Legislature(2009 - 2010)SENATE FINANCE 532
03/18/2009 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 75 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 75
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and appropriations to capitalize funds; and providing
for an effective date."
1:39:07 PM
Co-Chair Stedman introduced the legislation as an overview
of the governor's capital association bill.
DEPARTMENT OF REVENUE
Reference Number 46985
GINGER BLAISDELL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, introduced reference number
46985, the Tax Revenue Management System. She explained that
the project was the department's top priority as a three
phase project with an approximate cost of $24 million. The
first phase includes the oil and gas revenues along with
corporate income tax. The second phase addresses larger tax
systems such as mining, motor fuel, and cruise ship tax. The
third phase addresses the remaining tax systems and
insurance operated by the new management system.
Co-Chair Stedman requested information regarding the master
line of credit. Ms. Blaisdell answered that the master lease
line of credit is a funding mechanism, different from the
$50 million master lease line of credit that the state
typically runs to finance operating expenditures.
1:42:26 PM
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, explained that the
state sells certificates of participation subject to
appropriation. The line of credit has a final maturity in
approximately seven years with an interest rate of 3.25
percent. The master lease line of credit is designed for
smaller capital acquisitions that fit in department's
operating budgets. The master lease line of credit was
employed most recently by the University for Vehicle
Acquisitions Five Year Amortization at a five year rate.
Co-Chair Stedman asked why the committee should pay cash
instead. Mr. Mitchell responded that cash is always
preferred, but the strategy set forth by the governor's
office provides a balance of funding occasional projects
with sources other than cash. He noted that this instance
allows the access of capital at a low cost, tax exempt,
while allowing maintenance of money invested in other funds
at a taxable rate. Normally funds are maintained and
invested at a taxable rate
1:46:07 PM
Co-Chair Stedman requested the ongoing budget impact of the
decision. Mr. Mitchell indicated $4 million, but the
department utilized a conservative interest rate. He
explained that he used a rate of six percent due to the
volatile market allowing a savings of $6 thousand per year.
Co-Chair Stedman clarified that the debt financing would
lead to evidence of a smaller draw on general funds at the
end of the year.
Mr. Mitchell agreed that the master lease line of credit
balances capital budget expenditures. He noted that that
many different options exist regarding investment.
Co-Chair Stedman recalled that the legislature worked on the
financial structure to encourage better bond ratings and
retention. He concluded that increased debt service might
lead to an impact on bond ratings.
Mr. Mitchell agreed that the issue deserves awareness. He
noted that Alaska has a low debt burden compared to its
resources and revenue streams. He spoke of Alaska's small
population and great wealth resulting from oil production. A
percentage of unrestricted revenue is utilized as an allowed
annual service. The department prefers the comfort zone of
eight percent of unrestricted revenues obligated to debt
service. Currently the state is well within the eight
percent threshold.
1:50:01 PM
Ms. Blaisdell informed that the initial purchase is $20
million of the $24 million requested. She observed that the
choice reduces general funds. The remaining funds are
designated to customize programming.
Reference Number 46988
Ms. Blaisdell addressed reference number 46988 and the
Upgrade of the NetApp System. The current NetApp capacity is
approximately 7.5 terabytes of stored data, maximizing the
system's capacity. The projected growth through 2013
estimates the need for 27 terabytes. She noted the largest
growth includes online filing for Permanent Fund Dividend
(PFD) applications. The tax division adds approximately 100
gigabytes per year and treasury contributes 100 megabytes
per year as the smallest contributor.
Reference Number 42945
Ms. Blaisdell addressed reference number 42945 describing
phase five of the Child Support Services Computer
Replacement Projects. She informed that child support
services manage 230 employees. She explained that the
desktop personal computers, servers, printers, fax machines,
are on a five year rotation cycle for replacement. The
proposed cost is $216 thousand.
1:52:49 PM
Reference Number 42933
Ms. Blaisdell discussed reference number 42933 and the PFD
Computer Replacement Project requesting $119,500.
Ms. Blaisdell detailed reference number 46987 and the PFD
Call Center Automated Routing. She explained that the PFD
division envisioned the creation of a four person call
center with the ability to access records immediately and
provide information about application status. She mentioned
that the division currently employs an automated telephone
system, which leads to frustration among Alaskans.
Reference Number 46989
Ms. Blaisdell described reference number 46989 and the
Sequel Database Evaluation. She explained that the request
was included in the initial submitted budget. All
appropriations were reviewed until one was found unexpended.
The department requested a title change in the supplemental
budget for a $300 thousand appropriation.
