Legislature(2011 - 2012)SENATE FINANCE 532

03/21/2011 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 18 DURATION OF REGULAR LEGISLATIVE SESSIONS TELECONFERENCED
Moved CSSB 18(FIN) Out of Committee
*+ SB 97 COMMUNITY REVENUE SHARING/EDUC FUNDING TELECONFERENCED
Heard & Held
*+ SB 102 AK AFFORDABLE HEATING PROGRAM PAYMENTS TELECONFERENCED
Heard & Held
+ SB 23 FILM PRODUCTION TAX CREDIT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 97                                                                                                            
                                                                                                                                
     "An  Act  authorizing   additional  appropriations  for                                                                    
     public  education  and  for community  revenue  sharing                                                                    
     based on  the price  of Alaska  North Slope  crude oil,                                                                    
     and   adjusting    the   formula   for    payments   to                                                                    
     communities."                                                                                                              
                                                                                                                                
9:12:21 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman   stated  that   high  oil   prices  added                                                                    
operating burdens to local governments and schools.                                                                             
                                                                                                                                
TIM  GRUSSENDORF, STAFF,  SENATOR HOFFMAN,  highlighted some                                                                    
changes to SB  97. He began with Section  1, which presented                                                                    
the formula and the money  that would be appropriated to the                                                                    
Department  of Education.  Section 2  addressed a  technical                                                                    
change, which would assure that  the fund would always reach                                                                    
$180  million. Section  3  would add  a  new sub-section  D,                                                                    
which was  a calculation that  would add the new  formula to                                                                    
the revenue sharing.                                                                                                            
                                                                                                                                
9:15:07 AM                                                                                                                    
                                                                                                                                
Mr. Grussendorf presented  "Goal: Increase Community Revenue                                                                    
Sharing  when there  is a  GF  Surplus" (copy  on file).  He                                                                    
stated that $89/per barrel was  the trigger-point, but there                                                                    
was still an  effort to make a  more accurate trigger-point.                                                                    
He stated that  the decision to use $89  per barrel, because                                                                    
it was the  amount needed to balance the  state's budget. He                                                                    
looked  at line  G,  and stated  that revenue-sharing  would                                                                    
eliminate the $60 million, that  it was formulated to do. He                                                                    
looked at line  H, and stated that the  full revenue sharing                                                                    
would be $82  million. He looked at line J,  and stated that                                                                    
the  revenue would  be due  to the  progressive taxation  of                                                                    
oil. He  explained that the  excessive revenue would  not go                                                                    
directly into  the formula, but  would be calculated  out as                                                                    
the same  proportion as the  first $60 million.  He stressed                                                                    
that as  long as the formula  was above $60 per  barrel, the                                                                    
formula should produce at least $60 million.                                                                                    
                                                                                                                                
9:18:26 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  queried the  payout date.  Mr. Grussendorf                                                                    
replied  that the  payout date  was not  yet solidified.  He                                                                    
stated  that  the  revenue  sharing  would  go  out  at  the                                                                    
beginning of the fiscal date.  He noted that the payout date                                                                    
would probably be sometime in August.                                                                                           
                                                                                                                                
9:19:04 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  commented  that a  determination  of  the                                                                    
price trigger needed  to be solidified. He  stated that cost                                                                    
stress on small communities would be alleviated.                                                                                
                                                                                                                                
9:20:38 AM                                                                                                                    
                                                                                                                                
Senator Thomas wondered if the  date was referring to the 90                                                                    
day  period.  Mr.  Grussendorf replied  that  that  was  one                                                                    
option, and they were looking at the yearly average.                                                                            
                                                                                                                                
Senator Thomas  wondered if there was  consideration for tax                                                                    
credit return based on progressivity,  and wondered if there                                                                    
was  a  comparison.  Co-Chair   Stedman  requested  a  rough                                                                    
concept  of   the  revenue.   Mr.  Grussendorf   replied  by                                                                    
referring to line J of the spreadsheet.                                                                                         
                                                                                                                                
Co-Chair Stedman would like to  call it credits, rather than                                                                    
progressivity. Mr. Grussendorf agreed.                                                                                          
                                                                                                                                
9:23:01 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  wondered  if  $3.5  billion  referred  to                                                                    
spending. Mr.  Grussendorf replied  with 3.2 percent  or $22                                                                    
million would be collected in credits.                                                                                          
                                                                                                                                
Co-Chair  Stedman   stated  that   $2.5  billion   would  be                                                                    
collected, and  reiterated that it  was a small  fraction of                                                                    
the progressivity. He  stressed that all of  the terms would                                                                    
be open for discussion.                                                                                                         
                                                                                                                                
9:24:08 AM                                                                                                                    
                                                                                                                                
Senator  Olson wondered  if there  would be  possible retro-                                                                    
active mandates for tax  payments. Mr. Grussendorf requested                                                                    
further explanation.                                                                                                            
                                                                                                                                
Senator Olson referred to  discussion related to retroactive                                                                    
tax collecting. He wondered if  there was a retroactive date                                                                    
for  the tax.  Mr. Grussendorf  replied that  there were  no                                                                    
discussions regarding retroactive tax collections.                                                                              
                                                                                                                                
9:25:22 AM                                                                                                                    
                                                                                                                                
Senator Olson wondered if there  would be an increase in the                                                                    
rural  school districts.  Mr. Grussendorf  replied education                                                                    
would be separate, after the formula was established.                                                                           
                                                                                                                                
9:26:19 AM                                                                                                                    
                                                                                                                                
Senator Olson looked  at column D, and  wondered what impact                                                                    
the potential rise  28 percent might have on  the state. Mr.                                                                    
Grussendorf was unsure.                                                                                                         
                                                                                                                                
Senator  Olson noticed  that  they would  not  only get  3.2                                                                    
percent, but an  additional 8 percent. He  wondered how much                                                                    
that  would increase  the revenue.  Mr. Grussendorf  replied                                                                    
that the spreadsheet did not include that amount.                                                                               
                                                                                                                                
9:27:11 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  stated  that the  progressivity  tax  was                                                                    
included to ensure that the  percentage does not decline the                                                                    
state's share of the oil profits.                                                                                               
                                                                                                                                
9:28:51 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman reiterated  that  the concept  was on  the                                                                    
table for discussion.                                                                                                           
                                                                                                                                
Co-Chair  Stedman  looked  at   one  fiscal  note  from  the                                                                    
Department of Education and  Early Development, which showed                                                                    
an  increase of  $22 million  in K-12  funding; and  another                                                                    
fiscal note from the Department  of Commerce, Community, and                                                                    
Economic Development that showed  an increase of $22 million                                                                    
in community revenue sharing.                                                                                                   
                                                                                                                                
LUKE HOPKINS,  MAYOR, FAIRBANKS (via  teleconference), spoke                                                                    
in favor  of SB 97.  He stated that  there was a  backlog of                                                                    
school  maintenance. He  remarked that  revenue sharing  had                                                                    
been used in years prior,  to avoid tax payer contributions.                                                                    
He remarked that when oil prices  grew, they had to apply an                                                                    
appropriation in order to cover increased costs.                                                                                
                                                                                                                                
9:31:56 AM                                                                                                                    
                                                                                                                                
JOHN BOLLING,  CITY OF CRAIG (via  teleconference), spoke in                                                                    
favor of SB 97. He  stated that the municipality appreciated                                                                    
the Legislature's appropriation of money.                                                                                       
                                                                                                                                
9:32:41 AM                                                                                                                    
                                                                                                                                
BRYAN ZACK,  HOMER (via teleconference),  spoke in  favor of                                                                    
SB 97. He requested a change  from $84 per barrel to be used                                                                    
as a trigger point.                                                                                                             
                                                                                                                                
9:35:57 AM                                                                                                                    
                                                                                                                                
ELAINE   PRICE,  SOUTHEAST   ISLAND  SCHOOL   DISTRICT  (via                                                                    
teleconference), spoke in favor of SB 97.                                                                                       
                                                                                                                                
9:36:33 AM                                                                                                                    
                                                                                                                                
BEAR KETZLER, CITY OF TANANA  (via teleconference), spoke in                                                                    
favor of SB 97.                                                                                                                 
                                                                                                                                
9:38:19 AM                                                                                                                    
                                                                                                                                
BRUCE JOHNSON, EXECUTIVE DIRECTOR,  ALASKA COUNCIL OF SCHOOL                                                                    
ADMINISTRATION, spoke in  favor of the concept of  SB 97. He                                                                    
explained that  there was an  extraordinary cost  related to                                                                    
heating  and oil  costs. He  offered his  assistance in  the                                                                    
continued refinement of the bill.                                                                                               
                                                                                                                                
9:39:17 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  suggested  consideration for  the  amount                                                                    
that was proposed  for the revenue sharing  and the schools.                                                                    
Mr. Johnson agreed to help.                                                                                                     
                                                                                                                                
9:39:53 AM                                                                                                                    
                                                                                                                                
JOHN  ALCANTRA, NATIONAL  EDUCATION  ASSOCIATION OF  ALASKA,                                                                    
spoke in  favor of  SB 97.  He stressed  that 89  seemed too                                                                    
high a trigger.                                                                                                                 
                                                                                                                                
9:42:13 AM                                                                                                                    
                                                                                                                                
KATHY WASSERMAN, ALASKA MUNICIPAL  LEAGUE, spoke in favor of                                                                    
SB 97. She stressed that  the municipalities agreed to share                                                                    
in  the funds  when oil  prices go  up. She  reiterated that                                                                    
many  communities   face  high  oil  prices,   and  find  it                                                                    
difficult to provide basic services.  She stated that basing                                                                    
one day  as a target was  unfair, but getting an  average on                                                                    
holidays  might be  better.  She offered  to  work with  the                                                                    
Legislature in determining the best approach.                                                                                   
                                                                                                                                
9:44:23 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman closed public testimony.                                                                                       
                                                                                                                                
Co-Chair Hoffman  stated that the  struggling municipalities                                                                    
and  school districts  had asked  for assistance.  He stated                                                                    
that there  may have been  an initial concern of  relying on                                                                    
the  funds.  He  stressed  that  the  funds  would  only  be                                                                    
available in times of high oil prices.                                                                                          
                                                                                                                                
SB  97  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 18 Legislation Intro'd_byState.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 23 Alaska Film Incentives - Economic Impact.pdf SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Letters supporting.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Muni of Anchorage economic goal.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 18 Legislation Passed by State.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 New FN LAA Salaries and Allowances.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 New FN LAA Session Expenses.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Ratio_Legislation Intro'd to Passed_byState.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Sectional_CS_STA_ version I.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Session Limit Methods.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Sponsor Presentation.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Sponsor Statement.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Support Letter FbksNewsMiner.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Support Letter Juneau Chamber.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Support Letter JuneauEmpire.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18_ Support Letter_ Fran Ulmer.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 97 2011_03_14 AML reThanks.pdf SFIN 3/21/2011 9:00:00 AM
SB 97
SB 102 Sponsor Statement.docx SFIN 3/21/2011 9:00:00 AM
SB 102
HB 67 - SB 23 Anch. Resolut Sppt.pdf HEDT 2/17/2011 10:15:00 AM
SFIN 3/21/2011 9:00:00 AM
SB 23 Press Clippings.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
Sb 23 Sponsor Statement.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Sectional Summary Version X.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 23 SFIN Version X.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 23 Additional Support Letters.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 23 Markel Letter of Concern.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 97 3 2 11 rev sharing with annual trigger.xls SFIN 3/21/2011 9:00:00 AM
SB 97
SB 97-CCED-DCRA-03-19-11.pdf SFIN 3/21/2011 9:00:00 AM
SB 97
SB 97-EED-ESS-3-20-11.pdf SFIN 3/21/2011 9:00:00 AM
SB 97