Legislature(2007 - 2008)SENATE FINANCE 532

07/22/2008 09:00 AM FINANCE


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Audio Topic
09:09:10 AM Start
09:13:21 AM SB4001
11:56:33 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Introduction and Presentations by the
Administration
+= SB4001 APPROP: SUPP/CAP/OTHER RELATED TO AGIA TELECONFERENCED
Heard & Held
+= SB4002 RESOURCE REBATE PROGRAM FOR RESIDENTS TELECONFERENCED
Scheduled But Not Heard
+= SB4003 APPROP: ENERGY RELIEF/REBATE/FUEL TAX TELECONFERENCED
Scheduled But Not Heard
+= SB4004 SUSPENDING MOTOR FUEL TAX TELECONFERENCED
Scheduled But Not Heard
-- Testimony <Invitation Only> --
                  SENATE FINANCE COMMITTEE                                                                                      
                       July 22, 2008                                                                                            
                         9:09 a.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stedman called the Senate Finance Committee meeting                                                                    
to order at 9:09:10 AM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Kim Elton                                                                                                               
Senator Joe Thomas                                                                                                              
Senator Fred Dyson                                                                                                              
Senator Bert Stedman, Co-Chair                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Donny Olson                                                                                                             
Senator Lyman Hoffman, Co-Chair                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Thomas Wagoner; Senator Hollis French; Senator Bill                                                                     
Wielechowski; Karen Rehfeld, Director, Office of Management                                                                     
and Budget; Jerry Burnett, Director, Division of                                                                                
Administrative Services, Department of Revenue; Pat Galvin,                                                                     
Commissioner, Department of Revenue; Jerry Burnett,                                                                             
Director, Division of Administrative Services, Department of                                                                    
Revenue; Tom Irwin, Commissioner, Department of Natural                                                                         
Resources; Clark Bishop, Commissioner, Department of Labor                                                                      
and Workforce Development; Guy Bell, Assistant Commissioner                                                                     
and Director, Division of Administrative Services,                                                                              
Department of Labor and Workforce Development; Larry Ledoux                                                                     
Commissioner, Department of Education and Early Development.                                                                    
Leta Simons, Director, Division of Support Services,                                                                            
Department of Natural Resources.                                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
There were no teleconference participants.                                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 4001   "An Act making supplemental appropriations,                                                                           
          capital appropriations, re-appropriations, and                                                                        
          other appropriations; making appropriations to                                                                        
          capitalize a fund; and providing for an effective                                                                     
          date."                                                                                                                
                                                                                                                                
SENATE BILL NO. 4001                                                                                                            
                                                                                                                                
    "An Act making supplemental appropriations, capital                                                                         
     appropriations, re-appropriations, and other                                                                               
     appropriations; making appropriations to capitalize a                                                                      
     fund; and providing for an effective date."                                                                                
                                                                                                                                
9:13:21 AM                                                                                                                    
                                                                                                                                
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET                                                                        
(OMB), explained the bill totals $377 million in new funds                                                                      
requested for the Alaska Gas Line Inducement Act (AGIA) and                                                                     
requests consideration for re-appropriation of $336 million                                                                     
currently in the Alaska Housing  Finance Corporation's (AHFC)                                                                   
account to go towards the AGIA  reimbursement fund. New funds                                                                   
requested would support infrastructure projects along                                                                           
Alaska's road systems, workforce  development, instate gas                                                                      
use and project implementation  required under the Department                                                                   
of Natural Resources (DNR).                                                                                                     
                                                                                                                                
9:15:04 AM                                                                                                                    
                                                                                                                                
Senator Elton asked Ms. Rehfeld  to discuss the connection                                                                      
between appropriations requested  for fiscal year 2009 and                                                                      
the $2 billion plus expected for follow up in the next four                                                                     
to five years. He stated his concern  for constrained capital                                                                   
budgets in other arenas due to  significant expenditures that                                                                   
will be needed for the project  in the future. Ms. Rehfeld                                                                      
explained that the departments had been working on                                                                              
identifying all the infrastructure needs in building the                                                                        
pipeline and developing a 10 year plan, which has yet to be                                                                     
mapped out but will be included in OMB's budget for next                                                                        
year. She stressed that there  are significant infrastructure                                                                   
needs.                                                                                                                          
                                                                                                                                
Senator Elton reiterated that there would be significant                                                                        
future expenditures and questioned if there would be                                                                            
constrained capital budgets in  other arenas in future years.                                                                   
                                                                                                                                
9:17:30 AM                                                                                                                    
                                                                                                                                
Ms. Rehfeld noted that significant improvements would be                                                                        
needed in transportation infrastructure:  ports, highways,                                                                      
and bridges. Some of the appropriations  such as training are                                                                   
designed to be for five years,  but others are only in the                                                                      
initial stages and would require future requests.                                                                               
                                                                                                                                
Senator Elton expressed concern regarding the impact on                                                                         
future capital needs not related to AGIA.                                                                                       
                                                                                                                                
