Legislature(1993 - 1994)

04/15/1994 09:05 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
  SB  67 -  MENTAL HEALTH TRUST AMENDMENTS                                     
                                                                               
       An  Act amending provisions  of ch. 66,  SLA 1991, that                 
       relate to reconstitution  of the  corpus of the  mental                 
       health trust  and to the  manner of enforcement  of the                 
       obligation to compensate the  trust; and providing  for                 
       an effective date.                                                      
                                                                               
  Vice-Chairman Jacko directed  that CSSB 67 (Fin)  be brought                 
  on for discussion.   BRUCE BOTELHO, Attorney  General, Dept.                 
  of  Law;  and  HARRY NOAH,  Commissioner,  Dept.  of Natural                 
  Resources,  came   before  committee.     Commissioner  Noah                 
  directed attention to the land list (copy appended to  these                 
  minutes  as Attachment A)  associated with reconstruction of                 
  the mental health trust.                                                     
                                                                               
  The  Attorney  General  provided  a  recap  of  the  current                 
  proposal under consideration  by parties to  the litigation.                 
  He referenced a  handout (copy appended as Attachment B) and                 
  noted  specifically  the  schedule  of  events  on  page  3.                 
  Changes embodied within SB 67 are intended  to bring closure                 
  to the  mental health controversy through  either resolution                 
  or settlement.  Settlement involves agreement of all parties                 
  to  the   litigation.     Resolution  (a   legislative  fix)                 
  presupposes that not all parties will agree.                                 
                                                                               
  SB 67 reconstitutes the trust via three basic components:                    
                                                                               
       1.   Restoration, to  the extent possible,  of original                 
  mental                                                                       
            health lands to the trust.                                         
                                                                               
       2.   Substitution of additional  lands to the trust  to                 
  make                                                                         
            up  the difference between  the original 1 million                 
            acre trust and lands that are restored.                            
                                                                               
       3.   Cash payment  reflecting the fair market  value of                 
  lands                                                                        
            that have been sold.                                               
                                                                               
  If fewer than all parties agree  to the settlement, the bill                 
  would provide cash, substitute lands,  and restoration.  The                 
  state retains the ability  to set off, as the  Supreme Court                 
  in  the  Weiss  decision  directed  was possible,  the  $1.3                 
                                                                               
                                                                               
  billion the legislature has  appropriated for mental  health                 
  programs since 1978.  That means the state would continue to                 
  litigate  the  question  of  whether  the  state  has  fully                 
  satisfied  the  obligation  of   reconstituting  the  trust.                 
  Further, everything done  with regard to  Ch. 48 and Ch.  66                 
  would vanish, and the state would  no longer set aside 6% of                 
  its general fund receipts for mental health programs.                        
                                                                               
  If  all  parties  agree,  the  cash, substitute  lands,  and                 
  restoration  of original  mental health  trust lands  become                 
  part of the  bargain as  well as benefits  derived from  the                 
  trust authority embodied in Ch.  66.  That authority  allows                 
  the mental health community to make recommendations that are                 
  "for  the   most  part  binding  on  the  Governor  and  the                 
  legislature with respect to  earnings."  Additional  program                 
  improvements  are  embodied in  Ch.  66, and  a  trust fund,                 
  administered by the authority, would be established.                         
                                                                               
  If SB 67  is enacted, the  state expects to "walk  away from                 
  the mental health controversy now and forever."                              
                                                                               
  Commissioner Noah directed attention to page 4 of the second                 
  handout  (Attachment  B)  and  noted  assumptions   used  in                 
  reconstruction of  the mental health  lands trust.   He then                 
  directed attention to  the first handout (Attachment  A) and                 
  explained that  land is listed  by district.   He  cautioned                 
  that the handout was rapidly compiled and directed attention                 
  to   associated   maps  and   noted  inaccuracies   such  as                 
  designation of  land within  the Pt. MacKenzie  agricultural                 
  area as original mental health trust land when the intent is                 
  for  the subsurface estate only to return to the trust.  The                 
  surface  estate  falls  within  the  "sold"  lands category.                 
  Commission Noah  voiced his  anticipation that,  as part  of                 
  ongoing  negotiations,  the  land  list  may be  reduced  to                 
  accommodate concerns the  department was  not aware of  when                 
  the list was compiled.                                                       
                                                                               
  Commissioner   Noah  next   recited   assumptions  used   in                 
  reconstruction of the mental health lands trust as set forth                 
  on page 4 of the second handout (Attachment B).  He stressed                 
  that  the  $1.3 billion  set-off has  not  been used  in the                 
  present proposal.  In discussions of value, the $1.3 billion                 
  would be available to  the court to deduct from  claims that                 
  the trust has not been adequately compensated.                               
                                                                               
  Directing attention to page 5  of Attachment B, Commissioner                 
  Noah explained  that of the  original 1 million  acre trust,                 
  466,180  acres  will  return  while  530,865 acres  are  not                 
  available  for  return.   In addition,  approximately 98,398                 
  acres  of  subsurface only  land  are available  for return.                 
  Mental  health lawyers  initially  identified 525,000  acres                 
  they felt were suitable as potential  substitute lands.  DNR                 
  review and public comments pared the list to  356,884 acres.                 
  An additional 127,037  acres of subsurface only  values have                 
                                                                               
