Legislature(2007 - 2008)
08/05/2008 01:51 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| SB4002 || SB4002 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 4002(FIN) am
An Act relating to grants from the renewable energy
grant fund; amending the bulk fuel bridge loan fund and
the bulk fuel revolving loan fund; amending the power
cost equalization program, repealing the exclusion from
eligibility for power cost equalization for certain
power projects that take their power from hydroelectric
facilities, and amending the definition of 'eligible
electric utility' as it applies to the power cost
equalization program and the grant program for small
power projects for utility improvements; relating to
establishing a gas pipeline development fund in the
Department of Revenue; establishing the Alaska resource
rebate program and relating to that program; relating
to heating assistance; and providing for an effective
date.
1:54:01 PM
SENATOR LYMAN HOFFMAN, CO-CHAIR, SENATE FINANCE COMMITTEE,
informed that the Committee was meeting to discuss energy
relief. As energy prices have soared, the legislature has
heard concerns from Alaskans in every region of the state.
As the cost of oil has risen, so have the state's coffers.
He discussed the high price of oil.
He explained that with oil at $130 per barrel the state
receives $15.6 billion dollars on an annual basis. Last
year, the state approached approximately $10 billion. He
suggested that as the state's coffers have soared, Alaskans
have depleted their savings accounts due to high heating
bills. He attempted to put everything into perspective. The
call of the special session was in response to high energy
costs.
Senator Hoffman pointed out that the Senate's package was a
two year plan which allowed Alaskans some "breathing room"
for the next two winters. He stated that the Senate had this
in mind when working on the legislation. He indicated that
changes occurred along the way while arriving at this
legislation. He indicated that all regions of Alaska were
considered.
1:58:49 PM
Senator Hoffman recalled his time as Co-Chair of the House
Finance Committee. He acknowledged that there had been
disagreement on the Senate side. He contended that when it
came down to a decision on whether to support the
legislation or not, the consensus was to bring forward an
energy relief package to address needs from virtually every
spectrum of the state. He believed that the issue moved the
package forward to the House of Representatives.
2:00:38 PM
Senator Hoffman voiced that "Alaska is awash in money." The
state has accomplished many Constitution Budget Reserve
Account (CBR) funds. The account was due $5.2 billion
dollars, and the goal was to reduce the debt by 50 percent
and the amount now due is approximately $300 million. The
state now has $8 billion in savings in the CBR. The
Statutory Budget Reserve Account (SPR) has $1 billion. He
elucidated that if the price of oil averaged $110 per barrel
next year, it would provide the state approximately $12
billion dollars. The savings would then be $16 billion. He
asserted that the numbers were "staggering." He asked "out
of the 12 billion potential dollars, can a state with a vast
savings assist the people of Alaska with their energy costs
while giving us an opportunity for a long term solution?"
2:03:25 PM
SENATOR BERT STEDMAN, CO-CHAIR, SENATE FINANCE COMMITTEE,
addressed the process of determining the energy rebate
legislation. The issue is the same; how do people with fixed
incomes or low to moderate incomes afford to heat their
homes with the high cost of oil?
The Senate Finance Committee (SFC) was challenged as to how
to deal with the oil issue. The issue was approached from
several angles. The bill in discussion attempted to set a
price for residential heating. The proposed time period was
September through March for the next two winters at a cost
of three dollars per gallon. Up to 850 gallons per year
would be picked up by the state as a reimbursement program.
The committee did not want to give away free fuel, or to set
the price so low that people were not conserving, or so high
that there were challenges in heating the residents' homes.
The concentration is primary residential versus commercial
buildings. He noted that 300 gallons would be allotted per
multiple family units.
2:07:13 PM
Senator Stedman pointed out that there are many areas in
S.E. Alaska that heat with diesel fuel along with areas in
the Valley that heat with natural gas. He informed that
nearly half of the people in the state use natural gas,
while the other half use oil and electricity. The gas
subsidy proposed a ceiling of $3 dollars per million cubic
feet (mcf) up to about 100 mcf providing a 40% subsidy. The
heating price in the Anchorage area would decline
considerably. For those heating with electricity, the
subsidy would be $.05 cents per kWh for the first 16,100 kWh
per month.
2:09:39 PM
Senator Stedman explained the intent of the bill. He wanted
to ensure that Alaskans are able to get through the winter.
He directed comments on the simplicity of the proposal. The
residents around the state heating with oil would submit
receipts for reimbursement. The individuals heating with
natural gas will not need to file for a state rebate. The
residents who heat with oil and electric would be required
to submit receipts to multiple vendors. He recognized that
many state residents using oil and electricity aren't
familiar with the reimbursement process. The goal is to make
it easier for constituents to get reimbursed and take
advantage of this program.
