Legislature(2009 - 2010)HOUSE FINANCE 519
04/07/2010 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB270 | |
| HB363 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 363 | TELECONFERENCED | |
| + | SB 270 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 363
"An Act relating to the membership of the Alaska
Industrial Development and Export Authority."
9:21:55 AM
ROB EARL, STAFF, REPRESENTATIVE BOB HERRON, SPONSOR,
explained that HB 363 had been sponsored by the House
Community & Regional Affairs Committee, which is co-chaired
by Representatives Cathy Munoz and Bob Herron. He detailed
that the mission of the Alaska Industrial Development and
Export Authority (AIDEA) was to promote economic growth in
the state through providing entities with various means of
financing and investment. The organization provides Alaskan
businesses with long-term financing options at a reasonable
cost. Each year, 25 to 50 percent of AIDEA's return on
assets is redistributed back to the state's general fund as
a dividend. He noted that the dividend for the current year
amounted to $23 million.
Mr. Earl informed the committee that the AIDEA board also
functions as the Alaska Energy Authority (AEA) board.
Currently, the board has five members, including the
commissioners of the Departments of Revenue (DOR) and
Commerce, Community, and Economic Development (DCCED). A
third member is a discretionary commissioner appointed by
the governor; currently the member is the commissioner of
the Department of Transportation and Public Facilities. Two
public members are also appointed by the governor. House
Bill 363 would add three more private-sector or public
members to the board and retain the commissioners of DOR
and DCCED, expanding the board to seven members. The
legislation also stipulates that private-sector members
possess business and/or industry expertise as well as
leadership skills.
9:25:11 AM
ERIN HARRINGTON, STAFF, REPRESENTATIVE ALAN AUSTERMAN,
provided background on the bill. She reported that
Representative Austerman chaired the House Finance
Committee subcommittee for DCCED and had had opportunity to
consider the resources the state puts towards economic
development. In the spring of 2009, he asked staff to
identify best practices for the state's contributions to
economic development and to make a comparison with similar
activities in other states. She noted that Alaska is
acknowledged as a leader in encouraging private-sector
development.
Ms. Harrington reported that states with increased economic
development resulting from economic revitalization and
diversification had all brought additional private-sector
guidance into the application of state resources. She
summarized that in Alaska, the AIDEA board was the only
state entity with private-sector advisors; furthermore,
they represented only two of the board's members. She
pointed to a handout, "Economic Development in State
Government" (copy on file), and noted that Wyoming and
North Dakota were resource-based Western states that had
successfully brought in private-sector advisors. Other
states with the model included Oregon, Kentucky, and
Indiana.
Mr. Earl pointed to intent language in the bill (page 1)
that had been added in the Labor & Commerce Committee to
address concerns that appointees be broadly representative
of geographical areas in Alaska and of the industries
important to the state. He explained that a seven-member
board would give AIDEA more flexibility in forming
subcommittees and would provide more potential for diverse
experience and specialties as well as broader geographic
and industry representation.
Mr. Earl detailed that the $23,000 fiscal note would fund
travel and stipends for approximately ten annual meetings
for three additional board members. He pointed out that the
money requested would amount to one one-thousandth of the
amount the board returns to the state through the dividend.
He stressed that the state would benefit through the
dividend as well as through the jobs, infrastructure, and
access to capital that AIDEA provides.
9:29:52 AM
Co-Chair Stoltze questioned the bill's legislative intent.
Mr. Earl replied that the will of the Labor and Commerce
Committee was to offer direction to the governor.
Co-Chair Stoltze stated that he felt the language was not
meaningful, relevant, or practical, and could create
expectation by other boards.
Representative Salmon expressed concerns about language on
page 2, line 6, that could exclude rural representation. He
wanted language that stipulated the inclusion of at least
one rural area.
Co-Chair Stoltze thought the business and industry leaders
of Alaska were diverse.
Ms. Harrington pointed out that the language intended to
reflect some of the best practices that had been observed
in other states and the methods used to achieve them.
Co-Chair Stoltze observed that AIDEA probably developed
more than businesses.
