04/06/2001 10:05 AM Senate FIN

                                                                                                                                
     CS FOR SENATE BILL NO. 158(RES)                                                                                            
     "An  Act directing  the commissioner  of revenue  to prepare  a                                                            
     report   to   the   legislature   relating   to   the   state's                                                            
     participation  in owning or financing  a gas pipeline  project;                                                            
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  JOHN  TORGERSON,  sponsor,   relayed  that  in discussions                                                             
relating to  the construction of a  natural gas pipeline  in Alaska,                                                            
the question  has  arisen as  to whether  the state  should take  an                                                            
active ownership  role in all or part of the pipeline  or whether to                                                            
offer other financial incentives.  As a result of these discussions,                                                            
he stated, this  bill directs the commissioner or  the Department of                                                            
Revenue to  prepare a report  on this matter  to the legislature  by                                                            
January  31,  2002.  He  elaborated  this  report  would  include  a                                                            
recommendation  of whether the state should establish  a state-owned                                                            
public corporation;  an entity similar  to a port authority  for the                                                            
portion of the pipeline  located in Alaska. If the recommendation is                                                            
for   state  ownership,   he   noted   the  report   would   include                                                            
recommendations on how  it would be financed, either through general                                                            
obligation  bonds,  revenue  bonds,  guaranteed  debt,  etc.    This                                                            
report,  he continued,  would also  show the  impact that  ownership                                                            
would  have  on the  state's  revenue  and the  ability  to  provide                                                            
essential  services and  public services.  In  addition, the  report                                                            
would contain  information on how Alaskans could purchase  shares of                                                            
the public corporation, if it were formed.                                                                                      
                                                                                                                                
Senator  Torgerson pointed  out the  bill allows  the department  to                                                            
enter  into  an  agreement  with  a  qualified,   suitable  firm  to                                                            
undertake  this project.  This contract,  he said,  would be  exempt                                                            
from  the competitive  bid  requirements  under  legislative  policy                                                            
because of the limited time involved.                                                                                           
                                                                                                                                
Senator  Torgerson stated  the bill stipulates  that the  Department                                                            
would  provide   to  the  House  Resources   and  Senate   Resources                                                            
Committees,   the  data   which  the  contractor   would  base   its                                                            
recommendations.  He noted the contractor would give  status reports                                                            
to the Committees at least every 60 days.                                                                                       
                                                                                                                                
Senator Leman  referenced the fiscal  note and asked if the  sponsor                                                            
considered the $215,000 amount "reasonable".                                                                                    
                                                                                                                                
Senator Torgerson  replied a similar report was done  in 1982 at the                                                            
approximately  the same cost. Therefore, he surmised  this amount is                                                            
not extra-ordinary.                                                                                                             
                                                                                                                                
Senator  Wilken referenced  the  port  authority between  the  North                                                            
Slope Borough,  the  Fairbanks North  Star Borough  and the City  of                                                            
Valdez.   He  asked  if this  legislation  would preclude  the  port                                                            
authority  from   participating  in  ownership   of  a  natural  gas                                                            
pipeline.                                                                                                                       
                                                                                                                                
Senator  Torgerson  answered  it would  not,  since this  bill  only                                                            
involves recommendations.   He noted the port authority  established                                                            
between  the  three   communities  only  has  taxing   authority  on                                                            
activities  within  in their  boundaries,  and much  of  the area  a                                                            
pipeline would  cross would not be  included.  He qualified  that if                                                            
state-ownership  were to occur, it  was possible the port  authority                                                            
could be excluded.  However, he stressed, the matter  is still being                                                            
debated with a large port authority discussed as one option.                                                                    
                                                                                                                                
AT EASE 10:36AM/10:37AM                                                                                                         
                                                                                                                                
Senator Wilken offered a motion to report CS SB 158 (RES) from                                                                  
Committee with fiscal note #1 from the Department of Revenue.                                                                   
                                                                                                                                
There was no objection and CS SB 158 (RES) MOVED from Committee.