9:19:20 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman observed that the Senate Finance Committee                                                                     
asked the administration for historical analysis of                                                                             
expenditures dealing with AGIA  in particular, and the gas                                                                      
line in general. He hoped that this information would                                                                           
address Senator Elton's concerns.                                                                                               
                                                                                                                                
Senator Elton asked "How many  capital dollars could be spent                                                                   
if the workforce was place?" Ms. Rehfeld stated that the                                                                        
administration is currently having that conversation.                                                                           
                                                                                                                                
9:23:09 AM                                                                                                                    
                                                                                                                                
Senator Huggins believed it was important to approach the                                                                       
situation programmatically. He  wanted to look at the project                                                                   
within the context of the operation of the rest of the                                                                          
state.                                                                                                                          
9:25:02 AM                                                                                                                    
                                                                                                                                
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, provided                                                                       
information regarding the requested appropriation of $500                                                                       
million to be set aside for qualified expenditures as they                                                                      
are presented to the Department of Revenue (DOR) for                                                                            
reimbursement under the AGIA license. The request would                                                                         
transfer funds that were set aside in prior years by the                                                                        
AHFC for future gas line expenditures  ($300 million) as well                                                                   
as the interest earnings to the AGIA account. General funds                                                                     
would be added to fully fund the AGIA reimbursable account.                                                                     
He emphasized that it would be a good faith gesture on the                                                                      
part of the state, the money is  available, and the state has                                                                   
the obligation under the license.                                                                                               
                                                                                                                                
9:27:17 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman observed that  use of money set aside in the                                                                   
AHFC fund has been discussed before. He asked why the                                                                           
legislature would use money from  the capital fund when ample                                                                   
cash resources are available from the constitutional,                                                                           
statutory, and earnings reserves.  Commissioner Galvin stated                                                                   
that DOR believes that the money had been set aside, on the                                                                     
record, for the purpose of the gas line. He maintained that                                                                     
the $500 million needs go into the AGIA fund at this time,                                                                      
but indicated the administration would not object if the                                                                        
legislature wished to use general funds.                                                                                        
                                                                                                                                
9:29:31 AM                                                                                                                    
                                                                                                                                
Senator Elton asked how much of  the $500 million needs to be                                                                   
in the reimbursable fund by July 1, 2009. Commissioner                                                                          
Galvin estimated that $30 million would be needed under the                                                                     
TransCanada work plan. Senator Elton observed that the                                                                          
current legislature may make different decisions regarding                                                                      
appropriations for the project than future legislatures. He                                                                     
suggested it might be more appropriate to fund what is                                                                          
needed in the current fiscal year and allow the next                                                                            
legislature to consider what is appropriate for the next                                                                        
fiscal year. Commissioner Galvin argued that the funding                                                                        
should be available immediately so the project can advance                                                                      
as quickly as possible. He did  not want to see the project                                                                     
slowed down in order to allow  an appropriation to catch up.                                                                    
                                                                                                                                
9:32:44 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked for clarification regarding the                                                                          
funding match set up in the AGIA license. Commissioner                                                                          
Galvin explained that the AGIA  license is set up as a 50/50                                                                    
match for all expenditures between TransCanada and the state                                                                    
up to an open season. After an open season is held the state                                                                    
would be responsible for 90 percent of $500 million. He                                                                         
explained that the full $500 million  would be reimbursed in                                                                    
approximately five years.                                                                                                       
                                                                                                                                
CoChair Stedman asked what kind  of a timeframe was set for                                                                     
the reimbursement. Commissioner Galvin said the AGIA statute                                                                    
sets out the reimbursement schedule.                                                                                            
                                                                                                                                
9:37:23 AM                                                                                                                    
                                                                                                                                
Senator Thomas asked a question regarding accounting.                                                                           
Commissioner Galvin stated that the issue was having the                                                                        
funds available at the time they  are needed. He maintained                                                                     
the project timeframe should not be limited to the                                                                              
appropriation the state allows;  rather it should be able to                                                                    
move along as quickly as physically  possible. He emphasized                                                                    
that setting the money aside now is a good faith gesture.                                                                       
                                                                                                                                
9:39:39 AM                                                                                                                    
                                                                                                                                
Senator Thomas asked for clarity  regarding the use of AHFC                                                                     
for the project. Commissioner Galvin responded that the                                                                         
money would not move and would still be managed by AHFC, but                                                                    
would be dedicated to the AGIA  reimbursement fund under the                                                                    
terms of the license.                                                                                                           
                                                                                                                                
9:41:38 AM                                                                                                                    
                                                                                                                                
Senator Elton asked if interest  earned on the reimbursement                                                                    
fund over time would go back into the general fund.                                                                             
Commissioner Galvin said it could be set up that way.                                                                           
                                                                                                                                
JERRY BURNETT, DIRECTOR, DIVISION OF ADMINISTRATIVE                                                                             
SERVICES, DEPARTMENT OF REVENUE,  clarified that inducement                                                                     
is limited to the $500 million and any excess interest would                                                                    
be available to the legislature.                                                                                                
                                                                                                                                
