Legislature(2015 - 2016)SENATE FINANCE 532

04/09/2015 01:30 PM Senate FINANCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: Overview FY17 Operating Budget TELECONFERENCED
+ SB 56 MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS TELECONFERENCED
Heard & Held
+= SCR 1 CIVICS EDUCATION TASK FORCE TELECONFERENCED
Moved CS SCR 1(EDC) Out of Committee
+= SJR 2 CONST. AM: G.O. BONDS FOR STUDENT LOANS TELECONFERENCED
Moved SJR 2 Out of Committee
+ SB 22 MOTOR VEHICLE REG. TAX: COLLECTION COSTS TELECONFERENCED
Heard & Held
SB 50 AIDEA: BONDS;PROGRAMS;LOANS;LNG PROJECT
<Pending Referral>
= SB 26 BUDGET: CAPITAL
Moved CSSB 26(FIN) Out of Committee
SENATE BILL NO. 26                                                                                                            
                                                                                                                                
     "An   Act  making   appropriations,  including   capital                                                                   
     appropriations   and   other    appropriations;   making                                                                   
     appropriations  to capitalize  funds; and providing  for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
8:51:19 PM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  MOVED to ADOPT the  committee substitute                                                                   
for  SB 26,  Work  Draft  29-GS1781\I (Martin,  4/9/15).  Co-                                                                   
Chair MacKinnon OBJECTED for discussion.                                                                                        
                                                                                                                                
LAURA PIERRE,  STAFF, SENATOR  ANNA MACKINNON, explained  the                                                                   
difference  between the  proposed  committee substitute  (CS)                                                                   
and  the previous  version of  the bill,  detailing that  the                                                                   
committee cut the  governor's proposed capital  budget by $40                                                                   
million  for a total  capital budget  of $1,500,829,300.  She                                                                   
specified  that the budget  was broken  into an  Unrestricted                                                                   
General  Fund  (UGF)  total  of  $108,318,036,  a  Designated                                                                   
General  Fund (DGF)  total of  $56,325,100,  an "Other"  fund                                                                   
total   of  $61,233,800,   and   $1,274,952,400  in   Federal                                                                   
Receipts.                                                                                                                       
                                                                                                                                
Ms. Pierre  discussed the  changes reflected  in the  CS. The                                                                   
new  bill  consolidated  the allocations  for  the  Municipal                                                                   
Harbor Facility  Grant Fund, which would give  the Department                                                                   
of   Transportation   and  Public   Facilities   (DOT)   more                                                                   
flexibility   in  how   it  could  disperse   the  funds   to                                                                   
municipalities  and  complete  projects. She  continued  that                                                                   
the new  bill funded  the Alaska  Donor Services Program  for                                                                   
operational  costs in  the amount  of $75,000;  and in  order                                                                   
for the  program to  access the  funds an  allocation in  the                                                                   
capital   budget    was   required.   The   bill    added   a                                                                   
reappropriation of  legislative appropriations in  the amount                                                                   
of $211,000 for  the Senate Special Committee  on the Arctic,                                                                   
for  work  to  be conducted  during  the  29th  Alaska  State                                                                   
Legislature.  Additionally,  reappropriations  were added  to                                                                   
the  Alaska  Housing  Capital   Corporation  (AHCC)  account,                                                                   
brought forward by members who were lapsing.                                                                                    
                                                                                                                                
Ms. Pierre  continued that  a $45  million fund transfer  was                                                                   
removed  from the  Alaska  Capital Income  Fund  to the  AHCC                                                                   
account. As  a result,  $43,237,400 was  added to the  School                                                                   
Construction Grant  Fund to build  a new school  for Kivalina                                                                   
per  the consent  decree and  settlement  agreement from  the                                                                   
Kasayulie  lawsuit [a 2011  settlement for  the 1997  case of                                                                   
Kasayulie  vs.  State  of  Alaska  pertaining  to  equity  in                                                                   
education].                                                                                                                     
                                                                                                                                
8:54:38 PM                                                                                                                    
                                                                                                                                
Ms.  Pierre  specifically  thanked  Hilary  Martin  from  the                                                                   
Legislative Legal  Department and staff from  the Legislative                                                                   
Finance Division.                                                                                                               
                                                                                                                                
Co-Chair  MacKinnon WITHDREW  her OBJECTION.  There being  NO                                                                   
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
Co-Chair   MacKinnon  MOVED   to  ADOPT   Amendment  1,   29-                                                                   
GS1781/I.1, Martin, 4/9/15 (copy on file):                                                                                      
                                                                                                                                
