Legislature(1999 - 2000)
05/01/2000 05:46 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 281
"An Act providing for the issuance of general
obligation bonds in the amount of $665,000,000 for the
purposes of paying the cost of design, construction,
and renovation of public elementary and secondary
schools, renovation of state buildings, capital
improvements at the University of Alaska, and capital
improvements to state harbors; and providing for an
effective date."
Co-Chair Torgerson stated that some changes had been made
to this legislation. He made a comparison of how this
legislation changed from the "B" version to the proposed
"Q" version, the latter of which was now before the
Committee.
Senator Adams referred to Section 8, line number 24 of
version "Q" and asked about the use of the word "may"
versus "shall." He added that he wanted to make sure funds
were appropriated to these different communities by the use
of this particular word.
Co-Chair Torgerson responded that all of these bond
reimbursements were subject to appropriation by the
legislature and because of this, the use of the word "may"
was appropriate.
Senator Phillips inquired about a loss of funds for
Juneau's harbors. He understood that Juneau chose to take
$5.5 million for Southeast.
Co-Chair Torgerson responded that this reference to lost
money was never made in the "B" version since a new piece
of legislation was going to be introduced with port and
harbor funds outlined accordingly. He explained what had
transpired throughout each version in regards to Juneau's
harbors, at $1.77 million, the figure not accounted for in
the committee substitute presently before the Committee.
Senator Phillips asked why $2 million was deducted from
[indiscernible] Alaska, Anchorage.
Co-Chair Torgerson responded that this was part of "the
walkway." [He did not specify which walkway he was
referring to.]
Senator Phillips stated that he thought the $36 million was
for the library and that the walkway was $5 million extra.
Co-Chair Parnell responded that it was his understanding
that the library would cost $31 million and the walkway
would cost $5 million extra to equal $36 million total.
Co-Chair Torgerson concurred with this assessment.
Co-Chair Parnell made a motion to adopt CS 1-LS1201\Q of HB
281 as a workdraft.
Senator Phillips OBJECTED. A roll call vote was taken.
IN FAVOR: Senator Leman, Senator Adams, Senator Wilken,
Senator P. Kelly, Senator Green, Co-Chair Parnell, Co-Chair
Torgerson.
OPPOSED: Senator Phillips, Senator Donley.
The MOTION PASSED: (7-2)
Co-Chair Torgerson referred to a pie chart entitled, "Bond
Package - HB 281." [Included in the bill file.] He noted
that this chart represented $302,881,000 and he gave a
breakdown of how some of these figures shifted as a result
of changes to the corresponding legislation.
Senator Phillips asked if there was an amortization
schedule for a $28,105,000 figure as referenced.
Co-Chair Torgerson responded that it was forthcoming.
JOHN BITNEY, Alaska Housing Finance Corporation (AHFC)
stated that there might be some forthcoming policy calls
related to the package before the Committee, but noted that
the technical changes in response to the Corporation's
concerns had been met with this latest version "Q." He
suggested two areas of clarification, the first being
Section 9 on page 10. He noted that this language regarded
the right to sell and receive revenue by the Commissioner.
Mr. Bitney clarified that as this language is presently
written, the Corporation does not intend to renew the
referenced sales agreement on an annual basis. He added
that only one sales agreement would be effectuated. He
clarified that the Corporation will prepare a fiscal note
reflecting the bond payment schedule as outlined in a
spreadsheet already distributed.
DAN FAUSKE, CEO, AHFC testified via teleconference from
Anchorage to note that he had no further comments at this
time.
Senator Wilken asked what grade the corresponding bonds to
this legislation would be.
Mr. Fauske responded that these would be rated from an A to
an AA designation.
Senator Wilken noted an article about New York City selling
part of their revenue stream from the tobacco sales and
that the city was going to sell these at an A to an A+. He
asked if it was fair to say that Alaska has a better bond
rating than New York City.