Co-Chair Stedman asked if reimbursement  could be less that                                                                     
$500 million with a successful open season. Commissioner                                                                        
Galvin explained that reimbursement  up to $500 million was                                                                     
expected regardless of the outcome of the open season.                                                                          
Senator Stedman asked about the issue of triple damages.                                                                        
Commissioner Galvin clarified  that the incursion of treble                                                                     
damages would be the result of any future action by the                                                                         
state and would be calculated  upon the expenditures to date.                                                                   
Treble damages would be addressed in the future if there is                                                                     
a decision to support a competing project.                                                                                      
                                                                                                                                
Mr. Burnett observed that interest on the fund would be                                                                         
accounted for separately and available for appropriation on                                                                     
an annual basis. The interest  does not automatically stay in                                                                   
the fund; it can be appropriated  back to the fund or for any                                                                   
other purpose.                                                                                                                  
                                                                                                                                
9:45:00 AM                                                                                                                    
                                                                                                                                
Senator Huggins suggested educating  the public in phases and                                                                   
funding the project in phases.                                                                                                  
                                                                                                                                
Commissioner Galvin maintained that putting money aside now                                                                     
would be best for expediency.  He stressed the state needs to                                                                   
make the same full commitment to the project that                                                                               
TransCanada has made.                                                                                                           
                                                                                                                                
Senator Elton voiced that he understood  "political football"                                                                   
and  pointed  out   that  this  is  not  a   dedicated  fund;                                                                   
TransCanada  is not  guaranteed  the $500  million by  future                                                                   
legislatures.                                                                                                                   
                                                                                                                                
9:49:30 AM                                                                                                                    
                                                                                                                                
Senator Elton asked if the removal of the $336 million from                                                                     
AHFC would alter the way the AHFC dividend is calculated.                                                                       
Mr. Burnett said no. He explained that the money is                                                                             
currently invested by the Department  of the Treasury instead                                                                   
of AHFC.                                                                                                                        
                                                                                                                                
Commissioner  Galvin  agreed  with  Senator  Elton  that  the                                                                   
legislature would retain all authority  to re-appropriate out                                                                   
of the  fund in  the future.  He asserted  that the  level of                                                                   
comfort for  the licensee would  be higher knowing  there was                                                                   
the  availability of  the funds  now, rather  than having  to                                                                   
come  back  and  ask  for  them   to  be  added,  while  also                                                                   
recognizing  that  at  any  time   the  legislature  can  re-                                                                   
appropriate said funds.                                                                                                         
                                                                                                                                
AT EASE:       9:51:28 AM                                                                                                     
RECONVENED:    10:03:09 AM                                                                                                    
                                                                                                                                
10:03:26 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman   provided  a  revised   spreadsheet:  7/22                                                                   
Revised  Special  Session  Appropriation   Summary  (Copy  on                                                                   
File).                                                                                                                          
                                                                                                                                
TOM IRWIN, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,                                                                       
provided  members  with  a  slide  presentation,  "AGIA,  Gas                                                                   
Pipeline Implementation" (Copy on File).                                                                                        
                                                                                                                                
10:06:04 AM                                                                                                                   
                                                                                                                                
In  response to  a question  by  Senator Elton,  Commissioner                                                                   
Irwin clarified  that the  slides pertain  to the DNR  fiscal                                                                   
note for $15 million.                                                                                                           
                                                                                                                                
Commissioner Irwin  explained the roles  of DNR, DOR  and the                                                                   
governor's office:                                                                                                              
   · monitor TransCanada Alaska activities to ensure that it                                                                    
     fulfills its license obligations,                                                                                          
   · to work to ensure that the first open season is                                                                            
     successful,                                                                                                                
   · monitor and audit pipeline expenditures,                                                                                   
   · facilitate the issuance of environmental permits and                                                                       
     other government approvals.                                                                                                
                                                                                                                                
Commissioner   Irwin   addressed   the  next   slide   titled                                                                   
"Conformance with  License." which notes that  TransCanada is                                                                   
required to diligently  pursue its work plan and  a team will                                                                   
be assembled to ensure that it does so.                                                                                         
                                                                                                                                
10:08:16 AM                                                                                                                   
                                                                                                                                
  Commissioner Irwin emphasized the desire of the state to                                                                      
   work with TransCanada to help ensure a successful open                                                                       
   season. He reviewed slide three: "Monitor Commercial                                                                         
   Developments and Conditions." He said DNR will:                                                                              
                                                                                                                                
   · implement AGIA's upstream inducements:                                                                                     
   - through Royalty Valuation and RIV/RIK switching                                                                            
   regulations                                                                                                                  
   - possible fiscal certainty regulations                                                                                      
                                                                                                                                
   · Determine possible additional state inducements to help                                                                    
     ensure success of the first open season:                                                                                   
   - resource assessments, manage state's relationship with                                                                     
TransCanada, ongoing assessment of project costs and                                                                            
economic conditions                                                                                                             
   - examination of Alaska's gas fiscal regime                                                                                  
                                                                                                                                
