Legislature(2017 - 2018)ADAMS ROOM 519

04/11/2018 09:00 AM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HB 221 Out of Committee
<Bill Hearing Canceled>
-- Public Testimony --
Moved CSHB 304(FIN) Out of Committee
-- Public Testimony --
Scheduled but Not Heard
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 11, 2018                                                                                            
                         9:06 a.m.                                                                                              
9:06:17 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 9:06 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative Harriet Drummond,  Sponsor; Stephanie Butler,                                                                    
Executive  Director,  Alaska   Commission  on  Postsecondary                                                                    
Education,  Department of  Education and  Early Development;                                                                    
Kelly  Cunningham,  Analyst, Legislative  Finance  Division;                                                                    
Britteny  Cioni-Haywood,  Director,   Division  of  Economic                                                                    
Development, Department of  Commerce, Community and Economic                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
HB 221    WORKFORCE & ED RELATED STATISTICS PROGRAM                                                                             
          CSHB 304 (FIN) was REPORTED out of committee with                                                                     
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously published zero fiscal note: FN1(CED).                                                                      
HB 304    MICROLOAN REVOLVING FUND & LOANS                                                                                      
          HB 221  was REPORTED out  of committee with  a "do                                                                    
          pass"  recommendation  and   with  two  previously                                                                    
          published   zero   fiscal  notes:   FN1(CED)   and                                                                    
HB 384    REGULATORY COMM OF AK; BROADBAND INTERNET                                                                             
          HB 385 was SCHEDULED but not HEARD.                                                                                   
Co-Chair Foster reviewed the agenda for the day.                                                                                
HOUSE BILL NO. 221                                                                                                            
     "An  Act   relating  to  the   duties  of   the  Alaska                                                                    
     Commission  on Postsecondary  Education; relating  to a                                                                    
     statewide  workforce  and education-related  statistics                                                                    
     program;  relating  to   information  obtained  by  the                                                                    
     Department  of  Labor  and Workforce  Development;  and                                                                    
     providing for an effective date."                                                                                          
9:08:05 AM                                                                                                                    
Co-Chair Foster  indicated that the  bill had been  heard on                                                                    
April 2, 2018 and public testimony has been closed.                                                                             
9:08:52 AM                                                                                                                    
REPRESENTATIVE   HARRIET   DRUMMOND,   SPONSOR,   introduced                                                                    
herself. She  reported that failure  to pass the  bill would                                                                    
result   in  a   great  deal   of  wasted   work  and   lost                                                                    
opportunities for  the state. She  elaborated that  the bill                                                                    
clarifed  the   authority  of   the  Alaska   Commission  on                                                                    
Postsecondary Education  (ACPE) to  receive and  analyze de-                                                                    
identified  existing  data.  She  stated  that  the  current                                                                    
Memorandum  of  Understanding  (MOU)  would  likely  not  be                                                                    
renewed and  expired the current fiscal  year. The potential                                                                    
loss   of  data   would  result   in   the  destruction   of                                                                    
approximately 10 years of data  and difficulty in attracting                                                                    
additional funding.  She reported  that about  $800 thousand                                                                    
to  $1  million,  representing roughly  25  percent  of  the                                                                    
federal grant,  was invested in developing  file preparation                                                                    
necessary to  load the data.  A data base without  use would                                                                    
need funding to be  reestablished. Cross sector analysis for                                                                    
outcomes reports  would be inefficient  and cost  25 percent                                                                    
more to generate. The bill  provided the opportunity for the                                                                    
legislature to  receive data needed to  best allocate scarce                                                                    
educational and training resources.  The state would realize                                                                    
the full  potential of  the original  $4 million  grant that                                                                    
created the "Outcomes Database".                                                                                                
9:11:43 AM                                                                                                                    
Representative Wilson  MOVED to  ADOPT Amendment 1  (copy on                                                                    
     Page 3, following line 19:                                                                                                 
          Insert a new subsection to read:                                                                                      
               "(d)  The commission  shall provide  a method                                                                    
          for  an individual  whose information  is received                                                                    
          under  this section,  AS 14.42.030(e)(7)  and (8),                                                                    
          and AS  23.20.110 to opt  out of  the individual's                                                                    
          unit record  being used for  the purposes  of this                                                                    
     Reletter the following subsection accordingly.                                                                             
Vice-Chair Gara OBJECTED for discussion.                                                                                        
Representative Wilson reviewed  the amendment. She explained                                                                    
that  the  amendment  offered  an  opt  out  provision.  The                                                                    
amendment  would   allow  anyone   who  objected   to  their                                                                    
information being utilized could opt out.                                                                                       
