SB 11 SCHOOL DEBT REIMBURSEMENT BRETT HUBER testified regarding the changes incorporated in the work draft CS, version F. Also testifying were MICHAEL MORGAN and MIKE FORD. SENATOR PHILLIPS MOVED Amendment #4. SENATOR ADAMS objected. SENATOR PHILLIPS withdrew his motion and MOVED to adopt the work draft CS. SENATOR DONLEY objected for the purpose of discussion, then withdrew his objection. Without further objection, CSSB 11(FIN) was ADOPTED. SENATOR PHILLIPS MOVED Amendment #4. Without objection, Amendment #4 was ADOPTED. SENATOR DONLEY MOVED Amendment #5. COCHAIR SHARP objected, then withdrew his objection. SENATOR PHILLIPS objected. Amendment #5 FAILED by a 2 to 4 vote. SENATOR ADAMS MOVED Amendment #6. SENATOR PHILLIPS objected. Amendment #6 FAILED by a 2 to 4 vote. Amendment #3 was not offered. CSSB 11(FIN) was HELD for further consideration. SENATE BILL NO. 11 "An Act relating to state aid for school construction debt; and providing for an effective date." BRETT HUBER, Legislative Staff to Senator Halford, addressed the committee. He called attention to a CS work draft, version F, that was before the committee and noted it incorporated two previously adopted amendments. He discussed the amendments and pointed out an error in the CS draft wording on page 4, line 8. The word "payments" should be "projects." He brought up the retroactive clause in Section 6. SENATOR ADAMS inquired what the Anchorage school debt was on a yearly basis. MR. HUBER responded that the Anchorage bond issues went forward without Department of Education approval, but he thought the department may have an estimate of the amount. COCHAIR SHARP invited the bill drafter, Mike Ford, and Department of Education representative, Mike Morgan, to the committee table. SENATOR ADAMS had questions about the Anchorage and Mat-Su bond issues and the retroactivity clause that were addressed by MR. HUBER. MICHAEL MORGAN, Manager, Facilities Section, Department of Education (DOE), responded to SENATOR ADAMS' questions also. SFC-97, # 127 Side 1 (500) COCHAIR SHARP inquired if the retroactive clause in subsection (8) (page 4) opened a window for additional 70/30 funding. MICHAEL FORD, Attorney, Legislative Legal and Research Services, indicated that the issuance of bonds would have to have the DOE commissioner's approval by July 1 and be issued between July 1, 1995 and July 1, 1997. It was determined that it would be unlikely that a bond package could be put together, voted on, and approved by DOE before July 1, but it could open the door for Anchorage. End SFC-97 # 127, Side 1 (590) Begin SFC-97 # 127, Side 2 (000) SENATOR ADAMS inquired what the retroactive clause would cost the state. Mr. Huber responded that DOE had begun the analysis, but was still waiting for information from Anchorage. He estimated a potential impact would be $5.8 million for Anchorage and Mat-Su projects. There was discussion about a fiscal note dated 3/24/97 for $3.9 million which represented only Mat-Su reimbursement. MIKE FORD addressed technical changes to the bill that would make it consistent with other provisions, as referenced in his memorandum dated 4/10/97. SENATOR PHILLIPS MOVED the suggested changes as Amendment motion, then MOVED to adopt the CS work draft, version F, as CSSB 11(FIN). Without objection, it was ADOPTED. SENATOR PHILLIPS MOVED Amendment # 4. SENATOR DONLEY objected for the purpose of discussion, then withdrew his motion. Without further objection, Amendment #4 was adopted. SENATOR DONLEY MOVED Amendment #5, page 4, line 9, to delete "before the sale or issuance of debt for the project". COCHAIR SHARP objected, spoke to his objection, then withdrew it. SENATOR PHILLIPS objected. There was discussion about expanded eligibility of projects resulting from the amendment. A roll call vote was taken on the MOTION to adopt Amendment IN FAVOR: Adams, Donley OPPOSED: Parnell, Phillips, Sharp, Pearce Amendment #5 FAILED by a 2 to 4 vote. SENATOR ADAMS MOVED Amendment #6, page 4, lines 7-14, to delete all material. SENATOR PHILLIPS objected. A roll call vote was taken on the MOTION to adopt Amendment IN FAVOR: Adams, Sharp OPPOSED: Parnell, Phillips, Donley, Pearce Amendment #6 FAILED by a 2 to 4 vote. SENATOR PARNELL commented that the fiscal note was open- ended in that there was no cap on the amount that could be bonded for, so it was basically a blank check. He inquired how much more could be expected above the $3.9 million. MR. HUBER was unable to provide a number but spoke of the sponsor's intent. Voters would scrutinize which projects they would approve because they would be paying half the bill. SENATOR PARNELL questioned how reimbursements would fit in with the majority spending plan and if that had been considered by the sponsor. MR. HUBER acknowledged that there could be impact, but school construction would have to come from some place. Currently, the only mechanism is through capital appropriations at 100 percent project cost. SENATOR ADAMS believed the fiscal note should reflect a minimum of $5.8 million, noting that it could go up to between $12-15 million in debt service. He agreed that it would blow the five-year spending plan out of proportion, but he supported it as a good cause. COCHAIR SHARP commented that the bill represented a portion of the majority's comprehensive education package, but problems exist in doing it a piece at a time, particularly with subsection (8). He was supportive of the 50/50 share of the debt load. He requested a revised fiscal note that reflected the total impact of additional debt service that may be incurred due to bonds that have passed and may qualify within the window provided under subsection (8). Amendment #3 was not offered. SENATOR ADAMS commented that the bill takes care of only one segment of the state, and the whole state should be considered. He indicated he would keep the amendment pending and try to find a solution to take care of the "have nots." COCHAIR SHARP requested a report of the last bond package that passed showing whether Mat-Su got any of that money. CSSB 11(FIN) was HELD for further consideration. COCHAIR SHARP announced a ten minute recess at 10:00 A.M. The meeting reconvened at 10:12 A. M. End SFC-97, # 127, Side 2 (127) Flip tape back to Side 1, (begins at 275)