Representative Austerman noted that the statement did not
exclude rural representation. He believed there were many
competent business people in rural Alaska and hoped the
governor would choose the best representatives available.
9:33:36 AM
Representative Foster referenced experience serving on the
Alaska Workforce Investment Board (AWIB). He shared
Representative Salmon's concern and hoped at least one
person on the board would be from rural Alaska. He queried
the difference between private-sector and industry members.
On the AWIB, three people had to be from the private sector
and three had to be from business and industry sectors; he
did not understand the difference between the two
categories. Ms. Harrington reported that the issue had been
raised in the Labor & Commerce Committee. Previous language
had referred to business expertise; it was changed to
business and/or industry expertise. She believed the intent
was to not exclude people from organizations that were not
private-sector but might have industry expertise.
Representative Doogan opined that the bill would change the
makeup of the AIDEA board from one controlled by the
governor (and designees) to an undefined group of
civilians. He queried the advantage of the change. Ms.
Harrington responded that part of the advantage would be to
give the board a longer-term planning cycle than that
possible within the constraints of the political cycle. She
added that AIDEA had been involved in a long-term
strategic-planning process.
9:36:32 AM
Representative Doogan pointed out that the appointees would
serve on cycles as short as the election cycle. He asked
for more information. Mr. Earl responded that the public
members would be appointed by the governor and serve two-
year terms; the commissioners would be on the board as long
as they were in office.
Co-Chair Stoltze asked whether the members served at the
pleasure [of the governor] or could only be removed for
cause. Mr. Earl answered that the power to appoint
implicitly includes the power to remove unless explicitly
stated otherwise.
Representative Doogan questioned the need for a fix for
something that was not broken; AIDEA already gives the
state money each year. He had not heard a compelling reason
to change the system except that it might move the
decision-making further away from elected officials.
Representative Austerman did not think it was government's
place to create new businesses and tell them what kind of
investments they should be making. He acknowledged that the
board had done a good job of creating new businesses that
returned money to the state. He did not think the business
sector was well represented on the board, which he
characterized as dominated by state commissioners. He
stated that the measure intended to provide a stronger
business presence to guide the kind of investments made by
AIDEA. He referred to a group created by Governor Palin to
guide business-sector investments and increase economic
development in Alaska; he thought the group was top-heavy
with commissioners and had failed without private-sector
input. He believed the example was informative.
9:41:30 AM
Representative Doogan argued that AIDEA was a state agency
chartered by the state; its assets and powers are state
ones. He maintained that the legislation would make a
substantial change by altering the make-up of the board. He
was concerned about putting private members in charge of a
state agency; he believed the agency had made some bad
calls.
Co-Chair Stoltze asserted that most of AIDEA's bad calls
had initiated in the legislature.
Representative Joule referred to examples of other state
boards with similar appointments, including the University
of Alaska's Board of Regents, which is entirely made up of
public members, as well as the board of the Alaska Railroad
Corporation.
9:45:03 AM
Representative Salmon stated concerns with the make-up of
the board, which could be concentrated in one geographical
area. He argued that corporate concerns could be addressed
more than social concerns, which could adversely affect
rural areas.
Representative Gara thought the governor would have
discretion to appoint members. He described various
scenarios in which appointees would have strength in one
area rather than another. He pointed to page 2, line 7 and
wondered whether language could be added saying "each of
whom has expertise in economic development." The governor
would then have discretion to pick five people from the
private sector, but would have broader range.
Representative Austerman thought the point would be well
made if the subject was DCCED, but AIDEA is basically a
bank. He did not want board members who did not understand
banking. He wanted people from the business sector who made
similar decisions. He did not intend to disqualify people
from rural areas.
TED LEONARD, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, informed the committee
that AIDEA supported increasing the size of the board to
increase flexibility and allow for more working committees.
He noted that he had been on the Alaska Housing Finance
Corporation board when he was deputy commissioner of DCCED;
he believed the seven-member board was comprised of four
public members and three commissioners.
Mr. Leonard added that AIDEA had decided through the
strategic planning process that it needed more private-
sector input. The board believed a combination of advisory
committees and increasing the board through the legislation
would help the agency deal with rural and other kinds of
industries.
