Legislature(2003 - 2004)

04/09/2003 09:05 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 173                                                                                                        
     "An  Act repealing statutes  pertaining  to the Alaska  Science                                                            
     and  Technology  Foundation   and  transferring  money  in  the                                                            
     foundation's  endowment;  repealing  statutes  relating to  the                                                            
     BIDCO assistance program;  repealing statutes pertaining to the                                                            
     international  trade  and business endowment  and transferring                                                             
     money  in  the  international  trade  and  business  endowment;                                                            
     transferring  oversight  administration  of outstanding  Alaska                                                            
     Science  and  Technology Foundation  loans  and  grants to  the                                                            
     Alaska   Industrial    Development   and   Export    Authority;                                                            
     establishing   an  Alaska  BIDCO   assistance  program   to  be                                                            
     administered  by  the  Department  of  Community  and  Economic                                                            
     Development;  making conforming  amendments; and providing  for                                                            
     an effective date."                                                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-chair Wilken explained  that this bill, which is requested by the                                                            
Governor, would  repeal the statutes relating to the  Alaska Science                                                            
and Technology  Foundation  (ASTF)  and its programs.  He  specified                                                            
that the  BIDCO (Business  and Industrial  Development Corporation)                                                             
assistance  program  would be  replaced with  a program  within  the                                                            
Department   of  Community  and  Economic   Development,   and  that                                                            
oversight  of the former  ASTF program would  be transferred  to the                                                            
Alaska Industrial Development & Export Authority (AIDEA).                                                                       
EDGAR  BLATCHFORD,   Commissioner,   Department  of  Community   and                                                            
Economic Development read  the language included in the title of the                                                            
bill. He then read a portion  of the Department overview titled "The                                                            
Alaska Science  and Technology  Foundation,"  [copy on file],  dated                                                            
March 25, 2003 as follows.                                                                                                      
   ASFT was  created in  1988 with an  endowment  of more than  $100                                                            
   million to  support  grants for  technology  projects,  knowledge                                                            
   projects, small  business  innovative research  bridging  grants,                                                            
   and direct grants  to teachers. Through  its endowment,  ASTF has                                                            
   generated about $126 million in  income for distribution. Between                                                            
   1988 and 2002, one half  of the endowment income  - $63 million -                                                            
   has been appropriated and spent for "non-ASTF purposes":                                                                     
     · $35 million for University of Alaska operations, Alaska                                                                  
        Aerospace Development (AADC) Corporation operations, and                                                                
        International Trade and Development office operations;                                                                  
     · $11 million was used to match federal funding for                                                                        
        construction of the AADC's $39 million Kodiak Rocket Launch                                                             
        Center; and                                                                                                             
     · $17 million was appropriated to the state general fund.                                                                  
   Distributions to  support core programs  totaled: $25 million  in                                                            
   technology grants,  $10 million  for other  knowledge grants;  $8                                                            
   million for business  partners, and $2 million  in grants to math                                                            
   and science teachers.  Foundation operating expenses  totaled $13                                                            
   million, equal to 35%  of the $45 million spent  for core purpose                                                            
   In mid-March the Legislature passed  and the Governor signed into                                                            
   law  a  supplemental   appropriation   reducing   ASTF  FY   2003                                                            
   operations to amounts  spent and obligated  to date and  included                                                            
   instruction  to ASTF  to wind  down operations  by May  15.   The                                                            
   Governor's FY 2004  budget supports  the Legislative directive  -                                                            
   no funding is provided for ASTF.                                                                                             
Commissioner Blatchford  informed the Members that due to serving on                                                            
a Native  tribal  council, which  has applied  for  ASTF grants,  he                                                            
wished to declare  a potential conflict of interest  on this matter.                                                            
Senator  Stevens asked  the identity  of the  business partners  who                                                            
received the $8 million.                                                                                                        
TOM  LAWSON,   Director,   Division  of   Administrative   Services,                                                            
Department  of Community  and Economic Development,  specified  that                                                            
the  partners  include the  BIDCO  entities  of: the  Alaska  Growth                                                            
Capital; Alaska  Manufacturer's Association;  Alaska InvestNet;  and                                                            
the Alaska  Hi-Tech Business Council.  He stated that the  money was                                                            
allotted  to  those  entities  to  allow  them  to  operate  various                                                            
Co-Chair Wilken asked for  information regarding language in Section                                                            
5 (1) on page 2, line 15 of the bill that reads as follows.                                                                     
     (1) administering the Alaska BIDCO assistance program related                                                              
     to loans and other financial assistance made or provided under                                                             
     AS 37.17.500 - 37.17.690;                                                                                                  
Mr.  Lawson  responded  that the  intent  of  this language  is  "to                                                            
replicate  the BIDCO  program" in  the Department  of Community  and                                                            
Economic  Development rather  than in ASTF.  He asserted that  while                                                            
the  "shell  of the  program"  is  being transferred,  there  is  no                                                            
accompanying   request   for  funding.   He  stated   that   further                                                            
information regarding the language would be supplied.                                                                           
Co-chair Wilken  asked that information regarding  Alaska statute AS                                                            
37.17.500  be  supplied  to  the  Committee,  as  it  is  frequently                                                            
referenced in the bill.                                                                                                         
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             

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