Co-Chair Stedman asked how old the initial appropriation
was. Ms. Blaisdell replied that the documented appropriation
was last year's. Co-Chair Stedman noted a similar instance
in which the Department of Transportation (DOT) submitted a
similar request from 1980. Ms. Blaisdell noted that DOR
tracks old dollars and spends them first.
1:55:00 PM
Reference Number 47037
Ms. Blaisdell introduced reference number 47034 and the
Permanent Fund Corporation Investment Portfolio Accounting
and Reporting System.
MIKE BURNS, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND
CORPORATION, DEPARTMENT OF REVENUE, noted that the funding
is for security of an investment portfolio accounting system
for improved general ledger accounting. The previous
accounting system is 12 years old with limited ability to
report on current asset accounts. Key functions of the
system include reconciliation of assets, monitoring
performance of corporate actions such as dividends, pay
downs, calls, etc. The funding is spent on servers,
hardware, installation, business analysis, consulting.
Co-Chair Stedman asked Mr. Burns to remain in the building
to meet with Co-Chair Hoffman and himself.
1:57:17 PM
DAN FAUSKE, CEO/EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, presented the capital
budget for Alaska Housing Finance Corporation (AHFC). He
informed that the figures presented to the committee
represent 75 percent of adjusted net income for the
legislation that AHFC operates with. He explained that the
corporation assembles a list of projects from new and
existing programs.
Reference Number 37918
LES CAMPBELL, DIRECTOR BUDGET, ALASKA HOUSING FINANCE
CORPORATION, introduced reference number 37918 and the AHFC
Teacher Health Public Housing Loan Program. The program is
ongoing with $8 million of corporate dividend receipts. The
purpose is to provide gap funding to increase home ownership
and rental units throughout the state. The program is
designed to retain desirable professionals in high cost
areas. Seventy two units have been developed under the
program.
Senator Huggins asked for the annual objective regarding the
program. Mr. Campbell responded that the funding would allow
construction of another 62 units, existing primarily in
rural areas.
Senator Huggins asked the process of determining the
project's location.
Mr. Campbell answered that the location priority is based on
received applications. The public is informed about
available funds, and applications are received initiating a
priority process.
Senator Huggins asked if teacher housing in a rural area is
requested from the Department of Education or from the
village. Mr. Campbell responded that the municipality or the
school district applies for the funds.
2:01:21 PM
Mr. Fauske interjected that the corporation prefers
communication among government entities. Community support
is necessary for financing of the project. Once a project is
deemed viable, the corporation provides the funds necessary
to negotiate with the school district about a loan.
Senator Huggins asked if the school district owns the house.
Mr. Fauske replied that either the school district or a
private developer owns the home including a long term lease
with the school district.
Senator Huggins inquired about the expense to the teacher.
Mr. Fauske responded that the teacher's rent is negotiated
with the school district.
2:05:07 PM
Reference Number 6323
Mr. Campbell addressed reference number 6323 and the
Supplemental Housing Development Program. He noted the
ongoing program supplements federal housing funds from
regional housing authorities ensuring clean and safe housing
throughout Alaska. The program supplements up to 20 percent
of funds received from the federal government. The
supplemental housing funds generally cover the
infrastructure of rural homes.
Reference Number 6332
Mr. Campbell discussed reference number 6332 and the
Weatherization Program. The request for 2010 is $2 million
in federal receipts. The purpose is to provide cost
effective energy improvements to homes of low income
residents. The funds supplement those appropriated last
year.
Co-Chair Hoffman asked why the program is dropped from $300
million. Mr. Fauske answered that $360 million is committed.
Co-Chair Stedman requested a brief update about the status
of the $360 million. Mr. Fauske informed that $30 million of
the appropriation is committed.
2:08:26 PM
BRYAN BUTCHER, DIRECTOR, GOVERNMENT AFFAIRS AND PUBLIC
RELATIONS, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF
REVENUE, repeated that $30 million was committed in AHFC's
Weatherization Program. He explained that the ramp up was
accomplished with $200 million from the previous year. The
Home Energy Rebate Program encumbered $66 million for the
program. The wait list is in excess of 5 thousand Alaskan
residents. He expressed comfort that the corporation would
retain funds until FY10 for continuation of the program. Mr.
Fauske added that the stimulus money is not included in the
presented amounts.
Reference Number 6334
Mr. Campbell introduced reference number 6334 and the AHFC
Senior Citizens Housing Development Program. He cited the
request as $7,500,000 of corporate dividend receipts. The
purpose is to provide development of senior citizen housing.