Representative Drummond  responded that the adoption  of the                                                                    
amendment would result in a  fiscal impact note. She pointed                                                                    
out  that  it was  not  possible  to  opt  out of  the  data                                                                    
collection  for the  Outcomes analysis  and much  of it  was                                                                    
required by federal  law. An opt out  provision required the                                                                    
storage   of  personal   information  in   order  to   track                                                                    
individuals that  opted out and halt  further tracking, thus                                                                    
nullifying the  de-identified process for the  database. The                                                                    
person  that wanted  to opt  out was  required to  provide a                                                                    
full  name, signature,  date of  birth, and  social security                                                                    
number and apply to the  Outcomes Database. The database was                                                                    
not designed to  provide data on individuals  since the data                                                                    
was de-identified.                                                                                                              
9:13:56 AM                                                                                                                    
Representative  Guttenberg  understood  the  intent  of  the                                                                    
amendment but surmised that the  data was aggregated and de-                                                                    
identified  and opting  out would  create an  identifier. He                                                                    
asked whether he understood correctly.                                                                                          
STEPHANIE BUTLER,  EXECUTIVE DIRECTOR, ALASKA  COMMISSION ON                                                                    
POSTSECONDARY EDUCATION,  DEPARTMENT OF EDUCATION  AND EARLY                                                                    
DEVELOPMENT, responded  in the  affirmative. She  added that                                                                    
the  identified information  would have  to be  saved to  be                                                                    
removed from the database.                                                                                                      
Vice-Chair Gara  objected to the amendment  because the APCE                                                                    
stated that  the Outcomes  Database did  not contain  an opt                                                                    
out  option and  he  did  not understand  the  need for  the                                                                    
amendment since the information remained confidential.                                                                          
Representative  Wilson  believed  people   had  a  right  to                                                                    
protect  their   information  and  that   people  collecting                                                                    
unemployment   were  unaware   that  the   data  was   being                                                                    
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Pruitt, Thompson, Tilton, Wilson                                                                                      
OPPOSED: Grenn, Guttenberg, Ortiz, Gara, Foster                                                                                 
The MOTION FAILED (4/5).                                                                                                        
Co-Chair  Foster  directed  Vice-Chair Gara  to  review  the                                                                    
fiscal notes.                                                                                                                   
9:17:57 AM                                                                                                                    
AT EASE                                                                                                                         
9:20:39 AM                                                                                                                    
Vice-Chair Gara reviewed the fiscal  notes. He reported that                                                                    
the  zero  fiscal  note from  the  Department  of  Commerce,                                                                    
Community and  Economic Development  (DCCED) (FN1  (EED) was                                                                    
appropriated to the  APCE. The second zero  fiscal note from                                                                    
the  Department of  Labor and  Workforce Development  (DLWD)                                                                    
(FN2  (LWF)  was  appropriated to  Employment  and  Training                                                                    
9:21:41 AM                                                                                                                    
Representative Wilson  referred to the analysis  from page 2                                                                    
of  the DLWD  fiscal  note  where it  indicated  a cost  was                                                                    
associated  with   the  bill.  She  read   the  fiscal  note                                                                    
     This   legislation  would   allow  the   department  to                                                                    
     disclose   data   employers    submit   for   mandatory                                                                    
     unemployment  insurance (UI)  reporting  to the  Alaska                                                                    
     Commission on  Postsecondary Education in support  of a                                                                    
     statewide  workforce and  education related  statistics                                                                    
     program. However, 20  CFR 603 prohibits the  use of the                                                                    
     UI  Administrative Grant  to pay  for costs  associated                                                                    
     with  disclosures. Therefore,  the  requestor must  pay                                                                    
     for  all  costs  associated   with  the  disclosure  of                                                                    
     permissible records.                                                                                                       
     The department  is unable to estimate  costs associated                                                                    
     with these  disclosures without knowing the  number and                                                                    
     frequency  of  requests. No  change  to  the budget  is                                                                    
     anticipated at this time.                                                                                                  
Representative Wilson  surmised that  there was a  cost, but                                                                    
it was presently unknown. Ms.  Butler responded that she had                                                                    
worked with  DLWD and acknowledged  that the  department was                                                                    
very careful to  ensure it was fully  compliant when dealing                                                                    
with data collection funded  through the federal government.                                                                    
Typically, the ACPE would enter  into a Request for Services                                                                    
Agreement (RSA) and  pay for the cost of  DLWD's staff time.                                                                    