     Page 33, following line 18:                                                                                                
     Insert a new subsection to read:                                                                                           
                                                                                                                                
     "(e) The  amount necessary  for Dalton Highway  disaster                                                                   
     emergency   repairs,  not   to  exceed  $5,000,000,   is                                                                   
     appropriated  from the  general fund  to the  Department                                                                   
     of  Transportation   and  Public  Facilities   for  that                                                                   
     purpose."                                                                                                                  
                                                                                                                                
Vice-Chair Micciche OBJECTED for discussion.                                                                                    
                                                                                                                                
Co-Chair  MacKinnon explained  that  the  amendment had  been                                                                   
brought  to   the  committee   by  the  administration.   She                                                                   
mentioned  that  there  was an  emergency  happening  on  the                                                                   
Dalton Highway.                                                                                                                 
                                                                                                                                
8:56:01 PM                                                                                                                    
                                                                                                                                
PAT  PITNEY,  DIRECTOR,  OFFICE  OF  MANAGEMENT  AND  BUDGET,                                                                   
OFFICE OF  THE GOVERNOR,  explained Amendment  1. She  stated                                                                   
that  on March  13, 2015;  there was  an ice jam  on the  Sag                                                                   
River  (mile   390  to  410   of  the  Dalton   Highway  near                                                                   
Deadhorse)  which created  an  ice floe/flood  over the  road                                                                   
and stopped traffic.  The road had been closed  for some time                                                                   
and  when  open was  limited  to  one  lane of  traffic.  She                                                                   
recounted  that she  had shared  photos  of the  ice jam  and                                                                   
highway  blockage with  Co-Chair  MacKinnon's office  earlier                                                                   
in  the day.  She related  the DOT  Commissioner Marc  Luiken                                                                   
was on  site, and highlighted  the importance of  getting the                                                                   
road  open. She  continued  that  industry members  had  been                                                                   
working closely  with state personnel to  provide contractors                                                                   
to  help  clear  the  road. The  previous  day  there  was  a                                                                   
disaster  declaration for  the  flooding on  the road,  which                                                                   
put the state  into a faster procurement role.  She furthered                                                                   
that  the  amendment  would  provide  up  to  $5  million  to                                                                   
continue  to  mitigate  flooding  and  keep  traffic  passing                                                                   
through the area.                                                                                                               
                                                                                                                                
Vice-Chair Micciche  wondered if there was any  potential for                                                                   
federal aid to  offset the costs of cleanup  and repairs. Ms.                                                                   
Pitney  replied  that she  was  optimistic that  the  federal                                                                   
government  would offer  financial aid  based on the  state's                                                                   
disaster declaration.  She related  that the Federal  Highway                                                                   
Administration   (FHWA)  would  be   coming  to   assess  the                                                                   
flooding to  determine whether  it fit  within the  rules for                                                                   
federal response.  She specified  that if criteria  were met,                                                                   
some  of  the  federal  response   would  be  funded  at  100                                                                   
percent,  and other  work  would be  funded  at the  90 -  10                                                                   
federal rate.  There were  items that  would not qualify  for                                                                   
federal    response,   however    the   administration    was                                                                   
"cautiously  optimistic"  that there  would  be some  federal                                                                   
aid.  She  reiterated  the importance  of  getting  the  road                                                                   
open,  and estimated  that at  a minimum the  state would  be                                                                   
responsible  for $700,000  in up-front  costs. She  explained                                                                   
that  until  the threshold  was  passed,  there would  be  no                                                                   
sharing of costs.                                                                                                               
                                                                                                                                
8:59:19 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
8:59:44 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Micciche  wondered if  the funds in  the amendment                                                                   
were  only a  contingency, and  the  state would  not end  up                                                                   
using  the $5  million being  requested.  Ms. Pitney  replied                                                                   
that there  would be a minimum  of $700,000 used.  She agreed                                                                   
to share  Commissioner  Luiken's eyewitness  account of  with                                                                   
Vice-Chair Micciche  after the meeting; and related  that the                                                                   
commissioner was  optimistic there would be  federal funding.                                                                   
She  related that  the commissioner  had been  amazed by  the                                                                   
size and amount of ice.                                                                                                         
                                                                                                                                
Co-Chair  MacKinnon wondered  if there  was any comment  from                                                                   
DOT/PF  with  regard  to  use   of  the  funds,  and  perhaps                                                                   
assurance as to how they would be used.                                                                                         
                                                                                                                                