Mr. Fauske responded that this would depend on the
investment structure which Alaska choses, but he
anticipated Alaska's package to be as competitive as the
one for New York City. He stated that AHFC has a good
record and this Corporation's reputation in the marketplace
was strong.
CARL ROSE, Executive Director, Association of Alaska School
Boards (AASB) stated that his organization had some grave
concerns regarding this bond package, including the
exclusion of major maintenance projects. He referenced the
related Kasayulie suit as a violation of equal protection
and a violation of the education clause. He noted that the
legislature in response to this suit asserted that they
were poorly represented. He continued that it did not
appear that any of the concerns raised by this case would
be addressed in this present legislation and he was
concerned about future litigation surrounding these
neglected issues.
BRUCE JOHNSON, Deputy Commissioner, Office of the
Commissioner, Department of Education and Early Development
stated that the department appreciated the funding for the
first six new school construction projects included in this
legislation. He pointed out that this committee substitute
totally ignores the privatization of major maintenance
projects established by the department. He continued that
this legislation is inherently wrong because it funds
unknown projects in various urban communities, while
ignoring such critical needs of schools without functional
kitchens, hot running water, toilets and deteriorating
foundations.
Co-Chair Torgerson asked the department to prepare a fiscal
note on the debt reimbursement for their portion of this
legislation.
Amendment #1: This amendment adds new language as follows:
Page 13, after line 20
(E) Department of Transportation and Public Facilities to
pay for construction and renovation of highway and road
projects as follows:
PROJECT
Anchorage: Dowling Road Extension/ $39,200,000
Reconstruction - (Minnesota Drive
To Old Seward Highway and Lake Otis
Parkway to Abbott Loop Road); Abbott
Loop Road Extension To Dowling Road
Fairbanks: University Area Widening 15,000,000
Matanuska-Susitna: Seward Meridian
Upgrade to Seldon Road; Bogard Road
Extension to Glenn Highway; Seldon West
Extension Phase 1 Wasilla Fishhook to
Church Road;
17,255,000
Houston: Kevlar Road 700,000
Nome: Front Street 1,000,000
Russian Village Road 900,000
Milo Fritz Road 200,000
Big Tustumena Road 500,000
N. Kenai Escape Road 950,000
Kodiak: Chiniak Road 1,500,000
Quinhagak: Sanitation Road 500,000
Russian Mission Landfill Road 450,000
Selawik Boardwalk Improvements
(Phase II) 500,000
Palmer Airport Road and East
Evergreen 600,000
North Pole - Old Richardson
Highway 2,000,000
McGrath City Streets: Chinana
and Takotna 900,000
Barrow: Isatquak Lagoon Boardwalk
and Trail 1,200,000
Unalakleet Sewage Lagoon Road 475,000
Thorne Bay Shore Line Drive 350,000
Petersburg: N. Nordic U-Turn 250,000
Juneau: Old Dairy Road 650,000
Ketchikan: Bus Shelters and
Pullouts 350,000
Wrangell: Church Street 700,000
Glennallen - Glenn Highway 1,500,000
Emmonak Landfill Road 550,000
TOTAL $88,180,000
Senator Donley made a motion to adopt Amendment #1. He
explained that this amendment would add back in, not all,
but some of the road projects, which were originally in
this legislation sent over to the House. He noted that the
prior project list had been pared down to $90 million.
Senator Adams asked what the funding source was for this
amendment.
Senator Donley responded that the intent of this
legislation allowed a funding source similar to the bond
reimbursement system already in place.
Co-Chair Torgerson objected. A roll call vote was taken.
IN FAVOR: Senator Donley, Senator Adams.
OPPOSED: Senator Phillips, Senator Leman, Senator Wilken,
Senator P. Kelly, Senator Green, Co-Chair Parnell, Co-Chair
Torgerson.