She  expected  the  cost  to  be  "minimal."  Representative                                                                    
Wilson preferred that a representative  from DLWD answer the                                                                    
9:24:04 AM                                                                                                                    
KELLY  CUNNINGHAM,  ANALYST, LEGISLATIVE  FINANCE  DIVISION,                                                                    
had  spoken  with  the department  and  confirmed  that  the                                                                    
requester of  the data was  required to pay.  The Department                                                                    
of Labor and Workforce  Development had sufficient authority                                                                    
to enter the RSA and charge and collect for the data.                                                                           
Representative  Wilson asked  if a  fiscal note  should have                                                                    
been generated  by ACPE. Ms. Cunningham  deferred the answer                                                                    
to Ms. Butler.                                                                                                                  
Ms. Butler replied  that currently the cost  was unknown but                                                                    
expected  that the  cost  was minimal.  She  added that  the                                                                    
department entered  the RSA process  with DLWD  annually for                                                                    
data sharing.  Representative Wilson  asked where  the funds                                                                    
to  pay for  the  program originated.  Ms. Butler  responded                                                                    
that the funds were Interagency  Receipts (IA) funded by the                                                                    
student  loan   corporation.  Representative   Wilson  asked                                                                    
whether  corporation  funding  was   the  interest  paid  on                                                                    
student  loans.  Ms.  Butler responded  that  Representative                                                                    
Wilson was correct.                                                                                                             
Vice-Chair Gara  added that both agencies  had not requested                                                                    
additional funding.  He pointed  out that  both department's                                                                    
fiscal notes stated that they  did not anticipate any fiscal                                                                    
impact  from the  legislation and  both believed  they could                                                                    
absorb the minimal cost.                                                                                                        
9:27:05 AM                                                                                                                    
Representative  Wilson  stated  that someone  paid  for  the                                                                    
cost. She  wanted to  make sure  that it  was on  the record                                                                    
that  most of  the costs  were paid  with the  high interest                                                                    
charged to students.                                                                                                            
Vice-Chair  Gara MOVED  to report  HB 221  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
HB  221 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation  and  with   two  previously  published  zero                                                                    
fiscal notes: FN1(CED) and FN2(LWF).                                                                                            
9:28:41 AM                                                                                                                    
AT EASE                                                                                                                         
9:31:37 AM                                                                                                                    
HOUSE BILL NO. 304                                                                                                            
     "An Act relating to the Alaska microloan revolving                                                                         
     loan fund and loans from the fund."                                                                                        
9:32:19 AM                                                                                                                    
BRITTENY  CIONI-HAYWOOD,  DIRECTOR,   DIVISION  OF  ECONOMIC                                                                    
DEVELOPMENT, DEPARTMENT OF  COMMERCE, COMMUNITY AND ECONOMIC                                                                    
DEVELOPMENT,  reported  that  the  bill  amended  the  micro                                                                    
revolving  loan  fund.  She  explained  that  the  fund  was                                                                    
created by the legislature in  2012. The purpose of the fund                                                                    
was to  encourage entrepreneurs to  capitalize on  ideas and                                                                    
ingenuity.  The   fund  promoted  economic   development  by                                                                    
assisting  small and  micro businesses  that were  unable to                                                                    
access  traditional financing.  The  bill would  incentivize                                                                    
the  startup and  expansion of  small  and micro  businesses                                                                    
with emphasis  on rural communities. The  fund was initially                                                                    
capitalized with $2.5 million  and currently the balance was                                                                    
$2.3  million.  The fund  financed  14  loans to  date.  She                                                                    
related that  new businesses created  80 percent of  the new                                                                    
jobs  in  the  country  and   the  bill  would  help  Alaska                                                                    
incentivize   economic  development   during  the   economic                                                                    
downturn.  Small  scale  startups  had  difficulty  securing                                                                    
funding.  An effective  microloan program  could help  rural                                                                    
Alaskan startups  and small businesses  that could  serve as                                                                    
an  economic anchor  for  their  communities. She  indicated                                                                    
that  the   loans  were   available  for   working  capital,                                                                    
equipment,  and construction  or other  commercial purposes.                                                                    
The loans  were exclusively  for Alaskan owned  and operated                                                                    
businesses  and the  applicant needed  to be  a resident  12                                                                    
months prior  to the application  date. The loans  were only                                                                    
valid  for expenditures  that dated  6 months  prior to  the                                                                    
date of  the application. The  maximum loan amount  was $70,                                                                    
000  and  any  loan  over $35,000  required  a  bank  denial                                                                    