2:11:37 PM
Senator Hoffman addressed the Power Cost Equalization (PCE)
program. He claimed that program was "broken" because the
formula was primarily set up for three dollars per gallon
for electricity generation. The cost of diesel is at six
dollars in many areas of Alaska. The original cap of $.56
therefore required adjustment. The ceiling of $1.15
reflected this increase in cost. The floor is $.10. The non
PCE individuals would receive a reduction of $.05 including
Fairbanks, Valdez and Kodiak. The program would not expand
beyond the 500 kWh per month. The proposal would repair the
PCE program and reflect the high cost of energy generation.
2:13:57 PM
Senator Stedman commented on issues in a regional area. In
Southeast Alaska, many communities are on hydroelectric
power, which helps to lower the cost of fuel. There is a
transition from home heating oil to electric, which is good.
The challenge is to expand the hydroelectric. He recounted
that there were 100 people in Wrangell waiting to have their
electric baseboards installed. He explained the challenge of
not overwhelming the system as people abandon home boilers.
The components of the bill have taken into account all
regions of the state.
2:15:49 PM
Senator Hoffman addressed the costs. The components
currently in legislation equal approximately $440 million.
After funding the program, $13.2 million dollars remain. The
package is expensive, however looking at the potential
revenue; it is not out of reason. The savings should be
passed on when Alaskans are depleting their saving accounts.
The state residents need relief now in order to create a
long-term solution to energy?
2:17:34 PM
Co-Chair Meyer asked why in the Senate version, commercial
had not been included in PCE. Senator Hoffman wanted to look
at the existing program and look at expansion during the
long-term phase. He listed the communities that were added.
It was a judgment call not to expand the program from the
current vision. He suggested the expansion of the program
allowed for a long term solution.
2:19:33 PM
Co-Chair Meyer commented on the separate directions the
bodies' had taken on home heating. He remembered that both
he and Senator Hoffman agreed that the Low Income Home
Energy Assistance Program (LIHEAP) was the best approach.
He supported that program. He asked why the Senate had
abandoned the approach that helped everyone regardless of
heating method. He maintained that LIHEAP provides more
control and refrains from discriminating against different
heating methods. He expressed concerns about the Senate
version of the bill. He wondered how the "word would get
out" about the Senate's proposed program. He questioned the
ability to ensure that the dealers did not mark up the cost
of fuel knowing that the state would cover anything over
three dollars.
2:21:15 PM
Senator Hoffman stated that the three dollars was only for
the first 850 gallons; above that, residents pay the full
amount. The program includes the seven months of winter
only. During the rest of the year, the communities will pay
full price. The program for electricity, natural gas, and
for diesel fuel is being treated similarly. The goal was to
provide relief on a limited basis to all Alaskans.
He argued that many people in rural Alaska are living on
fixed incomes. For those Alaskans to absorb the rising costs
would mean spending 40 percent of their disposable income on
energy expenses. Energy costs are in the neighborhood of
five percent of disposable income for Anchorage. The goal is
to give energy relief to all Alaskans. He maintained that
this is a limited relief program and covers a portion of
heating costs for the winter months. All areas of the state
should get their energy costs covered. He opined that the
rural areas have considerably higher heating costs than
those in the rest of Alaska.
2:26:14 PM
Co-Chair Meyer stated that there was potential to argue the
different methods for the "rest of the day." The Senate
version had the resource rebate at $500 per person; the
House version at $1200 per person. The Governor's
recommendation was to issue a resource rebate allowing
constituents to decide how the money would best be spent.
Co-Chair Meyer asked why the Senate had chosen $500 for a
resource rebate. Senator Hoffman answered that the intention
was for a long term solution, so allowing for a two year
plan would allow the necessary "breathing room" to create
that long term solution.
2:28:14 PM
Co-Chair Hoffman stated that it was critical that a two year
solution be created for the problem. He cited that the
Permanent Fund Dividend (PFD) would be about $2000 per year.
The dividend portion was not removed from the package. He
stressed that the crucial issue was the resolution of the
energy crisis.
2:29:48 PM
Co-Chair Stedman agreed with Co-Chair Hoffman. He stated
that the concentration on the Senate side was to deliver
relief to all of Alaskans while buying time for the long
term energy plan. There is a section of the bill from Page
10, Line 30 to Page 11, Line 6 that prohibits distributors
from artificially inflating prices as a result of the
program. This provides a mechanism to deal with unscrupulous
merchants.
2:32:11 PM
Co-Chair Meyer asked if the $500 rebate was intended to help
commuters in the valley pay for the high cost of gas. He
asked Co-Chair Hoffman to discuss the Senate's disagreement
with the motor fuel tax suspension. Co-Chair Hoffman
answered that despite the tax suspension, he still had to
pay 120 dollars per fill up. He said that the plan did not
offer a significant reduction in the cost of gas, when some
Alaskans like himself are paying six dollars per gallon. He
wondered about the message that a fuel tax suspension would
send to the rest of the nation, when Alaska already had the
lowest gas tax in the nation at $.08 per gallon.
