Legislature(2017 - 2018)SENATE FINANCE 532

04/10/2018 09:00 AM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 79 OMNIBUS WORKERS' COMPENSATION TELECONFERENCED
<Bill Hearing Rescheduled to 4/12/18 at 9 a.m.>
+ HB 121 OCC. HEALTH AND SAFETY CIVIL PENALTIES TELECONFERENCED
<Bill Hearing Rescheduled to 4/12/18 at 9 a.m.>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+ SB 157 MICROLOAN REVOLVING FUND & LOANS TELECONFERENCED
Heard & Held
<Bill Hearing Rescheduled from 4/09/18 at 1:30pm>
+ SB 186 VOTER REGISTRATION & PFD APP REGISTRATION TELECONFERENCED
Heard & Held
<Bill Hearing Rescheduled from 4/09/18 at 1:30pm>
+= SB 216 SCHOOL FUNDING FOR CONSOLIDATED SCHOOLS TELECONFERENCED
Moved CSSB 216(FIN) Out of Committee
SENATE BILL NO. 157                                                                                                           
                                                                                                                                
     "An Act relating to the Alaska microloan revolving                                                                         
     loan fund and loans from the fund."                                                                                        
                                                                                                                                
9:26:58 AM                                                                                                                    
                                                                                                                                
BRITTENY  CIONI-HAYWOOD,  DIVISION   DIRECTOR,  DIVISION  OF                                                                    
ECONOMIC DEVELOPMENT, DEPARTMENT  OF COMMERCE, COMMUNITY AND                                                                    
ECONOMIC DEVELOPMENT,  shared the  purpose of  the microloan                                                                    
fund  was  to  promote  economic development  in  Alaska  by                                                                    
assisting small and micro business  that may not have access                                                                    
to  traditional financing.  She  stated that  the access  to                                                                    
badly  needed capital  would facilitate  startup, expansion,                                                                    
and job creation in the  state with specific policy emphasis                                                                    
on rural  communities. She stated  that new  businesses were                                                                    
responsible for  80 percent of  all new jobs created  in the                                                                    
U.S.  She   asserted  that  finding  ways   to  support  and                                                                    
incentivize new  business growth  would result in  the state                                                                    
filling some of the economic  gap created in the downturn in                                                                    
the  economy.  She  stated that  small  scale  startups  and                                                                    
businesses had difficulty  securing funding, especially when                                                                    
they  may not  fit the  profile of  a high-growth  potential                                                                    
business.                                                                                                                       
                                                                                                                                
9:30:25 AM                                                                                                                    
                                                                                                                                
Senator Stevens queried the  default rate. Ms. Cioni-Haywood                                                                    
replied that there  was currently one loan in  default, at a                                                                    
6  percent rate.  She noted  that there  were only  14 loans                                                                    
from the fund.                                                                                                                  
                                                                                                                                
Co-Chair Hoffman queried the reason  for listing a fix rate,                                                                    
instead  of points  above prime.  Ms. Cioni-Haywood  replied                                                                    
that it was two percentage points above prime.                                                                                  
                                                                                                                                
Senator  Micciche surmised  that  there was  a  drop of  the                                                                    
interest rate,  because interest rates were  lower than when                                                                    
the  bill was  enacted. Ms.  Cioni-Haywood replied  that the                                                                    
floor amounts had  been changed to 4 percent  and 8 percent.                                                                    
The  interest  rate  calculation  was  2  percentage  points                                                                    
versus  1 percentage  point on  prime. It  allowed for  some                                                                    
additional risk with the longer  term. She furthered that it                                                                    
would also bring the rates in line with the other programs.                                                                     
                                                                                                                                
Vice-Chair   Bishop  queried   the  balance   of  the   fund                                                                    
capitalization,  and  the  typical annual  loan  application                                                                    
number. Ms.  Cioni-Haywood replied  that the  cash available                                                                    
to lend was just under  $2.3 million, with 14 current loans,                                                                    
33 applications, and  14 approved loans. She  shared that it                                                                    
averaged about 2  loans a year over the last  six years. She                                                                    
stated that  the borrowers  were unwilling  to take  on that                                                                    
debt  risk,  so  extending  the term  will  allow  for  more                                                                    
flexibility with the payments.                                                                                                  
                                                                                                                                
Senator von  Imhof wanted permission  to list  her questions                                                                    
via email.                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon felt that putting  those questions on the                                                                    
record may be helpful.                                                                                                          
                                                                                                                                
Senator von Imhof listed her questions.                                                                                         
                                                                                                                                
9:36:20 AM                                                                                                                    
                                                                                                                                
Senator  Micciche wondered  whether there  was consideration                                                                    
of a slotted rate. He noted  that there was a socializing of                                                                    
the risk.  Ms. Cioni-Haywood replied that  she would provide                                                                    
that information.                                                                                                               
                                                                                                                                
Senator  Micciche  stated  that  he was  aware  of  how  the                                                                    
program functions, but wanted  to understand the change. Ms.                                                                    
Cioni-Haywood replied  that there was an  examination of the                                                                    
effectiveness of the program. She  noted that the demand for                                                                    
the program was  lower than expected. She  asserted that the                                                                    
change might increase the program.                                                                                              
                                                                                                                                