letter.  The  legislature  had  previously  asked  that  the                                                                    
division analyze  loan funds to ensure  they were effective.                                                                    
Currently, the  terms and conditions of  the micro revolving                                                                    
loan  fund   were  not  flexible   enough  to   allow  micro                                                                    
businesses to  take advantage of  the program.  The proposed                                                                    
changes  in the  bill would  help facilitate  growth in  the                                                                    
sector. She reviewed the sectional analysis.                                                                                    
     Section 1: Amends the ceiling loan amount to correct                                                                       
     an oversight in the original legislation to require a                                                                      
     bank denial for loans above $35,000.                                                                                       
     Section 2: Increases the maximum loan term from 6                                                                          
     years to 15 years and amends the minimum interest rate                                                                     
     from 6.00% to 4.00%.                                                                                                       
     Section 3: Defines that any statutory change is not                                                                        
Ms.  Cioni-Haywood added  that the  bill also  increased the                                                                    
interest  rate calculation  by one  percent. Currently,  the                                                                    
interest  rate  is  prime  plus one  percent  and  the  bill                                                                    
changed  it  to prime  plus  2  percent. The  interest  rate                                                                    
calculation change  accommodated increased risk  and brought                                                                    
the interest rate inline with other loan programs.                                                                              
Co-Chair  Foster asked  what the  prime rate  was presently.                                                                    
Ms.  Cioni-Haywood answered  that  the prime  rate was  4.75                                                                    
percent.  She   added  that   the  interest   rates  changed                                                                    
9:37:28 AM                                                                                                                    
Representative Pruitt  asked about the effect  of the change                                                                    
from 6 to 15  years and how it would affect  the size of the                                                                    
requested  loans. Ms.  Cioni-Haywood replied  that currently                                                                    
the average  loan was roughly  $20 thousand.  She elaborated                                                                    
that  the   loans  were   underwritten,  and   the  division                                                                    
scrutinized the business's finances  and decided what amount                                                                    
"made  sense for  the particular  business." She  thought if                                                                    
the loans  were extended out  the amount of the  loans would                                                                    
increase  slightly.  The  point  of  the  provision  was  to                                                                    
lengthen the  cash flow. She  suggested that the debt  for a                                                                    
$70,000 loan extended out over 6  years was very large for a                                                                    
small  business  and  it avoided  the  risk.  Representative                                                                    
Pruitt  asked   Ms.  Cioni-Haywood   how  she   thought  the                                                                    
sustainability  of the  fund would  be affected.  He guessed                                                                    
that the  fund might grow  capital due to the  longer period                                                                    
of  amortization.  Ms.   Cioni-Haywood  responded  that  she                                                                    
thought he was  correct. She added that  the interest earned                                                                    
on the  money was  used to make  other loans  to potentially                                                                    
more  businesses. She  noted that  the length  of the  loans                                                                    
could affect the revolving quality  of the fund, however she                                                                    
believed  such an  impact would  be minor  due to  the small                                                                    
amount of the loans.                                                                                                            
9:40:39 AM                                                                                                                    
Representative  Pruitt  asked  why  the  interest  rate  was                                                                    
reduced  from  4 percent  to  6  percent. Ms.  Cioni-Haywood                                                                    
reported that  the nation  had been in  a low  interest rate                                                                    
environment,  but  inflation  fears  was  driving  the  rate                                                                    
upwards. She noted  that the interest rate of  6 percent was                                                                    
considered high and  was "probably" the reason  the fund was                                                                    
underutilized.  The  division  wanted to  strike  a  balance                                                                    
between  being  "good stewards"  of  the  state's money  and                                                                    
making loans to further economic development.                                                                                   
Representative Wilson wondered  how many individuals decided                                                                    
not  to take  out a  loan from  the fund.  Ms. Cioni-Haywood                                                                    
reported that  there had  been a  number of  potential loans                                                                    
that had  been given an  estimation of the loan  payment and                                                                    
did not proceed besides  the 10 withdrawn loan applications.                                                                    
Representative Wilson suggested to  add a sunset date, since                                                                    
there had not  been much use of the  fund. Ms. Cioni-Haywood                                                                    
had hoped to  grow the fund and increase  utilization, and a                                                                    
sunset might  be a deterrent. Representative  Wilson thought                                                                    
that  a  sunset  was  a  better  approach  for  the  state's                                                                    
revolving loan  funds, so underutilized funds  could be used                                                                    
elsewhere in the budget to spur economic development.                                                                           
9:43:21 AM                                                                                                                    
Representative Thompson asked whether  the loans had a fixed                                                                    