THE MOTION FAILED: (7-2)
Amendment #2: This amendment deletes the existing Section
10 and inserts new language as follows:
Delete:
Page 5, Lines 15-22
Insert:
(10) subject to (h), (I), (j), and (p) of this
section, and after projects funded by the cash
payments, bonds, notes, or other indebtedness have
been approved by the Commissioner, 70 percent of
(A) payments made by the municipality during the
fiscal year for the retirement of principal and
interest on outstanding bonds, notes, or other
indebtedness authorized by the qualified voters
of the municipality on or after July 1, 1999, to
pay the costs of school construction, additions
to schools, and major rehabilitation projects
that exceed $25,000, are approved under AS
14.07.020 (a)(11), and are not reimbursed under
(n) of this section; or
(B) cash payments made after July 1, 1999, by the
municipality to pay costs of school construction,
additions to schools, and major rehabilitation
projects that exceed $25,000 and are approved by
the department before July 1, 1999, under AS
14.07.020 (a)(11).
Senator Adams made a motion to adopt Amendment #2. He
explained that the threshold of this present legislation is
too high at $200,000 for small projects. He stated that
this amendment would allow municipalities to be reimbursed
for cash payments, which would save interest and time, as
well as, a cost saving to the state.
Co-Chair Torgerson objected. A roll call vote was taken.
IN FAVOR: Senator Donley, Senator Adams.
OPPOSED: Senator Phillips, Senator Leman, Senator Wilken,
Senator P. Kelly, Senator Green, Co-Chair Parnell, Co-Chair
Torgerson.
THE MOTION FAILED: (7-2)
Amendment #3: This amendment would add new language as
follows:
On page 10, after line 28, add the following projects:
Petersburg - Fascia/Soffit
Repair/Replacment 112,000
Yukon-Koyukuk-Nulato
Structural Repairs 400,000
Pribilof Island-Senator Taylor.
George Remodel 4,385,000
Berring Strait-Shishmaref School
Roof Replacement & Renovation
Ph. III 8,133,000
Chatham-Angoon Elementary School
Major Maintenance 126,000
TOTAL: 13,156,000
Senator Adams made a motion to adopt Amendment #3. He
expressed his concern that the legislature has failed to
fund major maintenance projects. He explained that this
amendment would add back, the top ten items of Department
of Education and Early Development's major maintenance
recommendations.
Co-Chair Torgerson objected. A roll call vote was taken.
IN FAVOR: Senator Donley, Senator Adams.
OPPOSED: Senator Leman, Senator Wilken, Senator P. Kelly,
Senator Green, Senator Phillips, Co-Chair Parnell, Co-Chair
Torgerson.
THE MOTION FAILED: (7-2)
Senator Phillips requested an amortization of this
committee substitute and added that he did not support this
bond approach. He felt as though the legislature was
passing something that should rightfully go before the
voters.
Co-Chair Torgerson responded that the municipal portions of
this legislation would go to the vote of the people. He
added that the state would reimburse these costs after they
are realized. He continued that the rural schools for
tobacco cessation, does not require a vote and that the
rest of the funds cover university projects.
Senator Leman noted that he shared some of the same
feelings expressed by Senator Phillips, yet he appreciated
the work undertaken by Co-Chair Torgerson to keep this
legislation under control. He stated that his preference
would be to keep this funding under $250 million.
Co-Chair Parnell made motion to move HB 281, version 1-
LS1201\Q from Committee with individual recommendations and
zero fiscal notes from the Department of Transportation &
Public Facilities, the Department of Education and Early
Development, and the Alaska Housing Financing Corporation,
along with a $50,000 fiscal note from the Department of
Revenue.
Senator Donley objected. He agreed that it was essential
the Committee be able to consider a projection of on-going
costs that this legislation would generate. There was some
general discussion about this legislation's future impact
and the efforts to keep down costs as they now stand.
A roll call vote was taken.
IN FAVOR: Senator Wilken, Senator P. Kelly, Senator Green,
Senator Leman, Senator Adams, Co-Chair Parnell, Co-Chair
Torgerson.
OPPOSED: Senator Phillips, Senator Donley.
THE MOTION PASSED: (7-2)
Co-Chair Torgerson stated that HB 281 was MOVED from
Committee.
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