Legislature(2005 - 2006)

05/04/2005 04:52 PM FIN


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 280                                                                                                            
                                                                                                                                
     "An  Act relating  to the taxation  of mining  property;                                                                   
     relating  to contracts  approved  by municipalities  for                                                                   
     payments  in  lieu  of  taxes;   and  providing  for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
JIM POUND, STAFF, REPRESENTATIVE JAY RAMRAS, spoke in                                                                           
support of the legislation. He read from the sponsor                                                                            
statement:                                                                                                                      
     CSHB  280 is interestingly  enough  a bill requested  of                                                                   
     this  body by the  industry. Under  its language,  mines                                                                   
     operating in  the state would  be taxed by the  state on                                                                   
     the true and real value of real and tangible property.                                                                     
                                                                                                                                
     Precious  metal exploration has  continued in  the state                                                                   
     and  several of the  locations being  developed  are not                                                                   
     located in  organized boroughs. Without the  language of                                                                   
     CSHB  280 development  companies are  operating with  an                                                                   
     uncertain  and potentially  unstable  set  of rules  for                                                                   
     taxation.  Using AS  14.17.410 (b)  (2) as  a tax  base,                                                                   
     mines in unorganized boroughs  would be assessed a four-                                                                   
     mill levy.  Boroughs forming  later would be  allowed to                                                                   
     tax at their established property tax rate.                                                                                
                                                                                                                                
     Language  in  the bill  also  creates a  special  mining                                                                   
     property  tax  account  and allows  the  legislature  to                                                                   
     appropriate that  money into the public  education fund.                                                                   
     Essentially this  is an offer by the mining  industry to                                                                   
     assure funding for Alaska's Education System.                                                                              
                                                                                                                                
     HB  280  is  limited  to  large  producers  only.  Mines                                                                   
     producing less than $10,000,000  are exempt from the tax                                                                   
     formula. This keeps what  is left of our once profitable                                                                   
     mom and pop mines in operation.                                                                                            
                                                                                                                                
     In  a  world  market,  stability  both  politically  and                                                                   
     financially are critical  to success for these companies                                                                   
     that  invest  millions  of dollars  just  searching  for                                                                   
     precious  metals.  Creating a  stable  tax  base for  an                                                                   
     industry  that  creates  hundreds  of  jobs  in  Alaskan                                                                   
     communities  makes  sound fiscal  sense.  It also  gives                                                                   
     unorganized areas of the  state a clear understanding of                                                                   
     the  income they  will receive  from a  mine, once  they                                                                   
     become a borough and can receive the tax benefit.                                                                          
                                                                                                                                
4:53:42 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault asked if there  was a current limit on what                                                                   
municipalities  could tax.  Mr.  Pound noted  that there  was                                                                   
not. He thought  that the Fairbanks North Star  Borough taxed                                                                   
the Fort Knox Mine  at the existing mil levy  on property (14                                                                   
mils). The Red  Dog Mine pays the Northwest  Arctic Borough a                                                                   
severance tax  based on mineral  production (3  percent). The                                                                   
Usebelli Mine also pays the Denali Borough a severance tax.                                                                     
                                                                                                                                
4:54:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  asked the effect on the  Donlin Creek Mine                                                                   
and the Kensington Mine. He asked about the tax structure.                                                                      
                                                                                                                                
Representative Weyhrauch explained  that the City and Borough                                                                   
of  Juneau  has   a  two-tier  tax  structure.   These  mines                                                                   
currently pay 6.6  mils. If they connect to  services the mil                                                                   
rate would increase to 11.                                                                                                      
                                                                                                                                
In response  to a  question by  Representative Chenault,  Mr.                                                                   
Pound  noted  that  the  legislation  would  not  affect  any                                                                   
current mines operating within  an organized borough. A 4-mil                                                                   
levy  on  personal   property  would  be  imposed   on  mines                                                                   
operating outside of a municipality.  There is nothing in the                                                                   
legislation,   which  would  prevent   a  municipality   from                                                                   
annexing a mine, but they would  be required to come in under                                                                   
the existing property tax structure.  The state tax would end                                                                   
when the  mine is  annexed. The  legislation does not  affect                                                                   
the municipality's tax.                                                                                                         
                                                                                                                                