MARY SIROKY,  DIRECTOR, DIVISION OF ADMINISTRATIVE  SERVICES,                                                                   
DEPARTMENT  OF TRANSPORTATION  AND PUBLIC FACILITIES,  shared                                                                   
that DOT had  officially notified FHWA of the  intent to seek                                                                   
emergency  response  funding.   The  department  had  various                                                                   
conversations  with  regional  federal  representatives,  and                                                                   
she thought  there had  also been  conversations at  a higher                                                                   
level. She  shared that  the department  was optimistic  that                                                                   
FHWA would  participate in the  disaster relief  efforts. She                                                                   
discussed  the concern  over  what  the FHWA  would  consider                                                                   
"fundable"  and what the  state considered  necessary  to get                                                                   
the road  open. She  remarked that there  may be  more severe                                                                   
infrastructure  damage to  the  road, once  the flooding  was                                                                   
under control and ice was removed.                                                                                              
                                                                                                                                
Ms.  Siroky  continued that  the  department  had a  plan  in                                                                   
place, had  contractors on site,  and hoped to have  at least                                                                   
one lane open by the following day.                                                                                             
                                                                                                                                
9:02:39 PM                                                                                                                    
                                                                                                                                
Senator  Olson  wondered  if  any  occurrences  of  the  same                                                                   
magnitude had  happened in the  area in the past.  Ms. Siroky                                                                   
replied  that  there had  never  been  anything of  the  same                                                                   
magnitude  before.  She  described  photos  of  the  site  as                                                                   
amazing, and stated  that it was impossible  to discern where                                                                   
the  overflow ice  started  and  ended. She  reiterated  that                                                                   
Commissioner Luiken had been astounded at the sight.                                                                            
                                                                                                                                
Senator Olson asked  if there were plans in  place to prevent                                                                   
a  recurrence. Ms.  Siroky replied  that  there were  already                                                                   
two projects  for raising the  roadbed on the  Dalton Highway                                                                   
that were  already in the funding  queue. She added  that the                                                                   
projects were anticipated to start the following summer.                                                                        
                                                                                                                                
9:04:00 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon WITHDREW  her OBJECTION  to Amendment  1.                                                                   
There being NO further OBJECTION, Amendment 1 was ADOPTED.                                                                      
                                                                                                                                
Senator  Olson MOVED  to ADOPT  Amendment 2  (copy on  file).                                                                   
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
Senator Olson explained  the amendment, which would  fund the                                                                   
Kivalina road  at $2.5  million. He  remarked that  there was                                                                   
funding   in  the  budget   for  the   Kivalina  school   for                                                                   
approximately $43  million, but a road was  needed before the                                                                   
school could  be built. He  remarked that there  were several                                                                   
estimates on the  cost for the road. The $2.5  million in the                                                                   
amendment  would  provide seed  money  in  order to  try  and                                                                   
secure  federal funding  from  the Bureau  of Indian  Affairs                                                                   
(BIA), Indian  Reservation Roads Program (IRR).  He commented                                                                   
that the  governor was  in support of  the amendment.  He and                                                                   
pointed  out  that the  amendment  in  no way  obligated  the                                                                   
state to  fund the remainder of  the road, and referred  to a                                                                   
relevant  memo  from  the  Division  of  Legal  and  Research                                                                   
Services dated April 9, 2015 (copy on file).                                                                                    
                                                                                                                                
Senator  Dunleavy   also  objected   to  the  amendment.   He                                                                   
remarked  that there  were  various  issues with  moving  the                                                                   
amendment  forward. He  did not  think the  state should  get                                                                   
involved  in  building   a  road  that  may   lead  to  later                                                                   
obligations  of  moving  the town  of  Kivalina  [as  erosion                                                                   
would necessitate].  He did  not feel  that the state  should                                                                   
take on the construction of the road.                                                                                           
                                                                                                                                
Co-Chair MacKinnon handed the gavel to Vice-Chair Micciche.                                                                     
                                                                                                                                
9:06:53 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:07:19 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon  shared that  the committee was  currently                                                                   
reviewing  several pieces of  correspondence from  Department                                                                   
of  Education  and  Early  Development   (DEED)  Commissioner                                                                   
Michael Hanley  regarding the litigation associated  with the                                                                   
Kivalina school, and  did not believe that the  road was part                                                                   
of the resultant Kasayulie settlement.                                                                                          
                                                                                                                                
Senator Dunleavy MAINTAINED his OBJECTION.                                                                                      
                                                                                                                                