The program has funded 11 hundred units. The requested
funding provides 90 additional units and modifications for
accessibility to an additional 40 units.
2:11:10 PM
Reference Number 47066
Mr. Campbell detailed reference number 47066 and phase one
of the Fire Protection System. He explained that this is a
statewide program requesting $3,450,000 of corporate
dividend receipts. The purpose of the project is evaluation
of life safety code repairs for public housing throughout
the state. The project reduces maintenance cost and
increases the useful life of the structure. He mentioned a
previous capital budget observing the properties for
evaluation. This appropriation allows implementation based
on recommendations.
Reference Number 47068
Mr. Campbell noted reference number 47068 and a request for
$750,000 for Security System Replacement and Upgrades. He
announced that the program was statewide with the purpose of
upgrading existing security and door access systems in
senior, disabled, and multifamily public housing complexes.
Reference Number 47069
Mr. Campbell introduced reference number 47069 the Building
System Replacement Program. He announced the new program and
noted the request for $2,500,000 of corporate dividend
receipts. The purpose addresses specific repair or
replacement of items identified in a five year review. The
project addresses major roof replacements, sidewalks,
retaining walls, and paint for siding.
2:14:12 PM
Reference Number 6347
Mr. Campbell addressed reference number 6347 and the Housing
and Urban Development Federal Home Grant Program requesting
$3,300,000 in federal receipts with a corporate dividend
match of $750 thousand. The purpose of the program is
expansion of low and moderate income housing. He praised the
plan to design and implement strategies for the achievement
of safe, energy efficient and affordable housing. The
program funded 44 rental projects containing 818 units and
rehabilitated 373 low income family units, while assisting
315 low income households to purchase homes.
Reference Number 6342
Mr. Campbell addressed reference number 6342 and the Housing
and Urban Development Capital Fund Program. The request is
for $3,200,000 in federal receipts. The purpose of the
program is to receive federal funds for the public housing
program for the renovation of public housing units owned by
AHFC.
Reference Number 6348
Mr. Campbell addressed reference number 6348 and the Federal
and Other Competitive Grants. The request is $1,500,000 in
corporate receipts for match purposes and $3 million of
federal receipts. The purpose of the program is to allow
AHFC to apply for opportunities from Housing and Urban
Development (HUD) or other agencies targeting housing needs
and support services of low income and special needs groups.
2:16:59 PM
Reference Number 6350
Mr. Campbell discussed reference number 6350 and the
Competitive Grants for Public Housing. The request includes
$750 thousand in corporate receipt authority with a match of
$250 thousand of corporate dividend receipts. The program is
similar to reference number 6348, except it addresses public
housing residents.
Reference Number 6351
Mr. Campbell discussed reference number 6351 and the Energy
Efficiency Monitoring Research. The request is $2 million of
corporate dividend receipts. The purpose of the project is
the provision of a designated grant to the cold climate
housing research center. The cold climate center conducts
housing construction research analysis and provides
information dissemination among the housing industry and the
public.
Co-Chair Stedman asked about the annual increase in the
program's requests. He observed that the appropriated money
was spent. He requested that the committee retain
flexibility regarding fund appropriation.
2:19:14 PM
Mr. Fauske explained that the purpose of the requests was to
provide a list of projects that AHFC plans to continue and
their associated costs. He anticipated that the session
would provide the appropriate changes to the requests.
Co-Chair Stedman asked if the requests are listed in
priority order. Mr. Fauske affirmed that the requests are
listed in priority order. He offered to provide additional
detail regarding new projects and increased requests.
Reference Number 32526
Mr. Campbell described reference number 32526 and the State
Energy Program Special Projects. The request includes $150
thousand in federal receipt authority with a $50 thousand
corporate dividend receipt match. The program's purpose
enables the state to apply for and participate in special
projects funded by the Department of Energy (DOE).
2:20:58 PM
Reference Number 40068
Mr. Campbell discussed reference number 40068 and the
Statewide Project Improvements. The request equals $3
million in corporate dividend receipts. The purpose includes
funding to address known and unknown conditions in AHFC's
housing stock. He mentioned units throughout the state with
needs estimating $13 million.
Reference Number 43076
Mr. Campbell discussed reference number 43076 and the
Loussac Manor Renovation and Replacement. The request is for
$8,492,400 of corporate dividend receipts. The request
completes phase three of the project. Estimates were
reviewed and the replacement costs are $15.1 million by a
2007 estimate. For renovation, the cost is $13 million. He
thought it advantageous to replace the 15 units.