4:56:40 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze referenced  AS 43.67.020  on page  3. Mr.                                                                   
Pound  explained  that for  a  period  of 15-years,  the  tax                                                                   
language in place  under AS 43.67.020 would  be restricted to                                                                   
the particular taxes listed "except  where a municipality may                                                                   
comes in  and do personal property  tax on a new  one". After                                                                   
the  15-year period,  the  door  opens up  and  there are  no                                                                   
exemptions at all on what can and cannot be taxed.                                                                              
                                                                                                                                
Vice-Chair   Stoltze  mentioned   gas  line  provisions.   He                                                                   
questioned the  affect of  the legislation on  constitutional                                                                   
issues. Mr. Pound  discussed his understanding  of the intent                                                                   
of section  20. He  explained  that prior to  [a mine]  being                                                                   
annexed into a  municipality, for a period  of 15-years taxes                                                                   
are levied based on the items on the list:                                                                                      
                                                                                                                                
     (1) taxes on the sale or use of minerals;                                                                                  
     (2) taxes  on or  measured by gross  or net  income from                                                                   
     the   taxable  property,   including  income   from  the                                                                   
     exploration  for,  production  of,  or  of  minerals  or                                                                   
     taxable property; and                                                                                                      
     (3)  any   license,  excise,  fee,   charge,  severance,                                                                   
     throughput,  or  other  tax  on  or  pertaining  to  the                                                                   
     taxable property or services  used in or associated with                                                                   
     the taxable property or in  its maintenance or operation                                                                   
     unless the  tax is also  levied on property  not subject                                                                   
     to tax under AS 43.67.010(a).                                                                                             
                                                                                                                                
Vice-Chair Stoltze  wanted to make sure that  the legislation                                                                   
was on solid constitutional ground.                                                                                             
                                                                                                                                
5:00:11 PM                                                                                                                    
                                                                                                                                
Representative  Holm expressed  concern with  the ability  to                                                                   
exempt  previous  taxing authorities.  He  felt  it would  be                                                                   
appropriate for the  state of Alaska to have  an even playing                                                                   
field.  He recommended  that the  "grandfather provision"  be                                                                   
reviewed. He pointed out that  the residents of the state own                                                                   
the resource, not the municipality  adjacent to the resource.                                                                   
The  state  of  Alaska  cannot   constitutionally  allow  the                                                                   
municipality  to  tax the  resource.  He suggested  that  the                                                                   
activity could not be grandfathered  in because it is illegal                                                                   
in the  first place, even though  it has been  occurring. Mr.                                                                   
Pound  agreed that  there are  constitutional questions  that                                                                   
must be addressed by the courts.                                                                                                
                                                                                                                                
5:03:10 PM                                                                                                                    
                                                                                                                                
Representative Holm  recommended that the issue  be addressed                                                                   
before it is passed out of Committee.                                                                                           
                                                                                                                                
5:05:51 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze referenced  similar provisions relating to                                                                   
the gas line. He asked about the 15-year exemption.                                                                             
                                                                                                                                
BRETT FRIED, ECONOMIST, TAX DIVISION,  DEPARTMENT OF REVENUE,                                                                   
noted that he was not qualified to answer that question.                                                                        
                                                                                                                                
5:06:52 PM                                                                                                                    
                                                                                                                                
ETHAN  FALATKO,  ASSISTANT ATTORNEY  GENERAL,  DEPARTMENT  OF                                                                   
LAW, did not feel there would  be a constitutional issue with                                                                   
the statute.  He noted  that Article  X allows  the state  of                                                                   
Alaska very broad  authority to delegate taxing  authority to                                                                   
municipalities.                                                                                                                 
                                                                                                                                
5:08:44 PM                                                                                                                    
                                                                                                                                
JAMES  FUEG,  PLACER  DOME,  JOINT  VENTURE,  referenced  the                                                                   
handout from  the Donlin Creek  project. He commented  on the                                                                   
size of the project. A mine in  that area would employee over                                                                   
400 people.  There are benefits  in addition to  those listed                                                                   
in HB 280. He read from prepared testimony:                                                                                     
                                                                                                                                
   • The handout presented to you is a brief description of                                                                     
     the  ongoing work at  the Donlin  Creek Project.  As you                                                                   
     can  see, if  a decision  is made to  move forward  with                                                                   
     development of  a mine at Donlin Creek this  will be one                                                                   
     of  the largest  and most  complex resource  development                                                                   
     projects  in  Alaska. Current  estimated  capital  costs                                                                   
     for  the  project  are  welt in  excess  of  $1  billion                                                                   
     dollars.  A mine  at  Donlin Creek  would  employ ~  pay                                                                   
     royalties   to  the  shareholders   of  Alaskan   Native                                                                   
     Corporation   of   Calista  Corporation,   the   mineral                                                                   
     est~iho1der  for  the deposit,  and  pay Mining  License                                                                   
     Taxes  and Corporate  Income Taxes  to the State.  These                                                                   
     benefits  are  in  addition to  the  potential  payments                                                                   
     proposed under HB 280.                                                                                                     
                                                                                                                                