Senator Olson shared  that the amendment had  been an element                                                                   
of  concern  due  to  costs  associated  with  the  road.  He                                                                   
discussed the  Kasayulie settlement, and recognized  the need                                                                   
for the road. He  referred back to the letter  from the legal                                                                   
department   that   indicated   that  the   state   was   not                                                                   
necessarily  liable  for  its   construction.  He  asked  for                                                                   
support of the amendment.                                                                                                       
                                                                                                                                
A roll call vote  was taken on the motion to  adopt Amendment                                                                   
2.                                                                                                                              
                                                                                                                                
IN FAVOR: Olson                                                                                                                 
OPPOSED:   Kelly,   Bishop,  Dunleavy,   Hoffman,   Micciche,                                                                   
MacKinnon                                                                                                                       
                                                                                                                                
The MOTION FAILED (6/1).                                                                                                        
                                                                                                                                
Senator Dunleavy  MOVED to ADOPT  Conceptual Amendment  3. He                                                                   
described the  amendment as legislative intent  regarding the                                                                   
Kivalina School:                                                                                                                
                                                                                                                                
     a. The  legislature declines  to fund the  Kivalina K-12                                                                   
     School  renovation/addition   under  the   2011  consent                                                                   
     decree and  settlement agreement in Kasayulie  vs. State                                                                   
     (3AN-97-3782CIV   September   1st,  1999)   because   of                                                                   
     concerns about erosion and viability of the school                                                                         
     site.                                                                                                                      
                                                                                                                                
     b.  The   legislature  declines   to  fund   a  Kivalina                                                                   
     replacement  school at  the new school  site because  of                                                                   
     concerns about  erosion and viability of the  new school                                                                   
     site.                                                                                                                      
                                                                                                                                
     c. The settlement terms of the January 7, 2015 letter                                                                      
     from the Citizens for the Educational Advancement of                                                                       
     Alaska's Children are unacceptable to the legislature.                                                                     
                                                                                                                                
Senator Dunleavy  explained that  the amendment would  remove                                                                   
the funding for  the Kivalina School project.  He argued that                                                                   
the  decree  specifically  provided for  the  legislature  to                                                                   
decline funding  which would not  trigger a reopening  of the                                                                   
case.  The  amendment  also put  the  findings  on  permanent                                                                   
record as to avoid future misunderstanding.                                                                                     
                                                                                                                                
9:11:00 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:11:42 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon  brought up the aforementioned  legal memo                                                                   
pertaining to  the Kivalina  School construction,  and shared                                                                   
that she  would speak in  opposition to Conceptual  Amendment                                                                   
3 based  on  advice from  the Attorney  General's office,  as                                                                   
well  as the  memo.  It was  her belief  that  the state  was                                                                   
responsible for  some amount of  money to Kivalina,  although                                                                   
the matter was  still in dispute and not final  as to whether                                                                   
the project should  be a renovation (for much  less funds) or                                                                   
a new school entirely.                                                                                                          
                                                                                                                                
Senator  Olson referred  to  the  consent decree  and  stated                                                                   
there  was  strong  evidence  that  it  was  not  up  to  the                                                                   
legislature  to fund  or not  fund; rather,  the funding  had                                                                   
been mandated  and therefore he  wondered about  the validity                                                                   
of the conceptual amendment to withstand legal challenge.                                                                       
                                                                                                                                
9:13:32 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:17:28 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Micciche  queried  what conditions  were  on  the                                                                   
previously appropriated  funds for  the Kivalina  School. Co-                                                                   
Chair   MacKinnon   replied   that   there   was   a   direct                                                                   
appropriation  for the  Kivalina  School  in compliance  with                                                                   
the settlement.                                                                                                                 
                                                                                                                                
Ms.  Pierre  announced  that the  appropriation  was  to  the                                                                   
School Construction  Fund, and  would lapse after  five years                                                                   
if unspent (like any other capital project).                                                                                    
                                                                                                                                
9:19:00 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  directed the committee's attention  to page                                                                   
1, second paragraph of the memo. He read the passage:                                                                           
                                                                                                                                
     Note, as a  preliminary matter, that the  consent decree                                                                   
     specifically provides  that the parties cannot  bind the                                                                   
     legislature.                                                                                                               
                                                                                                                                
Senator  Dunleavy pointed  out  the words  "legislature"  and                                                                   
"state",  and reminded  the  committee  that the  legislature                                                                   
was the fiduciary or funding arm of state government.                                                                           
                                                                                                                                
Senator Dunleavy  directed the committee's attention  to page                                                                   
2, first paragraph of the memo. He read the passage:                                                                            
                                                                                                                                
     (Consent decree,  p. 6.) The consent decree  is slightly                                                                   
     ambiguous in this regard…                                                                                                  
                                                                                                                                