2:33:45 PM
Co-Chair Meyer replied that the basic five points from the
House Finance Committee (HFC) had been discussed. He said
the bulk fuel funds were agreed upon. The last topic that he
wanted to discuss was the issue of electric heating relief.
Co-Chair Stedman said that the focal point of this program
was home heating fuel. He elaborated that the price of oil
was unstable compared to natural gas and electricity, which
are regulated. Electric methods of heating are a small
component. The home owner heating with electricity does not
get help from the state. In discussing those who use
electricity, he said it had been decided to expand the $.05
cost per kWh beyond 500 kWh per month up to 2300 per month.
This plan would allow an offset of home heating for those
who heat with electricity and thereby cover all methods of
heating across the state.
2:36:21 PM
Co-Chair Meyer questioned how the Senate came up with the
$.05 and the amount of kWh. Co-Chair Stedman stated that the
number was $4.3 million for the electric component and that
the amount was small compared with $266 million for oil
relief and $80 million for natural gas. He said this was an
effort to create a balance. He enthused that there was
something in the bill for everyone to like. He expressed
enthusiasm at the possible changes that the HFC would make
to the Senate's workmanship.
Co-Chair Meyer requested an estimate of the cost of the fuel
rebate program.
2:38:36 PM
Co-Chair Stedman estimated $535 million for two years. Co-
Chair Meyer requested the administrative costs. Co-Chair
Stedman answered approximately $10 million.
Co-Chair Meyer questioned why the legislature would choose
to spend on the program and not distribute the money
directly to residents through the resource rebate. Co-Chair
Hoffman said he thought it would be more cost effective to
let private enterprise distribute the funds.
Co-Chair Meyer asked if Co-Chair Hoffman believed that this
was really a two year program. Co-Chair Hoffman answered
that the program would sunset in two years and if it was
successful then Co-Chair Meyer's question was valid. He
predicted that as long term solutions are developed, the
program could become part of the long range plan for Alaska.
He explained that the beauty of this program is if the
prices go down, the cost to the state would go down.
2:41:44 PM
Vice-Chair Stoltze spoke to the inefficiency of embedding
entitlement programs. He stated that he was not certain of
the ramifications. He supported refraining from working in a
rushed environment.
Representative Nelson said she was very excited about the
Senate's approach of buying down 40 percent of a household's
heating cost. She spoke of a "high energy offset fund" and
the ability to buy down a portion of Alaskans' cost with
royalty oil. She said that this program would couple nicely
with the state match for the Low Income Home Energy
Assistance Program (LIHEAP). She asked if that was the
understanding of the Senate as well.
Co-Chair Hoffman replied that the Senate had not observed
that detail, but it did make sense. The buy down program's
intention was to get a broader brush of assistance relief to
Alaskans and that was the primary motivation behind the
Senate's approach.
Representative Gara recalled that he had not seen a pure and
equitable plan come out of the Governors Office, the House,
or the Senate. He observed that the House was looking at a
bigger rebate, while the Senate was looking to bring fuel
help to people with higher fuel costs.
2:46:48 PM
Representative Gara stated that he did not see that any plan
was better or worse and he hoped that the committee could
make some headway in narrowing the gap between the two
plans.
Representative Gara asked if both the House and Senate
provisions on Power Cost Equalization (PCE) have a plan for
.05 a kWh subsidy. He objected to this plan for Anchorage
where electricity costs are low. He asserted that he would
prefer have the money go into the rebate instead.
Representative Gara requested more information about the
fuel subsidy portion of the Senate bill. He asked how this
subsidy will be administered and whether or not it is
workable.
Co-Chair Hoffman explained that the Senate did struggle with
the issue initially. First they considered buying down the
bulk plant price, which created many complexities. The
conclusion was that having a rebate program at the
residential level where the customer would present a slip to
the state would work best. The Alaska Energy Authority (AEA)
would then create the paperwork to make it easy. He
suggested that if a person was paying high prices to heat
their homes, and did not have the money, they would take the
initiative to get the rebate. Southeast has much less
expensive rates for fuel. In Anchorage, the offset will be
taken care of at the distributor level.
2:52:37 PM
Representative Gara asked for the difference between the
total cost of PCE in both the House and Senate versions. Co-
Chair Hoffman replied that the numbers in the House were
$124 million and those in the Senate were $169 million. The
numbers differed because the population numbers were
different. Co-Chair Meyer corrected that the number was $144
million for the House proposal due to the inclusion of
commercial customers.
2:54:22 PM
Representative Gara asked if the amount of the fuel cost
reduction portion was $530 million dollars. Senator Stedman
replied that the exact number was $533 million for the two
year program. Representative Gara clarified $270 million per
year. Senator Stedman pointed out the issue with oil is that
the residential customer has to send in a rebate slip to get
reimbursed. Representative Gara believed that there is
benefit to an extended plan.