9:51:45 AM
Co-Chair Stoltze queried the administration's position on
the bill. Mr. Leonard replied that he had not gotten a
statement but believed they were neutral; they want to
increase the size of the board but do not have a position
on the composition.
Representative Kelly spoke to past problems with the AIDEA
board having a quorum. He believed five was a low number to
do big business with. He supported increasing the size of
the board. He queried whether the proposed language would
allow for the appointment of rural business
representatives. Mr. Leonard replied in the affirmative.
Representative Kelly believed the challenge of involving
rural representatives was met. He asked whether the
governor could dismiss board members. Mr. Leonard answered
that the statute would not explicitly stipulate that
members serve "at the pleasure of the governor." The agency
asked the assistant attorney general whether the governor
would implicitly have the power. He reported that
Representative Herron's staff had discussed the issue with
Legislative Legal Services, who determined that the
governor would have the power.
Co-Chair Stoltze opined that someone would have the power
until it was explicitly stated otherwise.
Representative Kelly had serious concerns about the issue,
as he felt the governor currently controlled the majority
of the decision-makers on the board and the terms were
short. He wanted the issue to be very clear.
9:55:42 AM
Representative Doogan queried the amount of the dividend
paid to the state. Mr. Leonard replied that the dividend
had been $23,600,000 for the current year. Representative
Doogan pointed out that changing the system could affect
the money paid and create problems.
Vice-Chair Thomas understood concerns about rural
representation. He believed the Alaska Native Claims
Settlement Act resulted in the best rural people being
"urbanized" and disconnected from rural life. He relayed
personal experience. He stated concerns about members
leaving rural areas and not coming back and urged caution
in choosing rural representatives. He named retired people
in Barrow and Kodiak that could fit.
9:59:31 AM
Representative Joule felt the definition of "industry"
(page 2, line 7) was broad and could relate (for example)
to fishing, energy, or oil and gas industries. He thought
there had to be an interest on the part of rural people
first; he believed persons who had been named could be
appropriate and that the administration would consider the
people if the board were expanded.
Representative Austerman commented that the dividend from
AIDEA was great but should not be the driving force in
promoting economic development in the state. He wanted to
find good people who would serve on the board and use the
bank as a tool to expand economic development. He opined
that a lower dividend would be a good investment if the
board created new businesses across the state.
Representative Austerman thought the issue of people not
returning to the village was irrelevant to who should be
appointed to the board. He did not think there would be a
problem appointing qualified rural representatives. He was
concerned that geographically stipulating how boards are
appointed would open the question for all state boards. He
believed the governor makes the best appointments he or she
can. He did not know how the rural aspect could be defined.
10:03:56 AM
Vice-Chair Thomas commented that 99.9 percent of the
state's resources come from rural Alaska.
Representative Gara expressed concerns regarding language
that could be too narrow. He had suggested replacing the
terms "private-sector business or industry" with "a
background in economic development", but Representative
Austerman had wanted people with banking experience. He
wondered what could happen if there were five competent
board members without banking knowledge. He questioned
whether someone in AIDEA could guide the board on banking
issues so that board members would not need the experience.
Mr. Leonard thought the governor would want someone with
banking experience on the board since banking is a large
portion of AIDEA business; AIDEA has a loan portfolio of
approximately $370 million. He reminded the committee that
the board is for AEA as well. He believed that the Labor &
Commerce Committee had wanted to add the word "expertise"
to include persons with expertise in policy decision-
making; the committee tried to make the definition broad
enough to meet the responsibilities of both the AIDEA and
AEA boards.
Mr. Leonard reported that AIDEA believed that increasing
the number of board members would allow for rural
representation without stipulating geographic areas. He
assured the committee that the board would promulgate by-
laws to broaden its perspective through representation by
rural, urban, and "economically distressed" areas.
Representative Doogan asked whether the bill would allow
AIDEA to buy into a portion of a project. He questioned
other changes that would be made by the proposition.
