Legislature(1993 - 1994)
03/03/1994 09:20 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSSB 215: An Act relating to oil and hazardous substances; (RES) redesignating the oil and hazardous substance release response fund and its uses; repealing the authority in law by which marine highway vessels may be designed and constructed to aid in oil and hazardous substance spill cleanup in state marine water using money in the oil and hazardous substance release response fund and the authority of the Department of Environmental Conservation to levy and collect fees for review of certain submissions related to oil; altering requirements applicable to liens for recovery of state expenditures related to oil or hazardous substances; terminating the nickel-per-barrel oil conservation surcharge; levying and collecting two new oil surcharges; and providing for the suspension and reimposition of one of the new surcharges; and providing for an effective date. A teleconference was held and testimony was heard by Walt Furnace, General Manager, Alaska Support Industry Alliance, Anchorage, in support of SB 215. Wayne Coleman, RCAC, Prince William Sound, Kodiak, was on-line but was not heard due to lack of time. SB 215 was HELD in committee and another teleconference will be held if requested. Cambridge Energy Research Associates, Inc. Contract: SENATOR KERTTULA MOVED that Cambridge Energy Research Associates, Inc. contract be adopted. He went on to speak in support of their work, felt they provided a separate point of view and were very accurate in their forecasting of oil prices. No objections being heard, the contract was ADOPTED and signed by Co-chairs Pearce and Frank, Senators Kerttula, Rieger, Kelly, and Sharp. CS FOR SENATE BILL NO. 215(RES) An Act relating to oil and hazardous substances; redesignating the oil and hazardous substance release response fund and its uses; repealing the authority in law by which marine highway vessels may be designed and constructed to aid in oil and hazardous substance spill cleanup in state marine water using money in the oil and hazardous substance release response fund and the authority of the Department of Environmental Conservation to levy and collect fees for review of certain submissions related to oil; altering requirements applicable to liens for recovery of state expenditures related to oil or hazardous substances; terminating the nickel-per-barrel oil conservation surcharge; levying and collecting two new oil surcharges; and providing for the suspension and reimposition of one of the new surcharges; and providing for an effective date. Co-chair Pearce announced SB 215 was before the committee. She said that Bob Poe, Director, Information and Administrative Services, Department of Environmental Conservation, and two individuals, via teleconference, were waiting to testify. WALT FURNACE, General Manager, Alaska Support Industry Alliance (ASIA), Anchorage, said he hesitated to testify again but wanted to take a little different stand. He said ASIA was in strong support of SB 215. He wanted to address some concerns others had voiced regarding this bill. The first was that the split-nickel would not be sufficient moneys to fund the oil and hazardous substance release response fund. Testimony supported, under the split-nickel approach fund, balances could range from $16-26M annually. He believed expected expenditures of the fund had been stated at $10-13M. It would appear there were more than sufficient funds to meet the needs of the response fund. The second concern voiced was that SB 215 represented a tax break for the industry. The intent of the 1989 amendment to Chapter 43 was to levy a 5-cent a barrel surcharge until the sum of $50M was accumulated and then suspend that collection. Testimony to date supported collection of from $112-150M. Under SB 215, it appeared that, rather than a tax break, it would provide for a proper adjustment of the fund to include assurances of funding the $50M oil and hazardous substance release contingency and abatement mitigation account. Thirdly, there had been a rumor that the fund was broke. He stated the fund was not broke and anticipated the generation of $112-150M. SB 215 would provide an opportunity to fine tune the fund. Lastly, the taxing power was vested in the state, but the privilege of taxing policy must be exercised carefully and equitably. The general philosophy of taxation should be to only assess tax to the extent needed to support services of government. We must acknowledge that the petroleum industry provided over 80 percent of state revenue. In regard to additional taxes on this industry, how much is too much, and at what point did the taxing policy become a deterrent to business ***FIN062AM 0AASFIN 0303940920 MINUTES SENATE FINANCE COMMITTEE March 3, 1994 9:20 a.m. TAPES SFC-94, #31, Side 1 (000-end) SFC-94, #31, Side 2 (end-750) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:20 a.