2:55:41 PM
Representative Hawker described a point of legislative
direction for the House versus the Senate. The house is
headed down a simple path while the Senate has attempted to
craft an energy policy into the legislation. He believed
that crafting energy policy is the correct move. He wanted
to know that the outcome would be beneficial. He pointed out
that when making such a large change the unintended
consequences are sometimes large. He stressed his areas of
concern.
His first concern was the energy relief package broken down
between single family residences and multi family building.
He asked for the definitions of a "multi-unit structure" as
opposed to a "single family building".
2:58:44 PM
Senator Stedman responded that the concept of both terms is
the same; the target is the primary resident. The state can
use assistance to clean up and work on some of the language.
The time frame is short during special sessions to address
such large policy dilemmas. The state can move forward and
address the language issues because winter is coming soon.
3:00:01 PM
Co-Chair Hoffman pointed out those concerns with a one term
solution to get residents through the following winter. He
wanted it to be addressed here and now, enabling the
legislature to work on long range energy relief. He opined
that with the dividend program, it would be difficult to get
21 votes. The Senate plan received 14 votes. He speculated
that due to the absence of two senators this special
session, 16 votes might have been recieved. Because the HFC
was moving in a different direction it does not mean that
the body would concur. The Senate is already half way there.
There are only two days left to accomplish the energy relief
that Alaskans need.
3:02:10 PM
Co-Chair Stedman stated that gas and electric typically have
multi meters. There have been discussions dealing with the
multi units versus single heating units, which are probably
reflected by the language.
3:03:08 PM
Representative Hawker illustrated concerns about the
complexity of the bill before the Committee. He shared
another particular provision on Page 10 stating that a
landlord receiving beneficial payments shall pass on the
savings by lowering the amount of rent for the tenant. He
wondered about increasing the costs for landlords who have
been absorbing high costs for the last couple of years. He
opined that the legislation "would compound the sin against
the landlord."
3:04:46 PM
Co-Chair Hoffman commented on improving the current system.
He opined that the issue did not receive the vetting that it
required. He did believe that there are areas where
improvement was necessary.
Representative Hawker worried about the list of concerns
with the proposed legislation. He identified another
approach including the need for the program to extend two
years. He observed that one year ago, oil was $70 dollars a
barrel where now it is $140 dollar a barrel. The price is
declining as well as unpredictable. Additionally, if the
price trend continues, the cost could decline drastically.
He suggested that the state might better implement for one
year only.
3:08:28 PM
Co-Chair Hoffman agreed that there is a large variable in
the increased costs of oil prices. The beauty of the plan is
if the price of oil goes down, the cost to the state of
Alaska goes down. The senate plan protects the state.
3:10:16 PM
Representative Hawker felt the proposal was reactive; it is
a policy based approach. He asked the tax consequences on
the beneficiaries. He asked who would be responsible for
reporting that taxable income as part of the W2 1099
process. Co-Chair Stedman hoped that legislators could
determine those numbers. He opined that the structure of the
plan removed the risk of tax implication.
3:11:51 PM
Representative Thomas noted concern about urban and rural
divide. He opined that paying over three dollars might
create a rural-rural divide. He provided an example. He
asked why the state does not treat everyone in the rural
communities equally where the fuel issue is concerned.
Senator Hoffman commented that the proposed plan attempts to
treat everyone equally. He observed that the Senate
considered the volatile price of oil. Determining the price
of oil is only a calculation. Until the price of oil reaches
three dollars, it treats everybody equally. If the cost of
oil increases, the energy relief will increase and the state
will receive more revenue. He stressed that the state of
Alaska wins under the proposed scenario. He maintained that
"for the first 850 gallons, everyone is treated equal." The
state can depend upon the plan for the next two years. There
are provisions to protect the state on the low end and on
the high end.
3:16:08 PM
Representative Thomas pointed out that the cost of diesel
varies elsewhere. He warned about the rural/rural divide.
He did not think the proposal was fair.
Co-Chair Hoffman recalled the argument when PCE was first
introduced. The problem then was achieving equalization. If
a certain area has more consumption, then they end up paying
more. There is efficiency built in. The question remains
about the importance of the equalization of energy. The
senate plan attempts to accomplish this equalization.
Representative Thomas argued that the plan did not produce
equality.
3:19:35 PM
Representative Thomas referenced PCE and asked if Fairbanks
fell under the plan. Co-Chair Hoffman replied that Fairbanks
would under the proposed bill.
Representative Thomas asked about the $.05 subsidy that was
going to help communities. He asked if this would include
commercial properties. Co-Chair Hoffman replied that
residential properties were included but commercial users
were not.
3:20:41 PM
Representative Thomas noted that community facilities do not
have as much impact unless you add the commercial
properties. Co-Chair Hoffman explained that the legislation
was attempting to allow the new PCE customers to have
community facilities. The goal is to keep parity with the
program.
Representative Thomas noted that if they stray from a fixed
amount, his constituents lose. He encouraged increasing the
Permanent Fund Dividend (PFD) instead.
