Legislature(2005 - 2006)HOUSE FINANCE 519

04/18/2005 01:30 PM FINANCE

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
Moved Out of Committee
Heard & Held
Heard & Held
Bills Previously Heard/Scheduled
CS FOR SENATE BILL NO. 155(FIN)                                                                                               
     "An Act making appropriations  from the earnings reserve                                                                   
     account  for  construction   of  an  integrated  science                                                                   
     complex at  the University  of Alaska in  Anchorage, for                                                                   
     replacement  of the  virology  laboratory in  Fairbanks,                                                                   
     for  expansion of  the Anchorage  Museum of History  and                                                                   
     Art,  for  the major  maintenance  grant  fund, and  for                                                                   
     other  capital   projects  related  to   education;  and                                                                   
     providing for an effective date."                                                                                          
SENATOR  BEN STEVENS,  sponsor, explained  that SB  155 is  a                                                                   
one-time  appropriation bill  for major  projects across  the                                                                   
state.   The  bill retires  the  entire deferred  maintenance                                                                   
list of the  Department of Education and Childhood  and Early                                                                   
Development, $142  million for 70 projects across  the state.                                                                   
The  bill  funds   new  construction  of  schools   and  some                                                                   
rehabilitation projects.   The third  part of the  bill funds                                                                   
university  projects across the  state.   The fourth  part of                                                                   
the bill  appropriates money for  a museum in Anchorage.   He                                                                   
suggested  that  all  projects   are  a  lasting  investment,                                                                   
education-related,   and   affect   future   generations   of                                                                   
Alaskans.  He encouraged support of the bill.                                                                                   
3:24:38 PM                                                                                                                    
Co-Chair  Meyer spoke  about the  possibility  of adding  new                                                                   
funding amendments.   He asked  how flexible the  sponsor is.                                                                   
Senator Stevens  said the flexibility is contingent  upon the                                                                   
three criteria of the bill.  He  said he is opposed to a one-                                                                   
time debt service relief such  as the request from his school                                                                   
3:26:19 PM                                                                                                                    
Representative  Hawker  applauded the  bill.    He asked  for                                                                   
comments  on  the  fund  source  and  the  impact  on  future                                                                   
permanent fund  dividends.  Senator  Stevens referred  to the                                                                   
last page  of a handout  by the  Department of Education  and                                                                   
Early  Development  on  the  Effect  of  "One-Time"  Earnings                                                                   
Reserve  Account Withdrawal  in  FY06 on  the Dividend  Check                                                                   
(copy on  file.)  He  stated that the  money he has  paid for                                                                   
education as a property tax owner  over 15 years has been ten                                                                   
times greater than the impact on future dividends.                                                                              
Representative  Hawker summarized that  the cost  absorbed by                                                                   
individual Alaskans  over 15 years is $300.   Senator Stevens                                                                   
shared that that would be his  kindergarten son's impact.  He                                                                   
emphasized that it is well worth the effort.                                                                                    
3:29:51 PM                                                                                                                    
Representative  Croft  referred to  the  1999 permanent  fund                                                                   
vote and asked why the permanent  fund would be used now that                                                                   
oil is at $50 per barrel and there  is a great reserve in the                                                                   
government's  saving account.   Senator Stevens  related that                                                                   
the difference is that this is  a one-time source.  He opined                                                                   
that  "earnings  reserve  for government"  means  the  annual                                                                   
operation expenses  and a continuing fund source.   This bill                                                                   
is an  investment in  state assets, a  transfer of  an asset,                                                                   
not  expenditure.    He  implied   that  the  return  of  the                                                                   
investment  is non-tangible,  due  to the  savings in  school                                                                   
improvements and the benefits to students.                                                                                      
3:32:53 PM                                                                                                                    
Representative  Kelly   asked  what  chance  the   bill  has.                                                                   
Senator Stevens  replied "one  step at a  time".  He  said he                                                                   
hoped  there  is  enough  evidence   for  the  House  Finance                                                                   
Committee to consider this bill.                                                                                                
3:34:34 PM                                                                                                                    
Representative  Hawker requested  more  discussion about  the                                                                   
capital projects major maintenance list.                                                                                        
Co-Chair Meyer inquired  if this bill is part  of the capital                                                                   
budget.   Senator Stevens replied it  is not, it is  a stand-                                                                   
alone appropriation.                                                                                                            
3:36:18 PM                                                                                                                    
Senator Stevens  referred to the Department of  Education and                                                                   
Early  Development  list  and  reported  that  there  are  71                                                                   
projects throughout  Alaska (copy on file.)   He related that                                                                   
it  would be  many  years before  so many  maintenance  needs                                                                   
would  surface  again.    Current  appropriation  bills  only                                                                   
address the top 20 projects.                                                                                                    
