Legislature(2001 - 2002)

04/01/2002 02:00 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 01, 2002                                                                                           
                         2:00 P.M.                                                                                              
                                                                                                                                
TAPE HFC 02 - 71, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 2:00 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Bill Hudson                                                                                                      
Representative John Harris                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Richard Foster                                                                                                   
Representative Carl Moses                                                                                                       
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative   Lesil   McGuire;   Heath   Hilyard,   Staff,                                                                   
Representative  Jeanette  James; Barbara  Belknap,  Executive                                                                   
Director, Alaska  Seafood Marketing Institute,  Department of                                                                   
Community  and  Economic Development;  Jerry  McCune,  United                                                                   
Fishermen  of  Alaska  (UFA),  Juneau;  Eddy  Jeans,  Manger,                                                                   
School  Finance   and  Facilities   Section,  Department   of                                                                   
Education and Early Development                                                                                                 
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Herb  Jensen,  United  Salmon  Association,  Prince  Williams                                                                   
Sound, Cordova; Dee Hubbard, Sterling                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 390    An Act  extending the termination dates  of certain                                                                   
          activities  and salmon  marketing  programs of  the                                                                   
          Alaska  Seafood  Marketing  Institute  and  of  the                                                                   
          salmon marketing  tax; expanding the  allowable use                                                                   
          of that  tax for the  salmon marketing  programs of                                                                   
          the  Alaska Seafood  Marketing Institute;  relating                                                                   
          to the Alaska Seafood  Marketing Institute's salmon                                                                   
          marketing   committee;   and   providing   for   an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          HB 390 was reported out of Committee with a "do                                                                       
          pass" recommendation and with fiscal note #1 by                                                                       
          the    Department   of    Community   &    Economic                                                                   
          Development.                                                                                                          
                                                                                                                                
HB 451    An  Act relating  to  municipal bond  reimbursement                                                                   
          for school construction; and providing for an                                                                         
          effective date.                                                                                                       
                                                                                                                                
          HB 451 was reported out of Committee with a "do                                                                       
          pass" recommendation and with a zero fiscal note                                                                      
          #1 by the Department of Education & Early                                                                             
          Development.                                                                                                          
                                                                                                                                
#HB380                                                                                                                        
HOUSE BILL NO. 380                                                                                                            
                                                                                                                                
     An Act  relating to  reimbursement for certain  Medicare                                                                   
     premium charges for persons  receiving benefits from the                                                                   
     teachers'  retirement  system, the  judicial  retirement                                                                   
     system, the  elected public officers  retirement system,                                                                   
     and the public employees' retirement system.                                                                               
                                                                                                                                
Representative  Lesil  McGuire explained  that  HB 390  would                                                                   
extend the termination date of  certain activities and salmon                                                                   
marketing programs of the Alaska  Seafood Marketing Institute                                                                   
(ASMI) and the salmon marketing tax.                                                                                            
                                                                                                                                
Under   current   uncodified   law,  the   salmon   marketing                                                                   
activities  and programs  of ASMI described  in AS  16.51.100                                                                   
(7)-(9), terminate  on June 30,  2004.  The salmon  marketing                                                                   
tax  described  in  AS  43.76.110-43.76.130,  which  supports                                                                   
certain ASMI activities and ASMI's  domestic salmon marketing                                                                   
program,  terminates June  30,  2003.   HB  390 would  extend                                                                   
those activities  and programs and the tax  for an additional                                                                   
five years.                                                                                                                     
                                                                                                                                
In addition,  HB 390  would amend  AS 43.76.120(d)  to permit                                                                   
salmon marketing  tax revenue to  be appropriated for  use in                                                                   
ASMI's international  salmon marketing as well as  for use in                                                                   
its domestic  salmon marketing  program.   The changes  would                                                                   
assure the  continuation of  the important  work of  ASMI and                                                                   
would provide greater flexibility  in the marketing of Alaska                                                                   
salmon to the international marketplace.                                                                                        
                                                                                                                                
Representative  McGuire  urged that  the  bill moved  quickly                                                                   
from the House Finance Committee.                                                                                               
                                                                                                                                
Vice-Chair Bunde asked the original  motivation for including                                                                   
the domestic limitation.                                                                                                        
                                                                                                                                