Co-Chair Meyer noted that Fairbanks is currently not
included in PCE, but the Senate's bill does include them.
Representative Thomas pointed out that the commercial
properties would not get the same rate.
Representative Kelly agreed that in the short term, the
state can afford this program. He agreed that the need for
the program existed. But the deeper question is whether the
legislature should do this? In the past, there was a
tremendous price difference between fuel purchased in Alaska
and that purchased in the Lower 48. He said that this is no
longer the case, now fuel is competitively priced in Alaska.
This issue bothers him. He opined that today's children
receive many benefits, which compromises their self-reliance
and character. In a state already extremely dependent on
government, this could be considered a sad day in Alaskan
history if we adopt the Senate bill. He doesn't buy the
argument that the resources belong to the people of Alaska;
that's not the way the constitution was set up. He
questioned whether it was wise to put youth on the dole as
soon as they matriculate and believed this is partly what
the struggle between the two approaches is about. He
wondered about the road to Nome or Rampart or Cordova, or
the intertie to Glenallen, or the dam at Susitna, all of
which have been talked about for decades. He stated that
"this question of whether or not the state should do this is
far bigger than the other two reasons cited for instituting
this plan." In his district, the average income had slipped
th
to $34,000 and is now 48 in the nation. He expressed shame
about some of the things the state has not done.
3:31:02 PM
Co-Chair Meyer noted that Representative Kelly's question
was whether this program would work.
Co-Chair Hoffman explained that this is a temporary fix to
provide enough time to look at renewable and alternative
energy developments. A road to Nome would certainly be nice,
but if people can't afford to live there, that road will not
do well. Let this program sunset after two years, and then
the legislature can reevaluate. He asserted that "if the
energy issue is not addressed, then we will not be able to
live in this state."
Representative Kelly wrapped up by saying as we look forward
and avoid handing out more subsidies, there is going to be
more pressure from the constituents to get the roads
constructed. He wanted to raise the level of "howling" about
the lack of real progress.
3:35:23 PM
Representative Gara noted that he agreed with some of what
Representative Kelly said. He mentioned some areas of the
state where these handouts are used for the necessities of
life, and where survival is at stake. There is some effort
on the Senate side to steer more money to those needy
people. He was looking at an exit strategy for this
legislation before the session ends. There were bills on
each extreme of this issue. The House bill fell somewhere in
the middle. He asserted that his constituents don't really
need the electric subsidy. He proposed taking $335 million
dollars out of the heating subsidy and allocating an extra
$185 million to the resource rebate and $20 million into
LIHEAP. If there is not compromise, both sides will go home
saying their idea was better, but nothing will be
accomplished. He encouraged movement toward the center.
Representative Gara described the different tiers of energy
costs in the state: the bush, the Anchorage area, and
Fairbanks. He wondered what the Fairbanks heating costs
looked like and how this subsidy would affect those costs.
Co-Chair Stedman did not have those numbers in front of him.
He mentioned an energy rally in Fairbanks where nearly 1000
citizens attended due to concerns about heating issues. He
noted that Southeast Alaska also has its energy cost
concerns. Representative Gara asked for more specifics about
Southeast.
Co-Chair Stedman noted that most homes are heated by diesel-
fired boilers, even new ones. It was only in the last couple
of years that oil has become more expensive than electricity
for heat. His concern is that there are many senior citizens
and even middle income residents that are having trouble
heating. It is one of the warmest areas of the state, but
despite that there are challenges.
3:44:42 PM
Representative Kelly answered the previous question
regarding Fairbanks and the subsidy noting that the amount
would be $65 on the bill for the 500 kWh. He added that if
individuals in South East Alaska with hydro power are
putting resistance heaters in their homes, this will burn up
the hydro capacity.
Co-Chair Stedman attempted to address the concern. The hydro
can not be expanded. Not all of the dams were built under
the four dam pool. Representative Kelly reiterated the
concern.
3:47:34 PM
Representative Nelson noted appreciation on the plan
presented by the Senate Finance Committee, a comprehensive
plan to address the serious needs of all Alaskans.
3:49:43 PM
CURTIS THAYER, ENSTAR testified via teleconference. He noted
concern with how the bill is written to administer the
program. He observed that, as the bill was written, Enstar
does not have the system in place to do the credit and pass
billing. He noted that they are regulated by the Regulatory
Commission of Alaska and wanted to ease the administering of
the program to half of the state's population.
Representative Hawker referenced the draft language and
asked if that language was the focus of the concern. He
asked for the location of that language.
Mr. Thayer informed that Section 15, Line 28, was the area
of concern. This includes the definition of a multi-unit
structure. Representative Hawker asked if the language
identified the problem. Mr. Thayer said that it does. He
explained that since Enstar is regulated by the regulatory
commission of Alaska, they were attempting to modify the
language to fit within the tariff. He opined that the
simplest solution would be to take a credit from the state
against what the forecast is for the customer class and
identify it on the bill.