Mr. Fauske informed that the mentioned location is a
valuable piece of property. He explained that the $8,492,000
will leverage between $28 and $32 million due to the use of
tax credits. The result is a 120 unit development project.
2:25:49 PM
Co-Chair Hoffman asked if the investment property's future
includes privatization. Mr. Fauske concurred that the
property would house low and moderately low income families.
The tax credits provide leeway for the rent structure.
Co-Chair Hoffman if the state would continue to own the
property. Mr. Fauske affirmed that the state will remain
owner of the property with the right to determine tenants.
Co-Chair Hoffman asked the category of low to medium income.
Mr. Fauske answered those families within 80 percent of Area
Median Income (AMI).
2:27:03 PM
MARK ROMICK, DIRECTOR, PLANNING DEPARTMENT, ALASKA HOUSING
FINANCE CORPORATION, DEPARTMENT OF REVENUE (testified via
teleconference), answered the question about income
category. He informed that the income eligibility for a
family of four is $77 thousand per year, with 80 percent at
$56 thousand per year, and 60 percent at $40 thousand per
year.
Co-Chair Hoffman asked if the state is participating in
assistance in medium income homes. He asked about the
opinion of private enterprise regarding the involvement of
the state in medium income homes. Mr. Romick answered that
AHFC participates with less than 80 percent of the medium
income homes. He cautioned about heavy competition with the
private sector.
Co-Chair Hoffman asked if the income requirements would
remain the same once the property is owned by private
enterprise. Mr. Romick replied that rent and income
restrictions remain consistent for 15 to 30 years.
2:30:06 PM
JIM GURKE DIRECTOR OF PUBLIC HOUSING, ALASKA HOUSING FINANCE
CORPORATION (AHFC), (testified via teleconference) announced
that requirements for units designated as public housing
remain the same. He stated that AHFC retains fiduciary
responsibility to HUD for necessary assurances.
Co-Chair Hoffman asked if the concept of mixed finance
developed was considered in other state regions. Mr. Gurke
answered that the practice is common throughout the country.
Currently the project is the only one of its kind in Alaska.
The type of project is known as mixed finance development,
with public and private funding leveraging each other to
build affordable units.
Mr. Fauske announced AHFC's goal to apply the process to
other regions of the state as an avenue to affordable
housing.
Co-Chair Hoffman expressed concern that additional rural
Alaskans might leave their home towns to live in the
affordable housing in Anchorage. He expressed relief to know
that similar projects will occur statewide.
Senator Thomas asked how many square feet were available for
the project.
2:33:44 PM
Mr. Gurke estimated that 50-60 thousand square feet exist
among the livable space. He lacked the requested number of
total available square feet in the project. Senator Thomas
asked Mr. Gurke to present the information to the committee
in the near future. He expressed surprise that the elevator
requirement was avoided in public buildings.
Mr. Gurke responded that the property is substantial and the
design plan envisions a collection of eight-plex buildings
that span the perimeter of the property as one story
buildings. He noted that one building in the project plans
contains an elevator.
Mr. Fauske informed about an old building with centralized
location in need of repair. The location provides access to
the bus and other social services.
2:37:34 PM
Mr. Gurke answered the question about square footage for the
mentioned site as 119 thousand square feet of living area
and 8000 square feet for the community center.
Mr. Campbell discussed reference number 41531 and the Denali
Commission Project. He noted that the request is for $5
million in federal receipts with the purpose of
administering the Denali Commission's housing programs in
rural Alaska. The programs include both teacher and senior
housing programs.
Reference Number 45388
Mr. Campbell addressed reference number 45388 and the
Statewide Energy Improvements. The request is for $5 million
in corporate receipts. The purpose is to implement some of
the energy efficiency findings developed under the energy
audit process. The goal is to renovate AHFC properties to
the same standards.
Reference Number 45389
Mr. Campbell addressed reference number 45389 for $500
thousand of corporate dividend receipts. The Americans with
Disabilities Act (ADA) requires upgrades. He mentioned that
the project was ongoing and a similar request would be made
of the legislature next year.
Reference Number 47070
Mr. Campbell addressed reference number 47070 and the Birch
Park II Building Reconstruction. The purpose is to rebuild
the four-plex structure in Fairbanks recently destroyed by
fire. The original request was for $800 thousand in
corporate receipts and $640 thousand in federal receipts. He
noted the amendment to the Office of Management and Budget
(OMB) to reduce the corporate dividend receipts down to zero
while retaining the federal receipts of $640 thousand.
2:41:35 PM
Reference Number 45390
Mr. Campbell addressed reference number 45390 and the
Homeless Assistance Program. The purpose is to address
homelessness, providing assistance to families in imminent
danger of becoming homeless, or those currently homeless.