Senator  Dunleavy remarked  that he was  attempting to  clear                                                                   
up  any ambiguity,  so that  the legislature  (as opposed  to                                                                   
the state) was  not liable for future obligations  toward the                                                                   
"whole Kivalina concept."                                                                                                       
                                                                                                                                
9:20:49 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  directed the committee's attention  to page                                                                   
2, second paragraph of the memo. He read the passage:                                                                           
                                                                                                                                
     The consent  decree requires that the state  include the                                                                   
     "Kivalina  K-12   school  renovation/addition"   in  the                                                                   
     governor's   proposed  capital   appropriations   budget                                                                   
     bill. (Id.)  The consent  decree also provides  that "if                                                                   
     the   Legislature   declines    to   fund,   or   places                                                                   
     contingencies  on the  Kivalina  school project  because                                                                   
     of  concerns about  erosion or viability  of the  school                                                                   
     site,  the lack of  funding or  contingencies will  have                                                                   
     no effect on the settlement, and cannot be used by                                                                         
     plaintiffs to reopen the litigation."                                                                                      
                                                                                                                                
Senator  Dunleavy   stated  there  was  an  issue   with  the                                                                   
terminology  used in  the  memo, and  considered  the use  of                                                                   
"legislature" and  "state" to be incorrectly  differentiated.                                                                   
He argued  that the  legislature  was part  of the state.  He                                                                   
suggested  that the  administration had  put the  legislature                                                                   
in an  obligation, to some  degree, regarding the  school. He                                                                   
recognized  that   there  was  a  legitimate   issue  in  the                                                                   
Northwest  Arctic in  the town  of Kivalina.  He pointed  out                                                                   
that  the  project had  originally  been  a settlement  on  a                                                                   
school to do  a renovation on-site, starting with  a cost $14                                                                   
million. He  expressed concern  that the state  inadvertently                                                                   
would be responsible for a much larger obligation.                                                                              
                                                                                                                                
Senator  Dunleavy  referred  back  to  the  legal  memo,  and                                                                   
pointed  out  that  the  document  referred  to  "state"  and                                                                   
"legislature" and rarely mentioned "administration."                                                                            
                                                                                                                                
Senator Dunleavy  directed the committee's attention  to page                                                                   
2, third paragraph of the memo. He read the passage:                                                                            
                                                                                                                                
     Further, under  the consent decree, the  legislature can                                                                   
     decline to  fund the Kivalina K-12 school  project if it                                                                   
     has  concerns   about  erosion   or  viability   of  the                                                                   
     existing school site.                                                                                                      
                                                                                                                                
Senator Dunleavy  further explained  Conceptual Amendment  3.                                                                   
He  reiterated  that  the  purpose would  be  to  remove  the                                                                   
school funding,  and stated that  he would not  have objected                                                                   
to  funding the  school  and having  the  funds  be put  into                                                                   
escrow  or   contingency  funds  that  isolated   the  monies                                                                   
specifically  for  the  Kivalina  School. He  hoped  the  end                                                                   
result  was  that the  funding  would  remain  school-focused                                                                   
rather  than  being used  for  road  or town  site  projects,                                                                   
which he thought  should be separate discussions.  He thought                                                                   
there were  ambiguities  (as the letter  mentioned) and  that                                                                   
the legislature  was singled  out as  not being obligated  to                                                                   
fund the  school. He continued  that there was  discussion in                                                                   
the  memo   implying  that  the   state  was   obligated.  He                                                                   
reiterated that the  purpose of the amendment  was to isolate                                                                   
the  school  funding  to  keep it  designated  only  for  the                                                                   
particular school.                                                                                                              
                                                                                                                                
9:25:32 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:26:00 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator Dunleavy  asked for the support of  the committee for                                                                   
Conceptual Amendment 3.                                                                                                         
                                                                                                                                
Co-Chair  MacKinnon  directed  the committee's  attention  to                                                                   
page  3,  paragraph  4  of  the  legal  memo.  She  read  the                                                                   
passage:                                                                                                                        
                                                                                                                                
     Failure  to appropriate any  funding does not,  however,                                                                   
     resolve the state's constitutional obligations.                                                                            
                                                                                                                                
Co-Chair MacKinnon MAINTAINED her OJECTION.                                                                                     
                                                                                                                                
A  roll  call   vote  was  taken  on  the   motion  to  adopt                                                                   
Conceptual Amendment 3.                                                                                                         
                                                                                                                                