Representative Hawker hoped to see the bill move from
Committee today. Mr. Thayer revealed that there were three
attorneys available to make the necessary language changes.
3:54:46 PM
Vice-Chair Stoltze asked if an individual needed to request
a rate reduction of the Regulatory Commission of Alaska. He
doubted it would be a problem for the Regulatory Commission
of Alaska. Vice-Chair Stoltze asked if this would be an
expedited ruling. Mr. Thayer stated that he would request
one.
Vice-Chair Stoltze asked what expedited means. Mr. Thayer
st
replied before September 1.
3:55:55 PM
Representative Gara asked if Enstar had the proposed
language. Mr. Thayer stated that they did have the draft.
The definition of multi unit structure is different for
Enstar than it had been defined in the bill. He explained
that it would be difficult to identify how many multi-unit
structures exist behind one meter.
Representative Gara thought that if the need for a certain
number of days was present the committee could put it in the
bill. Mr. Thayer replied that this might be a possible
approach.
3:57:01 PM
Representative Gara asked if the draft language was
available for the committee. Mr. Thayer answered that he
could present the draft language in half an hour.
AT EASE: 3:58:36 PM
RECONVENE:4:48:42 PM
Vice-Chair Stoltze MOVED to ADOPT work draft #25-GS4057\R,
Cook, 8/5/08, as the version of the bill before the
Committee. Representative Gara OBJECTED.
SUZANNE ARMSTRONG, STAFF, REPRESENTATIVE KEVIN MEYER,
explained that the only difference between the current and
former CS was that this was a Senate bill.
Representative Hawker explained that what was formerly
Section 3 had been relocated to Section 5.
4:50:30 PM
Co-Chair Meyer commented on some of the differences between
the Senate and the House version of the bill. He recommended
not beginning any new programs.
He thought that the administration had the same problems. He
retained the idea of letting the people determine how the
$1200 dollars are to be spent. He added that the fuel tax
will help Alaska residents. He acknowledged that this is a
temporary solution. The PFD checks will be expedited
allowing the help to reach people before winter. He proposed
that the legislature take a more deliberate process next
session to do this correctly. He observed that by next year
there would be feedback from the energy coordinator as to
what direction the state will go in the area of resolving
energy needs.
4:54:44 PM
Representative Gara expressed confusion because a prior
version of the bill had included electrical cost assistance
and fuel assistance to offset high fuel costs for those with
limited incomes. The Senate added a different bulk fuel
position. He referenced the lack of heating assistance and
PCE appropriations. He did not understand the low cost items
that would make a big difference to those with lower
incomes. He expressed confusion regarding the removal of the
heating and electricity assistance.
Co-Chair Meyer reminded that the LIHEAP program is still in
existence and the money appropriated for LIHEAP had not yet
gone into effect. He maintained that LIHEAP will be expanded
this winter. He stated that the current PCE program will be
in place.
Representative Gara expressed his understanding of
Representative Meyer's comments. He recalled that the prior
bill included $20 million in additional LIHEAP
appropriations and additional PCE for the high cost
communities. He warned that many communities may be left in
the cold. Co-Chair Meyer proposed adding $10 million more to
LIHEAP and PCE. He maintained that the larger resource
rebate will help individuals cover the difference on the PCE
if that is how they choose to use the money.
4:57:42 PM
Representative Crawford added comments for Representative
Joule indicating that $1200 for a person in Anchorage makes
a big difference but would not go far in the rural
communities. There was legislation that did address those
concerns. He felt the legislature had taken steps backward.
He did not support the proposed bill. He expressed
disagreement with certain aspects of the Senate bill,
although the version adopted by the Senate was closer to
where he believed the state should move. He encouraged that
the Committee work toward a better compromise.
4:59:35 PM
Co-Chair Meyer did not know what the correct solution was.
He stressed that the proposed draft was a temporary
solution.
5:00:00 PM
Representative Nelson noted that when the PCE program was
constructed, the finance committee could have deemed it ill
advised. The Senate provided a thorough look at needs across
the state. There is broad recognition that what the Governor
offered is a starting place, but now the committee is
reverting back to a very shallow and arbitrary distribution.
She stressed that $1200 in one part of Alaska does not meet
needs in the same way in other parts of Alaska. She
encouraged greater statesmanship. She expressed sadness at
seeing the time spent in both bodies developing a
deliberative, comprehensive, approach go into the waste can.
She wanted to see substantive changes on the House Floor.
She did not support the current version of the bill.
Representative Nelson remained optimistic that changes can
be made on the House Floor. She did not support the bare-
bones version.
