Legislature(2005 - 2006)HOUSE FINANCE 519
04/18/2005 01:30 PM FINANCE
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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 district. 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 nothing. 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 155. 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 purpose. 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.