   • One of the biggest uncertainties facing mineral                                                                            
     development in  the unorganized borough of  Alaska., and                                                                   
     hence the  Donlin Creek Project, amongst  others, is the                                                                   
     lack of  any defined tax  structure at the  local level.                                                                   
     This   makes  it  extremely   difficult  to   accurately                                                                   
     predict future  operating margins and costs  when one is                                                                   
     developing  the  complex economic  models  that must  be                                                                   
     completed  prior to making  a billion dollar  investment                                                                   
     decision,  such as we are  facing at Donlin  Creek. This                                                                   
     in turn makes  it harder to achieve a  positive decision                                                                   
     on such large investments.                                                                                                 
                                                                                                                                
•    HB 280  presents several  mechanisms for companies,  who                                                                   
     wish  to  invest  in  mine  development  in  Alaska,  to                                                                   
     address  these uncertainties,  while  at  the same  time                                                                   
     providing a mechanism for  the industry to contribute to                                                                   
     the cost  of education in their communities  and, should                                                                   
     a  local  government be  formed  at  some point  in  the                                                                   
     future,  contribute   to  the  cost  of   funding  local                                                                   
     government.                                                                                                                
                                                                                                                                
5:11:30 PM                                                                                                                    
                                                                                                                                
KEVIN RITCHIE,  ALASKA MUNICIPAL  LEAGUE, JUNEAU,  noted that                                                                   
the League represents future municipalities  that might form.                                                                   
He  noted   that  there   have  been   improvements   to  the                                                                   
legislation.  He observed that  taking away taxing  authority                                                                   
in  any  manner  is of  concern  to  the  municipalities.  He                                                                   
addressed  section  2 (c),  which  allows a  municipality  to                                                                   
negotiate a payment  in lieu of taxes unless  the property is                                                                   
subject  to a  state contract.  He felt  that the  subsection                                                                   
would  take away  the authority,  which is  granted in  other                                                                   
parts of  the bill,  for the municipality  to define  what is                                                                   
needed to  pay for  schools, roads,  public safety  and other                                                                   
services. He encouraged the Committee  to review the language                                                                   
more closely.                                                                                                                   
                                                                                                                                
Mr. Ritchie discussed section  3. Section 3 would broaden the                                                                   
severance tax issue to all municipalities.  The provision was                                                                   
recently  added.  Previously,  the  bill  only  impacted  the                                                                   
formation  of new  boroughs. He  did  not think  there was  a                                                                   
current severance tax on minerals.                                                                                              
                                                                                                                                
5:14:56 PM                                                                                                                    
                                                                                                                                
STEVE  VAN  SANT, STATE  ASSESSOR,  DEPARTMENT  OF  COMMERCE,                                                                   
COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  (via  teleconference)                                                                   
offered to answer questions of the Committee.                                                                                   
                                                                                                                                
5:15:34 PM                                                                                                                    
                                                                                                                                
STEVE  BORELL, ALASKA  MINERS'  ASSOCIATION, ANCHORAGE,  (via                                                                 
teleconference)   noted   that   the   mining   industry   is                                                                   
volunteering to pay a new tax,  through HB 280. The tax would                                                                   
be on large  mines operating in the unorganized  borough at a                                                                   
constant  rate  for a  period  of  15  years from  the  first                                                                   
production  at the mine.  The industry  already pays  several                                                                   
taxes to  the state depending on  the type of land  where the                                                                   
mining  occurs. A  mining license  tax is paid  to the  state                                                                   
regardless  of  whether the  land  is  on state,  federal  or                                                                   
private land.  Mining also pays corporate income  tax, mining                                                                   
claim rentals,  production royalty  on state owned  land, and                                                                   
property  tax when  the  mine is  in the  organized  borough.                                                                   
Mines would  also pay taxes  to future boroughs.  He stressed                                                                   
the need for tax certainty.                                                                                                     
                                                                                                                                