3:38:34 PM                                                                                                                    
Vice-Chair  Stoltze stated  appreciation for  the efforts  of                                                                   
Senator Stevens.  He speculated  that the bill would not wipe                                                                   
out all  maintenance needs  and there  would be new  requests                                                                   
next  year.   Senator  Stevens  noted  that  in order  to  be                                                                   
eligible for this list, schools had to have a department-                                                                       
approved maintenance program.                                                                                                   
Co-Chair  Meyer asked  if  some of  the  new school  projects                                                                   
could  be completed  with the  70/30 match.   He wondered  if                                                                   
this bill  would set  a precedent.   Senator Stevens  replied                                                                   
that  it was  not a  major consideration  when  the bill  was                                                                   
written.  He related a story about  his children, M & M's and                                                                   
issues of fairness.   He noted that the same  concept applies                                                                   
to this bill, which is an attempt to meet many needs.                                                                           
3:43:44 PM                                                                                                                    
Co-Chair Meyer noted that this is a bold bill.                                                                                  
Representative Foster commented  that there is nothing in the                                                                   
capital budget for  his district.  He agreed with  the use of                                                                   
the funding source.   He repeated that his  district receives                                                                   
3:45:26 PM                                                                                                                    
Senator Stevens  said that the  competition for  resources is                                                                   
fierce.   This bill  is an  attempt to  eliminate one  of the                                                                   
areas  of competition,  the deferred  maintenance  list.   He                                                                   
addressed whether  Alaska is benefiting in the  best way, the                                                                   
way the  fund is  currently being  managed.   He related  the                                                                   
history of  the fund  and the  how checks are  paid out.   He                                                                   
suggested  that the fund  is an  underutilized asset,  and it                                                                   
should  be   transferred  to   facilities  that   generate  a                                                                   
different type of return instead of a monetary return.                                                                          
3:48:39 PM                                                                                                                    
Co-Chair Meyer pointed out that  school maintenance is a good                                                                   
use for  these funds.   He questioned  if Amerada  Hess funds                                                                   
should be used  for these projects.  Senator  Stevens replied                                                                   
that the  Senate has not mingled  the two sources.   Co-Chair                                                                   
Meyer suggested that  is another funding source.   He implied                                                                   
that the Amerada Hess is also "dead money".                                                                                     
3:50:55 PM                                                                                                                    
Representative Weyhrauch  noted that the debate  on this bill                                                                   
is  a  tune up  for  future  debates  about  the use  of  the                                                                   
permanent fund.   He stated that he analyzes this  bill on an                                                                   
independent basis.   He opined that the most  valuable return                                                                   
on the investment is the contribution  that kids will make in                                                                   
the future.                                                                                                                     
3:52:49 PM                                                                                                                    
ED  MARTIN, SR.,  KENAI, opined  that  raiding the  permanent                                                                   
fund is against the Alaskan's  will, which was expressed by a                                                                   
statewide  vote in  1999.  He  suggested that  there is  very                                                                   
strong support  against the  bill.   He testified against  SB
3:55:43 PM                                                                                                                    
PETRIA  FALKENBERG, KENAI,  spoke  in opposition  to HB  155.                                                                   
She  referenced   the  vote  in  1999  against   tapping  the                                                                   
permanent fund.  She shared details  of a recent survey where                                                                   
the majority voiced opinion against the bill.                                                                                   
3:58:41 PM                                                                                                                    
RED SMITH,  COOPER LANDING,  voiced concern  about using  the                                                                   
permanent  fund for  projects in  this bill.   He  maintained                                                                   
that the people own the fund.   He testified in opposition to                                                                   
HB 155.                                                                                                                         
4:01:03 PM                                                                                                                    
FRED STURNAM, SOLDOTNA, testified in opposition to HB 155.                                                                      
4:03:17 PM                                                                                                                    
JAMES PRICE, NIKISKI,  spoke in opposition to  HB 155 because                                                                   
the  people voted  not to  use  the permanent  fund for  this                                                                   
4:06:36 PM                                                                                                                    
IAN FELTON, KENAI, testified in opposition to HB 155.                                                                           
4:06:59 PM                                                                                                                    
ROCKY  FRANK, ANCHOR  POINT, speaking  as  a senior  citizen,                                                                   
spoke in  opposition to HB 155.   He suggested giving  a one-                                                                   
time permanent fund payout.                                                                                                     
4:09:08 PM                                                                                                                    
Co-Chair Meyer closed public testimony.                                                                                         
Co-Chair   Meyer  related  that   a  new   CS  for   SB  155,                                                                   
incorporating new amendments, would be drafted.                                                                                 

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