Legislature(2017 - 2018)BARNES 124

04/15/2018 10:00 AM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 15 Minutes After Adjournment --
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
Moved HB 376 Out of Committee
-- Public Testimony --
             HB 376-ESTABLISH THE ALASKA STATE BANK                                                                         
4:26:37 PM                                                                                                                    
CHAIR KITO  announced that  the next order  of business  would be                                                               
HOUSE BILL NO.  376, "An Act establishing a  state bank; relating                                                               
to insurance,  mortgage lending,  securities, and  permanent fund                                                               
dividends; and providing for an effective date."                                                                                
4:26:58 PM                                                                                                                    
REPRESENTATIVE    CHRIS   TUCK,    Alaska   State    Legislature,                                                               
reintroduced HB 376 as prime sponsor.   He said the proposed bill                                                               
would  create a  monetary policy  for Alaska  for infrastructure,                                                               
science, and technology projects.                                                                                               
4:28:21 PM                                                                                                                    
CHARLES DUNCAN,  Staff, Representative  Chris Tuck,  Alaska State                                                               
Legislature, presented  HB 376 on behalf  of Representative Tuck,                                                               
prime sponsor.   He said  that as  a researcher, he  believes the                                                               
most  important reason  to create  the  Alaska State  Bank is  to                                                               
allow the legal ability to  access the Federal Reserve to prepare                                                               
for the next financial crisis.                                                                                                  
REPRESENTATIVE TUCK  said the proposal  is to get money  into the                                                               
economy for long-term infrastructure projects.   He said the most                                                               
the state would participate is 35 percent.                                                                                      
4:32:53 PM                                                                                                                    
REPRESENTATIVE KNOPP  asked where  the funds  for the  state bank                                                               
would come from.                                                                                                                
REPRESENTATIVE  TUCK answered  some  funds would  come from  loan                                                               
guarantees, capital purchase, and the credit stimulus method.                                                                   
REPRESENTATIVE KNOPP asked  whether Alaska Industrial Development                                                               
and Export Authority (AIDEA) already does those things.                                                                         
MR. DUNCAN answered that AIDEA  doesn't directly fund science and                                                               
4:35:55 PM                                                                                                                    
CHAIR  KITO  shared his  understanding  that  the proposal  would                                                               
allow the state  to issue bonds for infrastructure  projects.  He                                                               
asked about the revenue source for paying back the funds.                                                                       
MR. DUNCAN answered the bank  would be active as  a securitizer."                                                               
He said  it would create packages  which would be put  on account                                                               
with the Federal Reserve.                                                                                                       
CHAIR KITO  suggested the infrastructure bonds  are for municipal                                                               
governments and they are paid back through municipal taxes.                                                                     
MR. DUNCAN answered that is correct.                                                                                            
4:37:39 PM                                                                                                                    
CHAIR KITO  suggested the state of  Alaska can go to  the federal                                                               
government with  the bonds and  the federal government  can allow                                                               
the  state   to  lend  or   generate  capital  for   science  and                                                               
MR. DUNCAN answered in the affirmative.                                                                                         
CHAIR KITO  suggested it  increases the  state bank's  ability to                                                               
enter into additional loans to support science and technology.                                                                  
MR. DUNCAN answered in the affirmative.                                                                                         
CHAIR KITO clarified  there is a two-step procedure.   The credit                                                               
holding with  the federal government  allows for the  creation of                                                               
additional  loans.   He  said  monetary  policy means  little  to                                                               
people  in Alaska.   He  said it  would be  creating a  method to                                                               
access capital that is not currently accessible to the state.                                                                   
4:39:48 PM                                                                                                                    
REPRESENTATIVE KNOPP spoke to issuance of  bonds.  He said he had                                                               
not heard  how they  were to  be repaid.   He stated  science and                                                               
technology are not necessarily revenue generators.                                                                              
MR. DUNCAN  said the  aim is  to prepare  for the  next financial                                                               
REPRESENTATIVE TUCK said that as  bonds are packaged together for                                                               
municipal projects  and the Federal  Reserve takes them  over, it                                                               
frees up more money.                                                                                                            
REPRESENTATIVE  KNOPP said  the state  does already  have a  bond                                                               
bank established.                                                                                                               
REPRESENTATIVE TUCK answered  he doesn't know what  the bond bank                                                               
is or whether it is able to do fractional reserve banking.                                                                      
CHAIR KITO answered  it is the Alaska Municipal Bond  Bank and it                                                               
is available for cities to support municipal bond programs.                                                                     
4:42:50 PM                                                                                                                    
REPRESENTATIVE  WOOL mentioned  the state  bank would  provide 35                                                               
percent  as  a down  payment  for  commercial  banks.   He  asked                                                               
whether commercial banks are welcoming the initiative.                                                                          
MR. DUNCAN clarified it also concerns other state agencies.                                                                     
REPRESENTATIVE WOOL  asked whether  the funds  would be  the seed                                                               
money to give commercial banks confidence.                                                                                      
REPRESENTATIVE  TUCK answered  that the  banking association  had                                                               
been  in  Juneau,  Alaska,  about  two  weeks  previous  and  the                                                               
proposal had peaked their interest.                                                                                             
4:45:02 PM                                                                                                                    
REPRESENTATIVE  KNOPP   asked  whether  the  committee   had  any                                                               
testimony from  the Department  of Revenue  or AIDEA  or received                                                               
any thoughts from the administration.                                                                                           
CHAIR  KITO  answered  that  to  date  there  had  not  been  any                                                               
commentary from the administration.                                                                                             
REPRESENTATIVE TUCK added that since  the last hearing there is a                                                               
fiscal note.                                                                                                                    
CHAIR KITO said the proposal was for a specific revenue source.                                                                 
REPRESENTATIVE  BIRCH  commented it  doesn't  sound  like a  good                                                               
business solution to him.                                                                                                       
REPRESENTATIVE  WOOL   commented  he  does  not   understand  the                                                               
REPRESENTATIVE KNOPP  commented he  is not  ready to  support the                                                               
proposed bill but is ready to  support the concept.  He said he'd                                                               
like to see a working group come forward with recommendations.                                                                  
4:50:07 PM                                                                                                                    
The committee took an at-ease from 4:50 p.m. to 4:51 p.m.                                                                       
4:51:19 PM                                                                                                                    
REPRESENTATIVE WOOL moved to report  HB 376 out of committee with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
4:51:48 PM                                                                                                                    
A roll call  vote was taken.   Representatives Stutes, Josephson,                                                               
Wool, and Kito  voted in favor of HB 376.   Representatives Birch                                                               
and Knopp voted  against it.  Therefore, HB 376  was reported out                                                               
of the House  Labor and Commerce Standing Committee by  a vote of                                                               

Document Name Date/Time Subjects
HB193 Opposition Letters 4.16.18.pdf HL&C 4/15/2018 10:00:00 AM
HB 193
HB 193 Followup HL&C Letter 4.19.18.pdf HL&C 4/15/2018 10:00:00 AM
HB 193