04/01/2011 01:30 PM House FINANCE

HOUSE BILL NO. 203                                                                                                            
                                                                                                                                
     "An Act  establishing and relating to  the in-state gas                                                                    
     pipeline fund; and providing for an effective date."                                                                       
                                                                                                                                
2:53:14 PM                                                                                                                    
                                                                                                                                
Vice-chair  Fairclough MOVED  to  ADOPT  CSHB 203(FIN)  (27-                                                                    
LS0719\D, Kirsch, 3/29/11) as  a working document before the                                                                    
committee.                                                                                                                      
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
REPRESENTATIVE  MIKE CHENAULT,  SPONSOR,  discussed the  new                                                                    
CS.  He explained  that the  legislation would  establish an                                                                    
instate  gas pipeline  fund in  the general  fund. The  fund                                                                    
would  be  managed  and  invested   by  the  Alaska  Gasline                                                                    
Development  Corporation (AGDC)  according  to  the new  CS.                                                                    
Millions of dollars were invested  in the idea of an instate                                                                    
gas  pipeline.  The  funding and  departments  have  changed                                                                    
multiple times  throughout the  planning process.  He stated                                                                    
that the  bill allows for  a simple manner of  reviewing the                                                                    
funds spent on the project.                                                                                                     
                                                                                                                                
Co-Chair Stoltze  withdrew his objection to  the adoption of                                                                    
the CS.                                                                                                                         
                                                                                                                                
Hearing NO further OBJECTION it was so ordered.                                                                                 
                                                                                                                                
Representative  Wilson wondered  whether people  could place                                                                    
their permanent funds into the account.                                                                                         
                                                                                                                                
Representative  Chenault  replied  no. The  option  did  not                                                                    
exist, although he found the idea worthy of exploration.                                                                        
                                                                                                                                
Representative Wilson  understood that many Alaskans  in her                                                                    
district expressed interest in the option.                                                                                      
                                                                                                                                
Co-Chair  Stoltze commented  that the  current configuration                                                                    
of "Pick, Click, and Give" would not permit the option.                                                                         
                                                                                                                                
2:56:58 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze was  anxious to  find a  mechanism to  the                                                                    
address gas shortages in Alaska.                                                                                                
                                                                                                                                
Representative  Chenault  stressed  the seriousness  of  the                                                                    
issue.  He discussed  the future  of Alaska's  energy supply                                                                    
and necessary jobs. He believed  that a great investment was                                                                    
warranted.                                                                                                                      
                                                                                                                                
Vice-chair Fairclough  discussed a pipe dream.  She proposed                                                                    
the  idea of  including  the Alaskan  citizens, by  allowing                                                                    
them to invest.  She expressed interest in  buying shares in                                                                    
the ownership of an instate gasline.                                                                                            
                                                                                                                                
Vice-chair Fairclough moved Amendment number 1.                                                                                 
                                                                                                                                
Co-Chair Stoltze objected for discussion.                                                                                       
                                                                                                                                
TOM WRIGHT,  STAFF, REPRESENTATIVE MIKE  CHENAULT, discussed                                                                    
that the amendment had been  proposed by DOR for clarity. He                                                                    
stated that Page  1, Line 8, following  "lapses," means that                                                                    
any funds  that remain within  the fund lapse back  into the                                                                    
general fund. He  continued with Page 2,  Line one following                                                                    
"and," the language  was changed to read  "shall remain in."                                                                    
Any interest accrued  by the account should  stay within the                                                                    
fund or appropriated by the legislature back into the fund.                                                                     
                                                                                                                                
3:02:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze removed his objection.                                                                                         
                                                                                                                                
Hearing no other objections the amendment was adopted.                                                                          
                                                                                                                                
Co-Chair Stoltze discussed the zero fiscal note.                                                                                
                                                                                                                                
Representative  Chenault echoed  the comments  of Vice-chair                                                                    
Fairclough regarding  Alaskans making a  personal investment                                                                    
in the project for a  guaranteed rate of return. He recalled                                                                    
Alaskan  companies   that  were   also  interested   in  the                                                                    
potential investment.                                                                                                           
                                                                                                                                
Representative   Hawker  discussed   that  the   legislation                                                                    
allowed the  AGDC the  opportunity to  open a  bank account,                                                                    
which   was  an   important   step   towards  assuring   the                                                                    
transparency of the corporation.  He stressed the urgency of                                                                    
the situation.                                                                                                                  
                                                                                                                                
Representative    Edgmon   expressed    support   for    the                                                                    
legislation.                                                                                                                    
                                                                                                                                
3:07:44 PM                                                                                                                    
                                                                                                                                
DANIEL  FAUSKE,   CHIEF  EXECUTIVE  OFFICER   AND  EXECUTIVE                                                                    
DIRECTOR,   ALASKA   HOUSING    FINANCE   CORPORATION   (via                                                                    
teleconference), echoed  the prior testimony and  offered to                                                                    
answer questions.                                                                                                               
                                                                                                                                
Representative Gara  supported the legislation,  but pointed                                                                    
out  the difficult  future  decision  regarding the  various                                                                    
options for production of Alaskan natural gas.                                                                                  
                                                                                                                                
Mr. Fauske noted  the requirement of a  report detailing the                                                                    
analysis on the wide variety  of options. The report was due                                                                    
on  July 1,  2011. He  mentioned  that results  of the  many                                                                    
studies  were expected  to arrive.  He preferred  the larger                                                                    
export line, but agreed that  each potential project must be                                                                    
properly vetted.                                                                                                                
                                                                                                                                
Co-Chair  Thomas pointed  out HB  152, a  funding bill  that                                                                    
passed out of the committee a few years prior.                                                                                  
                                                                                                                                
3:13:12 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  appreciated that the  governor in                                                                    
the 1950s  had the foresight  to make statements  similar to                                                                    
those made  today. He viewed  the gasline as a  utility that                                                                    
would provide great economic benefit to Alaskans.                                                                               
                                                                                                                                
Representative Wilson  asked Mr.  Fauske whether  there were                                                                    
other  funding  options that  would  be  provided in  July's                                                                    
report.                                                                                                                         
                                                                                                                                
Mr. Fauske  responded in the  affirmative. The  report would                                                                    
provide estimates,  detailed analysis  regarding recommended                                                                    
financing strategies, analysis of  the tax exempt financing,                                                                    
and recommendations regarding fund equity positions.                                                                            
                                                                                                                                
3:19:15 PM                                                                                                                    
                                                                                                                                
Representative  Wilson stressed  that the  people of  Alaska                                                                    
would really like to be a part of the project.                                                                                  
                                                                                                                                
Mr. Fauske believed that was a good suggestion.                                                                                 
                                                                                                                                
Co-Chair Stoltze opened and closed public testimony.                                                                            
                                                                                                                                
Vice-chair Fairclough  MOVED to report  CS HB 203  (FIN) out                                                                    
of  committee   with  individual  recommendations   and  the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CS HB  203 (FIN) was  REPORTED out  of committee with  a "do                                                                    
pass" recommendation  and with  new zero impact  fiscal note                                                                    
from the Department of Revenue.                                                                                                 
                                                                                                                                
3:20:53 PM