interest   rate.   Ms.    Cioni-Haywood   replied   in   the                                                                    
affirmative. Representative  Thompson wanted to  ensure that                                                                    
the  quarterly change  in interest  rates did  not apply  to                                                                    
existing loans.  Ms. Cioni-Haywood  clarified that  the loan                                                                    
interest was fixed for the life  of the loan. She added that                                                                    
since  the interest  rate was  tied to  the prime  rate they                                                                    
were adjusted quarterly.                                                                                                        
Representative  Tilton asked  why  someone  would be  denied                                                                    
traditional  financing.  Ms.  Cioni-Haywood  responded  that                                                                    
typically, some  of the  reasons for  a bank  loan rejection                                                                    
were   insufficient  credit   history  or   insufficient  or                                                                    
unacceptable  collateral, lack  of  historical income,  high                                                                    
unsecured debt  or judgements, lack of  relative experience,                                                                    
or  high risk  industry. Representative  Tilton asked  about                                                                    
the current  terms of a traditional  loan. Ms. Cioni-Haywood                                                                    
was unsure  of the  rate of  an equivalent  commercial loan.                                                                    
She offered that  often banks had risk  based interest rates                                                                    
and  did not  share the  information. Representative  Tilton                                                                    
asked for  clarification about what the  division considered                                                                    
acceptable collateral. Ms.  Cioni-Haywood responded that the                                                                    
division  looked  for  an   equivalent  value  that  usually                                                                    
comprised of the equipment being purchased or property.                                                                         
9:46:24 AM                                                                                                                    
Representative   Guttenberg  had   a  conversation   with  a                                                                    
representative  of several  banks. He  assured them  that he                                                                    
did not want the state to  be in competition with the banks.                                                                    
He  felt  the program  provided  loans  to individuals  that                                                                    
otherwise  could  not obtain  a  loan.  He had  provided  an                                                                    
example of a small scale  woodcutter wanting to by a skidder                                                                    
and  a trailer  without a  credit history  who was  denied a                                                                    
commercial  loan. He  asked if  his example  applied to  the                                                                    
types  of  individuals  that  requested   a  loan  from  the                                                                    
microloan   fund.  Ms.   Cioni-Haywood   responded  in   the                                                                    
affirmative. She  reiterated that any loan  request over $35                                                                    
thousand needed  to show a  bank loan rejection  letter. She                                                                    
mentioned the division employed the five "C's" of credit.                                                                       
Representative Tilton referred to  the 14 loans currently in                                                                    
the program, she wondered what  areas of the state the loans                                                                    
were applied.  Ms. Cioni-Haywood responded that  most of the                                                                    
loans  were from  Southeast Alaska  and  the remaining  were                                                                    
scattered throughout the  state. Representative Tilton asked                                                                    
how knowledge  of the program  was disseminated.  Ms. Cioni-                                                                    
Haywood responded  that the  division worked  through ARDORs                                                                    
(Alaska  Regional  Development Organizations),  other  local                                                                    
organizations,  and  outreach  trips to  spread  information                                                                    
about the program. Representative  Tilton commented that she                                                                    
had  not  been  aware  that  the  state  "was  in  the  loan                                                                    
9:50:29 AM                                                                                                                    
Vice-Chair  Gara liked  the way  the bill  was proposed  and                                                                    
liked  that the  administration thought  of ways  to improve                                                                    
the  program. He  shared that  the legislature  demonstrated                                                                    
its ability  to address  loan funds  that were  not working.                                                                    
He did not favor a sunset on the bill.                                                                                          
Representative Wilson  did not believe that  the legislature                                                                    
was  examining state  loan funds  and was  merely "grabbing"                                                                    
underutilized  funds based  on an  assumption that  the fund                                                                    
was underperforming. She ascertained  that a sunset analyzed                                                                    
the program  to determine whether changes  were necessary or                                                                    
that it  was not  working. She supported  a sunset  date and                                                                    
viewed it as a positive effort.                                                                                                 
9:52:29 AM                                                                                                                    
Vice-Chair Gara offered that a  sunset would end the program                                                                    
and  required  a brand  new  bill  to  pass both  bodies  to                                                                    
continue the  program. A sunset  did not simply  provide the                                                                    
opportunity  to  revisit  the  program  and  he  termed  the                                                                    
process as "difficult."                                                                                                         
Representative   Thompson    stated   that    the   indirect                                                                    
expenditure  bills included  sunset  dates  that forced  the                                                                    
legislature to review  a program's efficacy. He  felt that a                                                                    
