Legislature(2007 - 2008)SENATE FINANCE 532

07/24/2008 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB4002 RESOURCE REBATE PROGRAM FOR RESIDENTS TELECONFERENCED
Heard & Held
+= SB4003 APPROP: ENERGY RELIEF/REBATE/FUEL TAX TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
SENATE BILL NO. 4003                                                                                                          
                                                                                                                                
     "An  Act  making  supplemental   appropriations  to  the                                                                   
     Alaska  Energy Authority  for  power cost  equalization;                                                                   
     making  special  appropriations  to  the  Department  of                                                                   
     Revenue  and  to the  Department  of Health  and  Social                                                                   
     Services for the Alaska resource  rebate program; making                                                                   
     a  special appropriation  to the  Department of  Revenue                                                                   
     for  the payment  of certain  shared  taxes relating  to                                                                   
     aviation fuel; and providing for an effective date."                                                                       
                                                                                                                                
Ms.  Rehfeld  noted  that  SB   4003  was  the  appropriation                                                                   
legislation  for  SB  4002.    The  legislation  appropriates                                                                   
nearly $820  million, $800 million  of which is for  the one-                                                                   
time payment to eligible individuals  for the resource rebate                                                                   
program.    It does  include  the  associated  administrative                                                                   
costs.   There is  also $10.7  million included  in the  hold                                                                   
harmless provisions.                                                                                                            
                                                                                                                                
Ms. Rehfeld  noted there is also  a request for  $9.6 million                                                                   
for  the Power  Cost  Equalization (PCE)  program.   Of  that                                                                   
amount, $600,000  is to  fully fund  the FY 08  appropriation                                                                   
and cost  for PCE  so there would  be no proration  required.                                                                   
The  Alaska Energy  Authority  has estimated  a potential  $9                                                                   
million  shortfall in  the PCE  program  for FY  09 based  on                                                                   
estimates of increased fuel costs.                                                                                              
                                                                                                                                
Ms. Rehfeld  concluded that an  additional $150,000  would be                                                                   
requested   to  hold   harmless   municipalities  that   have                                                                   
municipal owned airports.                                                                                                       
                                                                                                                                
10:29:51 AM                                                                                                                   
                                                                                                                                
Senator  Elton asked  for clarification  about the  interplay                                                                   
between SB 4002 and SB 4003.   In SB 4002, Section 1 provides                                                                   
that "subject to appropriation  and availability of funds for                                                                   
the  program,  individuals  eligible   for  the  program  may                                                                   
receive a payment  in the amount of $1,200".   In SB 4003, on                                                                   
page 2,  line 22, it says,  "the sum necessary,  estimated to                                                                   
be at $800 million".  He inquired which bill was primary.                                                                       
                                                                                                                                
Mr.  Burnett  said that  the  $1,200  would go  to  everyone.                                                                   
Should the legislature chose a  different amount, it would be                                                                   
pro-rated.   As  the bills  are currently  written, it  would                                                                   
allow for $1,200 to each person.                                                                                                
                                                                                                                                
10:32:29 AM                                                                                                                   
                                                                                                                                
Senator Elton thought  that in January a supplemental  may be                                                                   
required.  Mr.  Burnett said the bill, as  currently written,                                                                   
would allow for spending beyond $800 million.                                                                                   
                                                                                                                                
Senator Huggins posited a scenario  whereby fuel costs remain                                                                   
the same  and next July the  expectation by Alaskans  is that                                                                   
they receive another rebate.                                                                                                    
                                                                                                                                
Ms.  Rehfeld   did  not  disagree  with  the   scenario,  but                                                                   
emphasized that the bill is a one-time payment.                                                                                 
                                                                                                                                
Senator Huggins  asked how the administration  will keep this                                                                   
to one year.  Ms. Rehfeld hoped  that the current legislation                                                                   
would provide some  relief, but she could not  say what might                                                                   
happen  in the  future.   Senator Huggins  suggested that  an                                                                   
expectation is being created.                                                                                                   
                                                                                                                                
10:36:08 AM                                                                                                                   
                                                                                                                                
Senator  Olson  asked  about page  3  regarding  municipality                                                                   
airports.  He wondered who would  be the beneficiaries of the                                                                   
subsection.  Mr.  Burnett reported that taxes  are not shared                                                                   
with anyone besides municipal  airports in this program.  The                                                                   
largest  amount to  a  municipality is  to  Juneau.   Senator                                                                   
Olson  wondered if  the bias  is towards  municipal or  rural                                                                   
airports.  Mr.  Burnett replied that Fairbanks  and Anchorage                                                                   
have  state-owned airports.    This program  is designed  for                                                                   
sharing with municipal airports around the state.                                                                               
                                                                                                                                
Co-Chair Stedman wondered  if it was a resource  rebate or an                                                                   
energy rebate.   He questioned  if there should be  a trigger                                                                   
amount before  the state steps in  to help.  Ms.  Rehfeld had                                                                   
not heard of information regarding that.                                                                                        
                                                                                                                                
Co-Chair Stedman  wondered about the ramifications  when this                                                                   
rebate is discontinued.  Ms. Rehfeld  understood the concern.                                                                   
She reiterated that  the rebate is intended to  be a one-time                                                                   
payment.                                                                                                                        
                                                                                                                                
10:39:52 AM                                                                                                                   
                                                                                                                                
Senator  Elton referenced  the  section on  aviation tax  and                                                                   
requested more  information about  how much revenue  would be                                                                   
lost.  He did not see a problem  with the benefits from a tax                                                                   
suspension.    He   wondered  how  much  of   a  benefit  the                                                                   
commercial industry would be getting.                                                                                           
                                                                                                                                
Mr. Burnett  said there is no  way to know who  is purchasing                                                                   
the fuel.                                                                                                                       
                                                                                                                                
Senator Thomas believed  that the price of oil  was not going                                                                   
to go down.   He thought the programs should be  in place for                                                                   
3 - 5 years.                                                                                                                    
                                                                                                                                
SB  4003  was  heard  and  HELD   in  Committee  for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
10:45:22 AM                                                                                                                   
                                                                                                                                
Co-Chair   Stedman  spoke  of   discussions  on   longer-term                                                                   
solutions to the energy problems in Alaska.                                                                                     
                                                                                                                                

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