The funding will provide DNR, DOR and the Governor's                                                                            
Pipeline Coordinator with outside  expertise to perform these                                                                   
activities.                                                                                                                     
                                                                                                                                
Senator Huggins asked Commissioner Irwin to expand upon the                                                                     
term "resource assessments." Commissioner Irwin explained                                                                       
that they will start at the gas fields and look at the                                                                          
resources there, at the progress of TransCanada, and the                                                                        
resource assessment they are putting into the project such                                                                      
as the engineering and design aspects.                                                                                          
                                                                                                                                
10:11:23 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin observed they would also monitor market                                                                      
and consumer conditions. He added that 82 percent of                                                                            
Canada's gas is currently exported to the United States and                                                                     
they project the relationship will be similar in 2020.                                                                          
                                                                                                                                
Senator Huggins said the term "resource assessment"                                                                             
automatically brought to mind "gas off-take." Commissioner                                                                      
Irwin answered that was part of the assessment.                                                                                 
                                                                                                                                
10:12:53 AM                                                                                                                   
                                                                                                                                
Senator Huggins suggested a timeline to anticipate                                                                              
milestones in the project such as gas off-take and in- state                                                                    
gas. He specifically mentioned Point Thompson.                                                                                  
                                                                                                                                
Senator Elton questioned if the $15 million was what would                                                                      
be needed through fiscal year 2014. Commissioner Irwin said                                                                     
that was correct. Senator Elton also questioned if the                                                                          
administration needs that much money to monitor the work of                                                                     
TransCanada, whether or not the legislature should be                                                                           
monitoring the program as well and would the legislature                                                                        
have access to the administration's  experts. Commissioner                                                                      
Irwin answered the administration  would be accountable to                                                                      
and in co-operation with the legislature.                                                                                       
                                                                                                                                
10:14:45 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin emphasized  that the stronger the unity                                                                      
between the administration and  the legislature the better                                                                      
chance for success with the project. Senator Elton responded                                                                    
that the project should be funded on a year by year basis to                                                                    
make sure the legislature has access in the future. He                                                                          
wondered if the best approach would be to fund the project                                                                      
on a year by year basis. Commissioner Irwin maintained that                                                                     
the project is going to move quickly and the money needs to                                                                     
be available immediately.                                                                                                       
                                                                                                                                
10:16:45 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin stated that  he could not project exact                                                                      
numbers year to year, only estimated numbers over time.                                                                         
Senator Elton requested a timeline of expected expenditures.                                                                    
Commissioner Irwin said he would  address that in the last                                                                      
slide of his presentation.                                                                                                      
                                                                                                                                
Senator Huggins expressed frustration with Special Sessions                                                                     
and the presentation. He asked  for a timeline with fiscal                                                                      
milestones.                                                                                                                     
                                                                                                                                
10:20:01 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin stressed that TransCanada will                                                                               
immediately go to work on a detailed design. The department                                                                     
will update the costs and enter into discussions with all                                                                       
parties on the North Slope, based on factual information. He                                                                    
promised to give the legislature as much notice as possible                                                                     
if the factual information indicates the need for further                                                                       
inducements. He felt that the legislature would not want                                                                        
them to delay.                                                                                                                  
                                                                                                                                
Senator Huggins reiterated his request for a timeline.                                                                          
Commissioner Irwin stressed that the more united the                                                                            
legislature and the administration is the more likelihood                                                                       
for success.                                                                                                                    
                                                                                                                                
Commissioner Irwin continued with his presentation The                                                                          
funding would provide DNR, DOR, and the governor's Pipeline                                                                     
Coordinator with outside expertise to perform activities                                                                        
stated on slide five:                                                                                                           
                                                                                                                                
     -Tariffs and ratemaking                                                                                                    
     -Policies of the FERC, RCA and NEB                                                                                         
     -Gas pipeline access                                                                                                       
     -Engineering and Project costs                                                                                             
     -Project Economics                                                                                                         
     -Federal loan guarantees                                                                                                   
     -Project management                                                                                                        
     -Worldwide gas investment opportunities                                                                                    
     -Pipeline development accounting                                                                                           
     -Environmental oversight                                                                                                   
                                                                                                                                
10:23:44 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin broke down the estimated budget on the                                                                       
final slide:                                                                                                                    
   · Conformance with license provisions estimated cost                                                                         
     $7,500,000                                                                                                                 
   · Monitoring commercial developments and conditions                                                                          
     estimated cost $6,500,000                                                                                                  
   · Oversight and Environmental Permit Coordination                                                                            
     estimated cost  $1,000,000                                                                                                 
   · Total of $15,000,000.                                                                                                      
Commissioner Irwin went further to break the budget down                                                                        
with his best estimates to date. He would immediately shift                                                                     
resources if there are opportunities to move the process                                                                        
forward. Conformance with license conditions, using a                                                                           
contracted team of four experts would be $1.25 million per                                                                      
year. There is $250 thousand a year to provide outside                                                                          
consultants to help with reimbursements and audit support.                                                                      
There is a one year appropriation for $250 thousand in FY 09                                                                    
for contractors to help develop royalty inducements and                                                                         
another $1.25 million per year for a contractor team to                                                                         
assess and possibly develop additional state inducements to                                                                     
ensure a successful first open season. There would be                                                                           
$200,000 per year for the pipeline coordinator. The funds                                                                       
would be expended by DNR, but  they could also be transferred                                                                   
as a reimbursable services agreement  (RSA) to the Department                                                                   
of Law or the governor's office as appropriate.                                                                                 
                                                                                                                                
