie  v.                                                                 
State of  Alaska. He pointed out  that the case has  not been                                                                 
decided and noted  that any appropriation to  urban districts                                                                   
is contingent  on a vote  of those districts  and legislative                                                                   
appropriation.  He  added  that  a  direct  appropriation  is                                                                   
always within  the purview of  the legislature.  In addition,                                                                   
the  2002  provision  went before  the  voters.  The  current                                                                   
legislation would  not go before  the voters. He  referred to                                                                   
SB 155  and noted  that the potential  implications  have not                                                                   
been addressed.                                                                                                                 
                                                                                                                                
2:29:59 PM                                                                                                                    
                                                                                                                                
Representative  Joule spoke in  support of the  amendment and                                                                   
noted that  it would  be appropriate to  merge the  bills. He                                                                   
stressed that  there is an  opportunity to fund  rural school                                                                   
construction.                                                                                                                   
                                                                                                                                
2:31:14 PM                                                                                                                    
                                                                                                                                
Representative Kelly questioned the rural participation.                                                                        
                                                                                                                                
2:31:59 PM                                                                                                                    
                                                                                                                                
EDDY JEANS, DIRECTOR, EDUCATION  SUPPORT SERVICES, DEPARTMENT                                                                   
OF  EDUCATION  AND  EARLY  DEVELOPMENT,  explained  that  the                                                                   
participating share for a REAA is 2 percent.                                                                                    
                                                                                                                                
Representative  Foster  observed that  Nome  does  not get  2                                                                   
percent.  Mr.  Jeans  explained  that there  are  REAA's  and                                                                   
municipal school  districts. There  is a graduated  scale for                                                                   
municipal school  district grant  programs based  on property                                                                   
wealth per child.                                                                                                               
                                                                                                                                
Representative  Croft  added  that  the percentage  is  on  a                                                                   
sliding scale.  Mr. Jeans  noted that  the sliding  scale for                                                                   
municipalities  is   5  -  35  percent.   Regional  Education                                                                   
Attendance Area's are at 2 percent.                                                                                             
                                                                                                                                
2:33:59 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer maintained his OBJECTION.                                                                                        
                                                                                                                                
A roll call vote  was taken on the motion  to adopt Amendment                                                                   
3.                                                                                                                              
                                                                                                                                
IN FAVOR: Moses, Weyhrauch, Croft, Foster, Joule                                                                                
OPPOSED: Hawker, Holm, Kelly, Chenault, Meyer                                                                                   
                                                                                                                                
The MOTION FAILED (5-5).                                                                                                        
                                                                                                                                
2:35:34 PM                                                                                                                    
                                                                                                                                
Representative Hawker MOVED to ADOPT Amendment 4:                                                                               
                                                                                                                                
     Page 7, line 15 through page 9, line 16                                                                                    
     Delete all material                                                                                                        
     Renumber following sections accordingly                                                                                    
                                                                                                                                
Co-Chair Meyer OBJECTED for discussion purposes.                                                                                
                                                                                                                                
Representative  Hawker  explained  that the  amendment  would                                                                   
delete the mechanism  for the district cost  differential. He                                                                   
felt that  the legislation was  an inappropriate  vehicle and                                                                   
spoke in support of keeping a clean bill.                                                                                       
                                                                                                                                
2:36:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  spoke against Amendment 4.  He stated that                                                                   
the two  studies were  not conclusive.  He acknowledged  that                                                                   
problems remained, but emphasized  that delay would only hurt                                                                   
students. All  the studies demonstrated  need, even  if there                                                                   
is  no agreement  over  the  level of  need.  The  bill is  a                                                                   
compromise,  phased in  over  4 years,  which  helps out  the                                                                   
school districts  and forces everyone to admit  that there is                                                                   
a problem  in order to find  a remedy. He  spoke passionately                                                                   
about his school district's efficiency.  He opined that short                                                                   
funding  has  made them  efficient,  but  they can't  go  any                                                                   
farther.  Rural Alaska  only recently  had to  make the  same                                                                   
cuts.  He  said the  problem  is  the cost  differential  and                                                                   
stressed  that he  was trying  to do  what is  best for  kids                                                                   
around the state.                                                                                                               
                                                                                                                                
2:41:27 PM                                                                                                                    
                                                                                                                                
Representative Hawker observed  that the legislative drafters                                                                   
would conform  the amendment. He addressed the  fiscal notes,                                                                   
which show a $20  million increase for each of  the next four                                                                   
years. He pointed  out that the cost would be  $80 million by                                                                   
FY09. He argued for being judicious.                                                                                            
                                                                                                                                
2:44:06 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  WITHDREW his  objection.  Co-Chair  Chenault                                                                   
maintained his objection.                                                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Hawker, Meyer                                                                                                         
OPPOSED:  Weyhrauch,  Croft,   Foster,  Holm,  Joule,  Kelly,                                                                   
Moses, Chenault                                                                                                                 
                                                                                                                                
The MOTION FAILED (2-8).                                                                                                        
                                                                                                                                
2:45:41 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault spoke in support for the bill.                                                                                
                                                                                                                                
2:46:24 PM                                                                                                                    
                                                                                                                                
GRAYSON CARLYLE, STUDENT, DZ MIDDLE  SCHOOL, spoke in support                                                                   
of  HB 13.  He  referred to  district  cost  factors and  the                                                                   
Institute of  Social and  Economic Research (ISER)  research.                                                                   
He spoke in support  of the new costs factors,  which he felt                                                                   
were better  than the current  ones. He stressed the  need to                                                                   
take steps forward to improve school systems.                                                                                   
                                                                                                                                
Representative Foster  MOVED to report  CSHB 13 (FIN)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  notes. There being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB 13 (FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation   and  with  a   new  fiscal  impact   by  the                                                                   
Department  of  Education  and Early  Development,  and  with                                                                   
indeterminate fiscal  note #1 by the Department  of Education                                                                   
and Early  Development, and with  a new indeterminate  fiscal                                                                   
note by the Department of Health and Social Services                                                                            
                                                                                                                                
2:50:42 PM                                                                                                                    
                                                                                                                                

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