sunset provided the opportunity to review a program.                                                                            
Co-Chair   Seaton  suggested   that  some   of  the   sunset                                                                    
provisions also  required an audit  and wanted to  avoid the                                                                    
expense. He  suggested requiring  a report presented  to the                                                                    
legislature  that   examined  the  program's   efficacy.  He                                                                    
thought  a  report would  be  sufficient  without having  to                                                                    
incur an audit expense.                                                                                                         
9:55:21 AM                                                                                                                    
Representative  Guttenberg related  that  the Department  of                                                                    
Commerce,   Community  and   Economic  Development   (DCCED)                                                                    
subcommittee  looked at  its loan  funds and  the department                                                                    
recommended some "reabsorption" of  funds from programs that                                                                    
were not  functioning properly.  He did  not favor  a sunset                                                                    
due to the  finance subcommittee process. He  noted that the                                                                    
subcommittee did  remove funds from loan  programs that were                                                                    
considered   over-capitalized.   He  maintained   that   the                                                                    
opportunity to examine the programs already existed.                                                                            
Representative  Wilson   asked  when   the  loan   fund  was                                                                    
established. Ms.  Cioni-Haywood responded that the  fund was                                                                    
established in December 2012.  Representative Wilson did not                                                                    
want  an audit  and  surmised that  it  was not  statutorily                                                                    
required  in the  current scenario.  She believed  that loan                                                                    
funds  were being  randomly removed  by the  legislature and                                                                    
the  governor's  office  without  discussion  regarding  the                                                                    
efficacy of the programs.                                                                                                       
Ms.  Cunningham  replied   that  Representative  Wilson  was                                                                    
correct that an audit was not mandated.                                                                                         
9:59:28 AM                                                                                                                    
Representative Tilton thought a  sunset was a beneficial way                                                                    
to determine  whether a loan  fund was  working effectively.                                                                    
She  asked  whether  the loans  were  performing  well.  Ms.                                                                    
Cioni-Haywood indicated  that the loans had  done "okay" and                                                                    
revolving loan funds  took some time to  work optimally. She                                                                    
added  that the  division had  discovered issues  with other                                                                    
loan funds.  The administration  felt that the  current fund                                                                    
fit   in  with   the  administration's   statewide  economic                                                                    
development  strategy  and  had   a  beneficial  impact  for                                                                    
"nontraditional lifestyle micro businesses."                                                                                    
10:01:18 AM                                                                                                                   
Representative Tilton  mentioned the  collateralization. She                                                                    
wondered what would  be done if assets had to  be taken. Ms.                                                                    
Cioni-Haywood  reported  that  the division  had  an  active                                                                    
collections department and had  one microloan fund loan that                                                                    
was  not  performing  and  considered  delinquent.  She  was                                                                    
working  with   the  borrower  to  develop   a  new  payment                                                                    
schedule. The  division worked with borrowers  until it made                                                                    
no   further  sense   and   pursued   repossession  of   the                                                                    
collateral.  Representative  Tilton   asked  how  the  state                                                                    
recouped  the funds  from  the  repossessed collateral.  Ms.                                                                    
Cioni-Haywood explained  that the division posted  items for                                                                    
sale on their website through a sealed auction process.                                                                         
Representative  Kawasaki  recounted that  Ms.  Cioni-Haywood                                                                    
had mentioned that  the revolving loan funds  needed time to                                                                    
develop.  He  asked  if  the  microloan  fund  had  been  in                                                                    
existence  long enough  to  properly  determine whether  the                                                                    
proposed changes  in the  bill were  necessary.   Ms. Cioni-                                                                    
Haywood  replied in  the affirmative.  She  shared that  the                                                                    
department  had  received  33 applications,  and  some  were                                                                    
withdrawn   or  inactivated   for   various  reasons.   Most                                                                    
applicants  backed   out  when  the  payment   schedule  was                                                                    
determined.  She believed  that  having  the flexibility  to                                                                    
tailor terms for a specific  loan would increase the success                                                                    
of the  programs. She  offered that not  all loans  would be                                                                    
amortized for  15 years and  the division would look  at the                                                                    
type of collateral and what amount  of time made sense for a                                                                    
specific business.                                                                                                              
10:05:22 AM                                                                                                                   
Representative  Kawasaki wondered  how a  sunset date  would                                                                    
work. Ms.  Cioni-Haywood reported  that the  Community Quota                                                                    
