Legislature(2013 - 2014)HOUSE FINANCE 519
03/05/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB181 | |
| HB112 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 112 | TELECONFERENCED | |
| + | HB 181 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 181
"An Act relating to the accounting for money received
by the state from the mining license tax, mining lease
payments, and royalties from mining on state tide and
submerged land seaward of a municipality, and the
availability of that money for appropriation to
certain boroughs and municipalities outside of a
borough."
8:35:04 AM
REPRESENTATIVE NEAL FOSTER, introduced himself. He
introduced his PowerPoint presentation: "HB 181 Mining
License Revenue Tax" (copy on file). He began with slide 2:
"Bill Language."
"An Act relating to the accounting for money received
by the state from the mining license tax, mining lease
payments, and royalties from mining on state tide and
submerged land within a municipality, and the
availability of that money for appropriation to
certain boroughs and municipalities outside of a
borough."
Representative Foster continued with slide 3: "Language
Clarification."
· Two types of revenue:
o Mining lease payments and royalties = Competitive
bids for tracts of off-shore mining areas
o Mining license = Tax on profits
· "State tide and submerged land" = Off-shore
8:37:23 AM
Representative Foster discussed slide 4: "Bill in Laymen's
Terms."
· By request of:
o Commissioner of Commerce Community and Economic
Development, or
o Commissioner of Department of Natural Resources
· Legislature may appropriate funds:
o From mining leases and taxes
o To municipalities
o If the mining occurs off-shore and in municipal
boundaries
8:38:20 AM
Representative Foster continued with slide 5: "Reason for
Legislation."
· State revenue associated with mineral lease sales:
o Off-shore and within Nome's municipal boundaries
o have brought in over $700,000 in recent years to
the State
· Caused increased traffic in Nome's port and harbor
· Need more infrastructure and personnel
8:39:01 AM
Representative Foster continued with slide 6: "Current
Funding." The funding mechanism included revenue from
mining lease, rents and mining taxes.
Representative Foster pointed to slide 7: "Proposed
Funding." One half of the revenue was placed in the
Permanent Fund, while the other half went to the general
fund. The legislation proposed that up to half of the
general fund portion would be allocated to municipalities.
8:39:32 AM
Representative Foster discussed slide 8: "Mineral lease
rental, royalties, and royalty sale proceeds in the Nome
area for 2011-2013." The slide's data was compiled by the
Department of Natural Resources. He stated that the revenue
was calculated based on leases within Nome's boundaries. He
noted that rents, royalties and lease sales in 2011 equaled
$704,676. Nome's share based on the actual allocation for
the same year would be $176,169.
8:40:48 AM
Representative Foster discussed slide 9: "So what do we
mean when we say off-shore but within a municipality's
boundaries?" He discussed the map's details.
8:41:26 AM
Representative Foster skipped to slide 11: "2011 Nome
Offshore Lease Sale Tract Location Map." The map depicted
the different tracts of lease sale areas. He stated that
the City of Nome's boundaries extended off-shore. He
explained that the lease sales impacted Nome's port and
harbor. The bill requested a small area be subject to the
legislation.
8:42:09 AM
Representative Foster discussed slide 12: "Nome Beach
Public Mining Areas." He explained that the yellow line
illustrated Nome's boundary. He stated that Nome's boundary
extended approximately 1-2 miles from the shore.
8:42:52 AM
Representative Foster moved the map on slide 13. He
explained the docks identified on the map and mentioned
that Nome would require a "middle dock" to address the
increased congestion.
8:43:17 AM
Representative Foster pointed to slide 14: "Area Within the
Municipality."
· What makes Nome unique is its municipal boundaries go
off-shore
· Nome cannot impose a property tax on open water
· Legislation would only capture revenue from the leases
that fall within the municipal boundary
· This area is small compared to the total mining leases
that affect Nome's port and harbor.
8:43:54 AM
Representative Foster discussed slide 15: "Port Vessel
Traffic." He stated that lease sales began in 2005. He
noted the graph's depiction of increased traffic due to
lease sales.
8:44:19 AM
Representative Foster discussed slide 16: "Effects
Increased Traffic."
· Increased traffic of smaller vessels are driving the
need for expansion of the inner harbor
· As leases are developed larger vessels (too big for
the inner harbor) are competing for already cramped
space in the outer port's two docks
· The number of dredges, vehicles and equipment being
shipped in for the mining industry is exacerbating the
delays and congestion at the port
8:44:58 AM
Representative Foster concluded with slide 17: "Final
Message."
· HB 181 offers one small portion of relief for
infrastructure and funding needs
· Yesterday the Department notified us that there are no
more lease sales planned within Nome's boundaries
· This means that going forward there would only be
about $4 thousand per year in revenue available to the
City. The funding request for the planned middle dock
alone is $3 million
· Solutions:
o Retroactivity
o Area Expansion
o Capital Request
8:46:50 AM
Representative Holmes commented that two areas in the state
were interested in offshore mining leases. She asked about
the type of mining occurring in Nome.
PAUL LABOLLE, STAFF, REPRESENTATIVE FOSTER, responded that
suction and traditional dredging comprised Nome's offshore
mining practices.