5:03:05 PM
Co-Chair Meyer argued that the Committee had put a lot of
time and effort into the bill. He acknowledged that the
process got diverted. He questioned the subsidy for natural
gas, electric, and heating oil. He argued that there are
many unknowns. The Senate had indicated that it could cost
up to $20 million dollars to implement programs that may or
may not work. He reiterated the promise of process in
January to work out a long-term plan along with the help of
the energy coordinator. He opined that regardless of an
individual's location $1200 would help.
5:05:02 PM
Representative Nelson understood that the goal of the Senate
was to buy down heat by 40 percent, whether the energy
source was oil, gas or electricity. She applauded the goal
as a worthy endeavor. She was optimistic that the
Legislature would provide meaningful relief to hard pressed
people. The concern about price gouging is meaningful
concern. Only a portion would be covered by the state. She
expressed her support for the Senate plan and proposed that
it be accepted and supported.
5:06:55 PM
Co-Chair Meyer thought that once regular session resumes,
the legislature could address revenue sharing to aid in the
heating situation.
Representative Nelson asked if it would be appropriate to
give a large sum of money to the Municipality of Anchorage
to pay down individual's heating bills. Co-Chair Meyer
explained that property taxes pay city government. He
understood the received testimony that it would go toward
buying heating fuel. He wanted to be prepared.
Representative Nelson argued that one of the testifiers
addressed the death of a person who died alone due to lack
of ability to heat his home. She maintained that municipal
assistance is needed, but that does not help individuals
that are cold, hungry, and living alone.
5:09:08 PM
Representative Gara asserted that $250 million dollars of
the resource rebate would equal a check to the federal
government. There was past consensus of the committee to
provide a combination of a flat check, allowing urban
individuals with smaller problems to be treated fairly. Also
included was heating assistance to those who can barely pay
for food. The previous version contained an extra provision
for those facing the greatest problems. He wanted an
explanation as to why the bill had been changed so
radically.
5:11:07 PM
Co-Chair Meyer explained that the House does not work for
the Senate. He hoped to come forward with a bill similar to
that of both committees. The expressed problem was that the
home heating fuel subsidy would not be taxed. The reality
was that it may indeed be taxable. He understood the focus
of the call was to help people who really needed the help.
He disagreed with the creation of any new entitlement
programs. He thought that the focus should be for those
that need to heat their home. Some of the wealthiest people
in the State will be qualifying for the subsidy, but they
may not receive it because it must be applied for.
5:13:13 PM
Vice-Chair Stoltze observed concerns with the previous House
version. He expressed shock that the $5,000 penalty in
Section 4 had not been removed. He wanted to be consistent
in his criticisms. He was against enabling a new
bureaucracy. Co-Chair Meyer believed that the penalty was
currently in statute for neglecting to provide monthly
reports.
5:14:40 PM
Representative Thomas stated that the other version was not
paying the people fairly in the rural communities. He opined
that the state should pay the first three or four dollars
and then have the individuals paid the remainder. He
stressed that if the committee delayed too long they would
not go to conference. He worried that it might not happen
at all. He encouraged that the committee move the bill to
the House Floor for discussion purposes.
5:16:52 PM
Representative Gara WITHDREW the OBJECTION. He asked about
the location of the final version. Representative Thomas
explained that probably the Senate version would not be
adopted and instead would go to conference. He maintained
that "the process is not over yet."
Vice-Chair Stoltze expressed irritation and agreed with
Representative Thomas referring to the process as fluid.
5:18:28 PM
Co-Chair Meyer referenced the $5,000 penalty for not
submitting reports in regard to the eight cent tax
suspension for motor fuels.
CHRIS POAG, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
explained that the provision imposes a penalty for
neglecting to file the tax return. The penalty is not based
on the tax, because there would be no tax. The penalty in
this provision is up to $5,000 and will require the returns
and the invoices to comply with federal requirements. The
current fine is different from what is proposed. The penalty
is 5% of the tax for each 30-day time period.
5:20:08 PM
Vice-Chair Stoltze asked if there was a standard guide that
led to the amount of $5000.
Mr. Poag answered that the amount is consistent with the
civil penalties provided in 4375 for an individual listed as
a fisheries business license taxpayer who failed to get a
license. The amount is consistent with other civil penalties
on the book for failure to comply with licensing
requirements.
Vice-Chair Stoltze asked for affirmation by the department
that the level of the fine was proper.
Mr. Poag explained that the amount was up to 5,000 dollars
and there would be an informal appeal process that would
apply.
5:22:14 PM
Representative Kelly asked why the penalty shouldn't be
suspended since the tax would be suspended.
Mr. Poag answered that there was need for an incentive to
encourage suppliers to file their tax returns, which provide
needed information for the Federal Highway Department to
continue eligibility for the Federal Highway Fund.
Representative Kelly questioned that the reporting is not
related to the tax when there is no tax; instead it is
related to the gallons of fuel.
JERRY BURNETT, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, explained that the returns
were needed to record the number of gallons of fuel used in
the state of Alaska.