10:26:20 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin expanded on the question "Why DNR?" He                                                                       
stated that the department's Division  of Oil and Gas is the                                                                    
business arm of oil and gas. He  elaborated that most of the                                                                    
contracts done with consultants  during the last process came                                                                   
out of the oil and gas side of the world because of needed                                                                      
knowledge and relationships specific to DNR.                                                                                    
                                                                                                                                
Co-Chair Stedman asked what was new on the list of                                                                              
expenditures that had not been  requested during the regular                                                                    
2008 legislative session. Commissioner  Irwin said he wanted                                                                    
to wait for the legislature to vote on AGIA. He felt it                                                                         
would be presumptuous to ask for  the funding for the program                                                                   
before it had been voted on. Senator  Stedman asked again for                                                                   
a year-to-year breakdown for this section of the project.                                                                       
Commissioner Irwin promised to provide him with a copy of                                                                       
the estimated breakdown adding that flexibility with the                                                                        
funds would be necessary.                                                                                                       
                                                                                                                                
Senator Elton reiterated his concerns  regarding Reimbursable                                                                   
Service Agreements (RSA). He asked  why it would be necessary                                                                   
to have outside contract accountants  detailing how accounts                                                                    
are dealt with rather than OMB or DOR. Commissioner Irwin                                                                       
stated that the accounting could be done within the                                                                             
department and emphasized that the plan for outside                                                                             
contractors is a contingency. He stressed that the                                                                              
department would work to enhance  the process where possible.                                                                   
                                                                                                                                
10:33:09 AM                                                                                                                   
                                                                                                                                
Commissioner Irwin insisted that  DOR, DNR, and Department of                                                                   
Law have worked well together  to ensure that the funds will                                                                    
go to the department that is accountable for providing the                                                                      
expertise. The RSA from the governor's office is for the                                                                        
individual who will provide oversight and environmental                                                                         
permit co-ordination.                                                                                                           
                                                                                                                                
10:35:02 AM                                                                                                                   
                                                                                                                                
LETA SIMONS, DIRECTOR, DIVISION OF SUPPORT SERVICES,                                                                            
DEPARTMENT OF NATURAL RESOURCES,  provided information about                                                                    
past appropriations for the purpose of AGIA and gas                                                                             
pipeline. She explained that the state has had $19,225,000                                                                      
appropriated in the past, beginning  at FY 05' for AGIA type                                                                    
gas line purposes. There have been appropriations to the                                                                        
commissioner's office for gas  line workload, appropriations                                                                    
to Oil and Gas for gas line workload, specifically capital                                                                      
budget projects. Of those funds approximately $3 million                                                                        
remains. There is also an on going $1.3 million that has                                                                        
been moved to the governor's office that supports an                                                                            
increased workload for the division of Oil and Gas, which                                                                       
could be available for increased staff in the future.                                                                           
                                                                                                                                
10:37:21 AM                                                                                                                   
                                                                                                                                
CLARK   BISHOP,  COMMISSIONER,   DEPARTMENT   OF  LABOR   AND                                                                   
WORKFORCE  DEVELOPMENT presented  workforce division  funding                                                                   
request  slides,  "Gasline Workforce  Development"  (Copy  on                                                                   
File).                                                                                                                          
                                                                                                                                
10:39:18 AM                                                                                                                   
                                                                                                                                
GUY BELL, ASSISTANT COMMISSIONER  AND DIRECTOR, DIVISION OF                                                                     
ADMINISTRATIVE SERVICES, DEPARTMENT  OF LABOR AND WORKFORCE                                                                     
DEVELOPMENT, informed the committee  that the total request                                                                     
for workforce development is $42.7 million and that it is a                                                                     
multi-agency partnership between DOL, the Department of                                                                         
Education, the Post Secondary Education Commission, and the                                                                     
University of Alaska. The Gasline Workforce Scholarship                                                                         
Program would cost $4,500,000 over a five year period, and                                                                      
would establish a scholarship  program for recent high school                                                                   
or general education degree graduates preparing for careers                                                                     
in AGIA-related occupations requiring associates or                                                                             
certificate level training and enrolling in programs of a                                                                       
minimum of eight weeks in length and up to two years in                                                                         
length. This would be a one-time project.                                                                                       
                                                                                                                                
10:42:09 AM                                                                                                                   
                                                                                                                                
Senator Elton queried funding all five years at once if the                                                                     
program is $900,000 dollars per year as an operating                                                                            
expense. why is it necessary to  fund all five years at once,                                                                   
He suggested appropriating $900,000 for FY 09' and see if                                                                       
the program is successful before giving it more funding.                                                                        
Commissioner Bell responded that the full five-year funding                                                                     
would reflect a commitment on the part of the state.                                                                            
                                                                                                                                
