Legislature(2005 - 2006)SENATE FINANCE 532
02/02/2006 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB217 | |
| SB218 | |
| SB236 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 217 | TELECONFERENCED | |
| + | SB 218 | TELECONFERENCED | |
| = | SB 236 | ||
| + | TELECONFERENCED |
10:50:24 AM
SENATE BILL NO. 236
"An Act relating to the dividend paid to the state by the
Alaska Housing Finance Corporation; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
DAN FAUSKE, Chief Executive Officer, Alaska Housing Finance
Corporation, Department of Revenue informed the Committee that
actions made by the national Governmental Accounting Standards
Board (GASB) affected the accounting procedures of the Corporation.
Therefore, this legislation is required in order to modify
financial terms so that the Corporation would remain in compliance
with State law dictating the annual transfer of funds from the
Corporation to the State. One specific term that would be changed
is the term "net income". That term would be replaced with new GASB
term "net assets".
Mr. Fauske explained that a new GASB ruling, GASB-34, would affect
the annual dividend the Corporation provides to the State. The
amount of the Dividend pre-GASB-34 would have been $40,000,000;
under GASB-34, the Dividend would be $80,000,000. "This is a good
thing."
JOE DUBLER, Finance Director, Alaska Housing Finance Corporation,
Department of Revenue stated this bill would change three elements
in current State Statute, including replacing the term "net income"
with "net assets". This change would align the Corporation's
accounting procedures with those of GASB.
Mr. Dubler explained that, in FY 2002, the Corporation had adopted
GASB-34, and that a Transfer Plan was developed to implement the
provisions of that ruling in FY 2007. The Transfer Plan required
that, in FY 2007, the Corporation's dividend to the State would be
the lesser of $103,000,000 or 75 percent of the Corporation's "net
income". [NOTE: the testifier inadvertently stated the percentage
as 95 percent.] That term must be changed to "adjusted change in
net assets." The inclusion of the term "adjusted" would reflect "an
additional change" required by the adoption of GASB-34, which "no
longer allows the Corporation to take certain returns of capital to
the State through our balance sheet."
10:53:41 AM
Mr. Dubler continued that the balance sheet had previously
contained a line item called "contributing capital, which is a
similar term" to that used in for-profit entities. In the process
of returning "capital to the State of Alaska through debt payments,
through cash transfers, we would reduce that amount. In our balance
sheet, it did not impact the Corporation's net income. In other
words, our net income was higher in those years before GASB-34.
Since GASB-34's been implemented, all of those payments that we
make to the State are required to come through our statement of
changes in net assets, which is the new name for an income
statement. That has reduced the Corporation's bottom line. Matter
of fact in 2005, it was negative after all those payments were
made, because we paid out more … on behalf of the State than the
Corporation earned in net income." This proposed definition of
"adjusted change in net income" would correct that by allowing the
Corporation "to comply with the intent of the original legislation"
by allowing "the current change in net asset number to [be] a more
comparable number to our prior net income." In summary, the effort
would allow the Corporation "to get back to where we were …before
the change".
Co-Chair Green understood therefore that the adoption of this bill
would not implement any substantive changes; it would simply change
terminology.
Mr. Dubler concurred.
Mr. Dubler stated that the third change included in this
legislation is depicted in Section 1 page one line nine: the
inclusion of the phrase "or other capital projects" would expand
the types of projects that subsidiaries created by the Corporation
could fund with Tobacco Settlement bond money.
10:56:09 AM
Senator Bunde asked whether any specific capital projects have been
identified.
Mr. Dubler responded that he was unaware of any specific capital
project list being developed. This change would allow the Governor
or the Legislature to expand the existing list beyond the current
three categories identified in Statute.
Mr. Fauske noted that, were this component of the bill approved, it
could be utilized to fund projects that are being advanced in
separate legislation.
Co-Chair Green recapped the changes in the bill.
AT EASE 10:57:39 AM / 10:58:54 AM
Co-Chair Green noted that the discussion had pertained to committee
substitute, Version 24-GS2058\G.
Senator Stedman moved to adopt Version "G" as the working document.
There being no objection, the Version "G" committee substitute was
ADOPTED.
Senator Bunde moved to report the committee substitute from
Committee with individual recommendations and accompanying fiscal
notes.
There being no objection, SC SB 236(FIN) was REPORTED from
Committee with new zero fiscal note dated February 1, 2006 from the
Alaska Housing Finance Corporation, Department of Revenue.
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