Legislature(1995 - 1996)
02/28/1995 03:35 PM Senate STA
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SENATE STATE AFFAIRS COMMITTEE
February 28, 1995
3:35 p.m.
MEMBERS PRESENT
Senator Bert Sharp, Chairman
Senator Randy Phillips, Vice-Chairman
Senator Loren Leman
Senator Dave Donley
MEMBERS ABSENT
Senator Jim Duncan
COMMITTEE CALENDAR
SENATE BILL NO. 92
"An Act requiring that, in addition to its operating budget, all
activities of the Alaska Housing Finance Corporation are subject to
the Executive Budget Act."
SSTA - 2/28/95
SB 72 (VOLUNTEERS AND EMPLOYEES OF NONPROFITS) was scheduled, but
not taken up on this date.
PREVIOUS SENATE COMMITTEE ACTION
SB 92 - No previous senate committee action.
WITNESS REGISTER
Representative Terry Martin, Chairman
Legislative Budget & Audit Committee
State Capitol, Juneau, Alaska, 99801-1182¶465-3783
POSITION STATEMENT: prime sponsor of SB 92/HB 189
Randy Welker, Auditor
Legislative Audit Division
P.O. Box 113300, Juneau, AK 99811-3300¶465-3830
POSITION STATEMENT: testified on SB 92
ACTION NARRATIVE
TAPE 95-7, SIDE A
Number 001
SSTA - 2/28/95
SB 92 AHFC SUBJECT TO EXEC. BUDGET ACT
CHAIRMAN SHARP calls the Senate State Affairs Committee to order at
3:35 p.m. and brings up SB 92 as the first order of business before
the committee. The chairman calls the first witness.
Number 030
REPRESENTATIVE MARTIN, Chairman of the Legislative Budget & Audit
Committee, prime sponsor of SB 92 and companion bill, HB 189,
relays information to the committee contained in the sponsor
statement. Representative Martin stresses the importance of having
all AHFC programs and activities under the review procedures of the
Executive Budget Act (AS 37.07).
Number 070
CHAIRMAN SHARP remarks, regarding the legislature retrieving some
of the equity that has been invested in AHFC, that if the
legislature were to receive just 5% of the money it has invested in
AHFC from 1980-1984, that amount would equal $800,000,000. If one
were to use real market rates in calculating that amount, it would
probably be in excess of a billion dollars. The equity in AHFC is
an asset of the state, not the AHFC.
Number 095
REPRESENTATIVE MARTIN mentions there is a loop-hole that should be
closed regarding the bonding authority of AHFC: AHFC is a public
corporation backed by the funds of the State of Alaska.
Number 115
SENATOR LEMAN notes that an article he read yesterday stated just
discussing potential withdrawal of money from AHFC damages the
corporation's bond rating.
Number 120
CHAIRMAN SHARP comments AHFC claims it went out of the subsidized-
loan business several years ago, but he would dispute that. The
chairman thinks the 5% low-income loan program the corporation
offered recently was a highly subsidized program.
Number 130
REPRESENTATIVE MARTIN thinks SB 92 will show how money has been
invested, and that investment in housing can be looked at as a
renewable resource.
Number 150
RANDY WELKER, Legislative Auditor, states SB 92 is the result of
frustration experienced by the Legislative Budget & Audit Committee
in the past with AHFC. Mr. Welker mentions the 5% loan program as
one example. Another example is the AHFC's attempt to construct an
office building for their administrative use outside the Executive
Budget Act process. SB 92 is an attempt to bring the corporation
back under the legislature's control and oversight.
Number 189
SENATOR RANDY PHILLIPS asks Mr. Welker if there is any reason the
Alaska Industrial Development & Export Authority (AIDEA), the
Alaska Railroad Corporation (ARRC), and the Alaska Science &
Technology Foundation (ASTF) should not be addressed by SB 92.
Number 195
MR. WELKER responds none of those entities are identical to AHFC,
so it would be hard to address them all in one bill. Mr. Welker
informs the committee that Senator Frank has introduced a bill
which would address the University of Alaska endowment income.
Number 220
SENATOR RANDY PHILLIPS asked Mr. Welker about the default provision
in the bond issue in November.
MR. WELKER replied a clause in the letters of credit for the
default provision stated, "should the legislature appropriate any
assets away from AHFC, that agreement would be considered in
default." Mr. Welker states that bond issue was short term
financing.
Number 250
SENATOR RANDY PHILLIPS expressed fear that AHFC would be able to do
that long-term, and wants to know if that problem can be addressed
through SB 92.
MR. WELKER thinks that might diminish AHFC's ability...it is his
understanding that provision was not initiated by AHFC, but was a
requirement of the financier. He thinks AHFC is well aware of
several legislators' dissatisfaction with that clause. Mr. Welker
thinks that clause may impact the timing of appropriation of funds
from AHFC, but he does not believe it would preclude transfer of
funds in FY 96.
Number 267
CHAIRMAN SHARP asks if there is any indication AHFC would coach
lenders to include that clause in order to thwart the intent of the
legislature.
Number 273
MR. WELKER states he had the same concern, but the best he could
tell was that the clause was initiated from the bank. There was
indication that certain staff members at AHFC were not pleased to
see the clause in the letters of credit, and did not think it was
necessary. He is satisfied the clause was not prompted or
initiated by AHFC, but of course there is never any absolute
assurance of that.
Number 285
SENATOR RANDY PHILLIPS makes a motion to discharge SB 92 from the
Senate State Affairs Committee with individual recommendations.
Number 288
SENATOR DONLEY asks if the committee should consider amending SB 92
to make sure it covers some other....
Number 290
SENATOR RANDY PHILLIPS responds he is satisfied with Mr. Welker's
explanation. SB 92 could always be amended in the Senate Finance
Committee.
SENATOR DONLEY states he would be supportive of the amendments
Senator Phillips suggested.
Number 300
CHAIRMAN SHARP adds his support, also. The chairman asks staff to
work on possible amendments to SB 92 to include other agencies.
Number 303
CHAIRMAN SHARP, hearing no objection or further discussion, orders
SB 92 released from committee with individual recommendations.
Number 315
CHAIRMAN SHARP adjourns the Senate State Affairs Committee meeting
at 3:55 p.m.
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