Representative Holmes asked about the impact on Nome of the
increased number of dockings. She wondered about the
proposed harbor changes.
8:48:12 AM
Mr. Labolle responded that 52 percent of the vessels
docking in Nome were associated with the leases, with the
remainder associated with recreational mining areas located
outside of the lease boundary.
8:49:19 AM
Representative Wilson asked about the mechanism used to
determine the harbor's users.
Mr. Labolle replied that Ms. Baker was the best person to
answer the question.
JOY BAKER, PORT OF NOME (via teleconference), asked the
representative to repeat her question.
Representative Wilson repeated her question. She wondered
about the utilization and upgrades for the harbor. She
asked about a vessel tax that would address those issues.
Ms. Baker replied that the city had an indication of users
of the harbors in the port. She stated that the smaller
dredgers utilized the recreational areas outlined by the
Department of Natural Resources. She mentioned a medium-
sized fleet that used the harbor when working the off-shore
leases. She noted the increase in larger vessels that were
too deep for the harbor and were crowding the already
congested docks at the port. She stated that the volume of
the inner harbor was the initial concern, but the
congestion now affected both facilities.
8:51:33 AM
Representative Wilson asked if the vessels could be charged
a fee that would be used to add to or maintain the harbor.
Ms. Baker replied that port fees were charged and increased
in 2012 and 2013 and the municipality was considering
another tariff increase. She stated that the fees could not
be so large that smaller vessels could not afford them.
8:52:57 AM
Vice-Chair Neuman asked about sales tax in Nome.
Representative Foster stated that Nome had a sales tax.
Vice-Chair Neuman asked the percentage.
Representative Newman replied 5 percent.
Representative Neuman stated that he watched the television
show "Bering Sea Gold," which was based out of Nome. He
discussed the mineral royalty sales. He noted that the
sales in 2011 were different from other years. He asked how
long the leases were.
Representative Foster replied that the leases were 10 to 20
years.
8:54:41 AM
SCOTT PEXTON, DEPARTMENT OF NATURAL RESOURCES (via
teleconference), replied that the off-shore mining leases
could be issued for 10-year to 20-year terms.
Vice-Chair Neuman stated that gold was a boom and bust
mining industry. He asked about the effect on the
department related to the leases. He asked how much of the
lease revenue covered the department's expenses.
8:55:54 AM
Mr. Pexton replied that he did not have the exact figures
requsted. Precise time would be difficult to account for,
but he did not anticipate a great expense would be
discovered. He stated that the majority of the work
occurred during the actual lease sale.
8:57:08 AM
Vice-Chair Neuman noted that the statutorily required
mandate included coverage of the management of the leases.
He imagined that additional revenue could cover the
municipality costs related to building and maintaining
infrastructure for the port of Nome.
8:57:38 AM
Representative Foster offered to work with the department
on some exact figures.
8:57:50 AM
Representative Munoz asked about mining activity off the
coast of Yakutat. She wondered why the community was not
included in the organization for coverage of their harbor
costs.
Mr. Labolle replied that lease sales in Yakutat did not
occur within the municipal boundary.
Representative Munoz asked to know more about the off-shore
mining practices and boundaries in Yakutat.
Mr. Labolle was unsure about specifics. He deferred the
question to the department.
8:59:04 AM
Mr. Pexton replied that most of the offshore activity in
Cape Yakataga was associated with tide and submerged land
mining claims. He stated that the activity was minimal for
off-shore mining leases; very little activity compared to
Nome.
Representative Guttenberg wondered how the definition of
municipalities was applied in the proposed legislation.
Mr. Labolle replied that all incorporated municipalities
were included. Second class cities were included.
Representative Guttenberg asked about a smaller isolated
area and lease sales. He wondered about incorporation of
the municipality for the lease payments.
Mr. Labolle replied that the bill was not written as
retroactive. Lease sales, without boundaries established,
could participate. He noted that many community boundaries
were based on tides as opposed to Nome's property corners
that were based on real space.
9:01:31 AM
Representative Gara opined that the problems faced in Nome
were understated by the sponsor. He stated that the food
bank was often raided by miners in the area for a short
period of time each year. He asked about the maximum amount
of money sought by Nome as revenue sharing from the mining
tax.
Representative Foster replied that the maximum amount
sought would be $740 thousand over a three-year period. If
the "up to 50 percent" was applied, $185 thousand would be
the maximum amount over the same time period. He
appreciated the question although the revenue sharing
contribution was a small step in the direction of a
solution.
9:03:37 AM
Mr. Labolle highlighted the point that the $185 thousand
was estimated from the combination of the sale of the
initial lease and subsequent rents and royalties, which
were small reoccurring payments.
9:04:35 AM
Representative Gara discussed the state's antiquated mining
tax policies for large scale mining operations.
9:05:15 AM
Co-Chair Austerman OPENED public testimony.
Co-Chair Austerman CLOSED public testimony.
HB 181 was HEARD and HELD in committee for further
consideration.
9:05:58 AM
AT EASE
9:08:21 AM
RECONVENED