Co-Chair Meyer introduced his conceptual amendment, which
changed the plan from a two year plan to a one year plan, in
an effort to ascertain whether or not constituents are
seeing the eight cent tax suspension passed though.
Vice-Chair Stoltze asked if it was valid to assume that
bringing it back in one year is consistent with the
commitment to address the omnibus issue of statewide
concerns.
Co-Chair Meyer affirmed.
5:26:10 PM
MOVED to ADOPT Conceptual Amendment #1, Page 3, Line 15,
deleting "June 30, 2011", inserting "August 31, 2009"; Page
3, Line 29, deleting "June 30, 2011" and inserting "August
31, 2009"; Page 3, Line 30, deleting "September 1, 2011" and
inserting "October 1, 2009".
Representative Gara expressed concerns about whether the gas
tax should disappear when the price of gas is high and
reinstitute when the price of gas is low instead of
instituting an expiration date.
Co-Chair Meyer explained that many people were not sure that
the savings would be passed on to the consumer.
Representative Gara preferred avoiding the need to vote on
various elements each year.
Vice-Chair Stoltze removed his objection.
Co-Chair Meyer noted no objections and passed conceptual
amendment 1.
5:28:22 PM
Representative Gara offered conceptual amendment 2. This
amendment would return the LIHEAP program assistance back
into this bill as in version 25-LS1757\E Kane 7/31/08,
Sections 6 and 7.
Co-Chair Meyer OBJECTED.
Co-Chair Meyer clarified that those sections appropriated
$10 million to LIHEAP.
Representative Gara said the amendment would include
sections 6 and 7 of the E version of HB4005, except for the
portion stating "the benefit may not exceed $170," he would
insert "the benefit may not exceed $340." He stated that the
LIHEAP program is very important to low income residents and
this bill should include a provision assisting those who
have a hard time affording fuel. The highest benefit goes to
the families with the most fragile members, such as seniors
and those with disabilities. He opined that there should be
a portion of this bill that reflects the reality that some
individuals have a much more difficult time paying for the
basic necessities of life. He pointed out that while $1200
will be a luxury to some, for others it will barely help put
food on the table.
Co-Chair Meyer reminded the committee that $10 million had
been passed for LIHEAP during regular session.
Ms. Armstrong requested clarification that the E version of
the bill adopts a dollar amount of $340.
Representative Gara confirmed that was his intention.
Co-Chair Meyer asked how much money would be added with this
change.
Ms Armstrong estimated that it would add 40 to 42 million
dollars to the program.
Co-Chair Meyer asked if the original recommendation was $10
million.
Representative Gara said that one quarter of the money
appropriated for the resource rebate would go to Alaskan's
who earn over $100 thousand per year. The state will be
spending over $250 million on families that make over $100
thousand per year, so $40 million to help people pay for
heat does not seem like too much.
5:32:55 PM
Representative Kelly noted that a heating program benefiting
someone earning over 100,000 dollars was "out of line."
Co-Chair Chenault asked about clarifying the point system,
up to 35 possible points. If each point were worth 340
dollars, then that household would be allowed up to $11,900.
JON SHERWOOD, DIRECTOR, OFFICE OF PROGRAM REVIEW, DEPARTMENT
OF HEALTH AND SOCIAL SERVICES, said that he could not verify
the math but Co-Chair Chenault's estimation sounded correct.
In the coldest communities with the most expensive fuel,
there is a limit to the amount of points that count, so
there can be some variations.
Co-Chair Chenault observed that the committee did not know
how many people would apply or qualify for the total points.
Representative Kelly apologized for his misspeak about the
$100 thousand, and corrected himself stating that the number
is $50 thousand for the 225 percent.
Representative Gara explained that current LIHEAP program
only applies for 225 percent of the poverty level, which is
roughly $39 thousand.
Mr. Sherwood read the appropriate statutes regarding income.
For $225 percent of poverty, the annual income for a family
of three is $49,500 and for a family of four is $59,625
gross income.
Co-Chair Meyer acknowledged that the family would also
receive the $1200 resource rebate.
Representative Kelly added that the family would also
receive the PFD.
Representative Gara withdrew the amendment and will
introduce changes on the floor.
Vice-Chair Stoltze noted the 100,000 per household was
considered "rich."
5:37:45 PM
Representative Gara said he never called someone making
$100,000 dollars per year "rich."
Vice-Chair Stoltze MOVED that HCS for CSSB4002 as amended be
MOVED out of committee with individual recommendations.
Co-Chair Meyer asked whether there were any objections.
Representative Hawker asked about fiscal notes.
Co-Chair Meyer agreed that fiscal notes were necessary and
noted that the bill moved without objections.
5:40:01 PM
HCS CS SB 4002 (FIN) was reported out of Committee with a
"do pass" recommendation and with two new fiscal notes by
the Department of Revenue, two new fiscal notes by the
Department of Health and Social Services and three new
fiscal notes by the Department of Commerce, Community and
Economic Development.
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