The request is $6 million in corporate dividend receipts,
$500 thousand in mental health trust authority receipts,
$500 thousand in general funds mental health, $1 million in
statutory designated funding, and $2 million of federal
receipts. A ten year plan to end long term homelessness in
Alaska was developed and is currently reviewed for internet
posting.
Mr. Fauske noted that the council will meet to review the
ten year plan recommending construction of multiple units.
He expressed satisfaction with the process.
2:45:14 PM
Reference Number 6360
Mr. Campbell discussed reference number 6360 and the
Homeless Assistance Program Beneficiary and Special Needs
Housing. The program request equals $1,750,000 of corporate
dividend receipts. The purpose is to provide funds for
Alaskan nonprofit service providers and housing developers.
The benefits include increased housing opportunities for
Alaska mental health trust beneficiaries.
Reference Number 43318
Mr. Campbell addressed reference number 43318 and the
Emergency Assistance Grants for Mental Health Trust
Beneficiaries. The request is for $200 thousand in mental
health trust authority receipts. The purpose is to support
beneficiaries in maintaining home ownership or long term
rental stability.
2:47:43 PM
Senator Thomas suggested that the cited cost for the four-
plex unit in Fairbanks was excessive at $1.4 million. Mr.
Fauske responded that bids were analyzed and the numbers
were reasonable. Senator Thomas asked when the project was
last bid. Mr. Fauske answered that it was out to bid twice,
last summer. Senator Thomas recommended that the project
receive yet another bid.
2:50:12 PM
Co-Chair Stedman introduced the final item for the hearing,
the request for the Alaska gas spur line.
Reference Number 45291
Ms. Blaisdell discussed reference number 45291 and the
Alaska Gas Spur Line. She informed that the request equaled
$8 million. The funds would go to the Alaska Natural Gas
Development Authority (ANGDA). The original request was $5
million, which addressed many logistics involved in the
gasline's establishment. The process helped determine that
$10 million is a more realistic amount. She mentioned $2
million available in a different appropriation from another
agency that might provide for the spur line. The $8 million
would enable development of an in-state gas line. She
mentioned Harry Noah and Harold Hines as two individuals
defining specifics regarding the creation of the instate gas
line. He promised a detailed work plan detailing the use of
the requested funds for the committee. Co-Chair Stedman
asked why the $8 million request in ranked last in the order
of projects presented to the committee.
Ms. Blaisdell answered that the agency was heard first and
the list is alphabetical. She noted that using alphabetical
order, the departments fall behind the agency requests.
Housing falls before natural in the alphabet.
Senator Thomas asked about the route for the spur line.
Ms. Blaisdell responded that another bill was recently
introduced to expand the scope of Alaska Natural Gas
Pipeline Development Authority to address the Western Slope
and the Brooks Range as a couple of possibilities. She
believed that the pertinent route was North Slope Gas to
South central Alaska. She was not aware of the route's
specifics.
2:54:13 PM
Senator Huggins asked about appropriating additional money
without a clearly outlined concept. He stated that the
committee required the concept and route prior to
appropriating funds. He asked where the allocated money
would rest. Ms. Blaisdell answered that currently the money
will go to ANGDA. She stated that the committee would
receive a detailed account of the proposed spending as early
as tomorrow.
Senator Huggins asked about the letter written by the
commissioner of DOR to ANGDA recommending that they cease
spending for some reviews. Ms. Blaisdell stated that she had
not reviewed the letter either. She mentioned that the
department was reviewing all appropriations to ensure that
they fit within the scope of work.
Senator Huggins asserted that the committee members
understood the criticality of instate gas. He mentioned the
two related bills and he assumed that they may pass in lieu
of the $8 million dollars requested today.
Ms. Blaisdell responded that there are three pieces of
legislation. The instate gas bill has a fiscal note. The
interstate transmission bill has a different fiscal note.
The instate gasline is similar to this $8 million project,
but differences exist as well.
2:57:41 PM
Co-Chair Hoffman requested information about the viability
of the gasline once the spur line is built. The spur line
may jeopardize the economic viability of the gasline to the
lower 48. He wondered if the appropriation of $10 million
addresses the question.
Ms. Blaisdell did not have an answer, but promised to pass
the question along to those hosting the ANGDA meeting.
SB 75 was HEARD and HELD in Committee for further
consideration.
2:59:22 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| AHFC Capital Budget Request.pdf |
SFIN 3/18/2009 1:30:00 PM |
SB 75 |