Legislature(2003 - 2004)

2003-01-31 Senate Journal

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2003-01-31                     Senate Journal                      Page 0088
SB 51                                                                                             
SENATE BILL NO. 51 BY THE SENATE RULES COMMITTEE                                                    
BY REQUEST OF THE GOVERNOR, entitled:                                                               
          "An Act relating to revenue bonds issued by the                                           
          Alaska Municipal Bond Bank Authority and the total                                        
          amount of bonds and notes outstanding of that                                             
          authority; and providing for an effective date."                                          
was read the first time and referred to the Community and Regional                                  
Affairs and Finance Committees.                                                                     
The following fiscal information was published today:                                               
 Fiscal Note No. 1, zero, Department of Revenue                                                     
Governor's transmittal letter dated January 30:                                                     
Dear President Therriault:                                                                          
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am                          
transmitting a bill relating to revenue bonds issued by the Alaska                                  
Municipal Bond Bank Authority and the total amount of bonds and                                     
notes outstanding of that authority.                                                                
The Alaska Municipal Bond Bank Authority (AMBBA) was created in                                     
1975 to assist Alaskan municipalities issue bonds for local projects.                               
The AMBBA is able to realize savings for municipalities by pooling                                  
bonds in large numbers and obtaining lower interest rates that result in                            
reduced costs for bond issuance, and often better terms overall, that                               
would not be obtainable by municipalities on their own.  The purpose                                
of this bill is to raise the limit on the amount of revenue bonds that the                          
AMBBA may issue in any one fiscal year and to raise the limit on the                                
total outstanding bond debt the AMBBA may carry at any one time.                                    
These limits have not been raised by the legislature since 1983 and                                 
1984, respectively.                                                                                 
An increase in the annual bonding cap under AS 44.85.100(b) from                                    
$50,000,000 to $75,000,000, would enable the AMBBA to act on the                                    

2003-01-31                     Senate Journal                      Page 0089
applications it has already received from municipalities this fiscal                                
year. Current fiscal year applications exceed $56,000,000.                                          
Further, an increase in the cap on the total outstanding bonds and notes                            
from $300,000,000 to $500,000,000 under AS 44.85.180(c), would                                      
enable AMBBA to issue the bonds and notes already applied for as                                    
well as those that are anticipated, which may exceed $70,000,000.                                   
Reaching the annual fiscal year limit or the outstanding limits would                               
prevent municipalities from proceeding with projects or prevent                                     
municipalities from using the financially more attractive debt terms                                
that could be made available if the bonds are issued by AMBBA.                                      
An increase in the amount of the AMBBA's indebtedness limit will                                    
not have a fiscal impact on the state's general fund. Debt of the                                   
AMBBA is not a direct liability of the state. Additionally,                                         
municipalities that use the AMBBA to issue bonds pay all of the debt                                
service on the bonds. And the AMBBA has sufficient reserve capacity                                 
to continue financing capital projects up to the requested $500,000,000                             
Finally, in order to accommodate current fiscal year applications                                   
received by the AMBBA, an immediate effective date is included in                                   
the bill.                                                                                           
I urge your prompt and favorable action on this measure.                                            
Sincerely Yours,                                                                                    
Frank H. Murkowski