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Kelly, Kerttula, Rieger and Sharp were present. Senator Jacko did not attend the meeting. ALSO ATTENDING: Duncan Fowler, Ombudsman, Office of the Ombudsman; Bob Poe, Director, Information and Administrative Services, Department of Environmental Conservation; C.E. Swackhammer, Deputy Commissioner, Department of Public Safety; Kenneth Bischoff, Division of Administrative Services, Department of Public Safety; Lauren Campbell, Director, Alaska Highway Safety Planning Agency, Department of Public Safety; Dean J. Guaneli, Chief, Legal Services Section, Criminal Division, Department of Law; Chip Thoma, self; Virginia Stonkus, fiscal analyst, Legislative Finance Division; and aides to committee members and other members of the legislature. VIA TELECONFERENCE: Walt Furnace, General Manager, Alaska Support Industry Alliance, Anchorage, testified in support of SB 215. Wayne Coleman, RCAC, Prince William Sound, Kodiak, was on-line but due to lack of time did not testify. SUMMARY INFORMATION Cambridge Energy Research Associates, Inc. Contract: Senator Kerttula spoke in support of contracting Cambridge Energy Research Associates, Inc. to provide a forecast of oil prices to the Legislature. Senator Kerttula MOVED for acceptance of the contract by the committee. No objections being heard, IT WAS SO ORDERED and signed by all members present. CSSB 215: An Act relating to oil and hazardous substances; (RES) redesignating the oil and hazardous substance release response fund and its uses; repealing the authority in law by which marine highway vessels may be designed and constructed to aid in oil and hazardous substance spill cleanup in state marine water using money in the oil and hazardous substance release response fund and the authority of the Department of Environmental Conservation to levy and collect fees for review of certain submissions related to oil; altering requirements applicable to liens for recovery of state expenditures related to oil or hazardous substances; terminating the nickel-per-barrel oil conservation surcharge; levying and collecting two new oil surcharges; and providing for the suspension and reimposition of one of the new surcharges; and providing for an effective date. A teleconference was held and testimony was heard by Walt Furnace, General Manager, Alaska Support Industry Alliance, Anchorage, in support of SB 215. Wayne Coleman, RCAC, Prince William Sound, Kodiak, was on-line but was not heard due to lack of time. SB 215 was HELD in committee and another teleconference will be held if requested. Cambridge Energy Research Associates, Inc. Contract: SENATOR KERTTULA MOVED that Cambridge Energy Research Associates, Inc. contract be adopted. He went on to speak in support of their work, felt they provided a separate point of view and were very accurate in their forecasting of oil prices. No objections being heard, the contract was ADOPTED and signed by Co-chairs Pearce and Frank, Senators Kerttula, Rieger, Kelly, and Sharp. CS FOR SENATE BILL NO. 215(RES) An Act relating to oil and hazardous substances; redesignating the oil and hazardous substance release response fund and its uses; repealing the authority in law by which marine highway vessels may be designed and constructed to aid in oil and hazardous substance spill cleanup in state marine water using money in the oil and hazardous substance release response fund and the authority of the Department of Environmental Conservation to levy and collect fees for review of certain submissions related to oil; altering requirements applicable to liens for recovery of state expenditures related to oil or hazardous substances; terminating the nickel-per-barrel oil conservation surcharge; levying and collecting two new oil surcharges; and providing for the suspension and reimposition of one of the new surcharges; and providing for an effective date. Co-chair Pearce announced SB 215 was before the committee. She said that Bob Poe, Director, Information and Administrative Services, Department of Environmental Conservation, and two individuals, via teleconference, were waiting to testify. WALT FURNACE, General Manager, Alaska Support Industry Alliance (ASIA), Anchorage, said he hesitated to testify again but wanted to take a little different stand. He said ASIA was in strong support of SB 215. He wanted to address some concerns others had voiced regarding this bill. The first was that the split-nickel would not be sufficient moneys to fund the oil and hazardous substance release response fund. Testimony supported, under the split-nickel approach fund, balances could range from $16-26M annually. He believed expected expenditures of the fund had been stated at $10-13M. It would appear there were more than sufficient funds to meet the needs of the response fund. The second concern voiced was that SB 215 represented a tax break for the industry. The intent of the 1989 amendment to Chapter 43 was to levy a 5-cent a barrel surcharge until the sum of $50M was accumulated and then suspend that collection. Testimony to date supported collection of from $112-150M. Under SB 215, it appeared that, rather than a tax break, it would provide for a proper adjustment of the fund to include assurances of funding the $50M oil and hazardous substance release contingency and abatement mitigation account. Thirdly, there had been a rumor that the fund was broke. He stated the fund was not broke and anticipated the generation of $112-150M. SB 215 would provide an opportunity to fine tune the fund. Lastly, the taxing power was vested in the state, but the privilege of taxing policy must be exercised carefully and equitably. The general philosophy of taxation should be to only assess tax to the extent needed to support services of government. We must acknowledge that the petroleum industry provided over 80 percent of state revenue. In regard to additional taxes on this industry, how much is too much, and at what point did the taxing policy become a deterrent to business generation in the state. In conclusion, he reiterated ASIA's strong support of SB 215. Co-chair Pearce announced that SB 215 was being HELD in committee. She noted that testimony from Wayne Coleman, RCAC, Prince William Sound, Kodiak, and the Department of Environmental Conservation would not be heard at this time, and asked them to return to the committee when the bill was rescheduled. ADJOURNMENT The meeting was adjourned at approximately 10:45 a.m.
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