5:17:53 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  asked about  AS 43.56 properties  assessed                                                                   
by the  state and  the tax proposed  on the mining  industry.                                                                   
Mr. Van Sant  observed that AS 43.56 oil and  gas properties,                                                                   
which  are assessed  by  the state  and  cross-jurisdictional                                                                   
lines between  communities, are  levied a  20-mil tax  by the                                                                   
state. Municipalities levy their  mil rate against the 20-mil                                                                   
tax.  Oil companies  do  not pay  more than  20  mils on  any                                                                   
evaluation. The State would retain  authority to assess a tax                                                                   
on  mining  property  contained  within  certain  boundaries,                                                                   
which don't cross-jurisdictional  lines. The 4-mil assessment                                                                   
would come  directly to the  state unless a municipality  was                                                                   
formed.                                                                                                                         
                                                                                                                                
5:20:54 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault inquired how  the value of the 4 mils would                                                                   
be determined.  Mr. Van  Sant responded  that the bill  would                                                                   
require them  to value property  based on the  cost approach,                                                                   
which is based on actual costs.  This approach is used on the                                                                   
Red Dog Mine. The  state also uses this approach  on AS 43.56                                                                   
property along with market and income approach to value.                                                                        
                                                                                                                                
5:22:07 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze asked if there were legal concerns.                                                                          
                                                                                                                                
KATHRYN  KURTZ, ATTORNEY,  LEGISLATIVE  LEGAL SERVICES,  (via                                                                   
teleconference) pointed  out that the state has  the power of                                                                   
taxation and has the authority to set a tax rate.                                                                               
                                                                                                                                
Vice-Chair  Stoltze asked  if there  were potential  problems                                                                   
with locking into  the rate. Ms. Kurtz could  not address the                                                                   
gas line  issue. She commented  that the bill would  give the                                                                   
state  of Alaska  the power  in lieu  of taxes.  It does  not                                                                   
cause a great deal  of legal concern because of  the scope of                                                                   
the issue. She  acknowledged that a surrender  of the state's                                                                   
taxing power would be unconstitutional.                                                                                         
                                                                                                                                
5:26:42 PM                                                                                                                    
                                                                                                                                
Representative Holm asked if the  state has the right to give                                                                   
away the taxing authority on minerals  owned by the residents                                                                   
of the state  and allow municipalities to impose  a severance                                                                   
tax.  Ms. Kurtz  pointed out  that  the state  of Alaska  has                                                                   
broad   powers   in   determining   the   taxing   power   of                                                                   
municipalities. The  state currently has a  taxing structure,                                                                   
which allows  municipalities to impose property  taxes, sales                                                                   
and use powers.                                                                                                                 
                                                                                                                                
5:29:17 PM                                                                                                                    
                                                                                                                                
Representative  Joule  asked if  the  bill would  change  the                                                                   
arrangements  of existing borough  operations. Mr.  Pound did                                                                   
not think it would affect existing operations.                                                                                  
                                                                                                                                
5:31:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  asked if  4 mils  was a reasonable  amount                                                                   
and how it is  determined. Mr. Van Sant responded  that the 4                                                                   
mils levy is  determined by the school contribution  in Title                                                                   
XIV, which  changes each year  depending on the value  of the                                                                   
mine. The  value of the mine  is determined by cost.  The tax                                                                   
value would  increase as the  investment increases.  He noted                                                                   
that AS 43.56 property is 20 mils  times the value. The value                                                                   
would go down each  year if new dollars were  not invested in                                                                   
the mine.  The 4-mil rate is  not based on the  ore extracted                                                                   
but on the investment in the property.                                                                                          
                                                                                                                                
5:35:08 PM                                                                                                                    
                                                                                                                                
Representative Holm MOVED to ADOPT Amendment 1:                                                                                 
                                                                                                                                
     Page 4, line 2                                                                                                             
     Insert new subsection (c)                                                                                                  
     (c)  Property tax  imposed  by a  municipality under  AS                                                                   
     29.45 is in place of the  tax levied under AS 43.67.010.                                                                   
     In  the  case  of  a  municipality   incorporated  after                                                                   
     January  1,  2005,  the   transition  provisions  of  AS                                                                   
     29.05.140 govern  the transition from assessment  by the                                                                   
     department to assessment by the municipality.                                                                            
     Re letter the remaining subsection accordingly                                                                             
                                                                                                                                
     Page 5, line 20                                                                                                            
     Following "after"                                                                                                          
     Delete "an assessment"                                                                                                     
     Insert "a determination"                                                                                                   
                                                                                                                                