Co-Chair Stedman asked why these  funds were not asked for in                                                                   
April 2008.                                                                                                                     
                                                                                                                                
10:44:17 AM                                                                                                                   
                                                                                                                                
Commissioner Bishop said that the training plan was not                                                                         
finalized until February 2008'  and that this particular AGIA                                                                   
Training Strategic Plan was not completed until May 2008'.                                                                      
Co-Chair Stedman questioned the timing of the funding                                                                           
request. Commissioner Bishop stated  he had not wanted to ask                                                                   
for funding until the program had been confirmed.                                                                               
                                                                                                                                
                                                                                                                                
10:45:59 AM                                                                                                                   
                                                                                                                                
Ms. Rehfeld added that OMB felt that it was appropriate to                                                                      
keep some cost separate so they could be clearly looked at                                                                      
as the project advances.                                                                                                        
                                                                                                                                
Co-Chair Stedman asked if the training program is                                                                               
appropriate to the goal of putting Alaskan's to work on a                                                                       
gas line regardless of who owns it. Commissioner Bishop                                                                         
replied in the affirmative.                                                                                                     
                                                                                                                                
10:47:57 AM                                                                                                                   
                                                                                                                                
Ms. Rehfeld elaborated that additional funding was necessary                                                                    
to provide more training to more Alaskans.                                                                                      
                                                                                                                                
Senator Elton admitted to bias against dedicated funds and                                                                      
called for more fiscal clarity. He wants the ability to                                                                         
determine from year to year how much money the program would                                                                    
merit.                                                                                                                          
                                                                                                                                
10:49:52 AM                                                                                                                   
                                                                                                                                
Senator Elton agreed with Ms. Rehfeld regarding additional                                                                      
funding and added he would like to keep operating and                                                                           
capital projects separate. He maintained that he did not                                                                        
want to commit to a five-year program that was currently                                                                        
only a concept. Ms. Rehfeld asserted that it would be                                                                           
difficult for training programs to provide sufficient                                                                           
training without sufficient funding. Senator Elton stated                                                                       
the importance of all operating requests and asked why this                                                                     
one was so compelling. Ms. Rehfeld said she saw his point.                                                                      
                                                                                                                                
10:51:41 AM                                                                                                                   
                                                                                                                                
Senator Thomas pointed out that the skilled workforce                                                                           
created by the program could carry over to many different                                                                       
Alaskan industries such as construction and mining.                                                                             
Commissioner Bishop concurred.                                                                                                  
                                                                                                                                
10:53:31 AM                                                                                                                   
                                                                                                                                
Commissioner Bishop agreed that the skills were                                                                                 
transferrable.                                                                                                                  
                                                                                                                                
Senator Huggins stated he was excited for the Department of                                                                     
Education and Early Development and the Department of Labor                                                                     
and Workforce Development to be working together, but was                                                                       
concerned about what would happen to the trained workforce                                                                      
after the pipeline was built.                                                                                                   
                                                                                                                                
10:56:13 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  referenced Ilisagvik College,  a vocational                                                                   
technical school in Point Barrow  which had the same plan and                                                                   
had its funding vetoed. He pointed  out that there was no one                                                                   
from  Point  Barrow employed  in  the  oil industry.  He  was                                                                   
curious about the reason for the funding veto.                                                                                  
                                                                                                                                
10:57:59 AM                                                                                                                   
                                                                                                                                
Ms. Rehfeld replied that DOL had  some legal concerns because                                                                   
Ilisagvik College is eligible  for competitive training funds                                                                   
from other sources.                                                                                                             
                                                                                                                                
Commissioner Bishop asked for clarification concerning                                                                          
Senator Stedman's question. Senator Stedman answered that                                                                       
during conversations with the people of Point Barrow they                                                                       
were concerned that people from their community were not                                                                        
employed on the oil field.                                                                                                      
                                                                                                                                
Senator Thomas thought the comment was directed more at the                                                                     
producers. He said that the people of Point Barrow had                                                                          
created their own company and  worked through sub-contractors                                                                   
to get their people hired. The frustration lay in getting                                                                       
their people employed directly by the oil companies.                                                                            
                                                                                                                                
Co-Chair Stedman noted that his comment was broad.  He                                                                          
mentioned the Inuit Circumpolar Council's problem with                                                                          
employment in Western Alaska. He asked how policy would be                                                                      
crafted to deal with the issue of unemployment in Western                                                                       
Alaska.                                                                                                                         
                                                                                                                                
11:00:58 AM                                                                                                                   
                                                                                                                                
Mr. Bell explained the workings  of the job center in Barrow.                                                                   
He asserted that the job proposals  would be available to any                                                                   
job training center in the state.                                                                                               
                                                                                                                                
Senator Elton questioned why the fiscal notes contain no                                                                        
funding for the University of Alaska Southeast.                                                                                 
                                                                                                                                
Mr. Bishop shared his experience  with touring the Point                                                                        
Barrow facilities. The center  seemed satisfied with the                                                                        
placement of their students. He  offered to meet Senator                                                                        
Elton later to discuss his question.                                                                                            
                                                                                                                                
Senator Elton stressed the urgency of the situation.                                                                            
                                                                                                                                
11:05:07 AM                                                                                                                   
                                                                                                                                
Mr. Bell reported  that scholarship programs  for gasline job                                                                   
training would be open to all  Alaskans, as would be a number                                                                   
of the other programs.                                                                                                          
                                                                                                                                
Mr. Bell addressed the appropriation for Gasline Workforce                                                                      
Development. $34,800,000 would fund a five-year program                                                                         
necessary to implement the strategies  from the AGIA Training                                                                   
Plan Steering Committee for skills development in                                                                               
preparation for pipeline occupations. The program includes                                                                      
job awareness and using various media forms to make Alaskans                                                                    
aware of training possibilities.                                                                                                
                                                                                                                                
11:07:10 AM                                                                                                                   
                                                                                                                                
Mr. Bell explained that Pipeline Training Program                                                                               
Administrator would be a new position requiring $800,000                                                                        
spread over five years. He stated  the Adult Basic Education                                                                    
Increase would require $2.5 million,  again over five years,                                                                    
to prepare Alaskans for employment  by providing instruction                                                                    
in the basic skills of reading,  writing, mathematics, and                                                                      
General Education Development preparation and testing.                                                                          
                                                                                                                                
Co-Chair Stedman requested a cash-flow  timeframe.  Mr. Bell                                                                    
agreed to provide that information.   Ms. Rehfeld offered to                                                                    
help.                                                                                                                           
                                                                                                                                
11:09:07 AM                                                                                                                   
                                                                                                                                
Commissioner Bell continued with a request for AGIA Training                                                                    
Strategic Plan Strategy 3.1 the  Alaska Vocation Technical                                                                      
Center Instructional Expansion of $1.5 million (copy on                                                                         
file).                                                                                                                          
                                                                                                                                
11:10:47 AM                                                                                                                   
                                                                                                                                
Senator Huggins asked if the organizations that already                                                                         
provide this training are also  receiving grants. Mr. Bell                                                                      
explained how those entities are  funded.  Senator Huggins                                                                      
encouraged the expansion of training programs. He inquired                                                                      
if there is a funding component for training state troopers.                                                                    
Commissioner Bishop said there was, through a grant                                                                             
application process. Senator Huggins  noted a shortfall in                                                                      
troopers and strongly supported their training.                                                                                 
                                                                                                                                
AT-EASE:       11:13:18 AM                                                                                                    
RECONVENED:    11:22:11 AM                                                                                                    
                                                                                                                                
Co-Chair Stedman requested more information about the Alaska                                                                    
Works Partnership. Commissioner  Bishop explained that the                                                                      
Alaska Works Partnership is a 501(c) (3) non-profit                                                                             
available to all Alaskans for skill training that has been                                                                      
in Barrow for about eight years.  Co-Chair Stedman asked why                                                                    
the Alaska Works Partnership qualified for funding and                                                                          
Ilisagvik College did not. Ms. Rehfeld said she would                                                                           
provide the legal memo that explained the veto of the                                                                           
appropriation to Ilisagvik College.                                                                                             
                                                                                                                                
11:25:40 AM                                                                                                                   
                                                                                                                                
Mr. Bell spoke of the Gasline  Occupations Grant Program for                                                                    
$26.5 million to reestablish Career Technical Education                                                                         
(CTE) programs around the state. He shared statistics on the                                                                    
successes of the CTE program.  He pointed out that schools                                                                      
across the state have lost funding  for this purpose and this                                                                   
would be a chance to try to fix that.                                                                                           
                                                                                                                                
11:26:58 AM                                                                                                                   
                                                                                                                                
LARRY LEDOUX COMMISSIONER, DEPARTMENT  OF EDUCATION AND EARLY                                                                   
DEVELOPMENT, spoke in support of funding for vocational                                                                         
education in Alaska. He told of the advantages of programs                                                                      
directed at significant needs.  He noted it takes time to                                                                       
integrate grant programs and funding into school systems.                                                                       
Using request for proposals allows programs to reach their                                                                      
goals by leveraging their money  and developing partnerships.                                                                   
He listed several other benefits of partnerships.                                                                               
                                                                                                                                
11:29:34 AM                                                                                                                   
                                                                                                                                
Senator Huggins asked  if there are any charter  schools with                                                                   
a career or  technology focus.  Commissioner  Ledoux admitted                                                                   
he  was not  aware of  any specific  charter  schools but  he                                                                   
would get back to Senator Huggins when he knew more.                                                                            
Senator Huggins noted the importance of internships and the                                                                     
connection between the education site and the work site.                                                                        
Commissioner Ledoux commented on the importance of training                                                                     
employees to have strong work ethic in order to keep a job.                                                                     
                                                                                                                                
Co-Chair Stedman voiced a concern about short-termed                                                                            
sponsorship of programs.  Mr. Bishop shared a story about a                                                                     
successful welding program in Matanuska-Susitna due to                                                                          
support. He stressed the importance  of bringing industry and                                                                   
business together to make such programs work.                                                                                   
                                                                                                                                
11:34:07 AM                                                                                                                   
                                                                                                                                
Senator Thomas commented on the importance of communication                                                                     
between the school site and the job site. He supported a                                                                        
class that would provide basic  life skills such as balancing                                                                   
a checkbook.                                                                                                                    
                                                                                                                                
Co-Chair Stedman noted concern in the business world                                                                            
regarding a migration toward higher paying jobs on the gas                                                                      
pipeline, causing problems for other areas of Alaska's                                                                          
economy. Commissioner Bishop shared those concerns.                                                                             
                                                                                                                                
11:37:36 AM                                                                                                                   
                                                                                                                                
Senator Huggins thought that the state system contains                                                                          
obstacles regarding vocational  education. He asked what kept                                                                   
the state from getting highschoolers and young workers to                                                                       
the job site. Commissioner Ledoux  thought it was a matter of                                                                   
a lack of resources in some school districts. Mr. Bell                                                                          
pointed out that additional emphasis has been put on                                                                            
voluntary programs by employers.                                                                                                
                                                                                                                                
11:40:03 AM                                                                                                                   
                                                                                                                                
Mr. Bell discussed instruction academies, slated at $3.5                                                                        
million per year, and partnerships around the state. He                                                                         
stated that occupational preparation is still needed                                                                            
throughout the state for this project. He pointed out the                                                                       
Youth First programs directly connect to the CTE programs.                                                                      
                                                                                                                                
11:41:39 AM                                                                                                                   
                                                                                                                                
Mr. Bell related  that Regional Training Centers  and Gasline                                                                   
Training  programs  for  $2  million   are  included  in  the                                                                   
appropriation  request.   Co-Chair  Stedman  asked   why  the                                                                   
appropriation  was  not  included   in  the  regular  session                                                                   
budget.   Mr.  Bell reported  that this  was a  late-arriving                                                                   
program after the budget was developed.                                                                                         
                                                                                                                                
Co-Chair Stedman recalled a legislative leadership meeting                                                                      
where there was no mention of a "multitude of                                                                                   
appropriations". He asked how long this request has been in                                                                     
the works.  Mr. Bishop replied about a month.                                                                                   
                                                                                                                                
11:44:34 AM                                                                                                                   
                                                                                                                                
Ms. Rehfeld recalled discussion of which appropriations                                                                         
might be needed for AGIA. She thought the timing was                                                                            
appropriate for the discussion.                                                                                                 
                                                                                                                                
Mr. Bell continued to explain the Skill Upgrade and                                                                             
Supervisory Training appropriation for $750,000 total, or                                                                       
$150,000 per year.                                                                                                              
                                                                                                                                
11:46:35 AM                                                                                                                   
                                                                                                                                
Mr. Bell explained the Alaska Works Partnership Gasline                                                                         
Workforce Development request for $2,287,500 to equip the                                                                       
pipeline training center in Fairbanks. The training center                                                                      
has already received just over $10 million from legislative                                                                     
general fund appropriations.                                                                                                    
                                                                                                                                
Senator Huggins asked how much TransCanada was contributing                                                                     
in dollars for equipment and assets. Mr. Bishop did not                                                                         
know. Co-Chair Stedman asked when he would know. Mr. Bishop                                                                     
thought within the next 30 days.                                                                                                
                                                                                                                                
Co-Chair Stedman asked about shipping the steel flat and                                                                        
rolling it in-state via a rolling mill.  Mr. Bishop was not                                                                     
familiar with the concept regarding this pipeline project.                                                                      
He embraced the idea.                                                                                                           
                                                                                                                                
11:50:11 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman questioned if Canada has a premium on the                                                                      
American labor force, and if American contractors would be                                                                      
on equal footing with Canadian contractors.  Mr. Bishop                                                                         
offered to ask in a meeting with TransCanada in Whitehorse                                                                      
next week.                                                                                                                      
                                                                                                                                
Co-Chair Stedman inquired if the field was level regarding                                                                      
duty or supplies and would there be local bidder's                                                                              
preference. Mr. Bishop stated he would find out.                                                                                
                                                                                                                                
11:51:58 AM                                                                                                                   
                                                                                                                                
Senator Huggins noted that the agreements between                                                                               
TransCanada and the state should be reciprocal.                                                                                 
                                                                                                                                
11:52:25 AM                                                                                                                   
                                                                                                                                
Mr. Bell spoke to the last appropriation request for the                                                                        
University of Alaska Gasline Workforce Development in the                                                                       
amount of $1,072,000, which would fund simulated work                                                                           
scenarios for heavy equipment training.                                                                                         
                                                                                                                                
Senator Huggins stressed avoiding competition with those                                                                        
already in the business of providing simulated work                                                                             
scenarios.                                                                                                                      
                                                                                                                                
11:56:33 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:57 AM.                                                                                          
                                                                                                                                
                                                                                                                                

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