Entity  (CQE) loan  program recently  sunsetted. She  voiced                                                                    
that  current loans  were being  serviced and  no new  loans                                                                    
issued.  She thought  that  fund's money  went  back to  the                                                                    
general fund (GF).                                                                                                              
Co-Chair Seaton  remembered a sunset bill  for the education                                                                    
tax credits  that wasn't  accompanied by  a report.  He felt                                                                    
that sunsets should be accompanied by a report.                                                                                 
Co-Chair Seaton MOVED to ADOPT  Conceptual Amendment 1 which                                                                    
would  require  a  report  about  the  status  of  the  fund                                                                    
provided  to  the  legislature  each  year.  He  stated  the                                                                    
     "The department shall report to the legislature by                                                                         
     January 15, 2022 on the activity, effectiveness, and                                                                       
     suggestions for improvement of the loan fund."                                                                             
Representative Wilson OBJECTED for discussion.                                                                                  
Representative Wilson  asked whether  the division  had done                                                                    
any  similar  type of  reporting  in  the past.  Ms.  Cioni-                                                                    
Haywood responded  that the division  had answered  a number                                                                    
of requests from the  Legislative Finance Division regarding                                                                    
loan  funds. The  information was  provided  in a  narrative                                                                    
format  reporting the  number of  loans,  balance, and  fund                                                                    
activity.  She  was  uncertain   whether  the  division  had                                                                    
reported  on a  specific  loan  fund. Representative  Wilson                                                                    
recounted  that the  education  tax  credit bill  discussion                                                                    
included  making  a  change  to the  program  and  was  more                                                                    
thorough than  a simple discussion.  She wondered  about the                                                                    
timing of the report.                                                                                                           
10:10:08 AM                                                                                                                   
Co-Chair Seaton  responded that the  report would be  due by                                                                    
the 15th  of January  2022. He elaborated  that he  wanted a                                                                    
detailed report  and not "just some  numbers," that included                                                                    
suggestions for improvements if necessary.                                                                                      
Representative Wilson agreed with the amendment.                                                                                
Representative  Kawasaki  appreciated that  Co-Chair  Seaton                                                                    
clarified the motion. He thought  the information was easily                                                                    
accessible  and suggestions  for improvement  achievable. He                                                                    
maintained  that the  word  "effectiveness" was  subjective.                                                                    
However, he favored the amendment.                                                                                              
Representative  Pruitt asked  if there  would be  a cost  to                                                                    
providing   the  report.   Ms.  Cioni-Haywood   thought  the                                                                    
information was  mostly maintained  and the  reporting could                                                                    
be absorbed by the division.                                                                                                    
10:12:23 AM                                                                                                                   
Representative Pruitt asked if  the same reporting should be                                                                    
applicable to other loans especially  since the work was not                                                                    
a  financial burden  to  the  department. Ms.  Cioni-Haywood                                                                    
responded  that  the  division  would  happily  provide  the                                                                    
information to  the legislature.  In the past,  the division                                                                    
had  provided  information  regarding  the  loan  funds  and                                                                    
similar  requests could  be accommodated  without additional                                                                    
costs  to the  department.  She reported  that  most of  the                                                                    
revolving  loan  funds  had  been  working  very  well.  The                                                                    
commercial fishing revolving  loan fund functioned optimally                                                                    
for decades.                                                                                                                    
Representative  Guttenberg  would   not  speak  against  the                                                                    
amendment but believed it was  redundant. He reported having                                                                    
received  and  reviewed the  information  on  every loan  in                                                                    
DCCED in the  finance subcommittee in the  current year with                                                                    
the administrative  services director of the  department. He                                                                    
thought it should  be a "normal course of  events" each year                                                                    
and was carried out by the subcommittee chair.                                                                                  
Representative    Kawasaki   agreed    with   Representative                                                                    
Guttenberg that the  reporting should be a  normal course of                                                                    
events and  favored the amendment especially  since the cost                                                                    
to DCCED was  minimal. He asked how  Ms. Cioni-Haywood would                                                                    
administer  the report.  Ms. Cioni-Haywood  replied that  it                                                                    
was  a   good  question  and  assumed   that  administrative                                                                    
services  would "tag"  the mandate  and alert  the division.                                                                    
Representative  Kawasaki suggested  putting the  reminder on                                                                    
their outlook calendar.                                                                                                         
10:17:23 AM                                                                                                                   