10:08:33 AM
Mr. Leonard explained that HB 410 would allow AIDEA to
partner, to change the way rates are set for internally-
funded loans, and to set up an incentive-rebate program to
incentivize businesses to invest in certain areas to meet
economic criteria. The fourth change would improve the
agency's rural-development initiative fund by changing the
rates and conditions of getting a loan.
Representative Kelly asked whether the current AIDEA board
supported the proposition. Mr. Leonard responded that the
board did not have a position.
Representative Kelly asked whether the strategic planning
mentioned earlier included a board expansion like the one
proposed. Mr. Leonard responded that the agency did not
think of increasing the board; it was going to use advisory
boards because the legislative process was longer and more
difficult.
Representative Kelly reminded him of the question for the
attorney general's office. He also wanted to know the
governor's position.
Co-Chair Stoltze asked whether Representation Kelly wanted
to hold the bill. Representative Kelly responded that he
did not want to hold it long.
Representative Austerman agreed that the question should be
answered before the bill was moved from committee.
Representative Austerman asked whether the board would use
advisory boards regardless of the size of the board. Mr.
Leonard responded that the agency believed that advisory
boards would be needed in either case to give the broad
perspective regarding the different industries and the
private sector.
Representative Kelly advised having an amendment ready if a
change was required because of the governor's position.
10:12:51 AM
WAYNE STEVENS, PRESIDENT/CEO, ALASKA STATE CHAMBER OF
COMMERCE, testified in support of the bill. He detailed
that the chamber has had a position over the past four
years encouraging the development of a comprehensive
strategy for the state. The position includes the goal of
having the private sector work more collaboratively with
state government to find and develop a strategy so that the
state, legislature, administration, business community, and
the university would end up at the same place. The chamber
viewed the legislation as one part of the direction.
Representative Doogan asked whether the state chamber
believed the proposed changes were necessary. Mr. Stevens
responded that there are many different and disjointed
efforts in economic development arenas. He felt that HB 363
was one part of the effort to bring together an economic
strategy for the state.
Representative Salmon asked whether the rural community was
part of the larger economic strategy. Mr. Stevens answered
in the affirmative.
STEVE HAAGSON, DIRECTOR, ALASKA ENERGY AUTHORITY (via
teleconference), reported that he was available for
questions.
10:16:24 AM
Representative Gara queried the different missions of the
shared board for AIDEA and AEA and wondered if language was
needed to ensure that AEA's mission was met. Mr. Haagson
opined that the language was insightful as it spoke to a
broad spectrum. He thought the requirement for demonstrated
leadership skills was critical. He informed the committee
that the two organizations had shared the board for many
years. The current board had expertise that worked well for
both entities even though their missions were different;
AIDEA concentrated on economic growth opportunities and AEA
focused on program management for both rural and urban
areas.
Co-Chair Stoltze closed public testimony.
Representative Gara cautioned against holding the bill for
a position from the governor. Representative Kelly proposed
that no answer would be an answer.
10:19:30 AM
HB 363 was HEARD and HELD in Committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 363 (L&C) Bill Changes.doc |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| CSHB 363 (L&C) sponsor statement final.doc |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| HB363 AIDEA Reponse To Questions.pdf |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| HB363 AIDEA Strategic Plan.pdf |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| HB363CS(L&C)-CED-AIDEA-3-24-10.pdf |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| HB 363 - AIDEA Board Fact Sheet & Member Info.PDF |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| HB 363 - Briefing Paper Economic Development in State Government.pdf |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| HB 363 - Letters of Support.PDF |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |
| SB 270 AHFC Transfer Plan Sectional Analysis[1].pdf |
HFIN 4/7/2010 9:00:00 AM |
SB 270 |
| SB 270 AHFC transfer plan Sponsor Statement[1].pdf |
HFIN 4/7/2010 9:00:00 AM |
SB 270 |
| SB 270 Transmittal Letter.pdf |
HFIN 4/7/2010 9:00:00 AM |
SB 270 |
| HB 363 Econ Dev. in State Gov..pdf |
HFIN 4/7/2010 9:00:00 AM |
HB 363 |