Representative McGuire  explained that when the  board, which                                                                   
address salmon  marketing, was created, Alaska  was primarily                                                                   
exporting salmon  to international markets.   It was believed                                                                   
at that  point that there was  a domestic market,  waiting to                                                                   
be  explored,  which  was the  reason  for  that  limitation.                                                                   
Changing  it now,  reflects  the  changing times  within  the                                                                   
market and is an effort, which provides more tools.                                                                             
                                                                                                                                
Representative Harris clarified  that the money would be paid                                                                   
through the taxes paid by the fishermen.                                                                                        
                                                                                                                                
Representative  McGuire  advised  that the  requested  amount                                                                   
would result  from a  1% excise  tax, which  was paid  by the                                                                   
fishermen.   She reiterated  that  it was being  paid by  the                                                                   
industry, not the Legislature.                                                                                                  
                                                                                                                                
BARBARA   BELKNAP,   EXECUTIVE   DIRECTOR,   ALASKA   SEAFOOD                                                                   
MARKETING  INSTITUTE, DEPARTMENT  OF  COMMUNITY AND  ECONOMIC                                                                   
DEVELOPMENT, advised  that passage  of the bill  would extend                                                                   
the 1% excise  tax for a second  time.  She pointed  out that                                                                   
the  action would  provide for  the  second five-year  period                                                                   
renewal.  By renewing  it this year, will allow  ASMI to keep                                                                   
out  of a  "wind-down type  scenario".   She  added that  the                                                                   
Board   of  Directors   supports   removing  the   "domestic"                                                                   
restrictions.                                                                                                                   
                                                                                                                                
Representative  Hudson questioned  the reason  to spend  more                                                                   
than the oversea portion.                                                                                                       
                                                                                                                                
Ms.  Belknap explained  that  the  Board of  Directors  would                                                                   
determine the actual  make-up.  She added that  ASMI hoped to                                                                   
use  the 1%  as a  match for  some of  the overseas  funding,                                                                   
adding  that her  sense was  that  the vast  majority of  the                                                                   
funds  would stay  within the  U.S. market.   There would  be                                                                   
additional  funding that  could be used  to leverage  federal                                                                   
funds  for  the overseas  markets.    There continues  to  be                                                                   
definite  interest in  the Japanese and  European market  for                                                                   
the Alaskan salmon.                                                                                                             
                                                                                                                                
HERB JENSEN,  [TESTIFIED VIA  TELECONFERENCE], UNITED  SALMON                                                                   
ASSOCIATION, CORDOVA,  proposed an  amendment to HB  390 that                                                                   
would note a one-year extension  instead of the five year, as                                                                   
there is a planned meeting in  2002.  He believed that change                                                                   
would make  sense and  would create  a win-win situation  for                                                                   
all concerned.                                                                                                                  
                                                                                                                                
Representative  Harris commented that  the bill would  extend                                                                   
ASMI marketing  out to 2008, 2009.   He noted that  making no                                                                   
changes to the  bill would extend it for only  one more year.                                                                   
He  pointed  out that  Ms.  Belknap's  explanation  addresses                                                                   
concerns  to reach the  sunset date.   Representative  Harris                                                                   
questioned  why   a  one-year   extension  period   would  be                                                                   
beneficial for the State.                                                                                                       
                                                                                                                                
Mr. Jensen  responded that many  fishermen do not  agree that                                                                   
ASMI  is working  to  the benefit  of  all  fishermen.   Some                                                                   
fishermen  believe  that  the   current  charter  needs  some                                                                   
changes.   He  reiterated  that ASMI  has  not benefited  all                                                                   
fishermen and  thought that the  Legislature should  wait for                                                                   
one year to reauthorize the program.                                                                                            
                                                                                                                                
Co-Chair  Williams recommended  that the  bill be amended  in                                                                   
future  committee's  of  referral.     He  advised  that  the                                                                   
Committee should  continue full discussion  and consideration                                                                   
of HB 390.                                                                                                                      
                                                                                                                                
Mr. Jensen agreed.                                                                                                              
                                                                                                                                
In response  to Mr. Jensen,  Representative Hudson  said that                                                                   
to extend the proposed  program for only one year  would be a                                                                   
"waste  of money".    He warned  that  this  type of  program                                                                   
requires continuity for recognition.                                                                                            
                                                                                                                                