     Page 6, line 26                                                                                                            
     Insert new (2)                                                                                                             
     (2) "department" means the  Department of Revenue or the                                                                   
     Department   of   Commerce,  Community,   and   Economic                                                                   
     Development;                                                                                                               
     Re number the remaining paragraphs accordingly                                                                             
                                                                                                                              
     Page 7, line 6                                                                                                             
     Following "The Department of Revenue"                                                                                      
     Insert "and  the Department of Commerce,  Community, and                                                                   
     Economic Development"                                                                                                      
                                                                                                                                
Vice-Chair Stoltze OBJECTED.                                                                                                    
                                                                                                                                
5:35:33 PM                                                                                                                    
                                                                                                                                
Mr. Pound  noted that the  amendment deals with  how property                                                                   
tax  is imposed  on  a municipality  under  Title  29. A  new                                                                   
borough would have  up to two years for transition.  The time                                                                   
line for  appeals was restructured  to allow 30 days  after a                                                                   
determination.  The  Department  of Commerce,  Community  and                                                                   
Economic  Development  was  added  under  the  definition  of                                                                   
department and given the power to formulate regulations.                                                                        
                                                                                                                                
5:37:44 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault asked for the definition of determination.                                                                    
Mr. Pound clarified that there are 50 days.                                                                                     
                                                                                                                                
Vice-Chair Stoltze WITHDREW his objection. There being NO                                                                       
further OBJECTION, Amendment 1 was adopted.                                                                                     
                                                                                                                                
                                                                                                                                
HB 280 was HELD over.                                                                                                           
                                                                                                                                
HOUSE BILL NO. 280                                                                                                            
                                                                                                                                
     "An  Act relating  to the taxation  of mining  property;                                                                   
     relating  to contracts  approved  by municipalities  for                                                                   
     payments  in  lieu  of  taxes;   and  providing  for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
Vice-Chair   Stoltze   referred   to   Article   IX   [Alaska                                                                   
Constitution], and questioned  if there is a problem with the                                                                   
legislature  surrendering the  power of  taxation. Mr.  Pound                                                                   
restated that legal counsel, as  indicated by Ms. Kurtz, does                                                                   
not have a problem with it.                                                                                                     
                                                                                                                                
8:52:14 AM                                                                                                                    
                                                                                                                                
Representative   Kelly  referred   to  Vice-Chair   Stoltze's                                                                   
question and  summarized that  the question  is if  the state                                                                   
has  the  right  to  transfer  taxing  authority  to  another                                                                   
entity.                                                                                                                         
                                                                                                                                
Representative  Holm said he spoke  with Jack  Chenoweth from                                                                   
the Alaska  Legislative Legal. He  referred to a  memo, which                                                                   
states  that  the  legislature  has  the  right  to  restrict                                                                   
taxation authority  and to give it away. The  legislature has                                                                   
prohibited municipalities  from taxing  oil or gas.  He noted                                                                   
that the  legislation would change  a severance tax to  a mil                                                                   
tax,   which   would   allow  municipalities   to   tax   the                                                                   
infrastructure but  not the minerals. He maintained  that the                                                                   
legislature has  a fiduciary obligation  to set  state policy                                                                   
that clarifies that the resources  are owned collectively and                                                                   
should  benefit all  Alaskans. He  maintained that  resources                                                                   
need should  be brought into the  community pot and  it would                                                                   
be bad policy to allow individual communities to benefit.                                                                       
                                                                                                                                
8:56:46 AM                                                                                                                    
                                                                                                                                
Mr. Pound corrected earlier testimony  by clarifying that the                                                                   
Northwest Borough does not collect a severance tax.                                                                             
                                                                                                                                
8:57:20 AM                                                                                                                    
                                                                                                                                
Representative Holm MOVED to ADOPT Amendment 2:                                                                                 
                                                                                                                                
     Page 2, Lines 18-19                                                                                                        
     DELETE [other than a tax imposed before January 1,                                                                         
     2006]                                                                                                                      
                                                                                                                                
Co-Chair   Chenault   OBJECTED   for   discussion   purposes.                                                                   
Representative  Holm  explained   that  the  amendment  would                                                                   
remove  the  retroactivity  provision.   This  would  prevent                                                                   
municipalities  from charging  a severance  tax on a  mineral                                                                   
resource.  Mr.  Pound stated  a  concern that  some  boroughs                                                                   
already use a severance tax.                                                                                                    
                                                                                                                                
