HOUSE BILL NO. 196 "An Act relating to the power project fund and to the bulk fuel revolving loan fund; establishing a bulk fuel loan account and making the bulk fuel loan account and the bulk fuel bridge loan account separate accounts in the bulk fuel revolving loan fund; providing for technical assistance to rural borrowers under the bulk fuel bridge loan program; relating to the administration and investment of the bulk fuel revolving loan fund by the division in the Department of Commerce, Community, and Economic Development responsible for community and regional affairs; and providing for an effective date." 1:40:36 PM Vice-Chair Fairclough MOVED to ADOPT the proposed committee substitute for HB 196, Work Draft 27-LS0529\I (Kirsch/Nauman, 3/20/12) as a working document. Co-Chair Stoltze OBJECTED for the purpose of discussion. JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, explained the additions in the new CS and stated that it offered two changes from the previous version, which committee members had examined earlier in the day. He pointed to page 7 of the bill and related that the effective date was changed to January 1, 2013 from January 1, 2012. Co-Chair Stoltze inquired why the date change was necessary. Mr. Michel replied that certain regulations needed to be adopted and that the additional year would provide the Department of Commerce, Community and Economic Development (DCCED) with time to make the changes. Co-Chair Stoltze WITHDREW his OBJECTION. There being NO further OBJECTION, Work Draft 27-LS0529\I was ADOPTED. REPRESENTATIVE BRYCE EDGMON, SPONSOR, hoped that Mr. Teal's upcoming discussion on the new fiscal notes would resolve concerns that the notes should reflect the "streamlining of the process" that HB 196 was attempting to achieve. DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION, discussed the three fiscal notes and related that he had been working on the notes at the behest of the sponsor in order to make them appear the way the committee had expected. He explained that the bill consolidated the Bridge and Bulk Fuel Loan programs into a single location and discussed the first fiscal note for the Alaska Energy Authority (AEA). The AEA note was similar to how it had originally appeared and reflected a loss of revenue in the amount of $57,000 per year because the bill eliminated the application and origination fees that were associated with the loan program; the $57,000 would go back into general fund. The second change in the AEA note was that the $53,600 in administrative or operating costs that were associated with the loan program would go away from AEA's budget and would essentially be removed from the process. The second fiscal note from AEA was for DCCED's Division of Investments; instead of containing the $86,000 that was in the original fiscal note, the new note directed the $53,600 that used to be in AEA to the Division of Investments. He stated that because AEA would be retaining its position and also because the Division of Investments wanted to add a position, the funding for an additional position was kept in the fiscal note. He mentioned that although the money would not fully fund the position, the program should not require a dedicated, full-time position. He observed that the cost of the additional position in the Division of Investments would be charged directly to the Bulk Fuel Revolving Loan Fund, instead of going through the Division of Community and Regional Affairs (DCRA); costs for additional positions used to appear as inter-agency receipts, but now the position could be direct charged to the program. He related that the third fiscal note for the Division of Investments was zeroed out and did not need to be transmitted with the bill. He explained that the note was zeroed because DCRA currently provided technical assistance to communities that were applying for loans and that it would continue to do so; DCRA would still be helping people with bridge loans, while the bulk full loans would be handled by the Division of Investments. He observed that the third fiscal note originally had the costs of technical assistance changing from the general funds to the Bulk Fuel Loan Program, but that the Legislative Finance Division did not see any reason to do it this way because it was DCRA's role to assist communities. 1:46:53 PM AT EASE 1:47:20 PM RECONVENED Mr. Teal made a correction to his previous statement regarding the third fiscal note and clarified that it was the DCRA fiscal note that had been zeroed and did not need to be transmitted with the bill; the Division of Investments' note still reflected $53,600. He summarized that the net change in operating cost was zero, but that there was an annual loss in general fund revenue of $57,000. Vice-Chair Fairclough inquired if the Division of Investments' note could be structured to fund the position at a .50 full-time equivalent (FTE). She observed that the new position was only being partially funded and wondered whether the fiscal note should reflect that aspect in order to inform the department of what the expectations were regarding its role in funding the position. She queried if there were receipts or other dollars that might be available to "backfill" the position if a full FTE was included in the fiscal note. Mr. Teal replied that a half- time position could be added, but that if the Division of Investments needed a position, it would have to hire a full-time one. He observed that the Division of Investments had requested $86,000 for the position, but that the fiscal note only funded $53,600; in order to get the rest of the funding, the division would have to pull money from other loan programs. He stated that the fiscal note funded a half-time to three-quarter-time position, but that the note could be changed to reflect a half-time position if the committee so desired; however, changing the position's classification did not make a lot of difference. 1:50:42 PM AT EASE 1:50:57 PM RECONVENED Vice-Chair Fairclough wondered whether the committee should consider additional funding or compensation in the legislation for the development of regulations. She noted that the bill was asking for consolidation and was providing money for a half-time FTE; however, the department would be required to make new regulations, which would take time and money. She stated that when she had originally examined the fiscal notes, she had wondered why there was not more funding, given the additional work that DCCED would have to complete. She concluded that the department would need to provide information regarding the regulations in an expedient manner and that additional funding would probably be needed to do so. Representative Edgmon stated that he had been an employee of DCCED and had worked with the Division of Administration to draft regulations; he recalled that the department had a full-time staff that worked on regulations, but that there might be a little more time involved with "other parts" of HB 196. 1:52:11 PM Vice-Chair Fairclough MOVED to report CSHB 196(FIN) out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 196(FIN) was REPORTED out of committee with a "do pass" recommendation and with three new fiscal impact notes by the House Finance Committee for the Department of Commerce, Community and Economic Development. 1:52:28 PM AT EASE 1:55:05 PM RECONVENED