HOUSE BILL NO. 281 "An Act providing for the issuance of general obligation bonds in the amount of $665,000,000 for the purposes of paying the cost of design, construction, and renovation of public elementary and secondary schools, renovation of state buildings, capital improvements at the University of Alaska, and capital improvements to state harbors; and providing for an effective date." Co-Chair Mulder explained that HB 281 contains the school- construction package. Members were provided with a proposed committee substitute, work draft 1-LS1201\V, 4/15/00 and a spreadsheet listing schools that would be included (copies on file). Schools, the university and ports and harbors would receive funding. The total cost of the package would be $269,595.8 million dollars and tobacco bond revenues would fund the legislation. He observed that: "It is the intent of the legislature that the sale of a portion of the revenue derived from tobacco settlement litigation described under sec. 3(a) of this Act result in funding of $1,400,000 annually for smoking education and cessation programs administered by the state." In response to a question by Co-Chair Therriault, Co-Chair Mulder clarified that the student housing identified in the legislation would be at the Alaska Vocational Technical Center in Seward. There is a piece of property that is across the street that would be used to build additional housing. Co-Chair Therriault asked for more information regarding the University of Alaska, Mat-Su Ortner building replacement. WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY OF ALASKA explained that the Mat-Su Ortner building replacement has been on the University of Alaska's capital list for many years. She observed that the facility would be for the maintenance shop. They are currently using a classroom. It is high on the Board of Regent's priority list. Ms. Redman noted that the definition under the projects should be broader than "deferred maintenance". She observed that "deferred maintenance/renewal and replacement/ code compliance" has been used in the past. She suggested that the legislation be amended on page 5, lines 16, 21, and 24 to include the broader definition. Vice Chair Bunde noted that "construction and renovation" is used on line 12. Ms. Redman noted that the terms were not used in the budgeting process. Vice Chair Bunde referred to page 2, section 1. He observed that funding would not be reduced below $1.4 million dollars. He questioned if the language should be more flexible to allow additional money to be appropriated if there is a surplus. Co-Chair Therriault stressed that the legislature could appropriate additional money and agreed that the language could be clarified. Representative Phillips recommended that "GO" be replaced with "revenue" bonds. Representative Williams asked how many projects could be completed with the tobacco securitization. Co-Chair Therriault responded that $269 million dollars is the total amount. Co-Chair Mulder explained that a higher amount could increase the cost of the bonds from 6.5 to 7 percent or higher. Representative Williams recommended that the state use as much as possible. Co-Chair Mulder stressed that the settlement would continue in perpetuity, if the bonds proceeds are realized in the level that is anticipated that they would be retired in 20 years and the MSA could be leveraged again. If there are problems in realizing the income stream as established in the MSA then risk is born by the holders of the bonds. There is a potential to be extended to 40 years. Co-Chair Therriault reviewed questions that arose during the meeting. (TAPE CHANGE, HFC 00 - 122, SIDE 1)  Co-Chair Mulder requested that the legislation be held to further review the suggestions. HB 281 was heard and HELD in Committee for further consideration.