9:42:27 AM                                                                                                                    
                                                                                                                                
Senator Stevens  spoke in favor  of the program.  He queried                                                                    
the success of the program.                                                                                                     
                                                                                                                                
Senator  Olson  understood  that  it  was  important  for  a                                                                    
business  to have  capital. He  noted that  the program  was                                                                    
created in 2012  at a time of state surplus.  He queried the                                                                    
cost benefit  ratio of  the program. He  assumed it  was not                                                                    
operating in the black. He  wondered whether the state could                                                                    
continue with  the program.  Ms. Cioni-Haywood  replied that                                                                    
it was  a smaller revolving fund,  and most of the  work was                                                                    
from the commercial fishing revolving  loan fund. She stated                                                                    
that the  division was self-sufficient through  the interest                                                                    
and fees.                                                                                                                       
                                                                                                                                
9:45:37 AM                                                                                                                    
                                                                                                                                
Senator Olson clarified that the  state operated somewhat in                                                                    
the  black  with the  oversight  of  the state.  Ms.  Cioni-                                                                    
Haywood replied that  she needed to do more  analysis of the                                                                    
microloan fund, but the other funds had grown over time.                                                                        
                                                                                                                                
Senator von Imhof wondered whether  there was further effort                                                                    
after  a bank  decline letter,  and why  the bank  would not                                                                    
lend the  money. Ms. Cioni-Haywood  replied the  bank denial                                                                    
letters must list a valid  reason. She noted that lending to                                                                    
individuals who  may not be  eligible increased the  risk of                                                                    
the portfolio,  but the division  often lent  to nonstandard                                                                    
borrowers.                                                                                                                      
                                                                                                                                
Senator  von  Imhof   queried  existing  organizations  that                                                                    
catered  to  the  higher risk  borrower.  Ms.  Cioni-Haywood                                                                    
agreed to provide that information.                                                                                             
                                                                                                                                
Co-Chair  MacKinnon  queried  a  sheet  that  addressed  the                                                                    
questions. She  wondered how  many loan  agents were  in the                                                                    
program.  Ms.  Cioni-Haywood  replied   that  there  were  9                                                                    
officers to service all ten revolving loan funds                                                                                
                                                                                                                                
9:50:34 AM                                                                                                                    
                                                                                                                                
Senator von  Imhof surmised that  it was basically  one loan                                                                    
officer per loan.                                                                                                               
                                                                                                                                
Co-Chair  MacKinnon  stated  that  there  were  other  loans                                                                    
inside of  the other programs.  She stressed that  this loan                                                                    
program had 14  loans over its life, which was  valued at 2.                                                                    
She noted  that some of  the other loans had  more activity.                                                                    
She requested a larger fact sheet about all the loans.                                                                          
                                                                                                                                
Senator  Micciche  stressed  that  there were  a  number  of                                                                    
revolving loan programs with higher value.                                                                                      
                                                                                                                                
Vice-Chair Bishop  remarked that the loans  could have great                                                                    
benefit to small businesses.                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  queried  Ms. Cioni-Haywood's  place  of                                                                    
residence.  Ms.  Cioni-Haywood  replied  that  she  live  in                                                                    
Juneau.                                                                                                                         
                                                                                                                                
Co-Chair MacKinnon asked for work  to develop a presentation                                                                    
to examine the investments.  She wanted a simple explanation                                                                    
of the programs. Ms. Cioni-Haywood agreed.                                                                                      
                                                                                                                                
                                                                                                                                
Co-Chair MacKinnon  noted that there were  audits about some                                                                    
of the loan programs.                                                                                                           
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
Vice-Chair Bishop discussed the fiscal note.                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  requested   that  program  concerns  be                                                                    
submitted by noon the following day.                                                                                            
                                                                                                                                
SB  157  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 186 SF Sponsor Statement.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 SF Supporting Document - Election Policy Work Group Report.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 SF Supporting Document - DOE bullets points.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 SF Supporting Document - Excerpt from 2017 DOE Fiscal & Policy Challenges Report.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 157 - Transmittal Letter.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
SB 157 - Sectional Analysis.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
SB 157 - Letter of Support.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
SB 186 SF Supporting Document - Excerpt from 2017 DOE Fiscal & Policy Challenges Report.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 Sectional Analysis v. J.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 216 MSBSD Letter of Support re SB216.pdf SFIN 4/10/2018 9:00:00 AM
SB 216
SB 186 Opt-Out Form C20-U.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 Opt-Out Form C20-N.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 04.10.2018 SF follow-up letter.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186_ Automatic Voter Registration Initiative--Support for the Opt-Out version in the original.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 Public Testimony Brown.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 186 DOR-PFD letter to S FIN 4-12-18.pdf SFIN 4/10/2018 9:00:00 AM
SB 186
SB 157 Public Testimony Ayers.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
SB 157 Finance Response LTR 4-11-18.docx.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
SB 157 DED Loan Portfolios brief.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
SB 157 Microloan Brief.pdf SFIN 4/10/2018 9:00:00 AM
SB 157
HB 304 SKMBT_C45218041614350.pdf SFIN 4/10/2018 9:00:00 AM
HB 304
HB 304-SB 157 Microloan support 2018 Senate SEC.pdf SFIN 4/10/2018 9:00:00 AM
HB 304
SB 157