Representative  Hudson   proposed  that  the   United  Salmon                                                                   
Association and the ASMI Board  have a meeting to address the                                                                   
concerns voiced by Mr. Jensen.                                                                                                  
                                                                                                                                
Mr.  Jensen responded  that  there is  a  lot of  frustration                                                                   
amongst the  fishermen and that  he would be willing  to meet                                                                   
with ASMI.                                                                                                                      
                                                                                                                                
JERRY  MCCUNE,  UNITED  FISERMEN  OF  ALASKA  (UFA),  JUNEAU,                                                                   
voiced support for the bill as  written.  He pointed out that                                                                   
the  original  concern  was  that   the  domestic  market  be                                                                   
included.   Now that  the economics in  Japan are  down, many                                                                   
people  are  switching  over to  the  European  and  domestic                                                                   
market  to get  more value  for  their product.   Mr.  McCune                                                                   
stated that a long-range plan  was needed with the 1% renewal                                                                   
tax.                                                                                                                            
                                                                                                                                
Representative  Hudson   MOVED  to  report  HB   390  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HB  390  was reported  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  with fiscal  note  #1 by  Department  of                                                                   
Community & Economic Development dated 2/27/02.                                                                                 
                                                                                                                                
#HB451                                                                                                                        
HOUSE BILL NO. 451                                                                                                            
                                                                                                                                
     An Act relating to municipal bond reimbursement for                                                                        
     school construction; and providing for an effective                                                                        
     date.                                                                                                                      
                                                                                                                                
HEATH HILYARD, STAFF, REPRESENTATIVE  JEANNETTE JAMES, stated                                                                   
that HB  451 would correct  the disparity in  statute between                                                                   
grant   proposals   and   bond   reimbursement   for   school                                                                   
construction.      Currently,   the  statute   requires   the                                                                   
presentation   of  a  preventative   maintenance  plan   when                                                                   
reviewing school  construction grant proposals,  but there is                                                                   
no  such requirement  for bond  reimbursement.   Mr.  Hilyard                                                                   
stated that HB  451 would correct that disparity  requiring a                                                                   
preventative   maintenance   plan   in   bond   reimbursement                                                                   
proposals.                                                                                                                      
                                                                                                                                
Representative Whitaker asked  if there had been any negative                                                                   
feedback.                                                                                                                       
                                                                                                                                
Mr. Hilyard  was not  aware of  any vocal  opposition to  the                                                                   
legislation.                                                                                                                    
                                                                                                                                
Representative  Davies  noted  his  concern on  Page  3,  sub                                                                   
Section (b) with the clause that  the district "is adequately                                                                   
following the  preventive maintenance plan".   He asked about                                                                   
circumstances  in  which  the  district  does  not  have  the                                                                   
funding to do that.                                                                                                             
                                                                                                                                
EDDY JEANS,  MANGER, SCHOOL  FINANCE AND FACILITIES  SECTION,                                                                   
DEPARTMENT  OF  EDUCATION AND  EARLY  DEVELOPMENT,  explained                                                                   
that  preventative   maintenance   programs  are  a   general                                                                   
operation of maintenance requirements.   All school districts                                                                   
should  have some type  of preventative  maintenance  plan in                                                                   
place.  Some  school districts cannot meet the  70-30 percent                                                                   
instructional  program  requirement.    The  Department  lets                                                                   
those districts  know that is  why there is a  waiver program                                                                   
in place  to help  meet that requirement.   Not meeting  that                                                                   
requirement  is beyond  the  districts  control and  provides                                                                   
justification to submit a waiver.                                                                                               
                                                                                                                                
In 1988,  the Legislature adopted,  the five criteria,  which                                                                   
the Department  should measure as an eligibility  requirement                                                                   
for being  placed on  the State's  major maintenance,  school                                                                   
construction.                                                                                                                   
                                                                                                                                
Representative  Davies  asked the  number  of districts  that                                                                   
were up  to date on  the proposed statute.   He asked  if the                                                                   
adoption would be harmful to any  districts that might not be                                                                   
able to apply for bonding.                                                                                                      
                                                                                                                                