                                                                               
  also been  identified that  could be  returned to the  trust                 
  through substitute lands.   The final tally  evidences total                 
  estate lands of 826,364 acres,  consisting of 446,180 acr/es                 
  of  original  land and  360,184  acres of  replacement land.                 
  Split estate lands total 225,435  acres, comprised of 98,398                 
  acres of  original lands  and 127,037  acres of  replacement                 
  land.                                                                        
                                                                               
  Commissioner Noah next  directed attention to large  maps of                 
  original lands that would  and would not return to  trust as                 
  well as proposed substitute lands.   Subsurface estate lands                 
  are  distinguished  as  either  mineral  and/or  hydrocarbon                 
  lands.    Hydrocarbon  only lands  are  associated  with the                 
  original mental health trust.                                                
                                                                               
  Discussion followed  between Commissioner  Noah and  Senator                 
  Jacko  regarding   subsurface  rights.     The  Commissioner                 
  explained that  the subsurface  owner would  have to  secure                 
  approval from the surface owner to come on to the  lands and                 
  disturb them.                                                                
                                                                               
  Senator   Rieger   requested    detailed   information    on                 
  legislatively designated areas.  He then  directed attention                 
  to  the   initial  handout   (Attachment  A)   and  inquired                 
  concerning  the   status  of  Telephone   Hill  in   Juneau,                 
  Commissioner Noah  explained that  the City  and Borough  of                 
  Juneau has spent  considerable sums securing the site  for a                 
  new state office building.   Municipalities all had concerns                 
  regarding  certain parcels.    Consideration  was  given  to                 
  instances  where  municipalities  had expended  considerable                 
  sums "over and above just having  vacant land . . . ."   The                 
  Commissioner  then highlighted  the  subport area  in Juneau                 
  which he described as under utilized because the water front                 
  property is only  used for  storage.  Since  there is  great                 
  potential  for higher use of this  valuable property, it was                 
  designated for inclusion within the trust.                                   
                                                                               
  In  response  to a  question  from Senator  Sharp concerning                 
  state lands in the area of Circle  Hot Springs, Commissioner                 
  Noah explained  that land  listed on  Attachment A  reflects                 
  more controversial parcels.   Great amounts of land are  not                 
  listed.                                                                      
                                                                               
  Commissioner Noah next spoke to  the status of negotiations.                 
  He attested to discussions in  "tremendous detail," over the                 
  past six  to seven weeks,  in an  attempt to  reach a  basic                 
  agreement everyone could support.  He then voiced his belief                 
  that "We're  pretty close  on the  land list,"  if we  could                 
  agree on the money.   If the current situation  unravels, it                 
  will be because of the amount  of money requested or control                 
  over mental health budgets.  Commissioner  Noah acknowledged                 
  that  he  was less  optimistic  a true  settlement  could be                 
  reached  because  of the  number  of individuals  and groups                 
  involved in the issue.                                                       
                                                                               
                                                                               
  Senator Rieger  inquired  concerning the  type of  budgetary                 
  control sought by the mental health community.  Commissioner                 
  Noah explained  that the trust authority would  like to have                 
  control over  both the trust  fund and general  fund dollars                 
  for mental health.   The  authority would like  to tell  the                 
  legislature how the money should be  spent.  If the Governor                 
  or legislature deviates from that plan, a finding would have                 
  to  be  rendered  detailing why  another  course  was taken.                 
  Senator Rieger asked  if the authority also wants control of                 
  land management.  Commissioner Noah responded affirmatively.                 
                                                                               
                                                                               
  Senator  Kelly  asked   if  the  trust  authority   is  well                 
  established.   Attorney General Bruce Botelho explained that                 
  it  does not  exist at  the present  time.   It  is embodied                 
  within Ch. 66 which has not yet become effective due to lack                 
  of approval of the  underlying settlement.  SB 67  would set                 
  up the three-member  board. Board membership is  dictated by                 
  professional   qualifications   and   recommendations   from                 
  constituents in the mental health community.  In function it                 
  would be similar to the permanent fund board.   Commissioner                 
  Noah described the state approach which calls for DNR to act                 
  as  the "hands  and  feet" for  the group  in terms  of land                 
  management.  The board would  ultimately make the decisions.                 
  Moneys   would  be   invested   with   the  permanent   fund                 
  corporation.   Commissioner  Noah observed that  while there                 
  are advantages to establishment of  the trust authority, the                 
  mental health enabling  act did  not require development  of                 
  such an authority.                                                           
                                                                               
  Co-chair Frank directed that the meeting be briefly recessed                 
  prior to proceeding with remaining agenda items.                             
                                                                               
                       RECESS - 9:35 A.M.                                      
                      RECONVENE - 9:50 A.M.                                    

Document Name Date/Time Subjects