Representative Thompson  had a problem with  the sunset date                                                                    
of  January 15,  2022.  He  stated that  a  sunset bill  was                                                                    
required to  pass in 2021  to avoid sunsetting  the program.                                                                    
Co-Chair  Seaton  clarified  that  the  date  reflected  the                                                                    
report due date not the sunset.                                                                                                 
Vice-Chair Gara suggested moving  forward with the amendment                                                                    
and the bill.                                                                                                                   
10:18:20 AM                                                                                                                   
Representative  Pruitt thought  Co-Chair Seaton's  point was                                                                    
valid.  He  was concerned  with  the  workload of  requiring                                                                    
DCCED  to provide  reports  on all  its  loans at  different                                                                    
times. He  suggested that all  DCCED's loans  should require                                                                    
the same report on the  same date and the information should                                                                    
be  streamlined.   However,  he  decided  not   to  add  the                                                                    
amendment to  HB 304 so  the bill could easily  move forward                                                                    
in the process.                                                                                                                 
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There  being  NO  OBJECTION,   Conceptual  Amendment  1  was                                                                    
Co-Chair  Foster  asked  Co-Chair   Seaton  to  restate  the                                                                    
amendment for recording purposes.                                                                                               
Co-Chair Seaton repeated his amendment:                                                                                         
     "The department shall report to the legislature by                                                                         
     January 15, 2022 on the activity, effectiveness, and                                                                       
     suggestions for improvement of the loan fund."                                                                             
Representative   Pruitt  agreed   with  the   amendment  and                                                                    
supported the bill.                                                                                                             
Representative  Tilton asked  for  the number  of staff  the                                                                    
division  had  to  support the  loan  programs.  Ms.  Cioni-                                                                    
Haywood reported  that the division  had 9 loan  officers, 4                                                                    
collections officers, 6 staff in  a loan closing section and                                                                    
an  uncertain number  of accounting  staff servicing  all 10                                                                    
revolving loan programs. Representative  Tilton wanted to be                                                                    
sure  the state  was  servicing its  own  loans. Ms.  Cioni-                                                                    
Haywood  confirmed  that  the loans  were  serviced  by  the                                                                    
division from start to finish.                                                                                                  
10:22:41 AM                                                                                                                   
Representative Wilson  asked if  the banks issued  loans for                                                                    
individuals with past due child  support. She noted that the                                                                    
state prohibited loaning to individuals  with past due child                                                                    
support. She  deduced that a  small business would  help the                                                                    
individual gain income. Ms. Cioni-Haywood  was unsure what a                                                                    
bank  would require.  However, the  state did  not make  any                                                                    
type of loan if there was past due child support.                                                                               
10:23:35 AM                                                                                                                   
Co-Chair Foster OPENED public testimony.                                                                                        
Co-Chair Foster CLOSED public testimony.                                                                                        
Vice-Chair Gara  reviewed the fiscal  note. He  reported the                                                                    
zero  fiscal  note for  DCCED,  FN1  (CED) appropriated  and                                                                    
allocated to the Investments.                                                                                                   
Co-Chair  Seaton  MOVED to  report  CSHB  304 (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
There being NO OBJECTION, it was so ordered.                                                                                    
CSHB  304 (FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass" recommendation and with  one previously published zero                                                                    
fiscal note: FN1(CED).                                                                                                          
Co-Chair  Foster  reviewed  the  agenda  for  the  following                                                                    
meeting at 1:30 pm.                                                                                                             
10:26:38 AM                                                                                                                   
The meeting was adjourned at 10:26 a.m.                                                                                         

Document Name Date/Time Subjects
HB 221 ACPE House Bill 221 Follow-Up.pdf HFIN 4/11/2018 9:00:00 AM
HB 221
HB 304 Sectional Analysis ver A 2.27.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 304
HB 304 Transmittal Letter 2.27.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 304
HB384 Legal Memo 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Sponsor Statement 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Supporting Document FCC Commissioner Pai Alaska Plan Dissent 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Supporting Document FCC Commissioner Rosenworcel on New National Broadband Map 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Supporting Document NCSL List of State Broadband Statutes 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Supporting Document RCA Enabling Statutes 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Supporting Document Restoring Internet Freedom Jurisdictional Excerpt 04.05.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB384 Supporting Documents Rural Broadband_Taking a Broad-Scope Look at State Legislation 04.06.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 384
HB 386 Opposition.PDF HFIN 4/11/2018 9:00:00 AM
HB 386
HB 339 BSA Increase PowerPoint House Finance Committee April 6 2018.pdf HFIN 4/11/2018 9:00:00 AM
HB 339
HB 339 Support4.9.18.pdf HFIN 4/11/2018 9:00:00 AM
HB 339
HB 385 - Amendment #1.pdf HFIN 4/11/2018 9:00:00 AM
HB 385
BSA Increase PowerPoint House Finance Committee April 6 2018.pdf HFIN 4/11/2018 9:00:00 AM
HB 339
HB 399 FY19 Foundation Report - Factors.pdf HFIN 4/11/2018 9:00:00 AM
HB 399