Mr.  Jeans  replied  that  there  are  two  people  that  are                                                                   
reviewing  school districts  compliance  for the  maintenance                                                                   
programs.   Currently, there is  not one district  that meets                                                                   
all  five of  the  requirements.   Through  the  Department's                                                                   
regulatory  process, the  definition of  the five points  has                                                                   
been expanded and the Department  has allowed a grace period.                                                                   
At  the next  board  meeting,  an additional  one-year  grace                                                                   
period will be put forth to help  comply with all five of the                                                                   
requirements.   Some of  the districts meet  only two  of the                                                                   
requirements.  The  intent of the grace period  is to provide                                                                   
the Legislature the assurance  that districts do have and are                                                                   
following a preventative maintenance program.                                                                                   
                                                                                                                                
Representative  Davies  asked  what  would  the  Department's                                                                   
position would be on applying  for new bonding in the future.                                                                   
                                                                                                                                
Mr. Jeans replied that would happen  on the grant side before                                                                   
the  bonding  side.   Regarding  the  five criteria  and  the                                                                   
preventative maintenance  program, the Department  is putting                                                                   
forth every  effort to  assure that the  districts do  have a                                                                   
program  that   meets  the   statutory  requirements.     The                                                                   
Department   has  developed  the   renewal  and   replacement                                                                   
schedule for  the school districts.   That action  would help                                                                   
the school  districts and the  Department in their  work with                                                                   
the Legislature in addressing statewide needs.                                                                                  
                                                                                                                                
Representative Whitaker  attempted to clarify  information on                                                                   
school districts  without bonding capabilities.   He asked if                                                                   
those  would mostly  be the  rural  schools.   Representative                                                                   
Whitaker questioned whether #5 would affect that group.                                                                         
                                                                                                                                
Mr.  Jeans  explained  that  it   would  apply  to  the  debt                                                                   
reimbursement  program.    The provisions  already  exist  in                                                                   
statute  for the  grant program,  which  applies to  Regional                                                                   
Education Attendance Areas (REAA's).   The REAA's do not have                                                                   
bonding capacity  or authority.   The grant program  is their                                                                   
only option to receive State aid  for school construction and                                                                   
major maintenance.   REAA's would  have a problem  before the                                                                   
municipal  districts.  The  point is  if that contributes  to                                                                   
their inability  to meet the minimum expenditure  requirement                                                                   
on  instruction,  that  would  be  a  justifiable  reason  to                                                                   
request  a waiver  and the  Department would  take that  into                                                                   
consideration.                                                                                                                  
                                                                                                                                
DEE  HUBBARD,   [TESTIFIED  VIA  TELECONFERENCE],   STERLING,                                                                   
explained that when the Legislature  adopted SB 7, it charged                                                                   
the  communities  and  districts   to  take  all  the  school                                                                   
construction process and make  them apply an equitable method                                                                   
across the  State.  Principles  of fiscal responsibility  are                                                                   
also  a  charge  that the  Legislature  gave  to  the  school                                                                   
districts.    In  regards  to  the  preventative  maintenance                                                                   
statute,   the   bonding   does    not   apply   to   bonding                                                                   
reimbursement.    She  added  that  in  February,  her  group                                                                   
endorsed  the  bill.   For  the  system  to remain  fair  and                                                                   
consistent, the requirements in  the preventative maintenance                                                                   
statute   and  regulations   must   apply   to  all   funding                                                                   
mechanisms.                                                                                                                     
                                                                                                                                
The Department has  worked really hard to make  sure that the                                                                   
school districts  would be  eligible to  apply, based  on the                                                                   
preventative maintenance  statute.  At their  latest meeting,                                                                   
they  addressed  the  unintended consequences  of  having  to                                                                   
spend additional  funds to guarantee  that a school  district                                                                   
would be eligible.  She thought  that would be a problem with                                                                   
a 70/30 requirement  under SB 36.  She urged,  there be quick                                                                   
passage of the bill from the House Finance Committee.                                                                           
                                                                                                                                
Representative  Davies   MOVED  to  report  HB   451  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note by the Department.   There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
HB 451 was reported out of Committee with a "do pass"                                                                           
recommendation and with a zero fiscal note #1 by Department                                                                     
of Education & Early Development.                                                                                               
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 2:36 P.M.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects