Legislature(1993 - 1994)

03/10/1994 08:30 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 10, 1994                                        
                            8:30 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #33, Side 1 (550-end)                                                
  SFC-94, #33, Side 2 (end-000)                                                
  SFC-94, #34, Side 1 (000-end)                                                
  SFC-94, #34, Side 2 (end-250)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 8:35 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to   Co-chairs  Pearce  and   Frank,  Senators                 
  Kerttula, Rieger,  and Sharp  were present.   Senator  Kelly                 
  joined the meeting after it was  in progress.  Senator Jacko                 
  did not attend.                                                              
                                                                               
  ALSO ATTENDING:  Senator Jim Duncan,  sponsor of SB 70; Stan                 
  Ridgeway,   Deputy   Director,   Vocational  Rehabilitation,                 
  Department  of  Education;  Mary  Lou  Miners,  Chairperson,                 
  Legislative Committee  for American  Association of  Retired                 
  Persons;   Brian  Rogers,   Vice   President  for   Finance,                 
  University  of  Alaska-Anchorage;  Ron   Swanson,  Director,                 
  Division  of Land,  Department of  Natural Resources;  McKie                 
  Campbell, Deputy  Commissioner, Department of  Fish &  Game;                 
  Rick Solie, Aide to Co-chair Frank,  sponsor of SB 217; Jack                 
  Chenoweth, Attorney, Legislative Legal  Counsel, Legislative                 
  Affairs Agency; Wendy Redman, Vice  President for University                 
  Relations, University  of Alaska; and Mike Greany, Director,                 
  Legislative Finance Division; aides to committee members and                 
  other members of the legislature.                                            
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  CSSB 70   An Act  establishing a loan guarantee and interest                 
            rate                                                               
  (L&C):    subsidy program for assistive technology.                          
                                                                               
            Senator  Duncan,  sponsor  of   SB  70,  and  Stan                 
            Ridgeway,     Deputy      Director,     Vocational                 
            Rehabilitation, Department of Education, testified                 
            in  support  of  the  bill.   Discussion  was  had                 
            between  Co-chair  Frank   and  Senator   Kerttula                 
            regarding loan  guarantees and  leveraging.   Mary                 
            Lou Miners, American Association  Retired Persons,                 
            also spoke in strong  support of the bill.   SB 70                 
                                                                               
                                                                               
            was REPORTED OUT of committee with a "do pass" and                 
            a fiscal note  for the Department of  Education in                 
            the amount of $100.0 (federal funds).                              
                                                                               
  CSSB 217  An Act relating  to the  University of Alaska  and                 
  univer-(RES):  sity  land,  authorizing  the  University  of                 
                 Alaska  to  select  additional  state  public                 
                 domain land, and defining net income from the                 
                 University of Alaska's  endowment trust  fund                 
                 as  `university  receipts'  subject to  prior                 
                 legislative appropriation; and  providing for                 
                 an effective date.                                            
                                                                               
            Co-chair  Frank, sponsor  of  SB  217,  and  Brian                 
            Rogers, Vice President for  Finance, University of                 
            Alaska Anchorage, spoke in support of SB 217.  Ron                 
            Swanson, Director, Division of Land, Department of                 
            Natural  Resources,  and  McKie  Campbell,  Deputy                 
            Commissioner, Department  of Fish  & Game,  voiced                 
            their  concerns  with the  bill.   Jack Chenoweth,                 
            Attorney, Legislative  Legal Counsel,  Legislative                 
            Affairs  Agency  answered  questions  and  offered                 
            opinions  on  amendments  before   the  committee.                 
            Amendments  1,  2,  3,  5,  and  6  were  ADOPTED.                 
            Amendment  4 was  withdrawn.    CSSB 217(FIN)  was                 
            REPORTED   OUT   of   committee  with   individual                 
            recommendations,  a  zero  fiscal   note  for  the                 
            Department  of Revenue,  and fiscal  notes  in the                 
            amount  of  $1,051.1  for  Department  of  Natural                 
            Resources, $100.0  for the  University of  Alaska,                 
            and $33.0 for the Department of Fish & Game.                       
                                                                               
  SB 319:   An Act relating  to the  possession of  controlled                 
            substances within 500 feet of recreation and youth                 
            centers; and permitting municipalities  to install                 
            `drug-free  recreation  and  youth   center  zone'                 
            signs.                                                             
                                                                               
            Co-chair Pearce,  sponsor  of  SB  319,  spoke  in                 
            support of the bill.   SB 319 was REPORTED  OUT of                 
            committee with a  "do pass" and zero  fiscal notes                 
            for the  Department of Corrections,  Department of                 
            Law, Department  of Safety, and the  Department of                 
            Health & Social Services.                                          
                                                                               
  ANNOUNCEMENTS AND BILL SCHEDULING:                                           
                                                                               
  CO-CHAIR PEARCE referred to several  bills already heard but                 
  held in committee.   She said  the following bills would  be                 
  heard on Saturday,  March 12, 1994.   SB 251  had been  held                 
  until  Senators Jacko and Kelly had  amendment(s) ready.  SB
  276 had been  held until a subcommittee of  Senators Rieger,                 
                                                                               
                                                                               
  Kerttula and  Kelly could  address the  fiscal note and  any                 
  amendments.  SB  278 had been  held because of questions  on                 
  the bill.  She urged members  to bring amendments forward on                 
  March 12, 1994 or the bills would be tabled.                                 
                                                                               
  Co-chair Pearce announced  a new subcommittee  consisting of                 
  herself as chair and  Senators Sharp and Rieger,  to address                 
  SB 308.   She hoped that bill  would be before the committee                 
  next week.  HB 450 was passed out to the committee and there                 
  being no objections,  Co-chair Pearce  said that this  House                 
  bill would be introduced in the Senate version.                              
                                                                               
  CS FOR SENATE BILL NO. 70(L&C):                                              
                                                                               
       An Act establishing a loan  guarantee and interest rate                 
       subsidy program for assistive technology.                               
                                                                               
  Co-chair Pearce invited  Senator Duncan  to come before  the                 
  committee to speak to SB 70.                                                 
                                                                               
  SENATOR DUNCAN, sponsor of  SB 70, said that the  bill would                 
  establish the assistive technology loan guarantee program to                 
  assist   persons  of   disabilities   to  purchase   durable                 
  equipment, adaptive aids, and assistive devices to obtain or                 
  maintain  employment in  order  to allow  them to  live more                 
  independently.   He said that this could  be thought of as a                 
  jobs bill for  persons with disabilities.  Under the federal                 
  receipts referenced in  the fiscal note, the  federal funded                 
  program   would    allow   the   Division    of   Vocational                 
  Rehabilitation to  guarantee loans made to  individuals with                 
  disabilities  by private  lending  institutions.   The  loan                 
  recipient  must  be unable  to  obtain the  needed equipment                 
  through other  programs such  as Vocational  Rehabilitation,                 
  Medicare, Medicaid, or  third party payments from  insurance                 
  companies.   Under  the bill,  a  loan could  be used  for a                 
  modification of a vehicle if the person lives independently,                 
  or with their  parents or guardian  and had been employed  a                 
  minimum of 90  days before  the initial loan  request.   The                 
  Labor  and  Commerce Committee  amended  the bill  and those                 
  amendments were  included in CSSB 70(L&C).  One amendment by                 
  Senator Kelly stated  that no state funds  would be expended                 
  on the program.                                                              
                                                                               
  End SFC-94 #33, Side 1                                                       
  Begin SFC-94 #33, Side 2                                                     
                                                                               
  Senator Duncan went on to say that the participating lending                 
  institutions would process loans pursuant  to their standard                 
  lending  procedures.    However, if  the  borrower  with the                 
  disability was not  able to afford  the payments due to  the                 
  prevailing interest rate,  the lender would then  refer them                 
  to  the assisted technology program for  a loan guarantee of                 
  up to 90 percent of the principle amount of the loan,  or to                 
                                                                               
                                                                               
  buy down the interest rate to  a payment level affordable to                 
  the borrower.   Under the  bill, the Division  of Vocational                 
  Rehabilitation would establish  an assistive technology loan                 
  committee within  the Division.    The purpose  of the  loan                 
  committee  was to  establish loan  guidelines, evaluate  the                 
  fund, and annually  determine the amount available  for loan                 
  guarantees and/or interest  subsidies, and to report  to the                 
  legislature on the operation of the program.   He understood                 
  the  Division of Vocational  Rehabilitation supported  SB 70                 
  and  indicated  that  the  fiscal  note  annually  for  that                 
  division committed $100,000 of federal funds to this program                 
  for at least 3 years.                                                        
                                                                               
  Co-chair  Pearce  confirmed that  federal funds  amounted to                 
  $100,000 and  that funds  could be  leveraged for  a greater                 
  amount perhaps to $750,000.                                                  
                                                                               
  STAN RIDGEWAY, Deputy  Director, Vocational  Rehabilitation,                 
  Department  of Education,  stated that  several states  have                 
  similar  loan programs.    Some of  those  states use  their                 
  guarantee  to  leverage  money  by purchasing  an  insurance                 
  policy that would allow the $100,000 to be leveraged so more                 
  loans could be made.  Another part of the loan program would                 
  subsidize interest.   The loan  committee would decide  each                 
  year, depending on  the health of  the fund, how much  money                 
  could  be used to subsidize interest  for persons that would                 
  normally  qualify  but the  payback  of interest  would make                 
  their payment too high.  Most loans in the lower 48 were 6.5                 
  to 8 percent.                                                                
                                                                               
  In answer to Senator Kerttula, Mr. Ridgeway said the maximum                 
  loan  per  person  in most  states  was  $5,000.   The  loan                 
  committee appointed by the director would actually decide on                 
  a maximum amount on a yearly basis depending upon the health                 
  of  the fund.    In concurrence  with Senator  Kerttula, Mr.                 
  Ridgeway agreed  the amount  was modest  but explained  this                 
  loan program was a last resort for most people.  Other funds                 
  and sources from the  Division of Vocational Rehabili-tation                 
  would be exhausted before a person applied for this program.                 
  For example, this  loan program could  help a person  afford                 
  the adaptive  equipment, if  they had  qualified  to buy  an                 
  automobile but not the equipment.                                            
                                                                               
  CO-CHAIR FRANK said he supported the  bill but asked how the                 
  guarantee would work if up to 90 percent of a loan  would be                 
  guaranteed and only  $100,000 was  available.  Mr.  Ridgeway                 
  said there  were several  similar programs  in other  states                 
  that had been established.  When the legislation passes, the                 
  committee would  investigate the  possibility of  leveraging                 
  the  money.   $100,000 could  be leveraged into  $750,000 by                 
  buying an insurance policy that would guarantee those loans.                 
  The  simplest  way  and the  least  risk  would  be to  just                 
  guarantee the loans with  as much money as was  in the fund,                 
  dollar for dollar, up  to 90 percent.  Co-chair  Frank hoped                 
                                                                               
                                                                               
  other ways  would be  used to  leverage the  money since  it                 
  would not  reach very  many people  on a  dollar for  dollar                 
  basis.                                                                       
                                                                               
  MARY LOU  MINERS,  Chairperson,  Legislative  Committee  for                 
  American Association of Retired Persons, spoke in support of                 
  SB 70.  She said that people with handicaps and disabilities                 
  needed  special  assistance  at times  and  this  bill would                 
  answer those needs.  She encouraged the committee to pass SB
  70.                                                                          
                                                                               
  SENATOR  KERTTULA  MOVED for  passage  of CSSB  70(L&C) from                 
  committee  with  individual recommendations.    No objection                 
  having  been  raised,  CSSB  70(L&C)  was  REPORTED  OUT  of                 
  committee  with  a "do  pass,"  and  a fiscal  note  for the                 
  Department of Education  of $100.00 of  federal funds.   Co-                 
  chairs Pearce and Frank, Senators Rieger, Kerttula and Sharp                 
  signed "do pass."                                                            
                                                                               
  CS FOR SENATE BILL NO. 217(RES):                                             
                                                                               
       An  Act  relating  to  the  University  of  Alaska  and                 
       university land,  authorizing the University  of Alaska                 
       to  select additional  state  public domain  land,  and                 
       defining  net income  from the  University of  Alaska's                 
       endowment trust  fund as `university  receipts' subject                 
       to prior legislative  appropriation; and providing  for                 
       an effective date.                                                      
                                                                               
  Co-chair Pearce announced that CSSB  217(RES) was before the                 
  committee as well as amendment 1 and revised amendment 2.                    
                                                                               
  Co-chair Frank said the reason for  the bill was to increase                 
  the land  grant  to  the  University.   The  University  had                 
  originally expected a  much larger land grant than  they had                 
  achieved.    The  first  legislature  actually   granted  an                 
  additional million acres.  It was  vetoed by the governor at                 
  that time,  and had been an  on-going issue.  He  thought it                 
  was an excellent  way for  the state to  achieve the  public                 
  purpose of supporting the University through the development                 
  of  land-based resources.    The bill  had  been drafted  as                 
  uncomplicated  as possible,  especially  in  regard  to  the                 
  Mental Health Trust  lands and  municipal entitlement.   The                 
  selections outlined in this bill would not take effect until                 
  after the Mental Health Trust was settled and the University                 
  would take  a place  behind any  municipal entitlement.   He                 
  said that an effort was being made to reduce the fiscal note                 
  for the Department of Natural Resources.  The Department had                 
  concerns over method of conveyance and legal descriptions.                   
                                                                               
  Co-chair Frank went on to say  he felt the University needed                 
  to rely  less and less  on general funds  as a mix  of their                 
  total  funds.  The University should have a substantial land                 
                                                                               
                                                                               
  base as in other  states.  He said the national  average was                 
  300,000 and our University only had  112,000 acres.  He said                 
  the concern over oil and gas resources had been addressed by                 
  limiting potential  oil and  gas lands  and eliminating  any                 
  land that was  on the  state's 5-year leasing  plan.   Lands                 
  under other types of leases were also denied the University.                 
                                                                               
  Co-chair Frank said  the University had  done a good job  so                 
  far  in managing  their lands,  and  had been  responsive to                 
  public  concerns  with regard  to  land  use  policy.    The                 
  question of Constitutionality or dedication of funds  issued                 
  should be addressed.  Co-chair Frank  felt it was clear that                 
  the University was  the state so  there would be no  problem                 
  with dedication of funds.  The legislature would continue to                 
  approve the University's budget on an annual basis.  He felt                 
  it would not be circumventing the Constitutional prohibition                 
  on dedicated funds.                                                          
                                                                               
  BRIAN  ROGERS, Vice  President  for  Finance, University  of                 
  Alaska, Anchorage, said this legislation  would right an old                 
  wrong since statehood.  At that time, a major portion of the                 
  University's land  grant was lost with the  enactment of the                 
  statehood act due  to the fact  that most of the  University                 
  land  was  unsurveyed  at  the time.    He  reiterated  that                 
  national  averages  give  about 5  percent  of  federal land                 
  grants to universities.  In Alaska,  that would mean about a                 
  5 million acre  land grant.   He said this was  particularly                 
  important  since the state was  looking to the University to                 
  reduce  its reliance  on state  general fund  dollars.   The                 
  University  had reduced its  dependence from about  75 to 50                 
  percent.   The current land management brought  money into a                 
  trust fund which predates statehood.  As of December 31, the                 
  fund had about $27M,  and currently was bringing in  $4-6M a                 
  year.  This  year, approximately  $7M was  deposited in  the                 
  trust fund.   The income  from the  trust fund  was used  to                 
  inflation-proof  the  fund,  to  cover  the  costs  of  land                 
  management  which  were  not   covered  by  projects-related                 
  income, and,  most importantly, for augmenting  the teaching                 
  and research responsibilities of the  University.  An annual                 
  report of  that fund  was  provided to  the legislature  and                 
  Governor.                                                                    
                                                                               
  Mr.  Rogers went  on to  say that  the bill would  allow the                 
  University  to  select  a  million   acres  but  placed  the                 
  following restrictions on those selections: the land must be                 
  unconveyed,  unencumbered,  and not  otherwise  selected for                 
  public domain;  anything in a  refuge or sanctuary  would be                 
  off limits; anything that had existing  gas or oil lease, or                 
  a 5-year oil and gas plan by Department of Natural Resources                 
  would be off  limits; and any  land with an existing  timber                 
  claim, mining  claim, or  material sale  or permit  would be                 
  able to be  selected but, for  the duration of the  existing                 
  agreement, DNR  would continue to  manage the  land and  all                 
  income would go  to the  state, and upon  expiration of  the                 
                                                                               
                                                                               
  existing encumbrance, the University  would take possession.                 
  The bill provided that the  Commissioner can deny selections                 
  if it  was not  in the  best interests  of the  state.   The                 
  University would attempt  to provide a  balance mix of  land                 
  since their land  currently was heavy  on timber.  It  would                 
  look to balance that with  leasing for commercial potential,                 
  gravel, or subdivision-type lands.                                           
                                                                               
  Mr.  Rogers  went on  to  explain  the fiscal  note  for the                 
  University of $100.0  would be funded  from the earnings  of                 
  the land grant fund and would not require any general funds.                 
  The University would be responsible for all costs.  The base                 
  level would be about $100.0 a year depending on  the pace of                 
  land selection.  It  could increase but  it would be at  the                 
  University's expense, and  subject to  the budget review  or                 
  RPL process.  The  legislature would have an  opportunity to                 
  review the  agreement between the  University and DNR.   The                 
  University  would be responsible for the survey of the land.                 
  One  amendment  included  from a  prior  committee  reducing                 
  survey costs, would provide only an exterior boundary survey                 
  at  the  time  of  initial  conveyance.   Interior  boundary                 
  surveys would not be  done until the land was  developed and                 
  would be paid for by the lessee.                                             
                                                                               
  SENATOR   RIEGER   referred   to   the  Resource   Committee                 
  amendments, page 10,  lines 28 and  29, and asked how  broad                 
  was  the   phrase  "is   subject  to   designation  or   for                 
  conveyance."  He asked  if that phrase covered all  the land                 
  in the  state.   Mr. Rogers  said it  was his  understanding                 
  subsection (1) through (3) was an attempt to put a "belt and                 
  suspenders" on the Mental Health  Lands settlement to insure                 
  that anything  that might  be considered  would be  excluded                 
  from the selection until the settlement was complete.  There                 
  may be new  legislation on Mental  Health Lands but  clearly                 
  the intent was that the Mental Health lands took priority as                 
  was  spelled out on  page 11, line  9, Section 12.   Senator                 
  Rieger asked the difference between  subsection (1) and (3).                 
  Mr. Rogers said that subsection (1) referred to that portion                 
  of the original Mental Health Lands  that still had not been                 
  otherwise conveyed,  subsection (3) to the  substitute land,                 
  and  subsection  (2)   to  anything   else  that  would   be                 
  identified.  The  Mental Health lands settlement  may either                 
  come under the terms of chapter 66 or new legislation.                       
                                                                               
  Senator Rieger referred  to page  7, lines 23-25,  regarding                 
  the words "the commissioner reasonably believes will be made                 
  part of,..."  Mr. Rogers said that in the case of selections                 
  by a  municipality, there  was a  clause that  said, if  the                 
  commissioner reasonably  believed a  selection might  occur,                 
  they could withhold  the University's selection but  not for                 
  more than three years.  Senator Rieger asked  if it could be                 
  made a part  of the last  clause on exploration licenses  so                 
  that 1 and 2 would look similar.                                             
                                                                               
                                                                               
  Mr. Rogers said the three year  limit under subsection 1 was                 
  a result of  the Municipal Entitlement Act  which provided 3                 
  years for a municipality to  select and transfer land  after                 
  the municipality was incorporated.  The Resources  Committee                 
  wanted it clear that the University  land bill would not get                 
  in the way  of exploration licensing so  a blanket exception                 
  was added.  Senator Rieger felt the two should parallel.  He                 
  felt the Commissioner  could frustrate any selection  by the                 
  University by saying  at some  point an exploration  license                 
  might be granted, and offered an  idea that there be a  time                 
  limit put on subsection (2) on page 7, line 22-25.                           
                                                                               
  Co-chair  Frank  said  he  would  view  that  as  a friendly                 
  amendment.     He  admitted   that  the   potential  for   a                 
  Commissioner to frustrate University selections probably had                 
  not been addressed.   Senator Rieger said he would  hold his                 
  amendment until testimony was complete.                                      
                                                                               
  RON  SWANSON,  Director,  Division of  Land,  Department  of                 
  Natural Resources, said DNR still  had concerns about SB 217                 
  and would not support it in its present form.  DNR  did feel                 
  that all oil and  gas interests should be excluded  from the                 
  bill since  it provided 85  percent of the  state's revenue.                 
  There   was  also   concern   over   existing  land   status                 
  complications.  17  million acres needed  to be conveyed  to                 
  the state  from statehood entitlement.   Of  the 40  million                 
  acres selected, 5 million conflict with federal withdrawals,                 
  12  million  acres   overlap  Native  selections  and   were                 
  unresolved,   600,000   acres   need  to   be   conveyed  to                 
  municipalities,  and 10 more  municipalities need to certify                 
  entitlement and convey.  He said DNR felt, even with all the                 
  provisions in the bill, it complicated all the existing land                 
  issues.                                                                      
                                                                               
  Mr. Swanson went  on to  say there were  also some  concerns                 
  about  diversifying  state  land management  which  included                 
  Mental Health, the state, and the University.  This bill did                 
  complicate the public's use of land.   He confirmed that the                 
  University  was managing land  at present  and doing  a good                 
  job.   He  also stated that  selection beginning  and ending                 
  dates needed to be established rather  than have it be open-                 
  ended.                                                                       
                                                                               
  Co-chair  Frank observed that the state  had few land owners                 
  and    additional  selections  by  the University,  who  was                 
  already  a landowner,  would  not complicate  the situation.                 
  Mr. Swanson felt the department  had concerns because of all                 
  the problems  it  had with  Mental Health  Lands.   Co-chair                 
  Frank agreed it  was a difficult  situation and assured  him                 
  that the University did  not want to get involved  with that                 
  at all.                                                                      
                                                                               
  In answer to Co-chair Pearce, Mr.  Swanson said that DNR did                 
  not  have any amendments  to propose that  would address its                 
                                                                               
                                                                               
  concerns.                                                                    
                                                                               
  SENATOR SHARP observed that the longer the University waited                 
  to  select  lands, the  smaller  the opportunity  became for                 
  available lands.   Mr. Swanson said  it was a juggling  act.                 
  Considering land  that had not  been settled at  present and                 
  adding more land  for the University  into the system  would                 
  complicate  the situation  and overload  DNR's  already busy                 
  workload.  In answer to Senator Sharp, Mr. Swanson said that                 
  of the 106  million federal acres,  89 has been conveyed  to                 
  the state.                                                                   
                                                                               
  MCKIE  CAMPBELL, Deputy  Commissioner, Department of  Fish &                 
  Game, said  that his department concurred with DNR and would                 
  highlight four specific  points.  First, if  the bill should                 
  pass, the department  suggested University selections  occur                 
  only  in  areas where  existing  state management  plans had                 
  identified  lands  suitable  for  disposal.    Secondly, the                 
  department  would like  the  bill  to specifically  disallow                 
  University  selections  in legislatively  designated special                 
  areas including state game refuges,  critical habitat areas,                 
  and game sanctuaries.   After speaking to  University staff,                 
  he was  told page  4, line  13 would  address that  concern.                 
  However, he remained  concerned it was not  specific enough.                 
  Thirdly,  the  department  requested  there  be  a  ten-year                 
  deadline  on  University  selections  (the  University   had                 
  suggested  20  years).   Finally,  the department  felt that                 
  Section  144365E  should   be  removed  which  allowed   the                 
  University to appeal  land conveyance decisions made  by DNR                 
  to the Superior  Court.  As  a general practice, he  pointed                 
  out  it was  not good  practice to set  up a  mechanism that                 
  encouraged  various state  agencies to  sue each other.   He                 
  asked that some other dispute mechanism be chosen.                           
                                                                               
  Co-chair Pearce  asked for the  Department of Fish  & Game's                 
  position paper.  This was passed out to the committee.   Co-                 
  chair  Frank  asked  for  clarification  of  Mr.  Campbell's                 
  position.   Co-chair Frank  then asked  Rick Solie  and Jack                 
  Chenoweth to come before the committee.                                      
                                                                               
  RICK SOLIE, Aide to Co-chair Frank,  sponsor of SB 217, said                 
  that amendments had been made  in Senate Resources Committee                 
  that allowed the University the use of an interim conveyance                 
  procedure which was  currently utilized by DNR  in municipal                 
  conveyances.    Unfortunately,  a technical  correction  was                 
  needed  to  the  amendment  which   had  been  addressed  in                 
  amendment 1.   He said another problem  was foreseen between                 
  the time the University  selected the land and the  time the                 
  selection was actually accepted or rejected by DNR.  Certain                 
  other  claims could  appear during  that time.   Amendment 2                 
  addressed  this  problem and  was  then replaced  by revised                 
  amendment 2.                                                                 
                                                                               
  Co-chair  Frank  MOVED  for adoption  of  amendment  1 dated                 
                                                                               
                                                                               
  3/9/94.   Senator Kelly OBJECTED  and asked if the amendment                 
  would increase the  fiscal note.  Mr.  Swanson answered that                 
  amendment  1  greatly reduced  the  fiscal note  because DNR                 
  would not have to go to survey and patent immediately but an                 
  interim  conveyance  could  be  issued   based  on  a  legal                 
  description.    Senator Kelly  withdrew  his objection.   No                 
  further  objection  having  been  raised,  amendment  1  was                 
  ADOPTED  for   incorporation  within  a   Finance  Committee                 
  Substitute for the bill.                                                     
                                                                               
  Mr. Swanson said that it  was his understanding that revised                 
  amendment 2 would mean  that once land had been  selected by                 
  the  University,  the  land  would  be segregated  from  any                 
  further entry,  such as mining claims or other leases, until                 
  the University selection was approved  or rejected.  He said                 
  this was how state  land selections worked with  the federal                 
  government.                                                                  
                                                                               
  JACK   CHENOWETH,   Attorney,  Legislative   Legal  Counsel,                 
  Legislative   Affairs  Agency,  said  page  4,  lines  20-24                 
  contained a list  of items that should  be held in  limbo if                 
  land  had  been  selected  by  the  University  and  DNR had                 
  received  notice.   It would  refrain from taking  action on                 
  leasing, or from  entering into  a timber contract,  selling                 
  materials, or permit, or right of  way under the Alaska Land                 
  Act.   What  he  did  not see  was  the opportunity  of  the                 
  University  to  reject or  refuse to  take  any action  on a                 
  mining claim.   Mining claims could  come in and a  claimant                 
  would expect some action.  He  said that revised amendment 2                 
  was directed  at  the presentation  of  a mining  claim  and                 
  directed DNR not to  take any action on a  mining claim once                 
  the University  had presented its land selection or until it                 
  accepted or rejected the land selection.                                     
                                                                               
  End SFC-94 #33, Side 2                                                       
  Begin SFC-94 #35, Side 1                                                     
                                                                               
  Mr. Swanson said that DNR's concern  was that a mining claim                 
  once  filed  was  a  property  right.   Discussion  followed                 
  between  Senator Rieger  and  Co-chair  Frank regarding  the                 
  difference between amendment 2 and revised amendment 2.  Co-                 
  chair Frank MOVED revised amendment  2.  No objection having                 
  been   raised,   revised   amendment  2   was   ADOPTED  for                 
  incorporation within a Finance Committee Substitute  for the                 
  bill.                                                                        
                                                                               
  Senator Rieger submitted  amendment 3  to the committee  for                 
  discussion purposes.  He said it limited to 3 years the time                 
  the commissioner could withhold a  University land selection                 
  on the basis  it might be  subject of an exploration  lease.                 
  He said he parallelled  the language on page 7,  lines 14-21                 
  and lines 22-25.   Senator  Rieger MOVED amendment  3.   Mr.                 
  Chenoweth explained that,  as written,  amendment 3 did  not                 
  exactly do  that.   Senator Rieger  MOVED amendment  3 as  a                 
                                                                               
                                                                               
  conceptual  one  and  Mr. Chenoweth  agreed  to  rewrite the                 
  amendment.   No  objection having  been  raised,  conceptual                 
  amendment 3 was  ADOPTED for incorporation within  a Finance                 
  Committee Substitute for the bill.                                           
                                                                               
  In answer to Co-chair Pearce, Mr.  Swanson said that the new                 
  fiscal note for DNR would contain  one position and $71,000,                 
  including  support   money  with   BIA  receipts  from   the                 
  University.                                                                  
                                                                               
  SENATOR  KELLY  said  he  would like  to  address  the  DF&G                 
  position paper  dated March  3, 1994.   Discussion  followed                 
  between Co-chair  Frank,  Senator  Sharp,  and  Mr.  Swanson                 
  regarding land selections by the University being restricted                 
  to land in existing state management  plan areas.  In answer                 
  to Senator Sharp, Mr.  Swanson said that of the  189 million                 
  acres owned,  about 64  million acres  were included  within                 
  area plans.  He also concurred with Co-chair Frank's earlier                 
  statement that in  those management plan  areas no land  was                 
  being considered  that had  conditional  conveyances to  the                 
  Mental Health Trust or  to the University.  Mr.  Rogers said                 
  the University would  be opposed  to this restriction  since                 
  the planning process was very lengthy, and it would preclude                 
  large sections of land from  the University's selection.  He                 
  felt the deadline  would have to be extended  to at least 50                 
  years.  In  answer to Co-chair  Pearce, Mr. Rogers said  the                 
  University  would prefer a twenty-year deadline without this                 
  restriction but could live with a shorter one.                               
                                                                               
  In regard  to the  second item  on the  position paper,  Mr.                 
  Rogers said  that such lands were already  reserved from the                 
  public  domain  on page  4, line  13.   Senator  Kelly MOVED                 
  conceptual amendment  4 to specifically  disallow University                 
  selections   in   legislatively  designated   special  areas                 
  including state game  refuges, critical  habitat areas,  and                 
  game sanctuaries.   Co-chair Frank OBJECTED.   Mr. Chenoweth                 
  agreed that this amendment had already been addressed in the                 
  bill.  Discussion followed by  Co-chair Frank, Senator Sharp                 
  and Mr.  Chenoweth clarifying the  existing restrictions  in                 
  the bill.  Senator Kelly withdrew conceptual amendment 4.                    
                                                                               
  Senator Kelly MOVED  amendment 5 that placed  a certain year                 
  deadline on University  selections.   In answer to  Co-chair                 
  Frank, Mr. Swanson said the  Alaska Statehood Act originally                 
  gave  the  state 25  years  for  land selection  and  it was                 
  extended to  35 because  of the  land freeze between  Alaska                 
  Native  Claims  Settlement  Act   and  the  Alaska  National                 
  Interest Lands Conservation  Act.  The state  originally did                 
  not file  selections very rapidly for several  reasons.  One                 
  reason was  the state  had no  resource base  upon which  to                 
  judge what kinds  of land should  be selected.  The  state's                 
  knowledge  of  resources  was  much  broader  now  and  that                 
  information could  be given to  the University.   The second                 
  reason was that it was expensive  for the state due to  fire                 
                                                                               
                                                                               
  protection  requirements.   As  soon  as the  state retained                 
  title  to land, it must provide  fire protection for it.  At                 
  present, he felt  a time period of ten  years, from the date                 
  the University would first select land, was reasonable.                      
                                                                               
  Senator Kelly again MOVED and  clarified amendment 5 placing                 
  a ten-year deadline  on University  selections.  Mr.  Rogers                 
  said that  there was  some confusion  as to  when the  clock                 
  would start on the ten year deadline.  Certain parcels could                 
  be selected on  the effective date  of the bill and  certain                 
  parcels might  not be selected  until all the  Mental Health                 
  Lands were settled.   Co-chair Frank suggested  the deadline                 
  be changed to 15 years.  Senator Kerttula AMENDED  amendment                 
  5 be changed to 15 years.   Mr. Campbell said that 15  years                 
  would take care of  DF&G's concerns.  In answer  to Co-chair                 
  Frank, Mr. Campbell said that land status would effect DF&G.                 
  With  the  existing  uncertainties of  land  selection  with                 
  Native  and  Mental   Health  Land   issues,  and  now   the                 
  University, the more difficult it  was for everyone involved                 
  to do land management.  It eventually effected both fish and                 
  game resources  and  developers.   He felt  the shorter  the                 
  deadline,  the   sooner  those  issues  could  be  resolved.                 
  Senator Sharp said  a 15-year deadline might  encourage DF&G                 
  to lock up  more lands prior  to University selections.   No                 
  objection having been  raised, amendment  5 was ADOPTED  for                 
  incorporation within a Finance  Committee Substitute for the                 
  bill.                                                                        
                                                                               
  Senator  Kelly addressed  the  provision  that  allowed  the                 
  University to appeal land conveyance  to the Superior Court.                 
  Mr. Swanson said that he concurred with DF&G's concerns over                 
  this issue.   He  agreed that there  should be some  form of                 
  dispute resolution but did  not agree that it should  be the                 
  Superior Court.  Mr. Rogers said  that the University had no                 
  objection to an  alternate dispute resolution.   The concern                 
  was that a commissioner might reject all the selections that                 
  the University made.   He felt there should be  some balance                 
  between the  University selections and the  determination by                 
  the Commissioner not to grant lands because the Commissioner                 
  may want the land kept in the state's hands.                                 
                                                                               
  Co-chair Pearce said this issue  precisely explained why she                 
  was not supportive  of SB 217.   Governor Egan had  vetoed a                 
  similar bill  in the first  legislature because  it put  one                 
  agency ahead of another in terms of their ability to produce                 
  a  revenue stream.  She felt  the University sat at the same                 
  level as the Commissioners, and  any Governor would have the                 
  ability to make such decisions.                                              
                                                                               
  Senator Kelly MOVED  conceptual amendment  6 which gave  the                 
  Governor  authority  to  make  the  final  decision  if  the                 
  University  and  the Commissioner  had  a dispute  over land                 
  selection.  Mr. Campbell said that in existing  statutes, if                 
  there was a dispute between the Commissioner of DF&G and the                 
                                                                               
                                                                               
  Board of Fisheries  or Game, that  decision was appealed  to                 
  the Governor and the Governor was  required to make a formal                 
  statement of decision within a certain time period.  He felt                 
  that could be paralleled in amendment 6.                                     
                                                                               
  Co-chair Frank asked how the municipal land grant had worked                 
  without a system  of dispute resolution.   Mr. Swanson  said                 
  the first appeal was to himself, the Commissioner  was next,                 
  and then to the Superior Court.  Mr. Swanson said he did not                 
  know how many  municipalities had gone  to court, but  there                 
  were  two  cases  pending  at  present involving  the  Kenai                 
  Peninsula Borough.  In answer to Co-chair Frank, Mr. Swanson                 
  said the system worked, however, it took a long time and was                 
  very expensive for both parties.   Mr. Swanson agreed that a                 
  more inexpensive system could be provided.                                   
                                                                               
  Senator Kelly voiced his  lack of faith in arbitration.   He                 
  felt  the Governor was  the person to  make those decisions.                 
  Co-chair Pearce  clarified that  conceptual amendment  6 had                 
  been MOVED.  Mr. Rogers said  the University was not opposed                 
  to  amendment 6, in  fact, he preferred  the Governor making                 
  such  policy decisions  rather than the  court.   No further                 
  objection having  been  raised, conceptual  amendment 6  was                 
  ADOPTED  for   incorporation  within  a   Finance  Committee                 
  Substitute for the bill.                                                     
                                                                               
  Senator Kelly again MOVED amendment 4 to disallow University                 
  selections   in   legislatively  designated   special  areas                 
  including state  game refuges,  critical habitat areas,  and                 
  game sanctuaries.   Mr.  Campbell reiterated  that the  DF&G                 
  would  rather  have  this specifically  spelled  out  in the                 
  legislation.  Senator Rieger said that it seemed to him that                 
  land status or land ownership was a bundle of rights and not                 
  always fee simple.   He wondered if DF&G's concern  could be                 
  addressed with an  amendment that  stated if the  University                 
  selected  land that was subject to some kind of encumbrance,                 
  etc., in that  event, those encumbrances be  carried forward                 
  if the commissioner  should transfer title.   In response to                 
  Senator Rieger, Mr. Swanson said that there were other types                 
  of legislatively designated areas such as recreation, public                 
  use, state parks, etc.  that had been set up  by legislative                 
  language.  The  appropriate division would manage  the land,                 
  and if any LDA's (land disposal  agreement) were conveyed, a                 
  conflict would be created right away.                                        
                                                                               
  Co-chair Frank made a  comment that the bill should  be kept                 
  simple and such an amendment  would only complicate matters.                 
  Mr. Chenoweth confirmed  that state  park lands were  exempt                 
  from  University  selections.    After the  discussion,  Mr.                 
  Campbell  agreed  that  the committee  had  satisfied DF&G's                 
  concerns regarding designated special areas.   Senator Kelly                 
  withdrew amendment 4.                                                        
                                                                               
  Mr. Chenoweth clarified amendment 1,  by saying it provided,                 
                                                                               
                                                                               
  in  addition  to  final patent,  a  document  called interim                 
  conveyance.  He  noted three  places in the  bill where  the                 
  amendment  could cause problems:  on page  3, line  31, when                 
  University land  is removed from the public  domain, or land                 
  selected  by  and  conveyed  to  the  University  by  either                 
  document;  on  page  6, line  11,  talking  about possessory                 
  interests, when land was conveyed to  the University in this                 
  section,  the  University  took  the  land  subject  to  any                 
  possessory  interest  held  by  any   other  person  on  the                 
  effective date of  the conveyance (He wanted to confirm that                 
  the effective  date of  the conveyance  would be  either the                 
  date of final patent or, the  date of interim conveyance, if                 
  that document was used); and finally, on page 9, line 28 and                 
  29,  in  reference to  municipality property  tax exemption,                 
  property became exempt from municipal property taxation when                 
  it was conveyed to the University under either circumstance,                 
  final  patent or  by  interim conveyance.    He stated  that                 
  changing  reference to the manner of conveyance by adding an                 
  interim conveyance document  would have  an effect on  other                 
  laws.                                                                        
                                                                               
  Mr.  Swanson  said  the  department  had  always  considered                 
  interim  conveyance  as  legal  conveyance.    He  said  the                 
  department   had  been   using   interim  conveyance   since                 
  statehood.  It  was how  the state received  title, and  how                 
  Native  corporations received  title.   He  did not  see any                 
  conflict.                                                                    
                                                                               
  Senator  Kelly  asked  if a  similar  situation  could arise                 
  because of the legislation that  happened with the railroad.                 
  Co-chair  Frank  agreed  that  the   land  conveyed  to  the                 
  University would be exempt  from taxes, but, if leased,  the                 
  value of  the lease  or any  improvements would  be taxable.                 
  Mr. Chenoweth referred Senator Kelly to page 9, lines 18-21,                 
  which  said  that  exemptions  run   to  municipal  property                 
  including  property  held  by  a  public  corporation  of  a                 
  municipality  or  state  property  except  that   a  private                 
  leasehold  contract  or other  interest  in the  property is                 
  taxable  to  the  extent of  the  interest.    He said  that                 
  supported Co-chair  Frank's comments.   Senator  Kelly asked                 
  what would happen if the  University developed the property.                 
  Mr.  Rogers said  that this  legislation would  add the  new                 
  lands to the  existing statute  and a  subdivision would  be                 
  taxable to the extent  of the improvements.  He  pointed out                 
  that the University  was cutting timber at the  present time                 
  on its  land.   Timber contracts  were subject to  municipal                 
  taxation since  those were done  by private parties.   Lease                 
  hold or  contract  interests we  now taxable  and paid  when                 
  assessed by the municipalities.                                              
                                                                               
  Discussion  was  had  by Senator  Kelly  and  Co-chair Frank                 
  regarding lands and  what development could  be done by  the                 
  University.  Co-chair  Frank said the University  could come                 
  back  to  the  legislature and  report  on  such development                 
                                                                               
                                                                               
  possibilities.  Senator  Kelly said he was still waiting for                 
  a production report  from last year that  the University had                 
  failed to provide.                                                           
                                                                               
  End SFC-94 #35, Side 1                                                       
  Begin SFC-94 #35, Side 2                                                     
                                                                               
  Co-chair Pearce asked Mr. Rogers to speak to Senator Kelly's                 
  question  regarding  the  production  report.    Mr.  Rogers                 
  deferred this request to Wendy Redman.                                       
                                                                               
  WENDY  REDMAN,  Vice  President  for  University  Relations,                 
  University of Alaska, said that she believed the intent note                 
  that the University had written placed the deadline of March                 
  15,  1994  for the  production  report.   She  said  she had                 
  personally handed  Senator Kelly  two copies  of the  report                 
  prepared  by  President  Komisar.     The  additional  data,                 
  individual workloads for every single faculty member,  would                 
  be  available March 15, 1994,  which she believed was agreed                 
  upon by Senator Kelly and the University.                                    
                                                                               
  Senator Kelly said  he was satisfied  by the date March  15,                 
  1994.  In general, he said, he had a problem with the fiscal                 
  impact of  SB 217 on the University.   He noted that DNR had                 
  said that land selections took time  and were very expensive                 
  to do.   The fiscal note  did not indicate  any personnel to                 
  make  the land selections.  He wanted  to know who was going                 
  to do  that.  Mr.  Rogers said that a  staff of nine  in the                 
  University's land  management  office  handled  the  current                 
  management of  lands, and  this new  legislation would  come                 
  into this staff's  workload.  He  noted that the  University                 
  had been through two similar selection processes in 1982 and                 
  1987.   In 1987-1988,  the University  selected $24  million                 
  worth of selections in compensation for lands taken from the                 
  University by  the state and  given to  the municipality  of                 
  Anchorage.   Those selections were made over a 60-day period                 
  with existing staff.  He did not expect this selection would                 
  be  made that  quickly  but felt  the  existing staff  could                 
  absorb the cost of  the selections.  The primary  costs were                 
  not in picking the  land but in the legal  documentation for                 
  conveyance and most  significantly, in the cost  of surveys.                 
  The cost  of survey  must be  borne by  someone, either  the                 
  University or the private sector.                                            
                                                                               
  Co-chair  Frank  MOVED  for passage  of  CSSB  217(FIN) from                 
  committee  with  individual recommendations.    No objection                 
  having  been  raised,  CSSB  217(FIN)  was REPORTED  OUT  of                 
  committee  with  a  "do  pass,"  and  fiscal notes  for  the                 
  Department of Natural Resources of  $1,051.1 (the department                 
  will provide a new  fiscal note), the University of  $100.0,                 
  the  Department of Fish  & Game of $33.0,  and a zero fiscal                 
  note for the  Department of Revenue.   Co-chairs Pearce  and                 
  Frank,  Senators Rieger  and  Sharp signed  "do pass."   (On                 
  March  16,  1994,  Senate  Finance  Committee  replaced  the                 
                                                                               
                                                                               
  Department of Revenue's  fiscal note with  a new one in  the                 
  amount of $71.0.)                                                            
                                                                               
  SENATE BILL NO. 319:                                                         
                                                                               
       An  Act  relating  to  the   possession  of  controlled                 
       substances  within  500  feet of  recreation  and youth                 
       centers;  and  permitting  municipalities   to  install                 
       `drug-free recreation and youth center zone' signs.                     
                                                                               
  Co-chair  Pearce,  sponsor  of  SB  319,  said there  was  a                 
  companion   bill   on   the   House   side   introduced   by                 
  Representative Jim Nordlund.   She went  on to list all  the                 
  organizations that supported SB 319.                                         
                                                                               
  Discussion was held by Senators  Kelly, Rieger and Co-chairs                 
  Pearce and  Frank regarding  the possibility  of adding  the                 
  word "gun-free" to  SB 319.   Co-chair Pearce  said she  was                 
  told that was impossible.                                                    
                                                                               
  Senator Rieger MOVED  for passage of  SB 319 from  committee                 
  with  individual recommendations.   No objection having been                 
  raised, SB  319 was  REPORTED OUT  of committee  with a  "do                 
  pass,"  and  zero   fiscal  notes  for  the   Department  of                 
  Corrections, the Department of Law, the Department of Health                 
  &  Social Services, and the Department of Safety.  Co-chairs                 
  Pearce and Frank,  Senators Rieger, Kelly, and  Sharp signed                 
  "do pass."                                                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:15 a.m.                        

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