IN FAVOR: Dunleavy                                                                                                              
OPPOSED: Olson, MacKinnon, Bishop, Hoffman, Micciche, Kelly                                                                     
                                                                                                                                
The MOTION FAILED (6/1).                                                                                                        
                                                                                                                                
9:27:09 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy offered Conceptual Amendment 4:                                                                                
                                                                                                                                
     Any  funds  appropriated   for  this  project  shall  be                                                                   
     placed in  a joint escrow  account to be spent  only for                                                                   
     direct  construction/design   for  a   school  structure                                                                   
     serving  Kivalina.  These   funds  shall  automatically,                                                                   
     without further  action by  either party, be  swept back                                                                   
     into the state  general fund if construction  is not yet                                                                   
     commenced prior to April, 2022.                                                                                            
                                                                                                                                
Senator Dunleavy  characterized the  amendment as  an attempt                                                                   
to safeguard the  public funds for the issue  of the Kivalina                                                                   
School. He  reiterated that the  idea was to focus  solely on                                                                   
funding the school  rather than a road, relocation,  or a new                                                                   
site.                                                                                                                           
                                                                                                                                
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
Co-Chair  MacKinnon found  the amendment  to be  "intriguing"                                                                   
and  thought  that  it  had  merit.  She  remarked  that  the                                                                   
previous  amendment  also  had  merit  for  the  purposes  of                                                                   
discussion and reducing  the state's liability in  a piece of                                                                   
legislation and  litigation that was before  the legislature.                                                                   
She expressed  a commitment  to working  towards making  sure                                                                   
the  children  of  Kivalina  saw   direct  benefit  from  the                                                                   
appropriation  and   allocation  being  considered   for  the                                                                   
Kivalina School.  She opposed the amendment and  believed the                                                                   
committee should  work with the legislative  legal department                                                                   
to ensure  there was compliance  with the decree.  She wanted                                                                   
to  review  the  relevant  language  and  work  with  Senator                                                                   
Olson.                                                                                                                          
                                                                                                                                
Senator Olson  inquired how Senator  Dunleavy came up  with a                                                                   
construction commencement deadline of 2022.                                                                                     
                                                                                                                                
9:29:40 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:29:50 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator  Dunleavy explained  that the date  specified  in the                                                                   
amendment  was   an  estimate  based  on   seven  consecutive                                                                   
construction seasons.                                                                                                           
                                                                                                                                
Senator  Dunleavy  WITHDREW  Conceptual  Amendment  4.  There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
Senator Dunleavy  MOVED Conceptual Amendment 5.  He explained                                                                   
that  the  amendment  would  remove  all  references  to  the                                                                   
figure of  $43,237,400  for the Kivalina  School and  replace                                                                   
it  with   $14,724,714  [the  original  capital   improvement                                                                   
project  (CIP) amount  for  major maintenance]  adjusted  for                                                                   
present day  value from July 1,  2012. He explained  that the                                                                   
amounts in  question pertained to  language in the  decree on                                                                   
the CIP  list when  the funds  were earmarked  for that  date                                                                   
for renovation of the school.                                                                                                   
                                                                                                                                
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
9:31:12 PM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  stated that he supported  $43,237,400 in                                                                   
school funding  for Kivalina  in order  to prevent  the state                                                                   
from  being  at  risk  for  litigation   being  reopened  and                                                                   
subsequently  being  responsible   for  the  purchase  of  an                                                                   
entire school at a much higher cost (nearing $100 million).                                                                     
                                                                                                                                
Vice-Chair  Micciche referred  to page 5  of the legal  memo,                                                                   
which  discussed  a  limit  to   the  state's  liability.  He                                                                   
specified  that  the  cost  of  the  replacement  school  for                                                                   
Kivalina was based  off of the 2013 CIP process.  He referred                                                                   
to the  second paragraph  on page 5,  and read the  following                                                                   
passage:                                                                                                                        
                                                                                                                                
     Because  the consent decree  specifically provides  that                                                                   
     the  amount of  the  appropriation  would be  determined                                                                   
     through  the  2013  CIP   process,  the  consent  decree                                                                   
     places  the risk of  a project  that exceeds the  budget                                                                   
     on   Kivalina.  If   the  project   exceeds  the   costs                                                                   
     estimated  in  the  2013  CIP,  the  state  may  not  be                                                                   
     required   to  provide   additional   funding.  If   the                                                                   
     legislature  takes this  approach, the  state will  have                                                                   
     met its  obligations and CEAAC  would not have  a strong                                                                   
     argument for reopening the litigation.                                                                                     
                                                                                                                                
