HOUSE BILL NO. 92 "An Act relating to borrowing in anticipation of revenues; relating to revenue anticipation notes; relating to line of credit agreements; and providing for an effective date." 1:37:59 PM Co-Chair Merrick indicated that the committee last heard the bill on April 16, 2021. LUCINDA MAHONEY, COMMISSIONER, DEPARTMENT OF REVENUE (via teleconference), asked committee members and the public to seriously consider the bill. 1:38:36 PM Co-Chair Merrick OPENED public testimony. 1:38:49 PM Co-Chair Merrick CLOSED public testimony. Co-Chair Merrick invited Ms. Pam Leary to review the fiscal note with OMB component number 121. 1:39:35 PM AT EASE 1:41:32 PM RECONVENED Co-Chair Merrick turned to the fiscal note review. 1:41:43 PM PAM LEARY, DIRECTOR, TREASURY DIVISION, DEPARTMENT OF REVENUE (via teleconference), reviewed the new indeterminate fiscal note for the Department of Revenue (DOR) appropriated to Taxation and Treasury. She explained that the proposed legislation updated AS 43.08 to clarify that borrowing in anticipation of revenue collections included employing other forms of short-term borrowing strategies such as line of credit agreements in addition to revenue anticipation notes. Fees paid would be offset by allowing state funds to continue to be invested, earning returns, rather than being borrowed to cover cash flow needs. The new fiscal note was indeterminant. She furthered that it was currently unknown how much interest the borrowing mechanisms would carry and the associated costs, but the division anticipated an offset to the costs. Representative Thompson deduced that the state would be paying a fee to access a line of credit. Ms. Leary replied that he was correct. Representative Thompson asked what the fees would be. Ms. Leary responded that the information was provided in the PowerPoint (copy on file) provided on April 16, 2021. The fees ranged from .08 percent to .055 percent based on a 12 month estimate on a hypothetical amount of $100 million. There would be some associated costs with the line of credit no matter what vehicle chosen or terms of the loan. 1:44:22 PM Representative LeBon referenced the two loan options: capitol market products and bank market funded products. He asked whether one product group would be easier to obtain in terms of the mechanics of placing the line of credit versus the other. He thought securing a revolving line of credit would be the quickest and easiest way to secure the line of credit. 1:45:08 PM Mr. Leary stated that Representative LeBon was correct. She indicated that there was a structure that could be accessed with a bank versus a syndicate that would take time to develop. Representative LeBon thought that the banking option would be cheaper, quicker, and easier to establish. He commented that a revolving line of credit was able to renew annually. Ms. Leary replied that it was not clear yet whether the state would choose a line of credit or a different financing mechanism. However, from a general cash flow perspective the department would choose a line of credit with some sort of annual renewal. Co-Chair Merrick indicated that amendments were due by 6:00pm.