Legislature(1995 - 1996)
05/01/1995 01:50 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 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. HCS CS SB 92 (FIN) was reported out of Committee with "no recommendation" and with a zero fiscal note by the Department of Revenue dated 3/1/95. SENATE BILL 92 1 "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." Representative Martin MOVED to adopt work draft #9-LS0762\M, Chenoweth, 5/1/95, as the version before the Committee. There being NO OBJECTIONS, it was so ordered. JOHN BITNEY, STAFF, REPRESENTATIVE TERRY MARTIN, explained that the work draft addressed language as recommended by the Subcommittee. The language will spell out the new items provided in the Executive Budget Act for the Alaska Housing Finance Corporation (AHFC). That information was included in the new subsection (D). He added that an amendment had been prepared to address the exemptions referenced in Section (F). [Attachment #1]. Representative Martin MOVED to adopt Amendment #1. Representative Therriault OBJECTED for purposes of discussion. DAN FAUSKE, CORPORATE EXECUTIVE OFFICER (CEO), ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF REVENUE, commented that the refinancing concern would be remedied through the amendment. That language would allow for service of the mortgage loans and foreclosures while providing the flexibility needed to remain in the market, capitalize on savings and allow the corporations to be in a position to react quickly in the bond market. Representative Parnell questioned the scope of Section 2(A) contained within the amendment. Mr. Fauske explained that within the budget two numbers would be provided; one in the front end (D) and the other in (F). Mr. Bitney responded that the 5% loan program was financed with the use of arbitrage earnings. He referenced the adopted committee substitute, Line 10 (C), indicating the exempted portion. Representative Brown asked how the proposed committee substitute had changed from the State Affairs version. Mr. Bitney replied that there had not been any substantive changes. He continued, under the House State Affairs version, the two loan programs were exempt from the review procedures. Current language dictates that the Legislature would provide an aggregate appropriation number for the loan permits. He added that there are new exemptions listed in Amendment #1. Representative Brown asked how the multi-family loan portion of the bill would be addressed. Mr. Bitney said that had been referenced in Subsection (E), Page 2, Line 3. The 2 appropriation would be divided into two parts; an aggregate appropriation for the loan programs in which a subsidy was not provided and also (E) would provide an appropriation for all the "other" loan programs including multi-family. Representative Martin understood that language would allow the bill to be more "open". Representative Brown questioned why portions of the bill had been deleted. Mr. Fauske pointed out that he prefered the last bill, although through the course of negotiation, it became apparent that the language addressing AHFC would need to become more "stringent". He summarized that a position had been accomplished within the proposed legislation which would not bind the corporation upward and which would permit it to continue to function. Representative Brown asked if opportunities would be lost. Mr. Fauske felt that there would continue to be enough lead time in order for the Legislative Budget and Audit Committee (LBA) to explain the case when the amount of money stipulated in the front section might not be sufficient. The propsed legislation needs additional work, although it would be "doable". Mr. Fauske anticipated that this year's loan activity would be $350-$400 million dollars. He understood that the Legislature would appropriate that amount each year for loan programs. Representative Brown asked if AHFC's corporate dollars would be incorporated as well as the funds bonded for. Mr. Fauske noted that was correct. He added that based on the companies appropriated estimates, that dollar amount will be in the front end of the budget. Representative Brown disagreed with that concept. Mr. Fauske understood the concern. Representative Martin explained that the Legislature has complete authority over appropriations as stipulated in Article 9. WILLIAM HOWE, DEPUTY COMMISSIONER, TREASURY DIVISION, DEPARTMENT OF REVENUE, responded to Representative Brown's concern. He noted that the intent of the language would be that the Legislature will review all of the loan programs that AHFC carries as part of their oversight process. With the multi-family housing loan and special-needs housing projects and programs will be reviewed through the Legislature. Both last year and this year, those programs consume approximately $50 million dollars of AHFC money, raised through new bond issues. The Legislature will have the right to review those programs. The amendment clarifies that once the scope of the total activities is determined, AHFC can operate freely within those boundaries. He stressed that the Legislature will not get involved in funding individual projects. 3 Representative Brown asked the distinction between (a)1(D) and 2(A). Mr. Howe stated that 2(A) would provide the ability to float bonds and borrow money for bond issues. He continued, Section 1(D) only deals with the lending of money. Representative Brown voiced confusion about the source of the money; she thought that they both represented the same funds. Mr. Howe explained that Section 1(D), the lending of money, the authorization is only related to an aggregate amount and provides the Legislature the ability to review programs. If the programs are supported by the Legislature, then the aggregate amount for all those programs will be given to AHFC to function. How they fund those loans will be a function of corporate receipts acquired from past loan payments, interest earnings as well as floating bonds. TOM WILLIAMS, STAFF, SENATOR STEVE FRANK, commented that Senator Frank requested that the bill return to the original Senate version or some modified version of that. Representative Martin noted that the committee substitute would represent the "middle ground" on the legislation. Representative Therriault WITHDREW THE OBJECTION to adopting Amendment #1. Representative Brown pointed out that the amendment would need a semi colon following the language "obligation" in Section (A). Representative Parnell noted that Section (B) would need an apostrophe in "corporations". There being NO further OBJECTIONS, Amendment #1 was adopted. Representative Martin MOVED to report HCS CS SB 92 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. HCS CS SB 92 (FIN) was reported out of Committee with "no recommendation" and with a zero fiscal note by the Department of Revenue dated 3/1/95.