SENATE BILL NO. 107 "An Act relating to the Alaska capital income fund." 9:02:47 AM LAURA CRAMER, STAFF, SENATOR ANNA MACKINNON, stated that the legislation changed the purpose of the Alaska capital income fund. The legislation would change the fund to a deferred maintenance fund. Senator Dunleavy surmised that the legislation would create a designated fund. Ms. Cramer replied that the funds would not be required to be spent on deferred maintenance. Senator Dunleavy understood that future legislatures could determine how the funds were spent. Ms. Cramer agreed. Co-Chair MacKinnon noted that the legislation was a Senate Finance Committee bill. She stated that there was never a designated a funding stream in the past. She stated that the bill only had six lines and one section. Senator von Imhof queried the process for determining which projects received funding. She remarked that the Alaska Capital Income Fund was created in 2006, and received an annual deposit of earnings. She queried the amount of the annual deposit, and the process for determining how those funds were spent. Ms. Cramer replied that the annual deposit was between $23 million and $26 million. She stated that the total amount in the fund was $423 million. She explained that deferred maintenance requests came from the department agencies through Office of Management and Budget (OMB), and were submitted in the governor's annual proposed budget. Senator Micciche queried the typical "spinoff" in revenue from the fund. Co-Chair MacKinnon replied that it was between $23 million to $26 million, depending on investment returns. 9:07:04 AM Vice-Chair Bishop stated that the fund was generated by the Amerada Hess Settlement funds. Ms. Cramer agreed. Vice-Chair Bishop stated that the interest generated in the overview was from the Amerada Hess Settlement. Ms. Cramer replied in the affirmative and explained that that the fund was $422 million, and generated approximately $23 million to $26 million annually. Vice-Chair Bishop remarked that it was a simple concept. He felt that the legislation was a way to save money. Senator Dunleavy wondered whether the income stream would replace any deferred maintenance money, or was it supplemental. Ms. Cramer replied that she felt the fund would add to the available funds. 9:10:09 AM Senator Dunleavy felt that there should be a schedule about how and when buildings were abandoned. He wanted a plan with the legislation to determine how the fund was utilized, because of the high number of deferred maintenance fees. Co-Chair MacKinnon stated that the bill did not add funds, because the funds already exists. She stated that the funds were already available. She explained that the outside credit agencies would see that there was an investment in deferred maintenance. She stressed that future legislatures would be able to use the funds as they saw fit. She remarked that every agency had their own system of prioritization and selling their properties. Ms. Cramer furthered that the legislation would provide a consistent funding stream that was not currently available. She remarked that OMB was working through a process with the agencies to better prioritize deferred maintenance needs. Senator Micciche felt that the fund did not provide more money, but rather was the "first money" for deferred maintenance. 9:15:00 AM Senator von Imhof stated that the initial purpose of the fund was for "any public purpose", and the purpose was changed to "deferred and preventative maintenance." She remarked that it was "okay" to create a guaranteed revenue stream to incentivize deferred maintenance. Senator Olson wondered whether there would be a change in the prioritization of major maintenance. Ms. Cramer replied that the legislation did not change the process that deferred maintenance projects were submitted; it simply provided a funding source. Senator Olson remarked that there was an attempt to move deferred maintenance to the capital budget. He wondered whether there were other assets besides buildings or assets that would be considered for maintenance that were not on the list. Ms. Cramer replied in the negative. Ms. Cramer addressed the zero fiscal note. Co-Chair MacKinnon CLOSED public testimony. Co-Chair MacKinnon stated that amendments were due by 5pm the following day. SB 107 was HEARD and HELD in committee for further consideration. 9:19:40 AM AT EASE 9:21:50 AM RECONVENED