Vice-Chair  Micciche reiterated  his concern  that the  state                                                                   
could be  responsible for greatly  increased costs if  it did                                                                   
not meet its responsibility to fund the school as planned.                                                                      
                                                                                                                                
Senator  Olson agreed  with  Vice-Chair  Micciche that  there                                                                   
was  a possibility  of litigation  over  the Kivalina  School                                                                   
being  reopened. He  respectfully asked  Senator Dunleavy  to                                                                   
withdraw his amendment.                                                                                                         
                                                                                                                                
Senator Dunleavy  expressed appreciation for  Senator Olson's                                                                   
words,  but  wanted  the  committee  to  vote  on  Conceptual                                                                   
Amendment 5.                                                                                                                    
                                                                                                                                
9:33:41 PM                                                                                                                    
                                                                                                                                
Co-Chair    MacKinnon   expressed    appreciation   for    an                                                                   
opportunity  to  discuss  the   issue  and  the  children  of                                                                   
Kivalina,  who had  waited for  15 years while  the issue  of                                                                   
the  school was  debated.  It  was her  view  that the  state                                                                   
should meet its  obligation to take care of  the children and                                                                   
students of Kivalina.                                                                                                           
                                                                                                                                
A  roll  call   vote  was  taken  on  the   motion  to  adopt                                                                   
Conceptual Amendment 5.                                                                                                         
                                                                                                                                
IN FAVOR: Dunleavy                                                                                                              
OPPOSED: Micciche, Olson, Kelly, Bishop, Hoffman, MacKinnon                                                                     
                                                                                                                                
The MOTION FAILED (6/1).                                                                                                        
                                                                                                                                
9:34:24 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  expressed appreciation for  the discussion.                                                                   
He  agreed  with  Co-Chair MacKinnon  that  the  children  of                                                                   
Kivalina  deserved  a  school   and  a  great  education.  He                                                                   
reminded  the  committee that  he  had  spent 13  years  near                                                                   
Kivalina,  much of it  as an educator  and administrator.  He                                                                   
relayed that he  had visited Kivalina on  numerous occasions,                                                                   
and looked  forward to  the fact that  the children  would be                                                                   
getting  a  new school.  He  emphasized  that he  would  like                                                                   
continued discussion  pertaining to constraining  the funding                                                                   
in  some way  so  it did  not  morph into  funding  something                                                                   
other  than a school.  He referred  back to  the legal  memo,                                                                   
and claimed  it "betrays  a weak link  in our situation."  He                                                                   
opined  that  the  state  was   responsible  for  things  the                                                                   
administration had  agreed to, and for that  reason he wanted                                                                   
to pursue further discussion.                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  brought up  the  aforementioned  letters                                                                   
from  DEED and  concurred that  the  department had  exceeded                                                                   
its authority in  some of the language that was  used for the                                                                   
Kivalina School appropriation.                                                                                                  
                                                                                                                                
Vice-Chair   Micciche  shared   the   concerns  of   Co-Chair                                                                   
MacKinnon  and Senator  Dunleavy.  He highlighted  protecting                                                                   
the  state from  additional expenses  and possible  reopening                                                                   
of litigation over the Kivalina School.                                                                                         
                                                                                                                                
9:37:28 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon made a statement:                                                                                            
                                                                                                                                
     In  1999 Kasayulie  vs.  State  a superior  court  found                                                                   
     that  the legislature  had  not met  its  constitutional                                                                   
     obligations  to maintain,  by general  law, a system  of                                                                   
     public  school open  to all  children of  the state.  In                                                                   
     response to  the superior court  order, and to  meet the                                                                   
     state's   obligation  under   the  consent  decree,   we                                                                   
     entered  in to resolve  the litigation. The  legislature                                                                   
     had  previously   provided  appropriations   for  school                                                                   
     construction    projects    in    Emmonak,    Koliganek,                                                                   
     Nightmute,  Kwethluk.  Through the  capital  improvement                                                                   
     project   grant  program   and  passed  legislation   to                                                                   
     equalize   funding  for   rural  and  municipal   school                                                                   
     construction  needs, in this  budget the legislature  is                                                                   
     appropriating  $43,237,399  for school  construction  in                                                                   
     Kivalina.  Kivalina  is  the  last  of  the  five-school                                                                   
     construction  project   the  state  agreed   to  request                                                                   
     funding  for in the  Kasayulie consent  decree. By  this                                                                   
     appropriation  the  state  is  providing  rural  schools                                                                   
     with  the  assurance  of  adequate  facilities,  funding                                                                   
     under  the  capital improvement  project  grant  program                                                                   
     and   meeting   its   constitutional    obligations   to                                                                   
     establish and  maintain a system of public  schools open                                                                   
     to all children  in the state. With  this appropriation,                                                                   
     the  legislature   intends  to  resolve   the  Kasayulie                                                                   
     litigation and  further the goal of providing  for equal                                                                   
     education opportunities  and adequate  facilities across                                                                   
     the state.                                                                                                                 
                                                                                                                                
