Legislature(2017 - 2018)SENATE FINANCE 532

04/10/2017 09:00 AM Senate FINANCE

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Heard & Held
Heard & Held
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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                                                                    
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                                                                    
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                                                                    
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                                                                    
9:19:40 AM                                                                                                                    
AT EASE                                                                                                                         
9:21:50 AM                                                                                                                    

Document Name Date/Time Subjects
SB 107 Sponsor Statement version A 04.05.2017.pdf SFIN 4/10/2017 9:00:00 AM
SB 107