02/10/1997 01:40 PM House FIN

  HOUSE BILL 102                                                               
                                                                               
                                6                                              
                                                                               
                                                                               
       "An  Act   abolishing  the   Alaska  Medical   Facility                 
       Authority; and providing for an effective date."                        
                                                                               
  Co-Chair Therriault noted that  the legislation would follow                 
  up with  last year's SB  136, which transferred  the balance                 
  remaining in the Alaska Medical Facilities Authority Fund to                 
  the General Fund, thus, closing  out all accounts pertaining                 
  to the  Authority.   By  repealing  AS 18.26,  the  obsolete                 
  Alaska Medical Facility Authority would  be cleared from the                 
  Statutes.                                                                    
                                                                               
  Mr. Spencer stated that the Department of Revenue (DOR)  did                 
  not oppose the proposed legislation.                                         
                                                                               
  GARREY  PESKA,  ALASKA  STATE  HOSPITAL  AND   NURSING  HOME                 
  ASSOCIATION (ASHNHA),  JUNEAU,  noted  that  ASHNHA  members                 
  request that HB  102 not be  passed from Committee and  that                 
  the Alaska  Medical Facilities  Authority not  be abolished.                 
  The Authority  was established  in 1978  for the  purpose of                 
  selling tax  exempt revenue  bonds with  the proceeds  being                 
  used for medical facility construction and improvements.                     
                                                                               
  Mr.  Peska  stated  that  in the  past,  the  Authority  had                 
  provided financing for two projects through bond sales.  One                 
  was for  the purchase of Careage North and the other was for                 
  remodeling  Fairbanks Memorial  Hospital; since  then, there                 
  has  been  no  activity  in  the  Authority.    Leaving  the                 
  Authority  on  the  "books" would  provide  a  mechanism for                 
  selling tax exempt revenue bonds to finance medical facility                 
  construction  and   improvements  in   the  future.     Some                 
  facilities are municipally  owned and they can  sell revenue                 
  bonds  through the  municipalities and  the State  Municipal                 
  Bond  Bank.    Other  non  profit facilities  that  are  not                 
  municipally owned could use this Authority for that purpose.                 
  He  emphasized, there is no compelling reason to abolish the                 
  Authority.                                                                   
                                                                               
  He continued, the Department of  Revenue has stated that  if                 
  bonds are sold  by the  Authority, they are  not general  or                 
  moral obligations of the  State.  They are secured  by lease                 
  payments on medical  facilities mortgaged  to the  Authority                 
  which would not impact the State's bond rating.                              
                                                                               
  Representative  Mulder  asked  what communities  might  take                 
  advantage  of the services offered.   Mr. Peska replied that                 
  one good example would be St. Ann's Care Center in Juneau, a                 
  private, non  profit care  center, not  affiliated with  the                 
  municipality.   The Authority  would be  the only  mechanism                 
  available to sell tax exempt bonds to keep their costs down.                 
                                                                               
                                                                               
                                7                                              
                                                                               
                                                                               
  Co-Chair Therriault  suggested that  the municipality  could                 
  loan out  their bonding  authority.   Mr. Peska  stated that                 
  would  not be possible  for any private,  non profit medical                 
  facility.  Co-Chair Therriault asked if there would be costs                 
  associated to the State for the Authority.                                   
                                                                               
  BETTY MARTIN, COMPTROLLER, TREASURY  DIVISION, DEPARTMENT OF                 
  REVENUE, advised that there would be no costs incurred until                 
  there was  money in the fund.  A  one percent (1%) charge of                 
  the  outstanding bonds would be  collected each year for the                 
  medical facility.                                                            
                                                                               
  Co-Chair  Therriault  acknowledged  that   unless  Committee                 
  members were compelled to  move the legislation, he did  not                 
  think  it  was essential  to move  HB  102 forward  with the                 
  remaining  legislation,  given  the   possibility  that  the                 
  medical community could  need that privilege in  the future.                 
  Co-Chair  Hanley  requested  that  research  be  provided to                 
  determine  if  other  avenues  exist   for  the  tax  exempt                 
  financing.                                                                   
                                                                               
  HB 102 was HELD in Committee for further discussion.