Vice-Chair  Micciche  MOVED to  REPORT  CSSB 26(FIN)  out  of                                                                   
committee  with individual  recommendations.  There being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSSB 26(FIN) was  REPORTED out of committee with  a "do pass"                                                                   
recommendation.                                                                                                                 
                                                                                                                                
9:39:53 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:41:03 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator  Dunleavy thanked  the committee  for the  discussion                                                                   
and  working hard  on the  budget.  He referred  back to  the                                                                   
Kivalina School,  and foresaw the need for  future discussion                                                                   
about education  and other  items that were  constitutionally                                                                   
mandated  by  the  state.  He thought  it  was  important  to                                                                   
ponder the  different ways  of doing  education, and  thought                                                                   
it  was possible  to  do  it differently  while  providing  a                                                                   
quality education for all kids.                                                                                                 
                                                                                                                                
Senator  Hoffman thanked  Co-Chair  MacKinnon  and her  staff                                                                   
for providing  leadership to continue  to reduce  the capital                                                                   
budget.  He  stressed that  many  people  in Alaska  did  not                                                                   
fully  comprehend the  magnitude  of the  financial  problems                                                                   
the state  was faced  with. He  recognized  the needs of  the                                                                   
constituency,  and  the  difficulty   of  trimming  a  budget                                                                   
further than what the governor had proposed.                                                                                    
                                                                                                                                
9:43:09 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche  commended  Co-Chair MacKinnon  and  the                                                                   
co-chair  of  the  operating  budget  for  persevering  in  a                                                                   
difficult   and  unpleasant   process.   He  recognized   the                                                                   
pressure the co-chairs  were under, and opined  that Co-Chair                                                                   
MacKinnon was consistent and fair.                                                                                              
                                                                                                                                
Senator Bishop said "good job."                                                                                                 
                                                                                                                                
Co-Chair MacKinnon thanked the committee for their efforts.                                                                     
                                                                                                                                

Document Name Date/Time Subjects
SB 56 Supporting Document BOSCOS letter - Copy.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB 56 PACE Presentation SFIN 04 09 15.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB056 A Supporting Documents- Letter REAP.docx SFIN 4/9/2015 1:30:00 PM
SB 56
SB056A Hearing Request Letter .pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB056A Supporting Documents- Letter IGU.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB056A Supporting Documents- Letter FNSB.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB056A Supporting Documents- Letter City of Fairbanks .pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB056A Supporting Documents- Letter Alaska Bankers Association.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB056A Sectional Analysis.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SB 56 Governor Sponsor Statement.pdf SFIN 4/9/2015 1:30:00 PM
SB 56
SJR 2 Letter of Support-University of Alaska.pdf SFIN 4/9/2015 1:30:00 PM
SJR 2
SJR 2 Letter of Support-Juneau Chamber of Commerce.pdf SFIN 4/9/2015 1:30:00 PM
SJR 2
SJR 2 Sectional Analysis.pdf SFIN 4/9/2015 1:30:00 PM
SJR 2
SJR 2 Sponsor Statement.pdf SFIN 4/9/2015 1:30:00 PM
SJR 2
SB 22 - Additional Questions to DMV.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Analysis of DMV Responses by Dan Moore.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Commission Agents Cost to DMV.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - DMV Data Summary.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - DMV PCN Info.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - DMV-MVRT Information.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - DMV-MVRT Leasing Costs.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Fact Sheet.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Motor Vehicle Registration Tax Communities.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Sectional Analysis.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Sponsor Statement.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 22 - Supporting Documents Letter of Support from MOA.pdf SFIN 4/9/2015 1:30:00 PM
SB 22
SB 26 Amendment 1 - MacKinnon.pdf SFIN 4/9/2015 1:30:00 PM
SB 26
SB 26 work order version I.pdf SFIN 4/9/2015 1:30:00 PM
SB 26
SB 26 Legal Opinion - Kivalina School Construction.pdf SFIN 4/9/2015 1:30:00 PM
SB 26
SB 26 Amendment 2 - Olson.pdf SFIN 4/9/2015 1:30:00 PM
SB 26