8:58:12 AM                                                                                                                    
                                                                                                                                
STEVE  VAN  SANT, STATE  ASSESSOR,  DEPARTMENT  OF  COMMERCE,                                                                   
COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  (via  teleconference)                                                                   
commented on  Amendment 2. He  explained that  Denali Borough                                                                   
collects a  severance tax on  gravel and coal,  which results                                                                   
in  approximately $56  thousand.  The Kodiak  Island  Borough                                                                   
collects a severance tax on timber.  He thought that the Lake                                                                   
and Peninsula  Borough also  has a  severance tax,  which has                                                                   
not been collected.                                                                                                             
                                                                                                                                
9:00:42 AM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  asked Representative  Holm to  clarify the                                                                   
intent of the amendment. Representative  Holm stated that the                                                                   
amendment would  prevent any re-cooping or  retroactivity. He                                                                   
questioned   if  those   communities   that  currently   have                                                                   
severance taxes in place could collect a mil tax.                                                                               
                                                                                                                                
9:01:48 AM                                                                                                                    
                                                                                                                                
Mr. Van Sant  replied that they  could have a sales  tax or a                                                                   
property tax,  but it  would take some  work. He  pointed out                                                                   
that the 4-mil levy is for the unorganized boroughs.                                                                            
                                                                                                                                
Representative  Holm   thought  the  bill  might   have  some                                                                   
unintended  consequences.  He  asked if  the  Denali  Borough                                                                   
currently has  a property  tax. Mr. Van  Sant noted  that the                                                                   
Denali  Borough does not  collect property  tax. The  Borough                                                                   
collects  a bed tax  and severance  tax. Representative  Holm                                                                   
noted  that  the  [severance  tax  collected  in  the  Denali                                                                   
Borogh: $56 thousand) is insignificant.                                                                                         
                                                                                                                                
9:05:02 AM                                                                                                                    
                                                                                                                                
Representative  Kelly requested  an opinion  from the  mining                                                                   
industry.                                                                                                                       
                                                                                                                                
9:06:20 AM                                                                                                                    
                                                                                                                                
At ease.                                                                                                                        
                                                                                                                                
9:14:31 AM                                                                                                                    
                                                                                                                                
JAMES   FUEG,  PLACER   DOME,  MEMBER   COUNCIL  OF   ALASKAN                                                                   
PRODUCERS,  testified via  teleconference.  He addressed  the                                                                   
mining perspective  on granting severance taxes.  He said, in                                                                   
general, the  mining industry does  not support them,  but is                                                                   
in  favor  of grandfathering  in  existing  severance  taxes.                                                                   
Representative  Holm  asked  if  this  was  a  constitutional                                                                   
position. Mr. Fueg said no.                                                                                                     
                                                                                                                                
9:16:31 AM                                                                                                                    
                                                                                                                                
Representative Joule asked for  clarification. Representative                                                                   
Holm replied.                                                                                                                   
                                                                                                                                
A roll call vote  was taken on the motion to  ADOPT Amendment                                                                   
2.                                                                                                                              
                                                                                                                                
IN FAVOR: Kelly, Holm                                                                                                           
OPPOSED: Joule,  Moses, Stoltze,  Weyhrauch, Foster,  Hawker,                                                                   
Chenault, Meyer                                                                                                                 
                                                                                                                                
The MOTION FAILED (2-8).                                                                                                        
                                                                                                                                
Representative Joule  MOVED to report  CSHB 280 (FIN)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal impact notes.                                                                                               
                                                                                                                                
Representative Holm OBJECTED.                                                                                                   
                                                                                                                                
A roll call vote  was taken on the motion to  report CSHB 280                                                                   
(FIN) out of Committee.                                                                                                         
                                                                                                                                
IN FAVOR: Stoltze, Foster, Hawker, Joule, Chenault, Meyer                                                                       
OPPOSED:  Moses, Weyhrauch, Holm, Kelly                                                                                         
                                                                                                                                
The MOTION PASSED (6-4).                                                                                                        
                                                                                                                                
CSBH  280 (FIN)  was REPORTED  out  of Committee  with a  "no                                                                   
recommendation" recommendation  and with a new  fiscal impact                                                                   
note by  the Department  of Revenue,  and with  a new  fiscal                                                                   
impact  note by  the Department  of  Commerce, Community  and                                                                   
Economic Development.                                                                                                           
                                                                                                                                
9:22:13 AM                                                                                                                    
                                                                                                                                

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